Timely template letter: The year in review

(November 2006) December is a natural spot in the calendar to touch base with your clients, review the events of the year, thank them for their business and send along your warm wishes for the holiday season. To help you get started we’ve created this customizable letter to send to your clients.

Dear [Client’s name],

As 2006 draws to a close, I want to thank you for choosing me as your financial advisor. I appreciate your trust, and the business that comes with it. The end of the year is a time to be with family and friends, but it’s also a good opportunity to look back and put things into context. Here’s a quick review of the more important financial events that occurred 2006:

The Markets

At the beginning of 2006 the S&P/TSX Composite Index was a little above 11,400. We had a bumpy ride during the late spring and early summer, and at one point in June the markets dropped below 11,000. Anyone who panicked and cashed out of their investments during that lull would have missed out on the rally that followed – the index has now recovered and was trading around 12,700 in early December.

I mention this to remind you how important it is to take the long view, and to congratulate you on sticking with your investment plan. Just four years ago, at the start of 2003, the S&P/TSX Composite was at 6,614. Despite all the ups and downs we’ve experienced along the way, that number is now about double.

Budget 2006

The Conservative government’s first budget in May announced a number of tax breaks aimed mostly at those in the middle and upper income tax brackets. Besides a credit for regular users of public transit, post-secondary students became eligible for a 15.25% non-refundable tax credit for textbook expenses, parents were given a $100 monthly child care benefit for kids under the age of six, and the pension income credit for seniors was increased to $2000. These are just a few of the changes announced. If you’d like to know more, please don’t hesitate to ask.

Income Trusts

When Finance Minister Jim Flaherty announced in November that income trusts would be subject to a new distribution tax, it caught many off guard and prices tumbled. Keep in mind, however, that those who hold income trusts outside of their RRSPs will actually be better off when the changes come into effect in 2011.

Favourable tax treatment shouldn’t be the sole criteria for choosing an investment. Depending on your long-term goals and risk profile, well managed, profitable investment trusts may still be worth considering as part of your portfolio. In fact, now may be a good time to pick up a few units while the sector is still “on sale”.

Should you have any questions about how these or other recent events might affect you, I’d be happy to schedule a time to either speak with you on the telephone or to sit down with you in person. If you have friends or colleagues who you think might benefit from my advice, I would also be pleased to meet with them in 2007. A referral is a wonderful present, and I’d like to thank everyone who gave me one over the last twelve months.

Best wishes for health, happiness and continued financial success in the New Year!

[Your signature] [Your name]

(11/27/06)