O D L U M B R O W N .

C O M

O D LU M
B R O W N
R EPO R T
0 3 2 0 19

IN S ID E T H IS IS S U E
P ag e 1
T h e B e s t H a v e G o tte n B e tte r
P ag e 3
W h a t Y o u N e e d to K n o w A b o u t
In d iv id u a l P e n s io n P la n s
O d lu m B r o w n L im ite d
S u ite 110 0 - 2 5 0 H o w e S t re e t
V anco uver B C V 6 C 3S 9
M a in 6 0 4 6 6 9 16 0 0
T o ll F r e e 1 8 8 8 8 8 6 3 5 8 6
K e lo w n a 2 5 0 8 6 1 5 7 0 0
V ic to r ia 2 5 0 9 5 2 7 7 7 7
C h illiw a c k 6 0 4 8 5 8 2 4 5 5
C o u r te n a y 2 5 0 7 0 3 0 6 3 7
L a n g le y 6 0 4 6 0 7 7 5 0 0
E m a il in fo r m a t io n @ o d lu m b ro w n .c o m
T h e B e s t H a v e G o tte n B e tte r
A d e c a d e a g o , d u rin g th e d e p th s o f th e 2 0 0 8 /0 9 F in a n c ia l C risis, E x e c u tive V ic e P re sid e n t, D ire c to r,
In ve stm e n t R e se a rc h , M u rra y L e ith ’s k e y n o te p re se n ta tio n a t th e O d lu m B ro w n A n n u a l A d d re ss
w a s title d “T h e B e st G e t B e tte r.” In it, h e sa id :
B e ca u se th e re a re n o q u ick fixe s, a n d n o b o d y kn ow s fo r su re h ow th in g s w ill u n fo ld , in ve sto rs n e e d to b e
co n se rva tive a n d fo cu s o n th e h ig h e st-q u a lity in ve stm e n ts. Th a t m e a n s, th e b e st-o f-b re e d co m p a n ie s – th e
b ig g e st co m p a n ie s, w ith le a d in g m a rke t p o sitio n s, th e b e st m a n a g e m e n t, th e h ig h e st p ro fit m a rg in s, th e
h ig h e st re tu rn o n ca p ita l a n d th e stro n g e st b a la n ce sh e e ts. Th e se a re th e co m p a n ie s th a t a re g o in g to
su rvive a n d th rive ove r th e lo n g ru n .
M u rra y co n tin u e d th e p re se n ta tio n b y sh a rin g th e re su lts o f a n e ye -o p e n in g stu d y b y M cG ra w H ill. Th e stu d y
h ig h lig h te d a sym b io tic re la tio n sh ip b e tw e e n a d ve rtisin g sp e n d in g a n d sa le s g ro w th d u rin g th e b ru ta l re ce ssio n
in th e e a rly 1 9 8 0 s. Th e stu d y reve a le d th a t co m p a n ie s w h ich m a in ta in e d o r in cre a se d th e ir a d ve rtisin g sp e n d in g
e xp e rie n ce d sig n ifica n t sa le s a n d m a rke t sh a re g a in s, w h ile th o se th a t cu t b a ck lo st m a rke t sh a re . W e
fa vo u re d th e b e st co m p a n ie s d u rin g th e Fin a n cia l C risis b e ca u se th e y h a d th e fin a n cia l stre n g th to in ve st in
th e ir b u sin e sse s d u rin g to u g h tim e s.
T h e R ise o f C o rp o ra te In e q u a lity
Th e H a m ilto n P ro je ct, a re se a rch g ro u p , re ce n tly p u b lish e d a p a p e r o n th e rise in co rp o ra te in e q u a lity.1 Th e
re p o rt sh o w s th a t fro m 1 9 9 7 to 2 0 1 2 , th e m a rke t sh a re o f th e to p fo u r co m p a n ie s in a n y g ive n in d u stry ro se
a lm o st 1 0 p e rce n ta g e p o in ts, o n a ve ra g e . O n th e o th e r h a n d , sta rt-u p ra te s, d e fin e d a s th e p e rce n ta g e o f
co m p a n ie s th a t a re le ss th a n a ye a r o ld , a re cu rre n tly a t th e ir lo w e st le ve ls sin ce th e 1 9 7 0 s. In 2 0 1 5 , o n ly 2 7 %
o f A m e rica n s w o rke d a t sm a ll co m p a n ie s (le ss th a n 5 0 e m p lo ye e s), d o w n fro m 3 3 % in 1 9 8 7 .
R e tu rn o n In ve ste d C a p ita l F o r U .S . F irm s 1 9 6 3 -2 0 1 4 A lo n g th e w a y, th e m o st p ro fita b le firm s h a ve b e co m e
e ve n m o re p ro fita b le . In d e e d , sin ce th e e a rly 2 0 0 0 s, th e
120
re tu rn o n in ve ste d ca p ita l (R O IC ) fo r th e 7 5 th p e rce n tile o f
P e rc e n t R e tu rn o n In v e s te d C a p ita l

