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4 | News/Bits and Bites 6 | Brics vs. Mint By the numbers


10 | Advisors on Earl Jones What they have to say ain’t pretty 12 | Emerging Markets What advisors are telling clients about this emerging opportunity – opportunities

FEATURES 16 | Independent Minded Going it alone – sans a big firm – isn’t for the faint of heart. But here’s a plan guaranteed to embolden you

54 | Client’s Take Why obvious signs of success in an advisor don’t necessarily endear them to clients

38 | Loonie ETF tales Advisors are fielding more and more interest from clients looking to capitalize, believe it or not, on the falling loonie

56 | Marketing muscle A blueprint for managing your firm’s human resources

46 | Charitable confidential

62 | A Day in the Life of advisor Karin Mizgala

50 | Website worries Advisors can’t be expected to know everything, but knowing how to create and maintain the perfect business website is, indeed, one of them

Follow us on Join the industry discussion at




WP’s look at wealth management’s leaders and how exactly they’re planning to grow the industry’s collective book

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FOLLOW THE LEADERS COPY & FEATURES SENIOR EDITOR Vernon Clement Jones SENIOR WRITER Sophie Nicholls COPY EDITOR Tanya Enberg CONTRIBUTORS Justin da Rosa, Mark David, Maggie Crowley, John Tenpenny, Therese E. Kinal, Cindy Tonkin

ART & PRODUCTION GRAPHIC DESIGNER Joenel Salvador, Marla Morelos



Editorial enquiries Advertising enquiries Subscriptions tel: 416 644 8740 • fax: 416 203 8940

Wealth management – it’s an industry absolutely crammed pack with star power. (If you doubt that, just look in the mirror.) From the hard graft of frontline planners to those steering some of the largest firms, the accomplishments are undeniably staggering. Celebrating that excellence and keeping you in the loop on who’s doing what to take this ship to the next level is the impetus behind the inaugural WP Hot List. Starting page 20, we outline some of the players helping expand the industry’s footprint at the same time keeping it focused on the client. The selection is by no means exhaustive, but reflects the headlines of the past year, industry feedback and the editorial input of those reporting on Canada’s increasingly dynamic wealth sector. What you’ll also find in that feature is some inspiration and some guidance, with several on the list offering their expert and varied takes on the opportunities and, indeed, challenges facing industry professionals. Rest assured that whatever comes, they’re ready. Cheers, Vernon Clement Jones Senior Editor

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2 | MAY 2014

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The film that paints the ugliest picture imaginable of the world of securities and investment has prompted a rush of jobseekers searching for stock broker positions online. Well, at least they weren’t lining up to be financial planners. Still, The Wolf of Wall Street should, theoretically, have scared people off of that career choice. After all, who wants to be anathema to all that’s decent in the world. But new data from online employment portal Indeed. com, suggests it had quite the opposite effect, with the worst of Wall Street’s excess and corruption on full display actually leading to an 80 per cent rise in searches for “stock broker” surrounding the release of the Martin Scorsese film.

A top economist says we face a 10 per cent chance of a global recession triggered by escalating tension between Russia, the U.S. and Europe over Crimea. Allen Sinai, CEO of New York-based consultant Decision Economics Inc, suggests that although economic growth is set to speed up this year, the mounting geopolitical strains spurred by problems in the Ukraine and other parts of the globe can’t be overlooked. And businesses are also becoming concerned. A poll of 1,400 corporate executives by consultants McKinsey & Co this month revealed 70 per cent of participants cited geopolitical tensions as a risk to global growth in the next year. This figure has soared from 27 per cent in December.


ut a fees

hat h ut


ees) fee.

The creation of the 15-member council, which includes top laymen from the world of finance and economics, reflects the widely acknowledged desire of Pope Francis to make changes to an institution previously viewed as secretive and murky. Advisors in Italy have called the move a significant step in moving the institution beyond legacy planning and toward greater financial transparency. The council consists of seven non-religious figures, including Maltese economist Joseph Zahra, former director of the Central Bank of Malta, and France’s Jean-Baptiste de Franssu, chairman of mergers and acquisitions advisory firm INCIPIT and former head of the European Fund and Asset Management Association.




27% TO 70% (December 2013)

(March 2014)


NOW THAT’S NOT NICE Really readers could – and should – have been more diplomatic. In answering this poll question as overwhelming one way as opposed to the much more politically correct way, they’ve run the risk of hurting someone’s feelings. Still, the results suggest that Canadian advisors are on side with their counterparts across the developed world, as more and more mortgage brokers look to broaden their horizons and their revenue streams by tabbing financial planning onto their shingles.


19% Yes

81% No

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Your clients – if they’re anything like their counterparts in the States – are increasingly hot for emerging market investments. The numbers explain why Russia’s actions in Crimea will undoubtedly impact foreign investment, but even before that, analysts here and around the world were suggesting the powerhouse BRIC economies – Brazil, Russia, India and China – were shifting down from their frenetic expansion. At the same time Mint economies – Mexico, Indonesia, Nigeria and Turkey – seem poised to lead growth in the next decade. Canadian advisors are following the ups and down of that debate, as clients increasingly throw home-country bias to the wind in favour of the heftier returns of some emerging markets. Here’s a look at the performance numbers driving interest in Mint and Bric groups.

“Emerging markets can expect 2-3 times as much growth as developed economies” International Monetary Fund

PROFIT MOTIVE What’s the big deal with emerging markets? (% of companies that cite the following factors as the main appeal)


markets poised for future growth

39% the customer mother lode


strengthen foothold in global markets


lacklustre growth in developed economies



- the percentage of revenue from emerging markets for the top 100 multinationals


spreads out the risk


short-term growth opportunities

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China 1,363,650,000

Indonesia 249,866,000

India 1,242,280,000

Nigeria 173,615,000

Brazil 201,032,714

Mexico 119,713,203

Russia 143,700,000

Turkey 76,667,864



2050 (projected)

















Sources: IMF, Goldman Sachs

South Africa 52,981,991

GO WHERE THE MONEY IS: Percentage growth in millionaires for 2014



NOT ALL BRICS CARRY THE SAME WEIGHT Those economies are better at somethings than others. Here multinational corporations rank the investment potential of each by sector

China Russia


Russia Nigeria




#2 #3 #1

#4 #4 #4



#3 #2 #3

#1 #1 #2





Natural resources



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MINTS CHIPPING AWAY AT BRICS GDP per capita growth for some of the most aggressive MINTs has surpassed that of slower BRICs

China ia GDP per s e on er d n I Pp % capita: 22% 2 . D 6 G ita: p % ca

a eri r % Nig P pe 6.6 : D G pita ca

ia r Ind P pe 6.3 GD pita: ca

Russia GDP per capita: 4.3%

Mex i GDP co p capi er ta: 3 .6


Bra GD zil P cap per ita: 2.


Tu GD rke ca P p y pit er a: 2


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Comments from on the news stories making waves in advisor waters ONTARIO BILL FACES ADVISOR OPPOSITION

WHOA! HOLD ON A MINUTE Financial advisors in Ontario are one-step closer to new legislation regulating their performance standards and they aren’t shy about sharing their opinions and concerns.

