RBC, BMO Signal They May Follow US Banks Out of Climate Club

Bank of Montreal and CIBC were upgraded to Outperform from Sector Perform at RBC Capital Markets.

Analyst Darko Mihelic raised his price target on BMO to $161 from $133, and on CIBC to $103 from $97.

"We upgrade BMO and CM... as returns to our target prices are more favourable versus that of peers," Mihelic said in a note to clients. "That said, our preference for these stocks is mild as we see decent returns (median return to target price) of approximately 17% for the group."

The analyst raised his targets on National Bank of Canada to $145 from $134 (Sector Perform), Bank of Nova Scotia to $83 from $74 (Sector Perform), and Toronto-Dominion Bank to $86 from $77 (Sector Perform).

"We believe 2025 will be a transitional year for the Canadian banks we cover and that 2026 would be a better representation of 'normal' earnings power," Mihelic said.

"The key factors we see for a more favourable landscape in 2026 include a stabilizing Canadian economy, reduced concerns on mortgage payment shock (although mortgage volumes may increase), peaking credit losses, stronger capital markets and wealth revenue growth, stabilizing capital, and buyback activity which is restarting," the analyst said.

"We suspect our 2026 EPS estimates are conservative with upside potentially coming from lower than expected PCLs, better net interest income growth, and possibly greater than modelled buyback activity."

By Steve Garmhausen

What's so great about being rich? Mötley Crüe drummer Tommy Lee may have said it best: "The best thing about being rich is the freedom; freedom to do whatever you want whenever you want. It doesn't suck."

But wealthy people can be as stressed and unhappy as anyone, despite, or sometimes because of, their money. They can even suffer from the feeling

that they don't have enough. For example, a recent survey from Northwestern Mutual found that only 32% of American millionaires consider themselves "wealthy." So what is it that rich people worry about? We put that question to five financial advisors in this week's Barron's Advisor Big Q column.

David La Pointe, founder, La Pointe Wealth Advisors: You're only as happy as your saddest kid. That's not a financial statement; it's just a reality. A lot of people who are extremely rich unfortunately didn't spend enough time with their kids, and/or their kids have no concept of how to make money and their lives are screwed up. Wealthy people often worked really hard and took major capital risk on some sort of innovation or even just a simple product. They scratched and suffered and went through lean times and usually borrowed money. They worried about cash flow, because leverage will kill you. You can have a great product, but if you run out of cash, you're bankrupt. It's a lot of stress. Then once they're rich, you'd think they wouldn't worry about money anymore. But they do, because if they're 60 or 70, they don't want to go through all of that again.

Nell Cordick, financial advisor, Bogart Wealth: Money is relative; it causes the same stress for someone who has a very low income as someone who is very wealthy. My clients are all wealthy, and they have the fear of running out of money. Regardless of how much someone has, they do not ever want to be dependent on their kids to provide for them.

Another fear is, "What happens if I passed away? Is there enough money left over for my spouse to live in the way that he or she has become accustomed to?" A third fear, and this ebbs and flows depending on what is going on in our economic system, is a fear of a market correction. They still can remember 2008. They certainly can remember 2022. "What happens if that affects my whole total portfolio?" How to react to that is always in the back of their mind. There is a fear of not leaving a legacy. The question is, "Do I have enough to live the way I want to live and still leave a legacy for my kids and/or charity?" Most people want to leave something to someone, regardless of what place the giver is on the economic spectrum. So they're cautious with their own money. There's a fear of not being able to help one's kids or grandkids. And people really fear very high inflation. When everything is more expensive — their food, utilities, home repairs, dental work — they have the fear of the money running out.

Bill Ringham, director of private wealth strategies, RBC Wealth Management: What I often see is that what wealthy people have to do becomes complex. Those who earn the wealth have a responsibility for shepherding it, and those who've inherited that wealth often feel a greater responsibility to be good stewards of it. There can be planning complexity: Where do I put my money? How do I invest? And there can be tax complexity: Where do I withdraw my money from? What's the most tax-efficient approach? There can be worry about tax laws changing, which could affect the planning a person has done. People often perceive that wealth breeds happiness, but they might not expect some of the more challenging nuances of the tax ramification of their wealth.

For people who are philanthropic, having more money allows them to capitalize on their philanthropic goals and objectives a little differently. However it also breeds a different complexity, where they're being invited to fund-raising events of causes they might not feel passionate about. So they become reactive givers versus having well-articulated philanthropic values, vision, and mission.

James Beam, head of investment management, brokerage, planning, retirement, and strategy, TD Wealth: Many people's financial fears arise from not being able to meet the essential needs of housing, food, healthcare, and education. The wealthy often worry about money, but I think their concerns are different. One is preservation of wealth: The more you have, the more you have to lose. And that can be via inflation, taxes, market volatility, or fraud. And lifestyle and obligations usually change the more wealth you have. You start adding luxury homes, private schools, vacations, staff in some cases, and more. And that creates financial pressure, especially if income streams are disrupted.

Finally, managing large sums of money often requires dealing with different issues such as tax strategies, legal strategies and structures, estate planning, and probably more complex investment portfolios. That leads to different stressors. And then there's legacy. If you're philanthropically inclined or geared towards leaving a legacy whether your family or externally, wealth can be drained faster than anticipated. And for some wealthy people there are the fears of entitlement or dependency for family members versus empowering the next generation to thrive and be successful and not be too dependent on the family.

Jay Funyak, lead financial advisor, MFA Wealth: There's often a fear of losing it all. And the concerns usually come down to a few things. There's geopolitical uncertainty; wealthy individuals are very tuned in a global sense because they know how quickly the markets can change and economies can react to things like political instability or international conflicts or trade disputes. Those are things that they cannot control, but they're constantly evaluating how to mitigate their exposure. Another worry is the U.S. being the economic leader. There's a lot of unease about what happens if, for instance, the U.S. dollar loses its global dominance, or if the country becomes weak and it's not as influential as it is now. Many of our clients have portfolios built on U.S.-centric investments, so any sign of real instability in our financial system is a significant concern.

The other big concern is natural disasters. There's a growing concern, especially among business owners, that they're very vulnerable to the impact of natural disasters. We witnessed that this past year with the terrible things that happened in North Carolina. It's not just the immediate damage that happens; it's also the potential long-term economic impact of that event. Wealthy people aren't just thinking about their current assets. They're focused on protecting their families, their businesses, and the legacies they want to leave. They're thinking long term, and they do get concerned about things that are out of their control.

Write to advisor.editors@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

Ratings actions from Baystreet: http://www.baystreet.ca

(16:59 GMT) Bank of Montreal Price Target Raised to C$161.00/Share From C$133.00 by RBC Capital

Ratings actions from Baystreet: http://www.baystreet.ca

Ratings actions from Baystreet: http://www.baystreet.ca

(16:59 GMT) Bank of Nova Scotia Is Maintained at Sector Perform by RBC Capital

Ratings actions from Baystreet: http://www.baystreet.ca

Ratings actions from Baystreet: http://www.baystreet.ca

(16:59 GMT) CIBC Raised to Outperform From Sector Perform by RBC Capital

Ratings actions from Baystreet: http://www.baystreet.ca

Ratings actions from Baystreet: http://www.baystreet.ca

(16:59 GMT) Toronto-Dominion Bank Is Maintained at Sector Perform by RBC Capital

Ratings actions from Baystreet: http://www.baystreet.ca