How advisors should approach the summer months

Summer investment strategy depends on your vantage point but there is no denying the temptation to swap bonds for the beach or portfolios for pina coladas.

Wealth Professional spoke to advisors about three different aspects of the industry – the robo platform, portfolio management and the trading – to gauge their thoughts about the sweltering months ahead and what investors should be doing.

Jean-Francois Courville, CEO of Wealthsimple for Advisors, said that if your plan is in place, now is the time to sit back and enjoy the fact you’ve done your homework.

It may also be the perfect chance to sit down, study your plan and decide if it needs changing. The advantages of a digitized portfolio, he added, is that it’s a living plan rather than a 400-page book, which is rarely returned to.

He said: “What if it’s not a thick book but rather a simple understanding of the facts. It’s digitized and there’s a graph which says, here’s what I said I needed to accomplish with the growth of my assets and here’s where I am today, there’s a couple of things I can do.

“If I’m not making it, I can invest more or I can reduce my expectations or I can increase my risk and potentially my returns. There’s no magic and what you have to understand is that these are your options and when it gets buried in a 400-page book, it may not always be the most consumable thing.

“Now the beautiful thing about the bringing together of a well-designed plan and technology is that you can make it a living plan. So you can actually take this time in the summer to slow right down and sit down with your spouse and say, are we on track? Are we doing the things we want to do with our lives? And is that still important to us? And if it is, how are we going to get there?”

For portfolio manager Grant White, who is also lead partner at White Hewson Wealth Advisory Group, August represents a good chance to assess business practices. He believes the summer can offer opportunity when the market slows so he keeps his foot on the gas but recognizes this is also an ideal time for evaluation.

He said: “Most advisors work in their business but never on it. So I take any opportunity I can to work on my business and evaluate what we’re doing and, if we want to make changes, it’s a really good time to do it.”

He added: “The markets certainly slow down. You can see that in the volumes so that can create opportunities as well but for me, I know a lot of advisors start getting sleepy in June and July but I still go pretty hard because our clients are still around.

“But June and July I try to go as hard as I can. August it slows right down and is a really good time to evaluate our business practices, our service offering, to make sure we are up-to-date on things and really ratchet it up to make sure we are ready to go when clients are ready after the September long weekend.”

On the trading side, Alfred Lee, director, portfolio manager and investment strategist at BMO GAM –Canada, said that while there is little evidence to back up the “Sell in May and Go Away” strategy, now is not the time to get reckless in the markets.

He said: “Investors should note that the current cycle is becoming rather extended. The current economic expansion of 73 months well exceeds the average business cycle expansion, since 1945, of 58.4 months.

“Since the equity markets bottomed out in early March of 2009, the TSX and SPX have gained 177.8% and 388%, on a total return basis, in local returns.

“It can be argued that this economic expansion should have a longer cycle, given the depth of the trough. Furthermore, data still suggests the economic backdrop remains expansionary, particularly in the US.

“While we are not implying that the longer cyclical rally in equities and risk assets is coming to an end, we wanted investors to remember to keep risk in check, as investors commonly throw caution into the wind during the later stages of a market cycle. Investors should instead be looking to safeguard portfolios by slowly increasing their exposure to assets that provide downside protection.”

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