I do not support this bill. As a CFP I already adhere to a strict code of conduct. Our industry is extremely highly regulated and this is just one more layer or red tape we can do without. I believe advisors should be educated and adhere to a code of conduct. Make CFP the standard before anyone can be called a financial planner or financial advisor. The colleagues I know and work with take their ethical duties to their clients extremely seriously. -Marilyn J Chambers, CFP, EPC

Earl Jones was not caught by the Quebec regulators because, in the regulators own words, he was not a “dues-paying member” of their Chambres de la securitie financiere. So unless the regulators are going to go out and find unregistered frauds then we are no further ahead in protecting the public. -Brian E. Jackson CFP

I am having a hard time supporting this bill and a URL that was forwarded to me hits the nail on the head

Join the debate at

“… I feel the bill is only going to add another layer of complexity for the people who are already following the rules… the categories that are exempt are where a lot of the problems lie. I am concerned as to how quickly this is going through as well as how quiet the entire banking system is being over this… but then again they know they will be exempt. I have two friends who own funeral homes in Ontario that are not part of a conglomerate and when a similar bill was introduced in that industry a few years ago it didn’t make anything better.” There are no exceptions to who is a doctor or who is a dentist, you either are or you aren’t… I agree something is better than nothing but at the same time define and educate what is a financial planner and what is a financial plan might actually help individuals. -Kevin Cahill, B.Sc.(Hons), CFP, CHS, CLU WHERE’S THE TAR … AND FEATHERS?

If you think investors are none too happy about the early release of Montreal fraudster Earl Jones – the confidence man who bilked his client for more than $50 million – just listen to what advisors have to say.

He was never registered as an advisor or broker, yet it still tarnishes the industry. Isn’t it time to be able to have a licence displayed and use it in advertising – not just course-completed certificates that can be duplicated/photoshopped? -MQ

Corrections Canada and/or the parole board need a reality check! To say: He was eligible for early parole because his crime was not considered violent a pile of bull crap. How would those bleeding hearts feel if it had been they or a relative who had been ripped off. -Ken MacCoy, CHS

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THE BIGGER PICTURE Brics or Mint? That is today’s very trendy question. But Canadian advisors are looking past fads and focusing on the economic fundamentals of any emerging market their clients eye. Justin da Rosa reports

When Goldman Sachs’s Jim O’Neill coined the term Bric 13 years ago, the countries lending their name to the acronym – Brazil, Russia, India and China – were on the cusp of growth other economies could only imagine. That was until now, as the so-called Mint nations come into their own impressive expansion, fuelled by large, young workforces and the entrepreneurial drive needed to churn growth. While Canadian investors are hearing more and more buzz about the opportunities in Mexico, Indo-

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ADVISORS’ BRICS-’N’-MINT APPROACH TO EMERGING MARKETS nesia, Nigeria and Turkey, very few clients – beyond accredited investors – have taken the leap into the Brics economies. That includes South Africa. Still, the question advisors are getting, even from rank-and-file retail investors, is which of the two groups of emerging markets should they explore? For their advisors, the answer is increasingly nuanced and reflects the fundamentals of strategic investment and not the trends of the moment. “We find it very dangerous for any financial advisor to go by something as broad-brushed as the Bric or anything as broad-bushed as the Mint,” Andrew Milligan, head of Global Strategy for Standard Life Investments tells WP. “It’s a very useful marketing piece of speak. “At times there may be reasons why you would want to buy some assets in Russia, India, China and maybe at some point you do want to buy some assets in Mexico, Indonesia, but we would be very wary indeed of clients simply saying ‘I want to buy the Mint countries rather than the Bric countries.’” According to Milligan, these asset classifications are merely buzzwords; an attractive way of dressing up and oversimplifying a group of investment opportunities that may not have much in common with one another. “It’s abundantly clear why a number of brokering houses and banks have put the name forward: it’s very attractive indeed, and from a journalistic point of view you can see why they did it,” Milligan says. “When you come down to actually thinking about these countries, the links between them are very, very different.” Canadian financial planners have been patted on the back for what many globally view as their more thoughtful approach to guiding clients into emerging economies and seeing past the bombast of a market bullish on them. Since O’Neill’s brainstorm, the Bric family has quickly become the standard for investors looking to cash in on emerging markets. However, O’Neill turned this niche investment category on its head when he established what many believe to be its successor – the Mint classification – in January 2014. And it seems that many have bought into the hype, with a recent study by internationally based Wealth Insight entitled “The Millionaire Explosion” almost-uniformally lauding the Mint countries as an attractive option for investors seeking high returns. According to the research, the Mint countries are expected to lead the world in the creation of new millionaires in 2014, with Indonesia out front and

Hit the books: look for solid and sound economic underpinnings to a emerging market Consider emerging market bonds as a hedge against uncertainty

Mix assets for a sustainable yield

Seek out the guidance of specialist fund managers Avoid economies with growing gap between rich and poor – could lead to political instability

likely to see a 22.6 per cent growth in millionaires. The other Mint countries Mexico (7 per cent), Nigeria (10 per cent) and Turkey (8.5 per cent) each fall within the top eight in terms of percentage growth in their own moneyed men and women. The Bric economies, on the other hand, are losing favour among the investment community, despite boasting three billion people; a collective GDP over US$16 trillion and $4 trillion in combined foreign reserves, according to the IMF’s latest World Economic Database. Many of these countries and others lumped together under separate acronyms have, at least until recently, enjoyed turbo-charge economic growth, say analysts. While Canadian investors suffer acronym anxiety, investment gains in both camps are not guaranteed and underperforming local stock markets have led fund managers to flee what had been fashionable groupings. Canadian advisors have generally been more cautious from the get-go. Assets under management in Bric funds fell to 9 billion euros at the end of 2010, although assets under management in broader emerging equity funds have grown concurrently. So the Bric nations have fallen out of favour and the Mint grouping has taken up the reins. The reason for this, according to Brett Turtleboom, co-founder of APQ partners, is due to geopolitical and economic uncertainty among the nations that have, traditionally, been the most attractive to international advisors looking to steer clients into developing MAY 2014 | 13  

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economies. The effort has everything to do with satisfying growing demand for high-yield investments. “This shift is taking place because investors are increasingly of the view that there is more to emerging markets than the Brics in terms of capital growth, productivity growth and innovation,” Turtleboom says. “Brazil is facing elections, Russia is dealing with the problems posed by Ukraine, India is going through a reassessment of its economic policies and China is reassessing the consequences of its expansionary credit policies since 2008. “In a broad swathe of emerging markets, including the Mint countries, a story of macroeconomic stability is developing, capital markets are deepening and Western involvement has been more limited.” And while the Brics may have taken their foot off the pedal, the Mint have flourished for various reasons. “The markets that I think are going to give you some upside are Mexico, which is going to give you upside tied to the United States,” Darren Sissons of Toronto-based investment firm, Portfolio Management Corporation tells WP. “Turkey is going to give you upside relative to the recovery in the EC (European Commission); and Indonesia is going to be somewhat of a middle ground, but it’s more of a consumer story.” However, despite the positives of this new groupNECK AND NECK IN GDP RACE GDP for both Mint and Brics are expected gain ground on and even surpass some of their G7 counterparts over the next 36 year Gross Domestic Product 2012