100 n o n -fin a n cia l, p u b licly-tra d e d firm s h a s ro u g h ly d o u b le d ,

O d lu m B ro w n L im ite d
80 w h ile th e p ro fita b ility o f th e 2 5 th p e rce n tile h a s sta ye d
60
sta g n a te . In sta rk co n tra st, th e m o st p ro fita b le firm s – a s
O d lu m B ro w n C o m m u n it y
re p re se n te d b y th e 9 0 th p e rce n tile – h a ve se e n a n e ve n
40
b ig g e r in cre a se in p ro fita b ility.
@ O d lu m _ B ro w n 20

0 N o t o n ly a re th e b e st co m p a n ie s b e co m in g m o re p ro fita b le ,
O d lu m B ro w n
b u t th e ir o d d s o f sta yin g su p e rio r a re a lso im p ro vin g .
1966
1972

1978
1984
1990

1996
2002

2008
2014

S o u rce : Th e H a m ilto n P ro je ct A cco rd in g to a re ce n t M cK in se y C o n tin u e d o n n e x t p a g e


“
In v e s tin g in th e b e s t h a s s e rv e d u s w e ll.
N o t o n ly d id o w n in g s tro n g e r U .S .
c o m p a n ie s p ro v id e c o m fo rt a s w e w e n t
th ro u g h th e F in a n c ia l C ris is , b u t th e
b u s in e s s e s h a v e p e rfo rm e d v e ry w e ll
s in c e a n d c o n trib u te d s a tis fy in g
re tu rn s . T h e a ll-e q u ity O d lu m B ro w n
M o d e l P o rtfo lio h a s trip le d in v a lu e
s in c e th e e n d o f 2 0 0 8 .
”
2
T H E B E S T H A V E G O T T E N B E T T E R C o n t in u e d fro m p a g e 1
stu d y,2 “ve ry p ro fita b le ” co m p a n ie s (d e fin e d a s h a vin g a n R O IC o f 1 5 -2 5 % ) in 2 0 0 3 h a d a n 8 3 % ch a n ce o f
re m a in in g ve ry p ro fita b le 1 0 ye a rs la te r. In th e p re vio u s d e ca d e , th a t n u m b e r w a s o n ly a b o u t 5 0 % .
A N u m b e r o f C a u se s
P e rh a p s th e b ig g e st re a so n fo r th e se tre n d s in co rp o ra te in e q u a lity is th e risin g ro le o f te ch n o lo g y; w h ich
in cre a se s th e sca le a d va n ta g e s fo r co m p a n ie s th a t ca n a ffo rd to m a ke th e n e ce ssa ry te ch n o lo g y in ve stm e n ts.
It’s n o co in cid e n ce th a t th e risin g d isp a rity a cce le ra te d a fte r th e 1 9 9 0 s, a n e ra w h e n th e d ig ita l re vo lu tio n
g a in e d ste a m . Th e re a re a lso re g u la to ry e ffe cts to co n sid e r, a s w e ll-in te n d e d ru le s ca n in a d ve rte n tly in cre a se
th e co st fo r n e w e n tra n ts. P ro fita b le se cto rs su ch a s Te ch n o lo g y a n d H e a lth ca re a lso re q u ire a m a ste ry o f
p a te n t la w , w h ich is m u ch e a sie r fo r la rg e co m p a n ie s to a ch ie ve . Fu rth e rm o re , U .S . co rp o ra tio n s d o u b le d th e ir
sp e n d in g o n g o ve rn m e n t lo b b yin g fro m 1 9 9 7 to 2 0 1 2 , a s la rg e in cu m b e n ts so u g h t to e n tre n ch th e ir p o sitio n s.
G lo b a liza tio n h a s a lso p la ye d a ro le , e sp e cia lly a fte r C h in a e n te re d th e W o rld Tra d e O rg a n iza tio n in 2 0 0 1 . La rg e
m u ltin a tio n a ls h a ve a re la tive ly e a sy tim e so u rcin g lo w -co st p ro d u ctio n , a n d th ey a re b e tte r p o sitio n e d to re a ch
in te rn a tio n a l m a rke ts. A s a re su lt, sm a ll lo ca lize d co m p a n ie s a re in cre a sin g ly b e in g o u tm u scle d b y fo re ig n riva ls.
A s th e se tre n d s d eve lo p , co m p a n ie s co n tin u e to a d a p t b y p u ttin g a g re a te r fo cu s o n th e ir m o st p ro fita b le b u sin e ss
lin e s. In d u stry le a d e rs g ra d u a lly b u y u p sm a lle r co m p e tito rs, w h ile co n g lo m e ra te s d ive st b u sin e ss lin e s th a t
a re su b sca le . S u ch a ctio n s h a ve b e co m e in cre a sin g ly n e ce ssa ry to co m p e te e ffe ctive ly, b u t h a ve a lso a cce le ra te d
th e rise in co rp o ra te in e q u a lity, th u s cre a tin g a se lf-re in fo rcin g m e ch a n ism .
H o w T h is S h a p e s O u r In ve stm e n t P h ilo so p h y
A lw a ys o w n in g th e b e st b u sin e sse s m a y se e m like a so u n d a n d su cce ssfu l in ve stm e n t stra te g y; h o w e ve r, th a t
