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Welcome to Soundbites, weekly insights on market trends and investment strategies, brought to you by Investment Executive and powered by Canada Life. For today’s Soundbites, we’ve asked Chris Reynolds, co-founder and executive chairman with Investment Planning Counsel, for some year-end strategy tips. We talked about where he sees opportunities, what clients want to hear in year-end conversations. And we started by asking how he would characterize the year that is now wrapping up.

Chris Reynolds (CR): 2025 was really the best possible time to be a financial advisor. And I’ve said this on many occasions: this is the time to be in the wealth management business. I’ll give you all the reasons. First of all, there’s a huge flow of money. I remember 10, 20 years ago, we used to sit around with awe and say, look at all the money that’s going to change hands! It was $1.4 trillion. Well, that’s happening in real time. Every week, somebody’s selling a business, they’re inheriting money, they’re selling real estate. These, big chunks of money are coming into the market on a regular basis. Number two is people want advice. The market is so complex people aren’t going to ‘do it yourself’ anymore. They want a professional and they want advice. Now, that’s great for us. Three? Great equity markets. We all look happy because everybody’s been doing well. And then the fourth reason is there’s probably one third less advisors in the Canadian marketplace since the pandemic, right? Because of demographics, we’ve seen a big consolidation. And so the advisors who are left and the advisors who are doing a good job are just gaining market share. So, as I said, this is literally the best time ever to be a financial advisor. And I think all the factors will continue to be on our side.

Underestimated sectors and themes

CR: If I had to give any advice, it’s [that] now is the time to re-examine your asset allocation. We did have a great run in equities, specifically U.S. equities — and Canadian equities did well as well. So are we still in the risk tolerance of the client? It’s easy to get caught up in the euphoria of, you know, great markets, but this is the time to be a little bit more cautious. Go back to your clients. Look at their risk tolerance. I’m not saying take huge amounts of money off the table, but make sure your allocation is what the client originally wanted. We’ve had a great run, led by the Magnificent Seven. Most of that gain has come from a multiple expansion, not necessarily an earnings expansion. Whenever that happens, it means your multiple’s going up on anticipation that the earnings will go up with it. If those earnings don’t follow, that becomes way more risky in your portfolio. Valuations are high right now, and it’s always a good time to take money off the table when valuations are high.

Risks on the horizon

CR: Why did the market go up so dramatically in 2025? And the main reason is around a singular theme on AI. And I’m not saying AI is not going to be very good for the marketplace, but earnings have not really followed at this point. They’re hoping to, and that’s why you’ve seen this multiple expansion. But there’s other companies who haven’t had the same kind of run in their pricing, and are great franchises. So do you want to continue to follow this trend all the way up? Or is it time to look at some unfavourable areas — some of the value areas — and maybe that’s where you rebalance to. Whenever you have high valuation multiples, that’s the time to get cautious. Let’s use the S&P 500. Of that 493 companies [that aren’t the Magnificent Seven] there’s some great franchise companies, great brands, great businesses, growing earnings that have been ignored by the marketplace. So this is the time to rebalance some of those profits, maybe into those types of companies.

Year-end tax decisions

CR: This is always the thing that you see. People are like, ‘Oh, I can’t sell that. There’s too much built up capital gain.’ But capital gain is actually a good thing. And where you can take capital gains, sometimes you should. And I’ll give you two good reasons. One is the inclusion rate. You know, we already had a scare with the Liberal government, where they were going to move the inclusion rate up. Luckily, that got bypassed during election. But that doesn’t mean it’s off the table. So taking your capital gains when you can at this inclusion rate is probably a good thing. Number two is if there was no tax, would you buy this company at this price? And if your answer is no, then it’s time to take some money off the table, tax or not. A good strategy, and one that should be on the top of every advisor’s list in the month of November is called tax loss harvesting. Generally when you have a position that has a loss in it, you would take that loss artificially. In other words, you would sell that security, buy something that’s equivalent — usually utilize ETFs — and you’re out for 30 days. Go back in . You have now crystallized your loss. That loss can then be used in that current tax year, past current tax years, and future tax years. So it’s always a good thing. A good financial advisor looks at all their clients with large open money positions and utilizes tax losses whenever they can. You’ll see a lot more activity at the year end, because you have to do it before year end. So as a result of that, you’re going to see some mispricings. In fact, you’re seeing some volatility right now in the marketplace, and a lot of that is due to tax loss harvesting.

And finally, what’s the key takeaway for financial advisors looking for year-end tips?

CR: Well, the number one talk — and I’ve been beating this drum for my entire career — is simplify your business. Simplify your clients’ portfolios around who your clients are. Generally, your clients fall into, you know, three major categories. There’s income clients, there’s balanced clients, and there’s growth clients. So in fact, you should only have three portfolios. What I see is advisors have a different portfolio for every client in their bay. How can you possibly manage that? That complexity leads to errors on administration part, leads to KYC misadjustments, client unhappiness, lack of oversight. All it does is cause problems, whereas consolidating and simplifying your business will only benefit you. The watch word is always simplify, simplify, simplify. No one ever got in trouble by making their business too simple.

Well, those are today’s Soundbites, brought to you by Investment Executive and powered by Canada Life. Our thanks again to Chris Reynolds of Investment Planning Counsel. Visit us at investmentexecutive.com, where you can sign up for our a.m. newsletter and never miss another Soundbite. Thanks for listening.

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