Estimated GDP in 2050 US

16.24 8.23 5.96 3.43








52.62 34.58 24.98 9.71





































Source: World Bank, Goldman Sachs

ing, veteran Canadian advisors are telling investors to be wary of investing within the Mint countries alone. “There can be lots and lots of other countries we can invest in where the fundamentals are solid and sound,” Richard House, head of emerging markets for Standard Life Investments, says. “At this point, I am not looking at them in those terms: Mint or Brics or Fragile Five; we take a fairly simple approach: if we don’t like a country we don’t invest in it (because) there are 60 countries we can invest in so it’s easy to avoid the handful of countries that are facing some problems.” But how are advisors based in the GTA or the Lower Mainland determine which of these countries are facing problems that could —and shoud —deface their investment appeal for clients? According to House, there are diligent advisors are taking key steps to ensure they make sound investment choices for their clients. One is working with an experienced fund manager. Advisor are “just finding managers (who) take a more active approach, who aren’t so tied to their benchmark, who can take relatively aggressive countries and avoid those countries that have difficulties,” House says. It’s an approach Andrew Milligan agrees with; though he also believes dedicated and knowledgeable advisors are also doing the necessary research themselves. “If they do the work themselves, they’ve got to put together a list of the drivers that they consider particularly important where the capital is going to be flowing into these sorts of countries or where the capital is going to be flowing out of these countries,” Milligan says. “There is a lot of number crunching and analysis that goes on there.” And for its part, Standard Life Investments encourages advisors to spread investments across various asset classes to maximize returns in the shortand long-term. “One of the themes that we talk about quite a lot is sustainable yield: encouraging some investors to be thinking how in the world of very low interest rates (and) low inflation, they can get some sort of yield out there and sometimes it’s real estate, sometimes it’s equity and sometimes it’s fixed income,” House says. “So a mixture of assets that are going to be giving a yield – obviously a sustainable yield: one that will actually continue for some time – and certain emerging markets are very attractive for that sort of sustainable yield.”

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THE BOLD AND THE INDEPENDENT Going solo – sans big firm – can be daunting for any financial planner. But still so many continue to dream. One advisor who overcame that fear now wants to help guide others through it Knowing when to walk away and having the courage to do so don’t necessarily happen in tandem. Financial advisor John Lindsey knows first-hand the hesitation and fear that fester when an advisor even contemplates going solo. But, Lindsey hasn’t looked back – at least not in regret – since he did two years ago. Now very much an independent, the advisor once a major player with a large international firm has launched a website – The Bold Advisor– offering encouragement and support to others, like him, who yearn to do the same. “I’m trying to be a voice for those who want to go independent and are afraid,” he says. “Or, who wanted to go independent and were being bullied by their current broker dealer or (are dealing with the) threat of being bullied by their current broker dealer.” Lindsey’s road to independence was by no means a smooth one – there was a lawsuit (which he won), tens of thousands of dollars poured into legal fees and one of the greatest tests endured on his moral character. With a high-profile reputation and solid book of business, Lindsey says he cut back his clients, fighting

hard for those he wanted to keep. He combatted accusations (which included stealing ‘corporate secrets’) that had the potential to soil his career. And, he guarded his jealously protected the composure necessary to come through to the other side.

BREAK ON THROUGH So, how did Lindsey make it through? “I had an incredible spouse. I had an incredibly supportive family. I had an incredibly supportive staff,” he says. “Luckily, I had the financial wherewithal to be able to withstand it.” One thing Lindsey stresses is that his decision to leave his firm was not driven by money. Instead, after more than 15 years with his former firm, Lindsey says he was disgruntled by the corporate culture, the investment philosophy and how he was expected to service his clients. He was also dissatisfied with the proposed succession plan, which, according to Lindsey, would have handed over the bulk of his clients to unknown advisors despite the years he spent developing these relationships. Once he committed himself to making the move,

Sup abo

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“Be more concerned with your character than your reputation. Your character is what you really are while your reputation is merely what people think you are”

Lindsey searched thoroughly (two years in total) for his next firm. He interviewed with five different companies, visited corporate headquarters and analyzed which teams aligned best with his moral and business values. “I did a tremendous amount of due diligence. I flew to different cities,” he says. “I had offers from all five (companies), but I took the one that wasn’t necessarily the largest. I took the one that gave me the most freedom, the most integrity with my clients, and the most ability to do what is right for the clients. I didn’t want to be owned in an indentured-servitude type of manner.”

TO THE OTHER SIDE And, so with 160 household clients - down from 500, most of whom were “garage” clients he left with the firm – Lindsey started doing business his own way. He settled on a new firm and launched Lindsey and Lindsey Wealth Management, Inc. in 2012. “I cleaned up my book because there were a lot of assets on the book that weren’t profitable and had been collected over the course of time,” he said. “I got almost 70 per cent of my book, which is unusual…” He now offers clients a diverse range of products – including real estate, annuities and other investment options that weren’t on his former firm’s grid – with better money management and risk assessment options and a more-efficient compliance department, he says. “My time is my own. I’m not being asked to volunteer all the time and have no compensation for it,” he says. “I’m able to offer my clients a much broader spectrum of investments. It’s the difference between chicken salad and chicken parmigiana.” Not only are the products notches above those he used to select from, but Lindsey says the technology he uses is far superior as well. Everything is web-based, so much so, that he can access client portfolios and complete trades via his mobile phone. When he attends a national conference, he wears a badge with an electronic chip that automatically allocates him CFP credits when he attends certain seminars.

FOLLOWING FOOTSTEPS When he considers the advice so often sought by other advisors considering the leap from a mammoth firm or bank, Lindsey isn’t short of words. Firstly, he reiterates what every advisor should already know. The firm you are with does not own you. “They are just renting you. They (advisors) lose sight of that,” he says. “If you know you haven’t done

anything wrong, truth will prevail.” Secondly, make sure you have some funds to tap into, or find an attorney who is willing to work on contingency and counter sue, if the necessity arises. Third, do your research when seeking another firm or broker with which to align yourself. Visit the headquarters and get a feel for the corporate culture. Fourth, be unwavering about the ethics, ideals and morals you stand for, and everything else will fall into place, he says. Fifth, always do what is right for the client. “Even if there are times you don’t get paid for it, something will fall in your lap that you didn’t expect,” he says. And last,, in the words of U.S. basketball coach John Wooden: “’Be more concerned with your character than your reputation,’” he says. “Your character is what you really are while your reputation is merely what people think you are.” “Anybody who just says ‘well it’s the client’s fault for getting duped’ is skipping right past the opportunity to ask questions. It’s more constructive to ask, what were the questions that should have been asked? What were the promises made? And were the promises reasonable?” says Gillian Stovel Rivers, CFP with Assante Wealth Management in Burlington, Ont. According to Stovel Rivers, many of these things happen because of poor financial planning habits. “Most of the time when people are looking at an opportunity like this, it’s to make up for lost time. It’s because they need to hit a finish line that’s two kilometers away and they have 100 metres to do it in. I think that people in a state of denial will sometimes forget to ask the tough questions of things that seem too good to be true.” When clients come to Stovel Rivers with what she calls “alternative” investment ideas, she uses it as an opportunity to help them become better independent decision makers. “Although I think advice is really important, we can’t always be with a client and we can’t always stop them from making these decisions. But we can help them get better at asking some questions about opportunities that seem too good to be true,” she says. Stovel Rivers notes that she also always looks for multiple layers of due diligence in any investment opportunity and suggests that her clients do the same. “Multiple layers of due diligence is a great way to know that the tough questions have been asked by the people who know what the tough questions should be,” she says.