w o u ld b e a m ista ke . E ve n th e b e st b u sin e sse s b o u g h t a t th e w ro n g p rice s w ill p ro d u ce p o o r in ve stm e n t re su lts.
S u ch w a s th e ca se w ith te ch n o lo g y firm s a n d o th e r b ig U .S . b u sin e sse s a ro u n d th e tu rn o f th e ce n tu ry. Th e
S & P 5 0 0 To ta l R e tu rn In d e x (m e a su re d in C a n a d ia n d o lla rs) is d o m in a te d b y la rg e co m p a n ie s a n d p e a ke d in
2 0 0 0 . It to o k 1 3 lo n g ye a rs fo r th e b e n ch m a rk to re co ve r fro m th e e xce ssive va lu a tio n s o f th a t e ra b e fo re it
co u ld o n ce a g a in a d va n ce to h ig h e r g ro u n d .
W e a d m ire d th e b e st U .S . b u sin e sse s fro m th e sid e lin e s in th e la te 1 9 9 0 s a n d e a rly 2 0 0 0 s, a s w e fe lt C a n a d ia n
b u sin e sse s h a d b e tte r risk a n d re tu rn ch a ra cte ristics. H o w e ve r, in 2 0 0 5 a n d 2 0 0 6 w e sa w a n o p p o rtu n ity to
m o ve u p th e q u a lity ch a in a n d o w n b e tte r b u sin e sse s so u th o f th e b o rd e r. W e so ld C a n a d ia n re so u rce sto cks,
w h ich h a d rise n in p o p u la rity a n d p rice , a n d b o u g h t b e st-o f-b re e d U .S . b u sin e sse s, w h o se va lu a tio n s h a d
fa lle n to re a so n a b le le ve ls.
In ve stin g in th e b e st h a s se rve d u s w e ll. N o t o n ly d id o w n in g stro n g e r U .S . co m p a n ie s p ro vid e co m fo rt a s w e
w e n t th ro u g h th e Fin a n cia l C risis, b u t th e b u sin e sse s h a ve p e rfo rm e d ve ry w e ll sin ce a n d co n trib u te d sa tisfyin g
re tu rn s. Th e a ll-e q u ity O d lu m B ro w n M o d e l P o rtfo lio h a s trip le d in va lu e sin ce th e e n d o f 2 0 0 8 .
A m o n g th e sto cks w e o w n , m a n y h a ve in cre a se d th e ir m a rke t clo u t a n d co n trib u te d to th e tre n d s d iscu sse d
h e re . Fo r e xa m p le , w e h a ve la rg e h o ld in g s in te ch n o lo g y g ia n ts V isa , G o o g le a n d A m a zo n . A ll o f th e se co m p a n ie s
a re g lo b a l le a d e rs w ith ve ry h ig h in d u stry m a rke t sh a re s. Th e y a re g ro w in g a t fa st ra te s, a n d a re co n tin u o u sly
w id e n in g th e ir le a d o ve r sm a lle r co m p e tito rs. N o m a tte r w h a t h a p p e n s in th e g lo b a l e co n o m y, w e se e th e
m o m e n tu m o f su ch co m p a n ie s co n tin u in g fo r ye a rs, o r e ve n d e ca d e s, to co m e .
M a n y o f th e b u sin e sse s w e o w n a re m o re p o p u la r th a n th ey w e re w h e n w e first b o u g h t th e m , a n d co n se q u e n tly
th e ir va lu a tio n s a re n o t a s co m p e llin g a s th e y o n ce w e re . Th e re fo re , re tu rn e xp e cta tio n s m a y n e e d to b e
m o d e ra te d . N e ve rth e le ss, w e b e lie ve th e b e st b u sin e sse s w ill co n tin u e to g e t b e tte r.
B E N S IN C L A IR , H B A , C FA
E q u ity A n a lyst
@ O B D iffe re n ce
1
h ttp ://w w w .h a m ilto n p ro je ct.o rg /a sse ts/file s/C o m p e titio n Fa cts_ 2 0 1 8 0 6 1 1 .p d f
2
h ttp s://w w w .e co n o m ist.co m /b rie fin g /2 0 1 6 /0 3 /2 6 /to o -m u ch -o f-a -g o o d -th in g
Th e O d lu m B ro w n M o d e l P o rtfo lio is a n a ll-e q u ity p o rtfo lio th a t w a s e sta b lish e d b y th e O d lu m B ro w n E q u ity R e se a rch D e p a rtm e n t o n D e ce m b e r 1 5 , 1 9 9 4 , w ith a h yp o th e tica l
in ve stm e n t o f $ 2 5 0 ,0 0 0 . It sh o w ca se s h o w w e b e lie ve in d ivid u a l se cu rity re co m m e n d a tio n s m a y b e u se d w ith in th e co n te xt o f a clie n t p o rtfo lio . Th e M o d e l a lso p ro vid e s a
b a sis w ith w h ich to m e a su re th e q u a lity o f o u r a d vice a n d th e e ffe ctive n e ss o f o u r d iscip lin e d in ve stm e n t stra te g y. Tra d e s a re m a d e u sin g th e clo sin g p rice o n th e d a y a ch a n g e is
a n n o u n ce d . P e rfo rm a n ce fig u re s d o n o t in clu d e a n y a llo w a n ce fo r fe e s. P a st p e rfo rm a n ce is n o t in d ica tive o f fu tu re p e rfo rm a n ce .
O D L U M B R O W N F IN A N C IA L S E R V IC E S L IM IT E D

