VOLUME XX NUMBER 1 | SPRING 2011 IN THIS ISSUE FIRST QUARTER UPDATE Strong Market Conditions WHEN DEMENTIA STRIKES A Devastating & Frustrating Disease EXECUTORSHIP What is involved? DALBAR SURVEY The results are in! CONTACT US CHRIS FORMAN Senior Financial Advisor Phone 604.687.4587 [email protected] MARK RICHARDS Senior Financial Advisor Phone 604.484.4559 [email protected] MIKE FRASER Financial Advisor Phone 604.484.4558 [email protected] PETER GRAHAM Financial Advisor Phone 604.484.4577 [email protected] TOM CHIPMAN Associate Phone 604.484.4552 [email protected] MAIN BRANCH #1310-925 West Georgia St Vancouver, BC | V6C 3L2 Phone 604.688.2123 www.roadmapforsuccess.ca "I was a multi-millionaire from playing hockey. Then I got divorced, and now I am a millionaire." -Bobby Hull First Quarter Update Anyone who expected a calm and uneventful start to 2011 was promptly disappointed. Within the first three months of the year, we experienced momentous geopolitical unrest in North Africa and the Middle East, European sovereign debt concerns, surging oil prices, and the Japanese earthquake and its nuclear concerns. If these facts could have been predicted going into the quarter, the prudent reaction may have been to move out of equities and into fixed income. This would have been an undesirable course of action. Notwithstanding a significant drop in stock markets during the month of March, markets the world over generally showed positive on a year-to-date basis. In fact, the U.S. S&P500 posted the best first quarter results since 1998, up over 5% in the quarter! The Bank of Canada, U.S. Federal Reserve, and the European Central Bank (ECB) all held their rates steady during the quarter. This did little to stem speculation in the commodities markets, thus pushing up top line inflation rates despite significant available capacity in the developed world. Markets in the face of these events have continued to be strong because of good market fundamentals (such as strong corporate earnings growth, relatively reasonable stock prices, and healthy corporate balance sheets) and strong economic data (such as improved unemployment, strong global trade numbers, and healthy GDP results). These factors continue to support a positive outlook for equity markets overall. However, each of the abovementioned risks remain significant and thus represent very real concerns for the short-term outlook of capital markets, and therefore further volatility is to be expected. When Dementia Strikes Our planning practice is nearly 20 years old and in that time we have seen booms, busts, market highs and lows, natural disasters, wars, famine, the effects of cancer, heart disease, AIDS, and malaria. But we have only seen the beginning of what may be the most dramatic of all…Dementia. We have already seen close-knit families torn apart by the ravages of this incurable scourge that is just now sinking its claws into the Baby Boomers. As these Baby Boomers age, one out of eight of them will develop dementia – a horrible, costly, heartbreaking disease. Increasingly for these Baby Boomers, it will no longer be their grandparents and parents who have dementia – it will be them. A diagnosis of dementia is devastating for a person – but it’s also incredibly tough, perhaps tougher, for their close family and friends. Dementia is a complicated, often confusing disease. It is as frustrating for the person experiencing its symptoms as it is for the caregiver. The term “dementia” refers to a chronic, progressive problem of cognition that usually affects memory and almost always affects judgment, decision-making, and relationships with others. Alzheimer’s disease is the most common type of dementia. Dementia originates in the cerebral cortex of the brain, which accounts for approximately two-thirds of the brain’s mass and controls sensory functions such as hearing, vision, touch, as well as cognitive functions such as thought, perception, and communication. Thus, once the cerebral cortex starts to degenerate, the person with dementia experiences difficulty in his or her ability GIC INTEREST RATES 2011 (%) ** JAN FEB MAR 1 YR 1.80 2.00 1.85 3 YR 2.70 2.75 2.75 5 YR 3.35 3.45 3.30 ANNUALIZED RATES OF RETURN AS OF MARCH 31, 2011 (%) *** CDN$ 1 YR 3 YR 5 YR TSX 20.4 5.0 4.7 S&P 500 15.6 2.4 2.6 TSX DEX 5.1 5.1 5.3 *EAFE 6.3 -4.2 -1.9 * Europe, Australia, & Far East Index ** Source: GICInvest.net *** Morningstar Manulife Securities and the block design are registered service marks and trade marks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Securities Incorporated. VOLUME XX NUMBER 1 | SPRING 2011 | PAGE 2 to think, feel, understand, speak, and act. As dementia progresses, the person will experience trouble performing basic life functions that were once second nature. Sadly, no cure for Alzheimer’s disease or other types of dementia presently exists. Drug treatments have been developed and continue to emerge, which can slow the progression of the disease and assist in controlling symptoms. Symptoms that signal the onset of dementia are usually subtle and may not be noticeable for a number of years. In fact, earlier signs usually are identified in retrospect, and often by someone other than the patient. Most people think of memory loss as the primary symptom of dementia. While most dementias affect memory, some forms of dementia do not initially involve memory loss. Other areas that may be affected include language, perceptual skills, reasoning, and personality. This is especially true in individuals whose symptoms begin before age 65. New research shows that one of the first signs of impending dementia is an inability to understand money and credit, contracts, and agreements If you have a loved one that you feel may be showing early signs of dementia, the first step is to see a doctor right away. While incurable, current approved drugs do slow the onset and the sooner one is diagnosed, the sooner the disease’s advancement may be slowed. Did