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LINDSEY’S SEVEN STEPS TO INDEPENDENT ADVISOR SEVEN THINGS EVERY ADVISOR SHOULD DO BEFORE GOING INDIE If you’re an advisor who is ready to leave a wirehouse, you’ve no doubt been doing your homework about making the transition to the independent space. You’ve been reading everything you can get your hands on, talked to other advisors who have made the move and done due diligence on the business model you want to pursue. As someone who has made the transition, I know that it can sometimes feel like information overload because there is so much of it to digest. So, in an effort to help you parse this information down to a manageable guide for making the transition, here are seven things you should do before leaving your wirehouse:

2. Think about your clients. While becoming an independent advisor might be the best move for your career, it’s important to think about how this transition will benefit your clients as well. 3. Conduct a review of your

team. Does each member share your vision? Are they ready to leave the wirehouse space for the independent model?

1. Determine your value proposition.

One problem for advisors, however, is that sometimes clients are not forthright with all of their investing activity. Tim Kelly, a financial advisor at Sun Life Financial in Richmond Hill, Ont., recalls one client who was taken for $20,000 by a neighbour in an “investment opportunity.” “I only found out about it after the fact. My client never asked me for advice. I didn’t know about any of this at the time,” he says. This is one of the reasons it’s important to express to investors that an advisor cannot help them achieve their goals unless they are given the whole financial picture, according to Stovel Rivers. “It’s like a doctor taking on a patient who’s not telling them all of their symptoms. How am I going to make a proper recommendation for us to work together as a team to help that person achieve what it is they’re telling me they want to achieve if I don’t have the whole playbook sitting in front of me with all of the facts?” she says. Beyond teaching financial decision-making skills and encouraging investor transparency, the industry should also be coming together to educate the public about what qualifications and qualities to look for in the person they trust to handle their money.

4. Prepare yourself for a delayed payoff. 5. Make sure your family is on board.

6. Be ready to give up

something to gain something. As you make the move to independence you are often giving up the brand recognition that you enjoyed at your old firm and are now starting from scratch. You may want to think about aligning yourself with a marketing firm

7. Keep an open mind

about compromising. Be open to partnering with a branch office, an independent broker/ dealer or other entity that can help make your transition easier by providing many of the services you enjoyed at your wirehouse.

Kelly says that during the course of one of his first appointments as a financial advisor in 1991 that the person told him he was only there for himself and not to help them. “That taught me that much of the public is already on high alert when it comes to investing their money. I think there’s a stigma attached to this business and every advisor has to do their due diligence,” he says. MacCoy argues that organizations like Advocis are working towards ensuring all planners meet certain standards, take part in continuing education and adhere to a professional code of conduct. As well, the Canadian Securities Administrators works to keep tabs on fraudulent practices in the industry. However, MacCoy warns that any implementation of new standards or requirements has to be implemented slowly and with consideration as to how it will affect the industry as a whole. “In principle it’s a good idea. But in the U.K. they put in more regulations and pushed it so far that a substantial number of advisors quit. The problem is if they implement really strict requirements, a lot of people will leave the business. And if we go from a commission base to a fee base, the average Canadian won’t be able to afford advisors,” he says.

John C. Lindsey CFP® is an award-winning financial advisor – based in California – who served as a regional leader, limited and general partner with one of North America’s top-rated advisory firms for more than 15 years. His site offers more tips on the journey to independence.

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THE WHO’S WHO OF CANADIAN WEALTH PROFESSIONALS WP has put its finger on the movers and shakers in this country’s dynamic industry. And as stellar as 2013 was for them, they were merely warming up for this year’s accomplishments Our inaugural Hot List showcases those industry trailblazers breaking ground, turning heads and making headlines … in a good way! Each one making the cut proves that the tumultuous bumps and grinds encountered this fiscal year – market volatility, regulatory burden and soaring client expectations, to name a few – can’t bring him or her down. If anything, they’re more motivated to rise higher. The rest of 2014 is sure to present its own set of challenges and this group appears positioned to take them on and continue to make headway. Some faces are famous, with names well-rooted in the scene; others are perhaps unknown, new kids circling the block. Many continue to lead the way, and there are those keen to join the ranks. From leading an independent firm through a complete rebranding to receiving the Order of Canada to being named one of Canada’s most powerful women in business, one thing’s for certain: achieving the goals they set seems mandatory for these players. Suffice to say, they will shape this evolving industry this year and beyond. But enough of the preamble. Your 2014 WP Hot List awaits.

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LUC PAIEMENT Co-President and Co-Chief Executive Officer, National Bank Financial; Executive Vice-President, Wealth Management


BRAD RADIN Founder & CEO, Radin Capital Partners Inc. Toronto, Ont. Years in business: More than 21 years, starting in Hong Kong as a research analyst with Credit Suisse

WHY HOT? Portfolio Manager for a top global equity fund that continues to outperform 96 per cent of all other global equity funds and the MSCI World Index every year. It’s done so for a decade. “I love the thrill and challenge of uncovering and analyzing hidden investment gems from all over the globe,” Radin says. “There’s a whole world of investment opportunities outside of Canada!”

WHAT’S NEXT? Radin believes the greatest challenge for the industry is to shift investor perspective away from a short-term focus and look towards the long-term opportunities to generate long-term returns. “Most investors would benefit from having less focus on the short-term greed or fear news-flow and focusing instead on the long-term return generating opportunities.

INDUSTRY FORECAST: “I’m anticipating a continued gradual rotation out of fixed-income securities into long-term, return-oriented equity opportunities.”

Early on in his career, Paiement was saddled with a spot on The Globe and Mail’s Top 40 Under 40 list – esteem that’s hard to sustain in your 50s or 60s. Not for Paiement, given his work to elevate the profile of Canada’s “sixth” bank outside of Quebec. The bank’s growing profit and name recognition speaks to his success. Paiement is responsible for all wealth management activities at National Bank of Canada. He is also a member of National Bank Office of President, and both Co-Chief Executive Officer and Co-President of National Bank Financial. Paiement has held a variety of key, strategic positions throughout his 33-year career. Of particular note, he has had an integral role in overseeing National Bank’s acquisition of HSBC Securities and Wellington West in 2011, which brought in nearly 100,000 clients and $20 billion in assets.

PAUL ALLISON Raymond James Ltd. Chairman and Chief Executive Officer

WHY HOT? It’s hard to argue with a 50 per cent growth in the firm’s retail brokerage. Undeniably Allison has made his mark, joining the Canadian arm of North American investment dealer Raymond James Ltd., in 2008 as co-president and co-CEO, with the vision to expand the firm’s equity capital market and private client businesses in Canada, including Quebec. Landing the widely respected Allison was a major coup for Florida-based Raymond James, and upon his appointment, Raymond James’ Peter Bailey predicted Allison would “make an immediate impact in accelerating our growth efforts.” In 2009, Allison took sole command as Chairman and CEO. The firm has greatly expanded its presence in la belle province, and in the first three years under his leadership, its retail brokerage grew by 50 per cent. Before joining Raymond James, Allison held top posts at Merrill Lynch Canada and BMO Nesbitt Burns.

