Welcome Letter

As we begin 2026, we want to take a moment to sincerely thank you for the trust and confidence you placed in our team over the past year. It is a privilege to work with you and your family, and we are truly grateful for your continued patronage and partnership.

Over the past year, our team has made significant investments in expertise, resources, and processes to ensure you receive the highest level of service and thoughtful advice. That commitment remains at the core of everything we do.

Looking ahead, we are excited to continue expanding our family office partnerships and deepening our long-term financial planning approach- helping you navigate opportunities, manage risk, and stay focused on what matters most to you.

While no one can predict the future or short-term market movements, history continues to show the value of staying disciplined and invested for the long term. Included in this newsletter are two insightful articles that reinforce the importance of patience, perspective, and a well-structured plan during periods of uncertainty.

We are also excited to share that we will be hosting a series of financial literacy events throughout 2026. These sessions are designed to empower individuals and families with practical knowledge and greater confidence around long-term financial decision-making. We look forward to connecting with you at one of these upcoming events.

Our practice continues to grow, and that growth is driven by relationships like yours. If you know someone who could benefit from a thoughtful, disciplined, and long-term approach to financial planning, we would be honoured by your referral.

We look forward to an exciting year ahead and continuing to serve you with clarity, care, and confidence.

Yours in this adventure,

Lara, Una & Andrew

The K-Shaped Economy: Where are Markets Headed in 2026

Welcome to the K-shaped economy, defined by a bifurcation in economic sentiment and outcomes. The letter "K" captures the divergence: the upward-sloping arm represents higher-income households, supported by rising income and wealth, while the downward-sloping arm reflects low- and middle-income households facing stagnant wages, rising living costs and heavy debt burdens. In this two-speed economy, consumer segments and the businesses (or business lines) serving them are growing at different rates.

In the U.S., where consumer spending makes up over two-thirds of GDP, this bifurcation has implications. Higher-income households now drive much of the activity: in Q2 2025, the top 10 percent accounted for nearly half of all consumer spending. Economic resilience has grown more concentrated among the wealthy, who have benefited most from asset price gains. As a result, softer labour-market data in 2025 drew less concern, as the weakness was felt mainly by lower-income households, who had a limited impact on aggregate consumption.

Canada's picture is more nuanced. Household spending remained resilient in 2025 but was challenged by heightened trade uncertainty, slower population growth and a cooling labour market. While U.S. tariffs have weighed on exports and jobs in affected industries, substantial new spending announced in the Federal Budget is expected to offset some of these pressures.

Looking to 2026, questions remain about the trajectory of economies and markets. In 2025, artificial intelligence (AI) was a key catalyst for market optimism. Debate persists around whether massive capital investments will deliver meaningful productivity gains, though some suggest expectations are already partly reflected in equity valuations. If consumer spending endures and investments begin to show real returns, markets are likely to continue discounting labour-market weakness, looking past the lower arm of the K.

At the same time, monetary stimulus from interest rate cuts in both Canada and the U.S., combined with tariff renegotiations and potential U.S. tax refunds, could help stabilize labour markets and support more exposed sectors. However, some argue that this same stimulus has further widened wealth inequality.

As equity markets reached new highs in 2025, many investors have asked: Are stock prices running ahead of fundamentals, or is there still room to grow?

Market performance is influenced by many forces-government policies, geopolitical events, economic growth, inflation, interest rates and even the headlines. But over the long run, corporate earnings remain a significant driver. Here, the story has been strong. U.S. corporate margins have risen, with the average S&P 500 net income margin now above 10 percent this decade, roughly double that of the 1990s. Canada has followed a similar trajectory, though aggregate corporate profits have been more sensitive to commodity prices.

Several tailwinds suggest that growth can continue: technological innovation, productivity improvements and resilient consumer demand all support sustained profitability. Still, history offers caution. In the 1970s, despite a decade of solid earnings growth (9.9%, chart), persistently high inflation and global energy shocks kept equity markets subdued. Even so, today's strength in earnings remains a key foundation of market performance that shouldn't be overlooked.

Our team continues to navigate the evolving landscape. The K-shaped economy reinforces the value of time-tested principles-diversification, a focus on quality and disciplined risk management-as key to successful long-term wealth management in an increasingly uneven economic environment.

S&P 500: Key Drivers of Stock Market Performance

Legendary investor John Bogle once suggested the key drivers of equity returns are dividend yield, earnings growth and speculative return or changes in valuations (the price/earnings (P/E) change).

New Year's Investing Resolutions: Focus on the Long View

"There is no elevator to success-you have to take the stairs." -Zig Ziglar

Success-whether in life or investing-rarely happens overnight. Some of the universe's most impressive creations, from towering sequoias to majestic mountains, have resulted from gradual, patient growth. Investing follows a similar principle: discipline and consistency over an extended period can often produce meaningful results.

As we enter a new year, it's worth reflecting on the quiet power of compounding. By maintaining a longer-term perspective and avoiding the distractions of short-term market noise or fluctuations, investors may be better positioned to navigate uncertainty.

Even modest returns, compounded over longer periods, can create impressive outcomes. Consider a one-time investment of $100,000 left untouched:

Time can have a powerful impact. Extending an investment horizon from 30 to 50 years can more than double and even triple the outcome at the same rate of return. Even a small increase in annual returns-just one percent-can make a substantial difference over decades.

