By Paul Delean
The Gazette
Thursday, March 01, 2007

Also published in:

Canadians contemplating a 2006 registered retirement savings plan (RRSP) contribution before the deadline at the close of business today got an unsettling distraction in the form of a steep, global stock slide yesterday.

Adrian Mastracci, fee-only portfolio manager at
KCM Wealth Management in Vancouver, says, "Risk management is Job One for an adviser. That's where a lot of the performance is won or lost."

But they should not deviate from their plan - provided they have a plan, financial advisers say.

If there is no predetermined course of action or their risk tolerance needs reassessment, the best recourse may be to park the new RRSP contribution in a short-term, deposit-style product for a month or three until an asset-allocation plan is drafted and the dust settles in equity markets, Adrian Mastracci of KCM Wealth Management said.

"Risk management is Job One (for an adviser)," he said. "That's where a lot of the performance is won or lost. On days like (Tuesday), you'll get a haircut; there's not a lot you can do. By having a diversified and long-term portfolio, hopefully it won't be as severe as other people's."

Keith Donoghue said investors appear to be taking the latest market correction in stride. He had no calls yesterday from concerned clients. "Those making last-minute RRSP contributions will simply be buying lower," he said.

For people with a plan and investment horizon of 10 to 15 years, declines like the one Tuesday should cause no alarm, said Jean-Pierre Duguay. "It's not something a mutual-fund investor should be concerned about. Let the fund manager worry about it."

Debi McMillan, vice-president in Montreal, said the volume of trades at the discount brokerage spiked about 30 per cent on Tuesday, and though not quite as strong yesterday, still exceeded the average.

It has more to do with market volatility than last-minute RRSP money, she said. Trading volumes edged up over the past few weeks as investors reduced positions in winning stocks while others bought names that had pulled back or deployed cash that had been on the sidelines.

"People are getting better at contributing (to RRSPs) earlier and throughout the year," she said.

NOTE: The information provided above is intended for general informational purposes only. It does not constitute advice for anyone's specific situation. Everyone should always first consult directly with their advisors to determine the appropriateness of any information contained above before taking any action. KCM Wealth Management Inc. assumes no responsibility for any loss or damage arising from the use of, or reliance upon the above information.