The Advisor Series with Financial Advisor Steve Lowrie

Over the years we have formed great relationships with other Financial Advisors who have a similar take on client care and investing. Join us today Rob McClelland speaks with Financial Advisor Steve Lowrie about his practice and his strategies on investing.



Rob (00:01):

This is Rob McClelland with Think Smart, with TMFG from the McClelland Financial Group of Assante Capital Management. Today we have a special guest, joining us today is Steve Lowry, who is a financial advisor that I’ve known for many years out of Barrie, Ontario. Welcome to the podcast.

Steve Lowry (00:21):

Thanks, Rob. Thanks for having me.

Rob (00:24):

So I’m going to get started, just to give our audience an idea of who you are, tell me about, you’re in Barrie now, did you grow up in Barrie? Or tell me about your childhood and schooling.

Steve Lowry (00:36):

Well, I grew up in Barrie, parents moved there when I was two years old, stayed there till I went to university and then I went to school in Kingston, went to Queen’s. University, traveled all through Europe, backpack through Europe for almost a year. Came back… I guess let me just back up. I went to business school and I graduated in 1990, which was-

Rob (00:56):

Okay what was it called at that time, just Queen’s Business School?

Steve Lowry (01:02):

I have a Bachelor of Commerce, so the Queen’s School of Business.

Rob (01:05):

Got it.

Steve Lowry (01:06):

It wasn’t the Smith School of Business, just the Queen’s School of Business.

Rob (01:09):

That’s what I was wondering, because mine changed as well.

Steve Lowry (01:11):

So it was pre-Smith, it’s modeled after the University of Chicago Business School and I graduated in 1990 and those who been around 1990 was a horrible recession for financial services. So I didn’t get a job out of university, so I thought okay, I’ll go to Europe. Went backpack for Europe for almost a year, came back and didn’t quite want to get a job, so I went out to Vancouver and we’re doing this in Whistler and I happened to be a ski bum for a year.

Rob (01:42):

Nice, that explains why you’re such a good skier.

Steve Lowry (01:45):


Rob (01:46):

Okay now I know the secret. So how did you get started in the business? What was your first entry point?

Steve Lowry (01:54):

I wish there was a really good story about it, about I had a passion for it, but after I moved back, I moved to Barrie from after being a ski bum in Vancouver and Whistler and I thought, “Boy, I better break down and get a real job.” There was a guy I went to school with that was working at the time at Midland Walwyn, which became Merrill Lynch, which got bought up by Wood Gundy.

Rob (02:18):


Steve Lowry (02:20):

So I called up my friend Bruce and said, “Bruce, what do you do?” He told me about it and I said, “Well, that sounds kind of cool.” He goes, “Well, Steve, let me introduce you to my manager.” And lo and behold I got offered a job as a junior advisor, a junior working with a senior advisor.

Rob (02:37):

So were you classified then as a broker?

Steve Lowry (02:42):

Yes, a broker. A good old stock broker working right on Bay Street.

Rob (02:46):

Okay, so I guess now as we discover the story, we’re going to find that you’re a reform broker.

Steve Lowry (02:51):

I’m a reform broker, exactly.

Rob (02:54):

So talk to me a little bit about your practice, who you look after, what does your average client look like, number of employees, et cetera.

Steve Lowry (03:05):

So my practice we deal with, well right now it’s 78 families, so fairly small but concentrated practice. The majority of my clients are business owners, owners of family businesses and that was a niche that I started with a number of years ago. I find that I like entrepreneurs, like working with them and from a financial perspective they’ve got a lot of needs, they don’t have pension plans they got to look after.

Rob (03:44):

Absolutely, they got to look after themself.

Steve Lowry (03:45):

Yeah. So they need advice and I think the other interesting thing with what I found, if I meet a business owner for the first time and this is maybe dating myself, but I’ll say, “How’s your business doing?” And they’ll pull up your left drawer and they’ll tell me to a dime how well their business is doing. When I say, “Well, tell me about your personal finances.” They’d open the right drawer and there’d be a stack of paper and, “Oh, I’ve got this, I’ve got that” and they have no idea. So I said, “What I try and do is make things as organized with your personal finances as they are with your business.”

Rob (04:18):

Great and it’s so true, because if you’re a business owner you’re so focused on running your business, that’s your big priority, that’s your bread and butter of your life really, that’s what supports your lifestyle and the rest of it is secondary.