W h a t Y o u N e e d to K n o w A b o u t
In d iv id u a l P e n s io n P la n s

T h a n k y o u to o u r c lie n ts a n d frie n d s
w h o jo in e d u s th ro u g h o u t B C la s t
m o n th fo r o u r 2 5 th
A n n u a l A d d re s s .
U n fo rtu n a te ly d u e to w e a th e r
c o n d itio n s , tw o p re s e n ta tio n s h a d to
b e p o s tp o n e d . D e ta ils re g a rd in g th e
n e w d a te s fo r th e V ic to ria a n d L a n g le y
p re s e n ta tio n s w ill b e a v a ila b le s h o rtly .

V id e o p re s e n ta tio n s a n d s p e e c h
tra n s c rip ts a re n o w a v a ila b le o n lin e a t
o d lu m b ro w n .c o m / 2 0 19 a a .

W e h a ve se e n re n e w e d in te re st in In d iv id u a l P e n sio n P la n s (IP P s) sin c e m e a su re s to re d u c e th e

sm a ll b u sin e ss d e d u c tio n fo r p riva te c o rp o ra tio n s w e re in tro d u c e d in th e 2 0 1 8 fe d e ra l b u d g e t.
T h is a rtic le p ro v id e s a n o ve rv ie w o f w h a t IP P s a re a n d so m e o f th e b e n e fits th e y o ffe r fo r b u sin e ss
o w n e rs a n d in c o rp o ra te d p ro fe ssio n a ls.

W h a t is a n In d iv id u a l P e n sio n P la n ?
A n IP P is a d e fin e d b e n e fit (D B ) p e n sio n p la n e sta b lish e d b y a co rp o ra tio n to p ro vid e p e n sio n b e n e fits to o n e
o r m o re e m p lo ye e s; typ ica lly ‘co n n e cte d ’ e m p lo ye e s w h o o w n 1 0 % o r m o re o f th e co m p a n y’s vo tin g sh a re s.
IP P s a re d e sig n e d to p ro vid e th e m a xim u m p e n sio n b e n e fit p e rm itte d u n d e r th e In co m e Ta x A ct.