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IAN RUSSELL President and CEO, the Investment Industry Association of Canada (IIAC) and Chair, the International Council of Securities Associations (ICSA); Toronto, Ont. Years in business: 35+

WHY HOT? First Canadian in 20 years to be elected chair of the International Council of Securities Associations (ICSA); Recipient of the Fellow of the Canadian Securities Institute (FCSI) designation—deemed the highest honour and most senior credential in Canadian financial services by the FCSI.

2013 MILESTONES: • Initiating a review of the regulatory burdens facing Canada’s investment industry • Raised awareness about the collapse of small business financings and proposing amendments to exemptions • Publicized financial struggles of small dealers leading to IIROC Notice lowering minimum capital requirements and OSC’s decision to lower some fees

2014 GOALS: • Witness introduction of Cooperative Capital Markets Regulator • Raise awareness of ICSA and its role on global market efficiencies and Canada’s role on the global stage Russell points to weak capital markets damaging revenues for many firms, particularly for those that are retail boutique, as a great challenge to the industry. An IIAC 2014 Capital Markets Outlook: A Survey of Canada’s Investment Industry CEOs found the top barriers of growth to be regulatory burden; competitive and pricing pressures; technology costs and reluctant investor participation. For 2014, 48 per cent of dealer firm CEOs feel the state of capital markets will stay the same, while 39 per cent feel conditions will improve, according to an IIAC survey. “Many firms face a tough challenge just to survive. For some, 2014 will determine whether their doors will be open next year. As it was last year, the pre-eminent roadblock is the ongoing regulatory burden.”

BILL MCELROY Manulife Securities Incorporated and The William Douglas Group Inc. Years in the business: 24

WHY HOT? No. 1 on the WP Top 50 Advisors in Canada 2014, exemplifying the excellence of fee-only advisors using ever-widening certification and expertise to retain and growth client numbers. “2013 was a big year for me, I bought a block of clients, took on an associate advisor, moved to a larger location, finished my CIM and qualified for Manulife’s 5 Star Master Builder award.”

WHAT NEXT? Things are happening for McElroy. Not only is he building relationships with a new book of clients, but he’s become an IIROC member, attained his CIM and transitioned to fee-based. Ask him why, and you’ll find out his stance on regulation. “I suspect the entire industry is due for a shakeup. When I hear of advisors permanently losing their Mutual Funds License one day and then going out and selling segregated funds the next, there is a problem. The industry needs better regulation across the board and maybe even tougher barriers to entry. This business is fantastic but it is so tough to gain the trust of prospective clients due to all that goes on in our industry.”

HOT PRODUCTS? McElroy believes it’s a stock-pickers market, with clients moving towards cheaper, high-yield options such as ETFs and Stocks.

DAVID AGNEW Royal Bank of Canada RBC Head of Wealth Canada

WHY HOT? Agnew is leading the strategic direction of the bank’s four wealth management businesses in Canada at a time when investors are increasingly spoiled for choice. That RBC Wealth Management has grown its book to some $615 billion in assets under administration and $373 billion in assets under management despite the onslaught of competitors speaks to his planning. This year it falls to Agnew to follow his own tough act. That seems doable. RBC Wealth Management has been listed as one of the world’s top 10 largest wealth managers for the past three years, a nod to strong customer service deliverables with both retail and qualified investors alike. RBC Wealth Management has more than a century of experience helping Canadians better manage their wealth, and if its recent slew of accolades is anything to go by, the business will further cement its leading position as industry triple threat. MAY 2014 | 23  

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THOMAS BEYER President Prestigious Properties Group – Canmore, Alta. and Vancouver, B.C. Years in business: More than 14 WHY HOT? This industry vet is a leading proponent of the private capital markets and the movement to bring real estate and its opportunities under the tent of Canada’s investment establishment. The REIN Player of the Year, with personally more than $100M real estate under management, he is introducing a new, yield-hungry generation to exempt markets with his 80 Lessons Learned on the Road from $80,000 to $80,000,000.

WHAT’S NEXT Beyer didn’t plan for a career in this industry. Regulatory changes in 2010 led him here. Labeling himself a primarily a real estate guy, hebelieves the exempt market is too strict in Ontario and poorly understood by the average investor. He predicts Ontario’s exempt market will cautiously open up to retail investors in 2014 and there will be increased consolidation of the exempt market dealer space. “I do believe that privately held real estate – well located, sensibly leveraged with low- cost mortgages and impeccably managed – always has been and always will be a sought after asset class that will outperform by a wide margin mutual funds or a passive stock index, and will be less volatile than publicly traded REIT,” he says. “Land development, construction or existing buildings are all asset sub-classes in real estate that will be in demand.”

GREG POLLOCK President and CEO Advocis, The Financial Advisors Association of Canada (Toronto, Ont.) Years in the business: Five Awards/Accolades: 2012 Diamond Jubilee Medal recipient; appointed to the federal government’s Task Force on Financial Literacy (2009 - 2011)

conduct,” Pollock says. “This lack of oversight leaves consumers exposed to possible fraud or bad advice from unqualified advisors.”


Though an advocate for regulation, ironically, Pollock believes it is one of the industry’s greatest burdens and that there is need for a more streamlined approach. Through his lens, this would be a self-governing body – which he says is the goal of Bill 157 in Ontario. “Currently financial advisors are being strangled by too much regulation. They are subject to over 50 federal and provincial statutes and regulatory bodies. This confusing, complex and inefficient system exists because regulations have been developed in a patchwork fashion. The terrible result of over-regulation is that professional financial advice is being priced out of the reach of those who need it most – Main Street Canadians.”

Working with Ontario to create Bill 157, Financial Advisors Act, 2014 – proposed legislation to regulate financial planners which has passed a second reading and is now before committee for consideration. Launched Advocis initiative Raise the Professional Bar for financial advisors across Canada requiring all advisors and planners to: meet initial and ongoing proficiency standards and continuing education requirements; adhere to a code of professional and ethical conduct; and maintain appropriate levels of errors and omissions insurance. “We recognized that consumers are at considerable risk when anyone can hang out a shingle and call himself a financial advisor without having to meet consistent standards of proficiency and ethical


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STEPHEN LINGARD Managing Director and Portfolio Manager, FT Solutions Franklin Templeton Investments Years in the business: 20

WHY HOT? Under Lingard, FT Solution’s $2.3-billion Quotential Diversified Income returned nearly 6 per cent, after all fees, compared to a loss of more than 1 per cent for the broader Canadian bond market in 2013. After 20 years in the business, Lingard still thrives on the challenge and responsibility of helping investors realize their savings goals. And, he has no plan to pack it in any time soon. “The market can be extremely humbling at times but every day is different, which is why it’s such a great career. I will never stop learning from my mis-

takes and I hope to keep refining my skill as a money manager for decades to come.”

