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From the financial front lines, from the heart

From the financial front lines, from the heart

Posted on: March 24, 2016
Author: Desmond Chow, Senior Financial Advisor, ATB Securities Inc.

It's been a rough few weeks—so difficult that it’s prompted me to write a post. I hope you'll feel compelled to share it.

These are interesting times here in oil country. Maybe we should have diversified our economy more, but we were riding high. And I'm not just talking about oil prices. I'm talking about livelihoods. In the last several weeks—months even— I've seen more and more Albertans parade into my office notifying me that they've been laid off. While most are in a position to weather the storm, others aren't.

I'm not going to take the time in this post to explain how we got here. But rather, I want Albertans to know where we go from here. In one week last month, I could count on two hands the new stories I heard around cutbacks. And as of right now, it seems unlikely to turn around any time soon.

I've had folks tell me that they've applied for jobs, and they're up against former oil company CFOs. I've had business owners tell me that their revenues are down 70 per cent, and that they're bidding on jobs against 30 other companies at thin margins. I've heard of companies cutting their staff by 40 per cent since November, and others fearing their jobs week by week. I've even had a gentleman wanting to get laid off (for the severance) but the company he works for has committed to no layoffs. Too bad for him.

What I’ve also noticed in my meetings is, while there are those who are financially prepared, there are more who are ill-prepared. It's a theme I’ve noticed over the course of my career, and this is my third major market pullback as an advisor, each unique in its own way. This one is going to have a deep impact—on Albertans, on my hometown, and on our country as a whole.

This was highlighted in one of my meetings last week. A gentleman was laid off after 25 years with the same company, and he's now in his late 60s. Money wasn't his cup of tea. He brought me his company RSP plan to look at. It was all in cash or cash equivalents, earning little to nothing. There was no advice given over the course of his working career, but he also didn't seek any. He wanted to keep his money safe. While over the course of 25 years, he saved a healthy amount, if he had invested it, even conservatively, over that same period of time, his savings would be worth two to three times more—which translates into several hundred thousand dollars. And that concerns me. How many others are in the same boat? According to a study done by Blackrock, 62 per cent of Canadians sit in cash or cash equivalents.

So here is my plea: If you've got any questions, or have been laid off, or are uncertain about your financial plan—please, please go and seek some advice. Whether it’s from a financial advisor, an accountant, your counsellor—it should be someone who can offer you guidance. The importance of advice at this juncture in time is tremendous. It can have a huge long-term impact on your financial life. Whatever has happened (or not happened) in the past, is the past. What matters now is having a game plan going forward.

ATB Securities Inc. (Member: Canadian Investor Protection Fund; Member: Investment Industry Regulatory Organization of Canada) and ATB Investment Management Inc. are wholly-owned subsidiaries of ATB Financial and authorized user of the trade name ATB Investor Services. ATB Investor Services is a registered trademark of Alberta Treasury Branches.