W h o is a n IP P su ita b le fo r?
In co rp o ra te d b u sin e ss o w n e rs a n d p ro fe ssio n a ls w h o :
• a re b e tw e e n 4 0 a n d 7 1 ye a rs o ld ;
• re ce ive T4 in co m e (i.e ., sa la ry, co m m issio n s, b o n u se s) o f $ 1 0 0 ,0 0 0 o r h ig h e r;
• g e n e ra te su rp lu s in co m e in th e co rp o ra tio n , n o t n e e d e d fo r co rp o ra te o r p e rso n a l sp e n d in g ; a n d
• w a n t re g iste re d re tire m e n t sa vin g s th a t e xce e d R e g iste re d R e tire m e n t S a vin g s P la n (R R S P ) a n d o th e r
re g iste re d p la n lim its.

W h a t a re a d va n ta g e s o f u sin g a n IP P ?
IP P s a llo w sp o n so rin g co rp o ra tio n s to m a ke a n n u a l ta x d e d u ctib le co n trib u tio n s th a t a re 3 0 -5 0 % h ig h e r th a n
R R S P a n d d e fin e d co n trib u tio n (D C ) p e n sio n p la n lim its a llo w .1 Th e y a lso o ffe r:
• S iza b le co n trib u tio n o p p o rtu n ity fo r p a st se rvice ye a rs u p o n im p le m e n ta tio n .
• A b ility to a d d fu n d s if a sh o rtfa ll o ccu rs.
• A d d itio n a l ta x-d e d u ctib le co n trib u tio n s u p o n re tire m e n t, kn o w n a s “te rm in a l fu n d in g .”
• P e n sio n in co m e sp littin g fro m a s e a rly a s a g e 5 0 (ve rsu s a g e 6 5 fo r R e g iste re d R e tire m e n t In co m e Fu n d s
[R R IFs] a n d Life In co m e Fu n d s [LIFs]).
• P o te n tia l to p re se rve th e sm a ll b u sin e ss d e d u ctio n (S B D ).

U n d e r ru le s in tro d u ce d in th e 2 0 1 8 b u d g e t, p riva te co rp o ra tio n s th a t risk lo sin g th e sm a ll b u sin e ss ta x ra te 2 o n

a ctive b u sin e ss in co m e m a y p a rticu la rly b e n e fit b y sh iftin g p a ssive in ve stm e n ts to a n IP P.

H o w a re IP P b e n e fits d e te rm in e d ?
Like a re g u la r D B p e n sio n p la n , th e a m o u n t o f o n g o in g b e n e fit p a ym e n ts d u rin g re tire m e n t is d e fin e d b e fo re
re tire m e n t a n d is p rim a rily b a se d o n a g e , le n g th o f se rvice a n d T4 e a rn in g s.