WHAT’S NEXT? For FT Solutions, managing risk amid the potential for higher market volatility will be the main focus this year. Industry-wise, communication will be paramount as regulation changes take effect and investor confusion hits a high, says Lingard. A shift away from the product to financial solutions would better serve client interests, he believes. “Our clients don’t always need more products, which we seem as an industry to want to sell them. What they need are financial solutions that give them access to professional money management for their unique set of investment objectives.”

MICHAEL WICKWARE Principal, Wickware (creative marketing, Toronto and L.A.) Years in business: 11

VICTOR DODIG CIBC Senior Executive Vice President CIBC and Group Head, Wealth Management


CIBC began 2014 by announcing its acquisition of a U.S.-based private wealth management firm for a cool US$210 million. Dodig was at the helm. The acquisition was part of CIBC’s strategy to grow its wealth management business in North America and increase its takings to 15 per cent of the bank’s overall earnings. Dodig is tasked with making that happen. That latest acquisition “provides (the bank) with an attractive entry into the U.S. private wealth market,” he says. Analysts suggest there’s more like it in his future. As CIBC’s senior executive vice-president and group head, Wealth Management, Dodig is no stranger to foreign markets. Prior to joining CIBC in 2005, he spent five years as managing director in Canada, the U.S. and U.K. for Merrill Lynch, and then as managing director and CEO for UBS Global Asset Management.

WP asked high-flying advisors who they turn to for the marketing lift to soar even higher and then swoop in to capture more retail and accredited investor clients. The answer, in more cases than not, was “Michael Wickware.” Spearheading marketing campaigns that have helped industry professionals win awards from the Insurance and Financial Communicator’s Association and Morningstar, the marketing guru says there is no business like the money business. “I started out with a gang of old-school stockbrokers in the early 1990s and I have to admit I loved the Wild West feeling of it.” It’s no surprise Wickware sees thought leadership as increasingly essential to building an advisor brand.


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KIM PARLEE TD Wealth Management Vice President


WOLFGANG KLEIN Portfolio Manager/Vice President Canaccord Genuity Wealth Management, Toronto, Ont. Years in the business: 13

WHY HOT? Featured on WP Top 50 Advisors list 2014, Klein is his — and the industry’s — very own PR machine as a financial commentator on CBC, RobTV and CP24. That’s on top of managing more than $100M last year while generating returns of 32 per cent, 23 per cent and 16 per cent respectively for Growth, Balanced and Conservative Model portfolios, gross of fees.

Seasoned broadcast journalist Kim Parlee, turned corporate executive, is renowned in the financial sector for her ability to talk shop. She currently hosts one of the country’s top finance shows Money Talks, and spent 10 years with the Business News Network (BNN) as a news anchor, host, reporter and markets editor. Former BNN colleague Mark McQueen commended Parlee in 2012 for her ability to ask tough questions, perform under pressure and her “innate business knowledge.” That hasn’t changed, despite Parlee taking a different direction, assuming the role of vice-president at TD Wealth Management. She’s helping shape consumer perceptions of the industry as a regular commentator in the media, a blogger and, through a Twitter following, an adroit analyst of an increasingly complex market. “I have a passion for helping people understand money, the markets, and what is happening in the world,” she says.

AWARDS/ACCOLADES: Chairman’s Club Member Considering himself the “product” that clients buy into, Klein is passionate about money management and its ability to help people better their lives. He believes the industry and client are moving towards a directionary model whereby investors deal directly with a money manager, rather than a third-party product. “I love what I do, I am good at it and I am absolutely privileged to be managing my clients’ hard earned money – a tall order taken very seriously,” he says.

INDUSTRY FORECAST: “2014 will probably be a year of continued upward trajectory in the North American and developed markets. Interest rates will remain very accommodative well into 2015/2016. Earnings are rising, employment in improving and money continues to flow into the American equity market. Don’t fight the Fed, the trend is your friend and you don’t get rich betting against America. China continues to slow down, Europe continues to repair itself and perhaps the TSX outperforms the S&P. Investors should overweight equities and underweight cash and bonds.” 26 | MAY 2014

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JAMES ROSS Assante Wealth Management Senior Vice President, Wealth and Estate Planning

WHY HOT? The Assante Wealth Management name continues on its meteoric rise under James Ross, a man with more than a decade of experience in senior leadership roles in wealth and management firms. His current role as senior vice-president, Wealth and Estate Planning positions him to oversee the delivery of successful wealth planning and advice. In addition, Ross is president of Stonegate Private Counsel, which is a partnership of professionals who provide a unique wealth advisory experience for some of the country’s wealthiest individuals and families.

PETER FIGURA Director, National Sales Centurion REIT (Toronto, Ont.) Years in business: 19 years in the securities business

WHY HOT? REITs as a craze are no longer in their ascendancy, but top performer Figura continues to elevate that investment as an increasingly key alternative to conventional securities — one more and more immune to real estate market fears. 2013 marked Centurion REIT’s best year to date, breaking ground with IIROC and EMD dealerships as distribution channels. What’s next? Figura believes with industry growth and regulatory changes on the horizon, private equity investments will hold a more prominent place in the industry and become one of the main choices for Canadian investors. Consolidation is inevitable, and education and understanding key, he says. “Investors will be looking more and more for stable investments.”

GREGG FILMON President Value Partners Investments, Winnipeg, Man. Years in business: 13

WHY HOT? Clients surpassed more than a quarter billion in assets in 2013, positive net sales for 100 consecutive months, 98 per cent of client accounts worth more than when they began investing with the firm. Set new standards on long-term planning for Canadian investment firms and lobbying for a sea-change in the nomenclature of client portfolio success and failure. Describing his role in the industry, “the most noble calling imaginable,” there’s no doubt Filmon loves his job. For 2014, his goals include attracting $30 million from existing clients and $100-$200 million from new clients, as well as building a business plan for the next five years.

WHAT’S NEXT? Filmon wouldn’t even try to change the industry. Instead, he says, he can only change his behaviour and try to influence those around him. “We will improve our investment decision making. We will improve the way we engage great advisors. We will communicate more effectively with our clients, our advisors and the dealerships that support us.” He believes the industry’s greatest faux-pas is not delivering the wealth that clients need, deserve and desire. “There is one challenge that dwarfs all others. The industry has not done what it is paid to do: Invest wisely such that its client’s wealth grows at a rate that allows clients to achieve their goals and at a rate that far exceeds the fee being charged.” To do so, Filmon says the financial impact of investment recommendations need to be measured in dollar terms, not fund returns, and the results must be transparent. “For our client’s sake, and ultimately our own sake, this needs to change. We have to achieve better client results, and we can, but it will take a huge amount of courage … That is the only way we can learn and get better.” MAY 2014 | 27  

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THOMAS R. HULL Portfolio Manager and Investment Advisor Dundee Goodman Private Wealth (DPGW) Toronto, Ont.

WHY HOT? Recognized as one of DGPW’s top portfolio managers and investment advisors for consistent growth — that’s even after the firm’s aggressive 2014 expansion. The organization now has a portfolio value of $6 billion. Ironically, Hull came to the industry having abandoned earlier plans to study law. “Right before university, I had the opportunity to sit down with a partner at a large law firm and have him tell me about his job; that was enough for me ... I was out.” After some puttering around in the stock market – and some initial success – Hull was sold. “I turned my small initial investment into a Harley Davidson, while I was still in school, and have been hooked since. It has worked well with my personality as well because I crave a fast pace work environment, and really enjoy working with smart motivated people.”

