Michael Banham, Michael Irwin
Michael Banham (left) Michael Irwin (right)

The British decision to leave the European Union and Donald Trump’s election as U.S. President triggered waves of market volatility. While U.S. markets appear to have now embraced Trump, the rollout of his economic agenda is being closely watched.

If Trump’s program, which includes massive across-the-board tax cuts and a US$1-trillion infrastructure program, is approved and does stimulate the economy, it might be good for the market. But an improving economy may also allow the U.S. Federal Reserve to raise interest rates, potentially roiling currencies and the market. For Canadians in or near retirement, investing in this uncertain market environment can be daunting. In the following interview, Michael Banham, Vice-President, Wealth Distribution at Sun Life Financial and Michael Irwin, Assistant Vice-President, Product & Investment Management at Sun Life Global Investments discuss how financial advisors can help their clients weather today’s market.

Michael Irwin

Michael Irwin, Assistant Vice-President, Product & Investment Management

Mike I: Donald Trump may be the biggest wildcard for the global economy and markets for some time to come. Investors are likely anxious – understandably so. How can a financial advisor help as this new political reality sets in?

Michael B: There are certainly a lot of unknowns out there. And as they always should when markets turn volatile, financial advisors should stay in touch with their clients to guide them through any rough patches. Today, with all the noise around the election, they need to know that just because there is a new occupant in the White House, it doesn’t change these basic rules for investing success – work with an advisor and stay invested with a well-diversified portfolio.

So with potentially turbulent markets and possibly higher interest rates in the U.S., advisors should have a conversation with their clients about yields and market performance. The objective should always be to keep clients on target to reach their retirement savings goals. And that means getting the right balance of products, plans and strategies working together to help create a sustainable income flow – no matter what is going on in the market.

Michael Banham

Michael Banham, Vice-President, Wealth Distribution, Sun Life Financial

Michael B: Now it’s my turn to ask you a question. With everything that’s going on, how do you believe advisors and investors should approach the market today?

Mike I: I’d like to answer that question, Michael, by starting with the bigger picture, and the fact that 1,000 Canadians turn 65 every day. That number is expected to climb to 1,400 a day by 2021.1 Many will need to turn assets into retirement income. And yet the 2014 Sun Life Canadian Unretirement Index (a survey of 3,400 Canadians) found that four out of 10 Canadians started to take on less risk in their portfolios following the 2008 financial crisis, with only 6% reporting that they are taking on more risk.

Taking a highly conservative investment approach today could have a negative impact on future income levels in retirement. Fortunately, there are potential solutions. These include taking a diversified, balanced approach with a mix of bonds (medium risk) and equity funds/stocks (higher risk) that may help investors reach their income goals, but with an acceptable level of risk. They should also diversify their investments by country, industry and management style, such as active or passive investment approaches.

This whole process can be simplified by investing in a managed solution, which offers a self-contained, fully diversified portfolio within a single investment. Advisors may want to talk to their clients about the current market, and choose a managed solution suiting their goals, risk tolerance and time horizon.

Mike I: Michael, what will be important in terms of support advisors will need over the next year or two?

Michael B: I think what we know for certain is that nothing is going to change from the client’s point of view – they will still want to transition into retirement with confidence. And that’s why the advisor’s role in providing sound financial advice is so critical. I should also note that 76% of retirees who work with an advisor are satisfied with their retirement savings.2

But advisors must keep their clients informed, especially in a period of market uncertainty. So we need to continue to provide advisors with timely, relevant messages about market developments, ensuring them that we’ve got a steady hand on the investment-management tiller.

Above all, we need to concentrate on a positive wealth message to reduce clients’ concerns by presenting a broad spectrum of wealth solutions to meet their needs. And that means as an industry, we have to develop new products and keep refining existing ones.

Michael B: People are living longer and need their income to last. That makes capital preservation critically important. Mike, how do you approach risk in Sun Life Granite Managed Solutions?

Mike I: One of the advantages of our tactical strategy is that it allows us to quickly adapt the Sun Life Granite Managed Solutions to changing market forces and the opportunities that may present.

Let me give you an example of how this works. Markets were volatile before the British referendum in June 2016, and we tried to take investors out of harm’s way by reducing our position in European and U.S. equities. We also anticipated that there would be a severe selloff if they voted to leave. To mitigate some of that downside, we adopted a conservative options strategy in international equities. That strategy worked, achieving a positive return while insulating our investors from the full impact of the Brexit correction.

I believe this is just one of the advantages we strive to offer retirees, or any investor for that matter. What they get is not only a broadly diversified portfolio, but one that is constantly being monitored and managed to mitigate risk. And in today’s market, that is more important than ever.

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1Statistics Canada, Canada’s Population Estimates, 2012
2Sun Life Retirement Now Special Report, 2016

Michael Banham, is Vice-President, Wealth Distribution, and a member of the Sun Life Global Investments Canada Leadership Team.

Mr. Banham is accountable for leading the growth of retail wealth sales for Sun Life Financial in Canada. He and his team work with advisors to support the development of their business leveraging the broader Sun Life Financial platform, including mutual funds from Sun Life Global Investments (Canada) Inc., segregated fund contracts and guaranteed wealth products issued by Sun Life Assurance Company of Canada, and trust products issued by Sun Life Financial Trust Inc.

Mr. Banham joined Sun Life in 1987 and has since held various senior leadership roles in Individual Wealth Management. Before his appointment as Vice-President, Wealth Distribution, he was Chief Operating Officer for Sun Life Global Investments where he was instrumental in launching the Sun Life Global Investments mutual funds.

Mr. Banham is a past director for the Investment Fund Institute of Canada. He holds an Honours Business Administration degree from Wilfrid Laurier University, Waterloo, Ontario, and has a Certified Management Accountant designation from the Canadian Society of Management Accountants.

Michael Irwin, CFA, is an Assistant Vice President, Product at Sun Life Global Investments.

Mr. Irwin joined Sun Life in 1999 and has held several senior positions in varying roles. His current responsibilities include the management and oversight of all SLGI’s sub-advisory relationships, as well as the development of new products. Prior to joining Sun Life, Mr. Irwin spent seven years as an investment advisor.

Mr. Irwin earned a Bachelor of Arts (Honours), Economics, at the University of Western Ontario. He is a CFA Charterholder and a member of the Toronto CFA Institute.