C o n tin u e d o n n e x t p a g e
3
H o w ar e I P P c o ntri b uti o ns d et er mi n e d? DI S C L AI M E R & DI S C L O S U R E
Past s er vi c e c o ntri b uti o n ( P S C): P S Cs ar e o pti o n al, b ut cr e at e a n o p p ort u nity t o m ov e f u n ds exc e e di n g
O dl u m Br o w n Li mit e d i s a n i n d e p e n d e nt, f ull- s er vi c e
n or m al R R S P c o ntri b uti o n li mits t o a n I P P. W h e n a n I P P is first est a blis h e d, a n act u ary d et er mi n es t h e i niti al i n v e st m e nt fir m f o c u s e d o n pr o vi di n g pr of e s si o n al
f u n di n g f or p ast s ervic e y e ars of e m pl oy m e nt, g oi n g b ack as f ar as 1 9 9 1. T h es e f u n ds c o m e fr o m t h e tr a nsf er i n v e st m e nt a d vi c e a n d o bj e cti v e r e s e ar c h. W e r e s p e ct
y o ur ri g ht t o b e i nf or m e d of r el ati o n s hi p s wit h t h e i s s u er s or
of p ers o n al R R S P ass ets a n d n e w c o ntri b uti o ns fr o m t h e c o m p a ny, if r e q uir e d. str at e gi e s r ef err e d t o i n t hi s r e p ort w hi c h mi g ht r e a s o n a bl y
b e e x p e ct e d t o i n di c at e p ot e nti al c o nfli ct s of i nt er e st wit h
r e s p e ct t o t h e s e c uriti e s or a n y i n v e st m e nt str at e gi e s
C urr e nt s er vi c e c o ntri b uti o ns ( C S C): O n g oi n g c o ntri b uti o ns r e q uir e d t o f u n d t h e c ost of f ut ur e r etir e m e nt
di s c u s s e d or r e c o m m e n d e d i n t hi s r e p ort. W e d o n ot a ct a s a
i nc o m e ar e d et er mi n e d ev ery t hr e e y e ars t hr o u g h a n act u ari al v al u ati o n, b ut m ay n ot b e m a n d at ory d e p e n di n g m ar k et m a k er i n a n y s e c uriti e s a n d d o n ot pr o vi d e i n v e st m e nt
o n t h e j uris dicti o n g ov er ni n g t h e I P P. If i nv est m e nt s h ortf alls cr e at e a f u n di n g d eficit i n t h e I P P, a d diti o n al b a n ki n g or a d vi s or y s er vi c e s t o, or h ol d si g nifi c a nt p o siti o n s
i n, t h e i s s u er s c o v er e d b y o ur r e s e ar c h. A n al y st s a n d t h eir
f u n di n g is p ossi bl e. a s s o ci at e s m a y, fr o m ti m e t o ti m e, h ol d s e c uriti e s of i s s u er s
di s c u s s e d or r e c o m m e n d e d i n t hi s r e p ort b e c a u s e t h e y
p er s o n all y h a v e t h e c o n vi cti o n t o f oll o w t h eir o w n r e s e ar c h,
W h at h a p p e ns w h e n y o u r etir e? b ut w e h a v e i m pl e m e nt e d i nt er n al p oli ci e s t h at i m p o s e
T h er e ar e t hr e e m ai n o pti o ns t o c h o os e fr o m w h e n y o u r etir e or t ur n 7 1: r e stri cti o n s o n w h e n a n d h o w a n A n al y st m a y b u y or s ell
s e c uriti e s t h e y c o v er a n d a n y s u c h i nt er e st will b e di s cl o s e d
i n o ur r e p ort i n a c c or d a n c e wit h r e g ul at or y p oli c y. O ur A n al y st s
1) M ai nt ai n t h e I P P a n d r ec eiv e lif eti m e m o nt hly p e nsi o n i nc o m e fr o m t h e pl a n r e c ei v e n o dir e ct c o m p e n s ati o n b a s e d o n r e v e n u e fr o m
• T h er e m ay b e a n o p p ort u nity t o e n h a nc e p e nsi o n b e n efits, s uc h as e arly r etir e m e nt b e n efits a n d i n v e st m e nt b a n ki n g s er vi c e s. W e d e s cri b e o ur r e s e ar c h
p oli ci e s i n gr e at er d et ail, i n cl u di n g a d e s cri pti o n of o ur r ati n g
i n d ex e d c ost of livi n g a dj ust m e nts, by m aki n g a d diti o n al t ax- d e d ucti bl e c o ntri b uti o ns u p o n r etir e m e nt s y st e m a n d h o w w e di s s e mi n at e o ur r e s e ar c h, o n t h e O dl u m
(t er mi n al f u n di n g). Br o w n Li mit e d w e b sit e at o dl u m br o w n. c o m.
• T h e u n d erlyi n g c or p or ati o n m ust c o nti n u e t o s p o ns or t h e I P P.
T hi s r e p ort h a s b e e n pr e p ar e d b y O dl u m Br o w n Li mit e d a n d
i s i nt e n d e d o nl y f or p er s o n s r e si d e nt a n d l o c at e d i n all t h e
2) Tr a nsf er t h e c o m m ut e d v al u e t o a L ock e d-I n R etir e m e nt Acc o u nt (LI R A) a n d wi n d- u p t h e I P P pr o vi n c e s a n d t errit ori e s of C a n a d a, w h er e O dl u m Br o w n
Li mit e d' s s er vi c e s a n d pr o d u ct s m a y l a wf ull y b e off er e d f or
• Mi ni m u m a n d m axi m u m wit h dr a w al li mits ar e b as e d o n t h e l ocki n g-i n pr ovisi o ns of t h e j uris dicti o n s al e, a n d t h er ei n o nl y t o cli e nt s of O dl u m Br o w n Li mit e d. T hi s
g ov er ni n g t h e I P P. r e p ort i s n ot i nt e n d e d f or di stri b uti o n t o, or u s e b y, a n y p er s o n
or e ntit y i n a n y j uri s di cti o n or c o u ntr y i n cl u di n g t h e U nit e d
St at e s, w h er e s u c h di stri b uti o n or u s e w o ul d b e c o ntr ar y
3) Tr a nsf er t h e I P P ass ets t o a n i ns ur a nc e c o m p a ny t o p urc h as e a n a n n uity a n d wi n d- u p t h e I P P t o l a w or r e g ul ati o n or w hi c h w o ul d s u bj e ct O dl u m Br o w n
• T h er e ar e v ari o us f or ms of a n n uiti es s uc h as si n gl e a n d j oi nt lif e. Li mit e d t o a n y r e gi str ati o n r e q uir e m e nt wit hi n s u c h j uri s di cti o n
or c o u ntr y. A s n o r e g ar d h a s b e e n m a d e a s t o t h e s p e cifi c
• T h e c ost of t h e a n n uity is b as e d o n a g e a n d i nt er est r at es at t h e ti m e of p urc h as e. i n v e st m e nt o bj e cti v e s, fi n a n ci al sit u ati o n, a n d ot h er p arti c ul ar
cir c u m st a n c e s of a n y p er s o n w h o m a y r e c ei v e t hi s r e p ort,
cli e nt s s h o ul d s e e k t h e a d vi c e of a r e gi st er e d i n v e st m e nt
U n d er t h e wi n d- u p o pti o ns, s o m e or all of t h e p e nsi o n v al u e m ay b e ‘r oll e d- over’ t o a LI R A or a n n uity t o m ai nt ai n
a d vi s or a n d ot h er pr of e s si o n al a d vi s or s, a s a p pli c a bl e, r e g ar di n g
t ax- d ef err al. If t h e v al u e of t h e pl a n is gr e at er t h a n t h e C R A’s pr escri b e d li mit, t h e exc ess is p ai d i n a l u m p t h e a p pr o pri at e n e s s of i n v e sti n g i n a n y s e c uriti e s or a n y
s u m t h at is s u bj ect t o i m m e di at e t ax ati o n. i n v e st m e nt str at e gi e s di s c u s s e d or r e c o m m e n d e d i n t hi s r e p ort.