WHAT NEXT? After adding on insurance to his practice in 2013, Hull plans to become registered to do business in the U.S. “When I set goals for myself, I always try to keep them ambitious, realistic, and personal, in addition to being smart.” In favour of transparency, Hull sees the full disclosure of fees and performance as the industry’s greatest challenge to date. He also sees the lower-cost ETFs and higher-yield REITs, debentures and high-dividend paying stocks – as well as flat-fee and discretionary accounts – as the investor’s growing preference. Change should come in the form of enhanced educational requirements and higher proficiency from “the bottom up,” Hull believes. “They need to show that there are some great people in the industry as well, those who take pride in continually improving their knowledge and who have consistently maintained high standards of integrity and education throughout their careers.”

D.R. (NICK) FOURNIER President and CEO Raintree Financial Solutions (Edmonton, Alta.) Years in the business: More than 18

WHY HOT? Leads one of Canada’s largest exempt market dealers, which reached its 1,000 days in business in 2013; elected to NEMA (National Exempt Market Association) board.

WHAT NEXT? Fournier wants to change the way Canadians think about investing their money; hence his departure from banking

after more than 15 years and his foray into into the exempt market. Now leading a top Canadian exempt market dealer, Fournier hopes to grow assets under administration to $500 million and expand his presence in Ontario. As the exempt market evolves, misperception and resistance persist, Fournier says. In response to this, he predicts – change. “We are continuously meeting opportunities and challenges – head on. We know there are substantial regulatory changes afoot, to which we’ll need to adjust. We also see an ever -changing landscape in how capital is being aggregated by dealers - across the country.” 

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GEOFFREY RITCHIE Executive Director, Private Capital Markets Association of Canada (PCMA) - (Toronto, Ont.) [formerly Exempt Market Dealers Association of Canada (EMDA)] Chief Compliance Officer and Vice-President, BMO Harris Private Banking (BMO Legal Corporate and Compliance Group) Years in the business: More than 10 years as a lawyer in Canada and London, U.K. Areas of expertise: Securities regulation, structured finance and banking, public and private capital raising, securities and private banking compliance and anti-money-laundering

DAVID SUNG Nicola Wealth Management President

WHY HOT? Credited with reshaping the niche firm, Sung uses advice from his father to guide his growth. “ ‘There’s only one way to do something,’ ” he says. Judging from his rapid ascent in the financial services industry, rest assured, whatever Sung is doing, it’s that same right way. Just seven years out of university, the Vancouver native started his own company, and four years later merged his business with Nicola Wealth Management. The growing mid-size wealth management company specializes in providing financial services to business owners and entrepreneurs. Sung believes this narrowed focus gives his company a competitive edge because all of the company’s “resources are directed towards understanding the specifics of that sector.” Sung is a familiar face on the Vancouver scene, helping shape consumer perceptions about a world once removed. He sits on the board of directors for both the Museum of Vancouver and the Arbutus Club, is a frequent guest speaker at business functions and has contributed to various media publications.


Led pivotal rebranding of the EMDA to the PCMA, announced March 2014 and set to elevate the profile of private capital markets to yield-hungry consumers and cautious regulators.

AWARDS/ACCOLADES: Appointed to Ontario Securities Commission, Registrant Advisory Committee (2013-2015); Course Designer, Exclusive & Revised IFSE Exempt Market Products Course For Ritchie, leading the rebrand of his organization is the ultimate highlight in his professional life. PCMA members and supporters, including dealers, issuers and other industry professionals, are now better served and represented in the private capital market, he says. The organization, according to Ritchie, will lead the way uniting the many elements of the exempt market into a stronger and more inclusive private capital markets industry. “The PCMA is focused on strengthening and developing the private capital markets to ensure robust capital raising opportunities across Canada and ensure Canadian investors have access to diverse private market investment options,” he says. “Our goal for 2014 is to continue to be a strong and effective national voice for the private capital markets industry in a period of unprecedented regulatory change.”

WHAT’S NEXT? Ritchie points to industry shifts including a volatile public market, the role of the higher-fee mutual fund versus the low-cost ETF, the stress on smaller boutique independents to stay afloat, and the burden of increased regulation as some of the industry’s key challenges. But, with the changing landscape he sees a new way to work together. “We have a unique opportunity to work together on new business models that will benefit investors, the economy and the companies large and small that rely on the capital markets to fuel their growth and development,” he says. “With private securities and alternative asset classes coming into the mainstream, private securities dealers and portfolio managers are seeing a surge of interest in the private capital market that is now raising well in excess of $100 billion a year across Canada.” MAY 2014 | 29  

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ROB TETRAULT Portfolio Manager Head of Rob Tetrault Wealth Management Group National Bank Financial (Winnipeg, Man.) Years in the business: 5

WHY HOT? The leading industry champion of retiring deferred sales charge funds (DSCs), Tetrault was handed the NBF Best Asset Growth Regional Award in 2013.

AWARDS/ACCOLADES: NBF Rookie of the Year Regional Award 2011 and 2012 For this former lawyer turned portfolio manager, 2013 proved to be a year of goals exceeded. After a weekend of “blue-sky” thinking, Tetrault and his team set three goals: generate $15 million in new assets, reduce inefficiencies and host a major event. “We knocked all our goals out of the park. We were able to grow the book significantly with new assets, our processes improved dramatically, and we hosted a client event with 225 people and guest speaker Kevin O’Leary.” On a personal note, Tetrault also became a licensed portfolio manager.

WHAT’S NEXT? This year, it’s 24 million in new assets, for the team, and teaching more university courses, for Tetrault. Industry-wise, Tetrault would like to see the abolishment of deferred sales charge funds (DSC). “There’s an inherent conflict that exists between managing money with the client’s interest in mind and selling a client a deferred-salescharge mutual fund.” Tetrault sees 2014 as the year of transition with the implementation of CRM2 and the enforcement of disclosure requirements. “Clients are in for a big shock in 2016 and 2017 when the full-fee disclosure is mandated.”

DENNIS MITCHELL Executive Vice-President & CIO Sentry Investments (Toronto, Ont.) Years in the business: 9 years

WHY HOT? Promoted to Executive Vice-President and lead manager for Sentry’s global equities business as it made a push to add $1 billion in AUM this year, Mitchell is also a three-time winner of the Brendan Wood International Canadian TopGun.

WHAT’S NEXT? Taking his role to the next level, Mitchell aims to bring Sentry Investments to $16B in assets under management (AUM) and grow the global platform by $1B in AUM in 2014. Mitchell sees the greatest challenge of the industry falling on the shoulders of the retail investor, who lacks the knowledge and comprehension to weed through all the literature and seek quality advice. “There is a lot of information out there, but few retail investors have the knowledge and tools to turn it into proper data for disciplined decision-making. Just because there are medical books out there doesn’t mean everyone should be diagnosing their family members’ ailments. Similarly, just because there are books out there that teach you how to invest doesn’t mean that all individual investors should manage their own money.” Mitchell also identifies with the survival struggle for independents, particularly when it comes to distribution and the pressure from banks. “Those remaining independent investment firms must compete increasingly on performance if they hope to continue to garner assets from investors.”