Accumulating significant wealth often takes a lifetime. This was the observation from Forbes' 2025 Annual Billionaires List: "The numbers speak for themselves: Nearly three-quarters of the world's billionaires are between the ages of 50 and 79. Just 12 percent are under 50."

The same long-term growth story applies to companies. Some of the world's largest publicly-traded firms have achieved extraordinary valuations through growth over decades. As of November 2025, only 10 U.S. companies have surpassed a trillion-dollar market capitalization ("share price X shares outstanding"), and none did so overnight.

Berkshire Hathaway, the first non-tech firm to do so, exemplifies the power of patience. Warren Buffett first took control in 1965 when Berkshire was a struggling textile mill valued at roughly $22 million. The company went public 15 years later, in 1980, but it took another 44 years to reach trillion-dollar status. Buffett attributes much of this long-term success to the power of compounding-profits were reinvested steadily, allowing Berkshire's value to grow over decades.

After solid gains in equity markets over recent years, many investors have been asking where the equity markets are headed in 2026. Rather than worrying about short-term market moves, longer-term investors should not become overly preoccupied with what might happen tomorrow or even in the months ahead. A more prudent perspective is measured in years, or even decades.

As we turn the page into 2026, why not resolve to think with a longer-term view? Even retirees can plan with an approach spanning a decade or more, given our increasing longevity. Significant growth can occur during that time, and one of the best ways for investors to continue benefiting is to stay invested. Look ahead with confidence, and here's to the growth yet to come. Happy New Year!

Note: This article is not intended to provide investment recommendations. It highlights the power of compounding and the patience needed to achieve meaningful growth.

Trillion Dollar Valuation: How Many Years Did It Take After IPO?

2026 Financial Literacy Events - Save the Date!

In addition to personalized, one-on-one support, we strive to provide financial literacy resources and education to our clients and community. You're always welcome to bring someone you care about if you think they'd find value and benefit.

*Attendance is complimentary but space is limited

Helping Family with Homeownership

Considering helping a family member with homeownership, or any non-traditional home ownership structures? Join us for this interactive event featuring an expert panel discussing common scenarios, potential structures, and considerations for all stages of life.

When: Thursday February 19, 2026 | 4:00 p.m. - 6:00 p.m.
Where: Stan Hagen Theatre @ North Island College, 2300 Ryan Road Courtenay, BC V9N 8N6
RSVP: andrew.cornell@rbc.com | 778-335-9430

Fanny Bay Estate Planning

Join us for this informative session to gain expert insights on estate planning. Attendees will receive resource guides and checklists to help them on their estate planning journey. Beverages and light snacks will be served.

When: Thursday April 2, 2026 | 6:00 p.m. - 8:00 p.m. | Presentation 6:30 p.m. - 7:30 p.m.
Where: Fanny Bay Community Centre, 7793 Island Hwy S, Fanny Bay, BC V0R 1W0
RSVP: andrew.cornell@rbc.com | 778-335-9430

Considering Renouncing US Citizenship?

Renouncing US citizenship the right way provides a legal and safe way out. However, when done improperly, it can result in an exit tax or worse, disbarment from the US. Bring your questions and gain valuable insight at this live/in-person event.

When: Friday April 17, 2026 | 2:00 p.m. - 4:00 p.m.
Where: Native Sons Hall - Lodge Room, 360 Cliffe Ave, Courtenay BC, V9N 2H9
RSVP: andrew.cornell@rbc.com | 778-335-9430

Business Exit Planning

Planning to sell your business in the next five years? A successful business exit plan takes years of preparation - only the business owners who take the right steps along the way will get the price they want.

When: Tuesday May 12, 2026 | 6:00 p.m. - 8:00 p.m.
Where: Old House Hotel, 1730 Riverside Lane, Courtenay, BC, V9N 8C7 - The Grand Fir Room
RSVP: andrew.cornell@rbc.com | 778-335-9430

More events to come in 2026 - we'll keep you posted!

Financial Planning Checklist

Breaking financial planning into small, timed actions reduces decision fatigue and increases follow-through over the year.

January: Use early-year momentum

• Cancel unused subscriptions
• Increase retirement savings by 1%
• Set up automatic savings transfer

February: Legal clarity

• Review will and power of attorney
• Confirm decision-makers still fit
• Store documents accessibly

March: Clean up transfers

• Review beneficiaries
• Check account titles
• Remove outdated designations

April: Use tax feedback

• Review last year's refund or balance
• Adjust withholding if needed
• Increase retirement savings by 1%

This information is not investment advice and should be used only in conjunction with a discussion with your RBC Dominion Securities Inc. Investment Advisor. This will ensure that your own circumstances have been considered properly and that action is taken on the latest available information. The information contained herein has been obtained from sources believed to be reliable at the time obtained but neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers can guarantee its accuracy or completeness. This report is not and under no circumstances is to be construed as an offer to sell or the solicitation of an offer to buy any securities. This report is furnished on the basis and understanding that neither RBC Dominion Securities Inc. nor its employees, agents, or information suppliers is to be under any responsibility or liability whatsoever in respect thereof.