T hi s r e p ort i s f or i nf or m ati o n p ur p o s e s o nl y a n d i s n eit h er

W h at h a p p e ns wit h a n I P P u p o n d e at h? a s oli cit ati o n f or t h e p ur c h a s e of s e c uriti e s n or a n off er of
s e c uriti e s. T h e i nf or m ati o n c o nt ai n e d i n t hi s r e p ort h a s b e e n
B ef or e R etir e m e nt: If t h e pl a n m e m b er di es b ef or e r etiri n g, t h e s urvivi n g s p o us e m ay tr a nsf er t h e c o m m ut e d c o m pil e d fr o m s o ur c e s w e b eli e v e t o b e r eli a bl e, h o w e v er, w e
v al u e t o a LI R A ( or a n R R S P, i n s o m e c as es) or us e t h e f u n ds t o p urc h as e a d ef err e d a n n uity. If t h er e is n o m a k e n o g u ar a nt e e, r e pr e s e nt ati o n or w arr a nt y, e x pr e s s e d or
s urvivi n g s p o us e, t h e I P P f u n ds c a n b e distri b ut e d t o t h e pl a n m e m b er’s est at e or ot h er b e n efici ari es. i m pli e d, a s t o s u c h i nf or m ati o n’ s a c c ur a c y or c o m pl et e n e s s.
All o pi ni o n s a n d e sti m at e s c o nt ai n e d i n t hi s r e p ort, w h et h er
or n ot o ur o w n, ar e b a s e d o n a s s u m pti o n s w e b eli e v e t o b e
D uri n g R etir e m e nt: T h e p e nsi o n fr o m a n I P P m ay b e b as e d o n a si n gl e lif e or j oi nt s urviv or b asis ( wit h a r e a s o n a bl e a s of t h e d at e of t h e r e p ort a n d ar e s u bj e ct t o
c h a n g e wit h o ut n oti c e.
s p o us e or c o m m o n-l a w p art n er) a n d m ay als o i ncl u d e a g u ar a nt e e d p ay m e nt p eri o d wit h n a m e d b e n efici ari es.
If t h e pl a n m e m b er di es b ef or e t h e e n d of t h e g u ar a nt e e p eri o d, t h e f ull m o nt hly p e nsi o n will c o nti n u e t o b e Pl e a s e n ot e t h at, a s at t h e d at e of t hi s r e p ort, t h e R e s e ar c h
p ai d t o a s urvivi n g s p o us e or ot h er d esi g n at e d b e n efici ary f or t h e r e m ai n d er of t h at p eri o d. Aft er t h e g u ar a nt e e A n al y st r e s p o n si bl e f or t h e r e c o m m e n d ati o n s h er ei n, a s s o ci at e s
of s u c h A n al y st a n d/ or ot h er i n di vi d u al s dir e ctl y i n v ol v e d i n
p eri o d, t h e s urvivi n g s p o us e will c o nti n u e t o r ec eiv e m o nt hly p e nsi o n p ay m e nts at a r at e s el ect e d at t h e ti m e t h e pr e p ar ati o n of t hi s r e p ort m a y h ol d s e c uriti e s of t h e
of r etir e m e nt. A j oi nt s urviv or r at e is ty pic ally 6 6 2/ 3 % a n d c a n b e as hi g h as 1 0 0 % of t h e I P P m e m b er’s p e nsi o n. i s s u er( s) r ef err e d t o dir e ctl y or t hr o u g h d eri v ati v e s.