Steve Lowry (04:34):


Rob (04:37):

So I’ve always found it difficult, especially with business owners in terms of getting them to take a piece of their business and the cash flow from the business and put it into investments because they always just want to say, “Well, Rob, I’m earning 20% on my business, can you get me 20%?” And I say, “No.” Then they say, “Well, why should I give you any money?” And I said, “Well, I’ll use the theme of, “Well every business goes bankrupt eventually, I’m sure yours won’t, but just in case I think it’s important have a backup.” So how do you handle that?

Steve Lowry (05:11):

I think the way I’d look at it is, well it’s similar to the idea is going bankrupt. Let’s just suppose, we’ll do a financial plan, let’s assume your business go to zero. What’s the likelihood of it go really low? But let’s just assume it goes to zero, where’s your backup? You’ve got this really successful business and, unlike a lot of successful businesses, making more money than they need, more than the lifestyle needs, you’ve got excess cash flow, so why don’t we take that excess cash flow and invest it? We’ve got a backup plan. So if it’s not a huge probability, but maybe something happens, your business goes to zero, here’s your backup plan.

Rob (05:56):

Got it. Is it difficult to get them to put money into an RSP account, a TFSA account? I sometimes find that accountants really want to restrict how much money is coming out of the corporation, so they really limit the income taking out. Do you find that as well?

Steve Lowry (06:14):

It varies. I think with RSPs, some business owners will just pay themselves in dividends, so then an RSP doesn’t make sense but you can make a case for a business on having a salary and then make the RSP contributions with the tax free savings account. I’ve done the math on it, it makes sense to take money out of a corporation, pay the tax and reinvest in the tax free savings account.

Rob (06:38):

That’s interesting.

Steve Lowry (06:39):

Yeah, it makes sense financially.

Rob (06:42):

Portfolio management, there’s so many different ways to manage a portfolio today, there’s so many different options out there. What’s your belief, what’s your strategy?

Steve Lowry (06:53):

I think we mentioned before, I’m a reform broker and I think the fact that I worked on Bay Street for the first 14 years of my career that I saw everything that was wrong with Bay Street and especially on the portfolio management side. Trying to predict the future, pick stocks, do this and investment, for me I got to the point where I said, Well there’s got to be a better way. During the time I guess the one smart thing I did when I was a broker is I went and got my chartered financial analyst designation, my CFA designation, and that kind of opened up a bit of a window.


So I started looking for alternatives and this is where getting an investment philosophy, I went to a conference called the Canada Cup of Index Management and so it was basically on exchange trading funds or ETFs and at the time they had this woman named Abby Joseph Cohen, who was the chief strategist with Goldman Sachs and they getting up there and other charts and darts and talking about this and that. The last speaker of the day was a guy named Eugene Fama, Jr.

Rob (08:05):


Steve Lowry (08:05):

Eugene Fama, the Nobel Prize winner, his son. But his son is a hundred percent different than his father because he’s got long hair, he talks like a surfer, but he’s brilliant. He gets up the last presentation of the day and he said, “Everything you heard today is just BS, ignore it all, this is what you want, this is what you want to look at.” And started talking about evidence based investing. I was blown away, I said, “Who is this guy?” And he works with this company called Dimensional. So that kind of opened the door to say, “Well there’s got to be a better way and I started doing my research and that was the big turning point to becoming what I say an evidence based investor.

Rob (08:50):

Interesting. So here I’m thinking you’ve got 14 years of experience as a broker, learning, making mistakes, having some wins, you’re a CFA, one of the highest designations you can get in the financial industry, you’re a Queen’s business grad and yet you still don’t believe in individual stock picking. So how is the individual investor, why do they think they can do it?

Steve Lowry (09:20):

Good question, it’s overconfidence perhaps. I think the other thing which I did as an advisor and CFA is I actually analyzed what I did and compared it to the market. If I was actively picking stocks, I would take it and look over long periods of time and say, “Wow, I could just do better buying the market, why am I doing all this other things?” So it was kind of a humbling experience.

Rob (09:53):

Am I really adding value here?

Steve Lowry (09:55):

Well basically I came to the conclusion that I was not adding value, if anything I was subtracting value and I thought, well if I can use a passive approach, not picking the stocks, just doing index or a bit more complicated factor based investing or enhanced index in investing, I’ll do a better job for my clients.

Rob (10:17):

Wow, that’s interesting. That’s a good revelation for our audience. Let’s talk about income taxes, because my belief is income taxes is extremely important, keeping the taxes low, we have a high marginal tax rate in this country and by the sounds of things they may even get higher. What are your thoughts and do you have any key strategies to reduce income tax or just the basics?

