With personal finances top of mind as a result of the many employment and economic impacts of COVID-19, Kent recently sat down for a video chat with Edmonton-based Realtor Sheldon Casavant to answer some important questions.

Watch the conversation or read the transcript below:

Sheldon: I’m Sheldon Casavant with Century 21 Masters, and thank you for watching.  I am excited for the conversation to come where I’ll be interviewing a good friend and really smart guy, Kent Akgungor, with High Level Wealth Management, who’s going to give us some tips, tricks, and advice for dealing with our personal finances in a time like this.  So right now, I’ll pass it to Kent: if you could introduce yourself and tell us a little bit more about what you do.

Kent: Thanks Sheldon.  I am a financial advisor in Edmonton with about 14 years of investment industry experience.  I spent most of my career at the City of Edmonton helping manage their $3 billion of investment assets.  About a year ago I decided to set off on my own and start my own firm, because I identified a need in Edmonton for independent financial planning and wealth management, trying to bring some of the tools and knowledge from the institutional investment side to the individual side.

Sheldon: Well you’re very qualified for this conversation, so thank you for being here.  I wanted to bring up some topics that would be really impactful for this time that we’re experiencing with COVID-19 as many people would most likely be facing some sort of financial challenge, and with that, I just wanted to get your thoughts and your opinion on a few things people could do to stay afloat during this time.

Kent: Obviously this is such an unprecedented time and has affected so many people in different ways.  Because of that it is a little bit hard to give specific advice that will apply to everybody, so I think it’s important if you have a financial advisor to reach out to them and try to get specific advice for your situation.  But generally speaking, a few things that I would mention are:

  • If you’ve lost income, the Federal government has come up with a few different programs, and they keep adding new ones it seems as they go, so look into any of those.
  • If you haven’t yet filed your 2019 tax return, that’s important to do.  Obviously if you have a refund due, that is going to help, but even if you don’t, filing your taxes will help you qualify for things like the GST rebate or the Canada Child Benefit, both of which have been enhanced as a result of COVID-19.  There’s also a Climate Action Incentive that Albertans qualify for this year as well.
  • If you owe money to a bank, they have all announced programs to defer mortgage payments so that’s obviously an options, but there are a lot of other companies and entities that are also providing flexibility for this customers.  So things like your utility payments, property taxes with the City of Edmonton can be deferred, if you have insurance premiums a lot of insurance companies are allowing those to be deferred as well.
  • As well, doing a general survey of your regular expenses might be an opportunity to figure out what’s essential and what can be cut during this time.
  • If you’re making regular contributions to your investments, maybe it’s time to stop that and keep as much cash available as possible.
  • If all of those have been taken care of and you’re still needing some cash, then it’s probably time to look at potentially borrowing.  If you have a home, maybe you can access a home equity line of credit (if you already have one established), which is a good way to borrow money at a relatively low interest rate and the repayments are quite flexible so you can either just pay the interest or potentially repay the whole amount once you get back on your feet.
  • If you have existing assets (savings and investments) that’s also a place where you could get access to some liquidity, but that’s going to be very specific based on the person so that’s where you probably want to consult with a financial advisor because there’s efficient ways of doing that and there’s potential tax consequences and things of that nature.  So the one piece of advice I’d give that probably applies to most people is that your RRSP would be sort of the last resort of where you’d want to pull assets just because any money you pull out would lead to taxes this year and you don’t get that contribution room back in future years.

Sheldon: Interesting.  So the biggest take away from that would be to do whatever’s possible from a liquidity and cash flow standpoint.  I guess with that in mind, if there’s anyone out there who is concerned about mortgage payments – Kent mentioned mortgage deferrals – but if you’re looking a few months or years down the line and anticipating that there might be some challenges paying that, definitely worthwhile to reach out to a Realtor or to a financial advisor in order to plan for that well in advance and create a plan sooner than later.

Taking the current market and economic situation in mind Kent, often when we see the market go down our gut instinct is to cash everything out.  Is that something that you would advise or what would you say to that?

Kent: Very good question and very timely as well.  Unless you absolutely need access to the funds in your investments, history has shown us that the best strategy during a market downturn is to stay invested.  As soon as we let our emotions kind of get involved and take control of our financial decisions we tend to make the wrong decisions, tend to sell out at the worst time and then we tend to stay on the sidelines waiting for the recovery, and by the time we start getting invested again things have already gone up quite a bit.

As an example with recent history, from about mid-February to mid-March of this year, stocks dropped about 30%.  So that’s a huge decline very quickly, very scary, and probably makes people ask whether they should sell out.  But if you would have done that, since mid-March until now when we’re having this conversation (April 23) stocks have gone up about 25%.  So if we would have reacted in February or March we would have missed out on the upside more recently.

Sheldon: Great advice there.  Looking forward with our financial plans in mind, what are three things you would suggest that we do or continue to do to set ourselves up for the future?

Kent: I would recommend focusing as much as possible on things that you can actually control:

  • We can’t control the ups and downs of the stock market but one thing we can control is the investment fees that we pay.  So rather than trying to find a manager that promises us 1% better return each year, I would recommend trying to find a manager that charges 1% less in fees, and that can add up to a lot over the long-term.
  • Another thing would be to make sure you have an appropriate asset allocation in your portfolio – so that’s the mix of stocks and bonds – and making sure that aligns with the amount of risk you’re comfortable with.  A financial advisor can definitely help you determine what that right mix is.
  • Third would be as much as possible to take a long-term perspective when you’re investing, trying to ignore the ups and downs day-to-day, especially during times like right now.  A good way to achieve that is to have a financial plan which by definition has a long-term focus and should keep you focused on that as opposed to what’s happening today or tomorrow.

Sheldon: Great, thank you.  And with a financial plan in mind, that’s probably bringing a question to those watching of how to find a financial advisor and what to look for with a financial advisor.  So maybe if you could answer some of those questions or hesitations that people might have as well as telling us about how we can reach out to you and maybe get you involved for planning for the future.

Kent: Selecting your financial advisor is a very personal decision and I think it’s really important that people try to find an advisor that fits well with their personality and how they think about investments.  I would recommend that you try to interview more than just one person to get a variety of people before you make a decision.  Some good questions to ask would be:

  • How does your advisor get paid?  There are different compensation models, some of which align better with client interests than others.
  • What education, credentials, and experience does your advisor have?  There is quite a range of practitioners in the financial services industry, so you want to know that the person helping you is qualified.  There are a lot of different designations out there, but I would recommend you look for somebody with the CFP designation (Certified Financial Planner) or the CFA designation (Chartered Financial Analyst).
  • What is your advisor’s investment philosophy?  There’s a whole bunch of different ways to invest.  Some people focus on picking the best companies and trying to outperform the market, which typically costs more (in fees), and that might be what you believe in as well.  Other advisors might recommend just trying to get an average return and reducing investment fees as much as possible.

I think we’ve talked about a lot of things here fairly quickly and any of these topics we could probably spend a good hour talking about, so I’d be happy to have people reach out to me through my website at highlevelwealth.ca if they’re interested in talking further.

Sheldon: Awesome.  Well, really appreciate your time and your advice, and if anyone watching wants to reach out to Kent we’ll have his information linked below, so feel free to be in touch and thanks for watching.