1. PERSONAL INVESTMENTS HELPING YOUR CLIENTS REACH THEIR GOALS

3. What are their goals? What’s important to them? – When there are many goals, ask which one is more important, what are the priorities. – What does retirement mean to them? How much are they willing to contribute to achieve their goals? Other than the investments they have with you, what other sources do they have in place to achieve their goals?

4. Once a list of priorities is set, select the goal you want to address and take the first step to building a recommendation. Investor Profile Questionnaire What types of investment are they comfortable with? Different options carry different levels of volatility. The Investor Profile questionnaire will help you and your client in this regard.

12. Have the client sign the questionnaire and keep a copy in your files. A client’s investor profile may change over time. Review your client’s profile periodically by completing a new questionnaire with them every few years or after a major life event (i.e. marriage, birth of a child, new job, loss of job, etc.) More that a tool to establish a score. Pay attention to your clients’ answers as they may be door openers for discussions on their expectations and financial challenges.

13. Investor Expectations Investor Profile Plan / Strategy Financial Goal GAPS

14. Budget – Gap between what the client can contribute and the amount used in the illustration. To avoid this gap, address the budget element early on. – “So Mr. X, how much of your monthly budget were you thinking of dedicating towards attaining your retirement goal?” Investment return – Is the client’s expectation realistic? – Ask your client what average annual return they are expecting on their investments. Investment volatility – Does the client understand the potential short-term ups and downs of his investment portfolio?

15. Investor Expectations Investor Profile To attain specific goal at a certain date, needs average annual return of 7% Investor Profile is “conservative”. Expected rate of return is 4% annually. GAP

16. Gap should be resolved before implementing investment strategy Possible solutions: – Stick with the investor profile risk level and accept to reach the goal at a later date. – Stick with the investor profile risk level and accept to increase the amounts being invested to reach the goal in time. – Accept more short term risk and adopt an investment strategy that will potentially generate the required rate of return to reach the goal in time. What does the client prefer? A combination of solutions can also be applied. Managing your clients expectations by addressing the gaps early on will prevent frustration and dissatisfaction.

17. Look at the suggested investment solution corresponding to the client’s investor profile. Address any gaps between the profile and the investor’s expectation, and see if the investment recommendation will change to address the gaps or if other solutions will be elected (i.e. invest more, extended the goal deadline). Choose between a “ready-made” solution – portfolios of funds – or use a customized approach by selecting a combination of funds.

18. Cash and liquidities (includes money market, GICs, Canada Savings Bonds) – Lowest volatility, low potential return. – Risk of the return being lower than inflation Fixed Income / Bonds – Some volatility, potential long term return higher than inflation, but typically lower than equities. – Bond funds tend to do well when stock markets drop. Equities – High short term volatility, higher potential long term return for growth compared with fixed income and cash.

21. Except for the recommendations made for people at the ends of the investor profile spectrum (i.e. maximum security or maximum growth), all recommendations are a mix of different asset classes. It is impossible to predict which asset class will perform better from one year to the next.

22. By diversifying, you lower the volatility of the portfolio. The weight of each asset class will depend greatly on the investor profile. Establish the investment strategy based on the investor profile and expectations/goals, not on short term market predictions.

24. Geography Economic sector Management style (growth, value, mix) Managers Duration / Terms (for those investing only in GICs or bonds)

25. The concept of volatility or risk relating to specific funds is a bit vague and can be interpreted in different ways by different people. Your interpretation of “mild risk” when talking about a balanced fund can be totally different than your client’s interpretation.

26. Compare a fund’s average return with its annual calendar return.

28. Keys to establishing a strong business relationship with your investment clients: – Get to know their goals, priorities and expectations – Establish their investor profile – Bridge the gaps between their expectations and their profile – Establish an investment strategy – Be as clear as possible about the volatility associated with the funds you recommend by using the tools and information at your disposal.