you know? • Your executor becomes personally liable for their actions when handling your estate, and can be sued by your beneficiaries if they make a mistake. • It takes approximately one year to administer most estates. • While you may feel you are honouring someone by appointing them as your executor, in fact serving as an executor can be an onerous burden that will impose on their personal time and finances for at least a year. • Most of an executor’s work must be done during normal business hours, and may conflict with their own work if they are employed. • Very few people have served as an executor previously, and therefore most personal executors will be learning on the job. • Every executor, personal or professional, is entitled to the same compensation for administering your estate. • Many people who have acted as an executor say they would not willingly accept the job again. Serving as executor is a huge responsibility, especially if you have anything beyond the simplest of estates. For a friend or family member charged with that responsibility, it can be overwhelming and stressful. By using a Corporate Executor, responsibilities are placed in the hands of experienced estate professionals. Their familiarity with the ever-changing tax and estate laws can be useful to ensure that your wishes are properly executed. The next step is to ensure all your papers are in order, specifically Power of Attorney, your will, lines of credit, life insurance contracts, any mortgage/real estate holdings, and any non-registered accounts should all be updated to reflect your new reality. Further, make sure someone else knows where everything is, who your financial planner is, and any other pertinent information someone would need to know in the event of an unexpected death. This is not a time to be coy with the details of your affairs. Client Survey For more information visit www.alzheimer.ca. The survey is designed to rate financial professionals against other survey participants and the National Average Benchmarks I the four key components of Trust, Financial Performance, Satisfaction with Services, and Quality of Advice. The intention of the survey was to identify overall client satisfaction as well as to help us see where we can improve our services. We feel the survey was a great help in meeting these objectives. (Source: New York Times, October 30, 2010) Executorship You have worked hard to accumulate your estate, but have you taken the time to plan what will happen to it when you pass away? Do you know who will settle your estate on your behalf? Almost 50% of Canadians have not developed a written plan for the financial management of their estate after their death. Failure to consider how your wealth will be passed on to future generations results in an incomplete wealth plan. Your executor is the person or trust company that you name in your will to administer your estate after death. Your executor carries out your wishes as stated in your will. Before choosing an executor, it is important to understand their duties and responsibilities, so you can decide if they have the necessary time and skills to look after your affairs. DALBAR ratings are issued to financial professionals who meet the criteria of having five years of experience, no disciplinary sanctions by certain regulators for five years, and are active practitioners. Financial professionals pay DALBAR a fee to obtain a rating of performance from clients. DALBAR ratings are not representative of any one client’s experience and are not indicative of future performance. As mentioned in our last correspondence, we received the results of the DALBAR client survey that we commissioned late last year. We had an extremely high response rate of almost 50%, and again, we thank each of you who took the time out of your busy schedule to provide your valuable feedback. Given the large sample size, we are very confident with the results. Following are the scores in the above-mentioned four areas: CATEGORY TRUST FINANCIAL PERFORMANCE SATISFACTION WITH SERVICES QUALITY OF ADVICE NAT’L AVERAGE OUR SCORE 2.99 3.15 3.27 3.37 3.35 3.29 3.52 3.47 Scores are based on a 4-point scale, with 4.0 being the highest available score. While we are pleased with the overall results, we have been able to identify areas where we may be able to enhance your overall client experience. We are exploring ways in which to effectively incorporate these ideas into our practice. Thank you again for your participation! If you like our service, please let others know. The greatest measure of our success is the referrals we receive from our clients. Manulife Securities Incorporated is a member of the Canadian Investor Protection Fund. This publication is solely the work of Christopher Forman for the private information of his clients. Although the author is a Manulife Securities Advisor, he is not a financial analyst at Manulife Securities Incorporated (“Manulife Securities”). This is not an official publication of Manulife Securities. The views, opinions and recommendations are those of the author alone and they may not necessarily be those of Manulife Securities. This publication is not an offer to sell or a solicitation of an offer to buy any securities. This publication is not meant to provide legal, accounting or account advice. As each situation is different, you should seek advice based on your specific circumstances. Please call to arrange for an appointment. The information contained herein was obtained from sources believed to be reliable; however, no representation or warranty, express or implied, is made by the writer, Manulife Securities or any other person as to its accuracy, completeness or correctness. Manulife Securities and the block design are registered service marks and trade marks of The Manufacturers Life Insurance Company and are used by it and its affiliates including Manulife Securities Incorporated.
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