Steve Lowry (10:45):

Well I think that they’re the basics, but not many people follow them. Basically what you want to do is defer as much investment income as possible, so capital gains and especially deferred capital gains. So you buy something today and hold it for 20 years and the benefit of it is a deferred capital, so you’re not paying tax each year versus if you say interest income with dividends, you’re paying tax on every year. So the most tax efficient thing is deferred capital gains. The other interesting thing is that you’re getting a compounded return because you’re not paying that tax, so that money you’re saving tax is compounding. So that’s kind of number one as a buy and hold strategy, buy and hold.

Rob (11:36):

So dividends are great because you’re getting a nice income, but what you’re saying is even though they’re tax preferred, you’re still better off with an unrealized capital gain and continuing to grow that.

Steve Lowry (11:47):

Exactly. Well dividends and there’s nothing wrong… it’s interesting because I think it seems to be every day I look at something like the global mail, there’s an article of dividend stocks and not that there’s anything wrong with dividend stocks, but there’s just a better approach. I think instead of doing dividend stocks, if you do a market based portfolio, an index fund or ETF or something like that, you’re focusing more on deferred gains, which is the most tax efficient thing you can do.

Rob (12:23):

I also find that sometimes, we know fixed income returns are really low down and we will say, “Well I’m just going to go buy a couple of the banks and get their dividends and they seem to equate the risk level to be the same and yet we all know that the price of Royal Bank could go down 50% in a big correction like it did in 2008. So people tend to forget that when they’re looking at that, they get attracted by the shiny dividend and ignore all the other factors. Kids education, do you do anything to save for children’s education? Do you have any strategies there that have been helpful, is the RSPs enough or do you do any interest accounts or income splitting, anything like that?

Steve Lowry (13:14):

So far the RSPs have been enough and what my recommendation with RSPs is start as soon as possible, get money in there and someone just born, you’ve got 18 years, so you can be really aggressive, you can have a hundred percent equity portfolio in RSP in the first few years. I kind of use the expression, beg, borrow and steal, try and get money in there, you get the government brands and the other thing which not many people do and I admit it’s hard to do, but if you’ve got enough money and actually makes sense to put in excess capital, capital-

Rob (13:59):

Over and above the allotted amount?

Steve Lowry (14:00):

Yeah exactly and you get that money in there and you get that growing for 18 years and when I’ve done that strategy, they’ve had more than enough for four or five years of school.

Rob (14:14):

It’s interesting you say that, I’ve seen strategies where they basically pre-fund, if you’ve got the money, you could pre-fund the RESP account and you give up government brands, but you’ve got the money in there growing free of tax until they add off to university or college. So huge advantage. Let’s talk about some of the themes that are going on today, we know the markets have had a great run for the last, call it 18 months since the bottom of COVID, when we used to call it the coronavirus. Cryptocurrencies seem to be everywhere, I recently saw them on the streets of New York being sold on a street corner. What are your thoughts on cryptocurrencies and maybe specifically even something like Bitcoin?

Steve Lowry (15:02):

I think the underlying technology, the blockchain technology has incredible opportunity. So you can apply for various things, higher security advantages, you’ve got this ledger that technology is here to stay. Cryptocurrencies is just an application of a blockchain technology. So it’s just an application. So I think with my feeling on it, when I look at Bitcoin and I looked at it first, I looked at it, I think it was $200 when I first looked at it and I looked at it and said, this doesn’t make sense to me because there’s nothing backing it. It could be worth $200, it could be worth a dollar.

Rob (15:54):

Or 40 thousand like it is today.

Steve Lowry (15:58):

Obviously hindsight’s 2020, I should have bought some of $200, but at then I didn’t think it made sense and at 40,000, I think it even more doesn’t make sense because there’s nothing backing it. You buy a Bitcoin, it’s the kind of greater fool theory, there’s nothing backing it up you buy it at 40,000, you got to sell it to someone else at a higher price.

Rob (16:23):

That’s the game you’re playing and people think they may hold this for a while, but really what you’re going to tie your money up in something that may or may not go up? At least with stocks, you know they’re out making a product and producing income.

Steve Lowry (16:39):

That’s right. Well exactly with stocks there’s cashflow, they do something, they make money, they have cash flow, they make earnings. There’s nothing, Bitcoin is a commodity.

Rob (16:52):

Non refundable tokens. What are your thoughts on those?

