Junuary Update


Winding through June, we find ourselves in the midst of a slowly reopening economy. National parks and businesses are unlocking their gates, some for the first time in months. Restrictions on camp sites in BC are being relaxed and reopening announcements have been made from many outdoor summer programs – the summer of 2020 is making best efforts to be as normal as possible. For the first time in weeks we have the ability to dine-in as well as take-out from our favorite restaurants. Even our own office has partially reopened, and we have welcomed the chance to reconnect with colleagues (while keeping six feet apart, of course). 
Still, it will likely be a long time before we start having in-person meetings and advice events. We are proud to see how a digital transformation is occurring in our industry amongst others. Work-from-home has stabilized into an efficient routine. We are now able to do much of our required paperwork electronically, receiving scanned copies and utilizing our secure client portal. Electronic signatures are becoming applicable for many types of documents with more being added to the list every month. For advice events, Rob will be hosting our first digital webinar this week: a Millennial Wealth event on our WebEx platform. The world is adjusting to the new normal and we are thankful for the technology that has allowed us to have this contactless convenience. 


We hope you and your loved ones can make the most of the warm days ahead. We continue to wish you good health, happiness and clean hands! If there is anything we can do to help you this summer, please do not hesitate to give us a call or email.

Your team,

Nevin, Tom, Karen, Jack & Rob

Market Update: Bouncing Along

The markets have been steadying themselves over the past few weeks buoyed by optimism that the recovery has already started in earnest. With a forward-looking eye, many businesses are focused on next steps and what the future may hold rather than dwelling on some of the current trials and tribulations. This quarter will likely be a mulligan for many companies from an earnings point of view, but most analysts are already expecting the worst so there may be surprises to the upside if profits do not decline as much as anticipated.

Speaking of optimism, the S&P 500 index turned positive on a year-to-date basis last week. Canada however is still struggling with the low price of oil: the TSX remains down on the year, similar to emerging markets and Europe.

Unemployment trends have started to reverse as businesses reopen. South of the border, unemployment briefly hit a post-depression high of 14.7% in April. That month saw a loss of 20.5 million American jobs, equaling nearly all the jobs created since the financial crisis. Many of these layoffs were temporary and we expect the job market to start tightening through the rest of summer barring a second wave of closures. Businesses that could work remotely have weathered the storm better than most. Technology companies in the Nasdaq have powered the index to all-time highs. If March was the month of fear, and April was the month of pause, May looks like the month of optimism by comparison. Amid the economic devastation and an outlook that remains incredibly murky, the adage that “stocks climb a wall of worry” has never been more appropriate.

Adding to the economic uncertainty, we are watching the protests and civil unrest throughout the US. Beyond a criticism of law enforcement, we see these demonstrations as a sign of deeper social issues that will likely be a major talking point until the next election. While the riots may be short lived, they signal a deeply fractured state where main street and wall street are farther apart than ever.

We remain confident in leadership, at least on the corporate level, to steer us through this crisis. The politics of how this will all be paid for will take some time to sort out, but it is clear that stimulus has had a major effect in softening the blow. While it will still be a long time until we see business as usual, a number of sectors are poised to thrive in the post-pandemic world. Healthcare is one of these and we are excited to review a recent addition to our managed account equity portfolios below.

The Shopping Cart: Dr. Robot & The Operating Room of the Future

Intuitive Surgical manufactures and sells surgical robotic systems, instruments and accessories. An early pioneer in surgical robotics, its systems are used around the world to perform minimally invasive surgeries across a variety of specialties. Their goal: the best patient experience for a lower total cost of care.

Their videos on YouTube illustrate how the future of robotically assisted surgery has arrived.



With a 90% market share by revenue in surgical robotics, Intuitive has become the gold standard and we expect this trend to persist within this rapidly growing market. In 2018, only 2% of global surgeries (10% in the US) were done with the assistance of robotics. The industry forecasts robotic assistance will grow to 15% of all procedures over the next decade. In the post-pandemic world, procedures administered by robots seem more valuable as the world focuses on limiting exposure to infectious diseases.

The company continues to innovate and improve, leveraging a vast data set from over 7.2 million procedures conducted to date. There are many new markets for them to explore around world. Their accessory suite and upgrade cycle are conducive to recurring revenue. We appreciate the expertise of their management team and note that many of the executive management were promoted from within the company with compensation tied to long-term company performance.

With no direct rivals and a strong technological advantage, we view that this company brings the technology of the future to today. While at its current valuation we would note that Intuitive Surgical is not cheap, we believe that the use of robotics in healthcare is still in its infancy and several tailwinds are set to push this company even further.


Reminder: CERB is a Taxable Benefit

If you know anyone who is currently claiming a CERB benefit, be sure that they know it is a taxable benefit. Payments must be reported as income for the 2020 tax year.

The Canada Emergency Response Benefit (CERB) is now in its fourth eligibility period. Those who have been claiming this benefit from the start will have collected $8,000 - a critical source of cash flow for workers of many disrupted industries. It is important to remember that this $2,000 per month payment is taxable and it is advisable that beneficiaries plan ahead to be able to pay the taxes owing when they file their taxes next year.

As the government states on its website, CERB is taxable, and “you will be expected to report it as income when you file your income tax for the 2020 tax year.” That being said, the Canada Revenue Agency is not deducting any income tax at source from the monthly $2,000 CERB payments, presumably to allow recipients to have full access to the cash when it is most needed. This may result in significant tax liabilities of hundreds to thousands of dollars depending on the total annual income level of the recipient.

CERB payments will be taxed as ordinary income, subject to the marginal tax rate for their total 2020 income.

If you know anyone who is currently collecting CERB benefits, make sure they know it is taxable income. It is very important that they are planning accordingly. If you would be comfortable to make an introduction to our team, we would be happy to go over this information with them and help them get on the right path.


Mortgage Payments: To defer or not to defer?

It may be a short-term option to manage cash flow, but consider the full picture.

If you or someone you know is thinking about deferring mortgage payments given the challenging economic times we’re living in, you’re not alone. The Canadian Bankers Association announced on April 3 that almost 500,000 requests for either a mortgage deferral or to skip a payment had already been completed or were in process since Canada’s banks announced a mortgage deferral program in March.

Deferring mortgage payments may be a good idea if the only alternative to manage restricted and depleting cash flows during this difficult period are high-interest personal loans and/or credit cards with double-digit interest rates.

But there’s much to consider with regards to a deferral and we urge you to proceed with caution. Please reach out to us to discuss your circumstances as you tackle what can be an emotionally driven decision.

In a brief article here, we’ve outlined some of the key considerations including the impact on your interest payments once the deferral period ends, the potential implications for your credit score, and the critical importance of maintaining a written record of correspondence with your bank or financial institution.

Please reach out if you have any other questions and forward this to anyone you know considering a mortgage deferral.