U p o n t h e s urvivi n g s p o us e’s d e at h, a ny r e m ai ni n g ass ets ar e distri b ut e d a n d f ully t ax a bl e t o t h e r e m ai ni n g N o p art of t hi s p u bli c ati o n m a y b e r e pr o d u c e d wit h o ut t h e
b e n efici ari es or est at e w h e n t h e pl a n is w o u n d u p. e x pr e s s writt e n c o n s e nt of O dl u m Br o w n Li mit e d. O dl u m Br o w n
Li mit e d i s a M e m b er- C a n a di a n I n v e st or Pr ot e cti o n F u n d.

F or m or e i nf or m ati o n, pl e as e c o nt act y o ur O dl u m Br o w n I nv est m e nt A dvis or or Portf oli o M a n a g er. O dl u m Br o w n Li mit e d r e s p e ct s y o ur ti m e a n d y o ur pri v a c y.

If y o u n o l o n g er wi s h u s t o r et ai n a n d u s e y o ur p er s o n al
i nf or m ati o n pr ef erri n g t o h a v e y o ur n a m e r e m o v e d fr o m o ur
MI C H A E L E R E Z, C P A, C G A, C F P m aili n g li st, pl e a s e l et u s k n o w. F or m or e i nf or m ati o n o n o ur
Vic e Pr esi d e nt, Dir ect or Pri v a c y P oli c y pl e a s e vi sit o ur w e b sit e at o dl u m br o w n. c o m.
O dl u m Br o w n Fi n a nci al S ervic es Li mit e d

1
Per Westc o ast Act u ari es I nc.
2
T h e 2 0 1 9 s m all b usi n ess t ax r at e is 1 1 % (c o m bi n e d f e d er al a n d B C) o n t h e first $ 5 0 0, 0 0 0 of activ e b usi n ess i nc o m e, b ut t h e $ 5 0 0, 0 0 0 S B D is r e d uc e d by $ 5 f or e ac h $ 1 of
a dj ust e d a g gr e g at e i nv est m e nt i nc o m e ( A AII) a b ov e $ 5 0, 0 0 0. T h e S B D is c o m pl et ely l ost if a c or p or ati o n r e p orts A AII of $ 1 5 0, 0 0 0 or m or e. A AII g e n er ally i ncl u d es n et t ax a bl e
c a pit al g ai ns ( excl u di n g o n t h e s al e of activ e b usi n ess ass ets), i nt er est i nc o m e, p ortf oli o divi d e n ds, r e nt al i nc o m e a n d i nc o m e fr o m s avi n gs i n a n o n- ex e m pt lif e i ns ur a nc e p olicy.

O dl u m Br o w n Fi n a nci al S ervic es Li mit e d is a w h olly o w n e d s u bsi di ary of O dl u m Br o w n Li mit e d, off eri n g lif e i ns ur a nc e pr o d ucts, r etir e m e nt, est at e a n d fi n a nci al pl a n ni n g
excl usiv ely t o O dl u m Br o w n cli e nts.