Steve Lowry (16:57):

Another kind of trendy thing. Once again, a really neat application of technology, but it fits in the category of collectibles. Although it’s like a digital token, but it’s like a piece of art and you could think a piece of art’s worth a thousand dollars or a million, but if thinking of trying to sell it, you got to sell it to someone at a higher price down the road. There’s nothing really backing it up, it’s just whether you like it or not. I think just the fact that there’s the digital token, you get the frothiness, the fact that it’s digital and you get these things that haven’t been able to buy and sell before, you get that kind of hype and the prices of these things seem kind of really unreasonable compared to what you’re buying.

Rob (17:55):

Compared to what you’re buying, I mean the reality, especially today, if you own 30 seconds or 15 seconds of a football game, I’m just not sure how that all turns out to be worth a hundred thousand dollars one day, unless it’s the greatest catch of all time and you’re probably not going to be able to buy that one.

Steve Lowry (18:13):

Yeah exactly.

Rob (18:16):

Tell me about Robo-Advisors, we all hear the ads on the radio, we hear whether it’s well simple or Questrade, they seem to say you don’t need a financial advisor anymore. Why do you think people should have a financial advisor? What’s the difference or why not just do it yourself?

Steve Lowry (18:40):

I can make a case for someone if you’ve got a very straightforward, maybe a RSP only, and you don’t have any other considerations, so I can say make a case, Oh, you don’t really need an advisor if you’re doing this, you can use a Robo-Advisor, which they’re just taking advantage of technology. So just purely on execution of an investment, the portfolio management execution, I can see there’s a place for that. The thing is, what I find for most people is they need planning and they need behavior management. People make mistakes and you could see that with the Robo-Advisors when there’s a correction in market turmoil in which happened in COVID, you dealing with a Robo-Advisor, they couldn’t get hold of anyone. People were calling in to change their portfolio and they couldn’t get ahold of anyone but if you’re working with a financial advisor, they would’ve educated you before saying, we’re predicting it’s going to happen, but we should have an expectation that we’ll have corrections.

Rob (19:53):

You can walk them through it and help them get through it.

Steve Lowry (19:57):


Rob (19:57):

If you look at the number of clients that Robo-Advisors have taken on, some of those are pretty small minimums, there’s no way they can have enough people on the phone to answer all the calls that are going to come in at the worst time.

Steve Lowry (20:12):

Yeah and there’s complaints about it when COVID hit last year.

Rob (20:17):

So what’s the hardest part of your job? When do you think you really earn your keep?

Steve Lowry (20:23):

I think I’ve always used the kind of a tongue in cheek joke that what would you do? Well, I kind of do financial planning, I do investment management, maybe I’ll call that wealth management and package of that together, 90% of the time I’m doing wealth management until things get tough or an individual client runs into some reason. They’re afraid about something, they want to cash out or their needs change and then my job changes where I’m not 90% wealth manager, I’m a 90% psychologist. The hardest part of my job during COVID with the equity markets went down by 34% in 33 days, that’s stressful, but people are relying on me.

Rob (21:15):

You’ve been doing it long enough, you trust the long term results and the process?

Steve Lowry (21:20):

Exactly. Well yeah, I trust the process and also the advantage of having experience in doing this for a while is that I lived through two really big bear markets, 1999/2000, the crash of the tech bubble and the financial crisis, 2002, 2008, 2009. Just basically what got me through it is faith in the future, we got to stick with it, this will work and there are some tough days during that and tough conversations with clients but you’re vindicated by staying with the plan.

Rob (22:01):

If you had a chance, is there anything you would do differently as a financial advisor?

Steve Lowry (22:08):

Looking at today I guess I wish I would’ve instead of doing 14 years of… I wish I would’ve figured that out earlier, but where I’m at today, I don’t think I’d change a thing.

Rob (22:23):

That’s great. Steve thanks for joining us today.

Steve Lowry (22:26):

Thank you, Rob.

Rob (22:28):

This is Rob McClelland from The McClelland Financial Group with Think Smart, with TMFG. Thanks for joining us.

Assante Capital Management (23:07):

You’ve been listening to the McClelland Financial Group of Assante Capital Management Limited. Assante Capital Management Limited is a member of the Canadian Investor Protection Fund and the investment industry regulatory organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Incorporated. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources, however no warranty can be made as to its accuracy or completeness. Before acting on any of the previous information, please sure to see a professional advisor for individual financial advice based on your personal circumstances. The opinions expressed are those of the authors and not necessarily those of Assante Capital Management Limited.



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