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LÉONY DEGRAAF HASTINGS Independent Financial Advisor, Retirement & Estate Specialist deGraaf Financial Strategies [Burlington, Ont.]

WHY HOT? As No. 2 on this year’s WP Top 50 Advisors in Canada 2014, she has led the public relations charge to showcase independent advisors to Canadian consumers. Those efforts landed her on the cover of FORUM magazine last May, with deGraaf Hastings voted one of Burlington’s Best Financial Planners six years running; she’s also recipient of the Hugh Murray MVP Award recipient. This year, deGraaf Hastings is turning her attention to consumer education with a laser focus on cash-flow planning and debt reduction – another area where independents shine. “Since 59 per cent of Canadians are now retiring in debt … I believe there are better ways for people of all income levels to pro-actively manage their debt and cash flow more efficiently.”

WHAT NEXT? deGraaf believes the uneven playing field that exists in the wealth management industry is hindering the consumer from receiving trustworthy, qualified and holistic advice. “Often consumers think they have a financial advisor when in reality, all they have is a revolving bank employee selling their own mutual funds or creditor insurance, but they don’t know any better so they maintain the status quo. Without deep corporate advertising pockets, it is challenging to stand

out in this industry and remain independent in order to offer clients as many choices as possible.” She sees professionalism in the field of financial planning leveling this out. “I foresee a continued push towards recognizing financial planning as a profession and setting a benchmark for qualifications and a planning process which consumers can rely on.”

WHY WEALTH MANAGEMENT? deGraaf Hastings’s entry into this field was a natural progression. “Aside from the obvious reason of being exposed to this business my whole life through my Dad, I’ve always wanted to help and have a positive, meaningful impact on people’s lives. Family, health and money are the most important things to people and in my career, as a CFP, I can help to protect all three – it’s very rewarding.

SUE LEMON CEO, CFA Society Toronto (Serving 8,000 GTA financial professionals) Years in the business: 28


Claimed coveted CEO role with CFA Society Toronto

INDUSTRY AWARDS/ACCOLADES: Leads global fixed income team at CIBC to a top ranking in Greenwich sales surveys; past president of CFA Society Toronto in 1992-1993. For Lemon, developing and strengthening relationships with employers, regulators and policy makers on behalf of her members and the financial community is the top priority as CEO for the country’s biggest CFA Society.

INDUSTRY TO-DO LIST: Lemon believes the industry needs to work hard to win back the trust and respect of individual investors and focus on those tough conversations key to the future of financial planning, particularly for aging Canadians. “Public and private workplace pension plans will no longer be sufficient,” she says. “People will have to be prepared to save more and spend less sooner so that they can be ready for unforeseen expenses.”

INDUSTRY/PRODUCT FORECAST: “Based on current trends, I believe the threat of rising rates will become more apparent later in the year so asset prices will react to the magnitude expected … Mutual funds and ETF’s that are well priced in terms of fees with established managers and products that help to match cash flows will continue to attract individual investors.” MAY 2014 | 31  

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GORD GRAVES Bank of Montreal (BMO) Vice President - Client Strategy & Head, Private Wealth Group

WHY HOT? In the fiercely competitive finance industry, awards and accolades speak volumes. BMO has won a string of them recently, including Best Private Bank in Canada honours again last year, following on the heels of claiming the same honour in 2012 and 2011 for its BMO Private Harris Banking. Graves is leading that excellence, now with the bank for 10 years out of his 30 years in Canada’s financial services industry. His experience encompasses leading banking, investment and estate and trust businesses. Graves lends his expertise as a board member for BMO Harris Investment Management and as a member of the Investment Advisory Council.

(Photo Credit: Caroline Phillips, The Ottawa Citizen)

DAVID LANE Edward Jones Managing Principal Canada

ALEX BESHARAT ScotiaMcLeod Managing Director and Head


Besharat broke headlines at the start of the year with his appointment as ScotiaMcLeod’s Managing Director and Head. His predecessor Hamish Angus was retiring after nearly three decades with the firm, leaving Besharat with big shoes to fill. According to one media report, the change was part of a “major shakeup of senior roles at Scotiabank.” But the appointment appears to be a seamless progression for Besharat, who has engendered loyalty among the firm’s professionals since joining their ranks as a new graduate, 28 years ago. Besharat has spent the last 10 years helping devise the firm’s direction through its leadership group, and the new role puts him in a place where he can implement those strategies. Besharat’s most recent post was as ScotiaMcLeod’s regional West Coast manager and director. The division is responsible for one-third of the firm’s national business. The new post means the Vancouverite will be spending more time operating from the firm’s Toronto base.

Financial services firm Edward Jones continued its winning streak in 2013 as one of Canada’s top 10 employers for the 12th year running. And, with over 620 branches across the country, the firm continues to put its money where its mouth is in terms of training and nurturing young talent at a time when the business sees fewer and few join its ranks. Driving the firm’s Canadian operations is American David Lane. He has extensive experience across the border, including working at Edward Jones headquarters in St. Louis and leading the organization’s growth in key U.S. and Canadian metropolitan markets. He relocated to Canada in 2010, and in 2012 assumed the leadership position as Managing Principal Canada. From the onset, David Lane has proven a force to be reckoned with. Lane joined Edward Jones as a college intern in 1986 and by 1992, was one of the firm’s top five financial advisors – an honour he consecutively held for 13 years.


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ERIC SPROTT Chairman and CIO of Sprott Inc., Senior Portfolio Manager, Sprott Asset Management Years in the Business: More than 40

WHY HOT? Appointed Member of the Order of Canada 2013 for contributions as a philanthropist (health care, education and international development), Sprott is also recipient of the T. Patrick Boyle Award from the Fraser Institute 2013. But the continuing dominance of the firm he started in 2001 keeps him firmly planted in the investment world he helped build.

ACCOLADES: Canadian Investment Awards’ Opportunistic Strategy Hedge Fund Award (Sprott Hedge Fund L.P., 2004); MarHedge’s Best Canada Based Annual Performance Award (Sprott Offshore Fund Ltd., 2006); HFM Week’s Best Long/Short Hedge Fund Globally (Sprott Offshore Fund Ltd., 2008); and Winner of Absolute Return’s Hedge Fund of the Year (Sprott Capital LP, 2010).

AWARDS: Investor Digest’s Canada’s Best Investors (2004); Ernst & Young’s Entrepreneur of the Year (2006); Terrapinn’s Most Influential Hedge Fund Manager (2012); the 2012 Murray Pezim Award for Perseverance and Success in Financing Mineral Exploration; Queen Elizabeth II Diamond Jubilee Medal by the Governor General (2012); Elected Fellow of the Chartered Professional Accountants of Ontario (FCA, FCPA). Since Mr. Sprott founded Sprott Securities – one of Canada’s largest independently owned securities firms - in 1981 (Sprott Asset Management Inc. was founded in 2001), he’s been making waves in the industry. Renowned for his accurate market predictions, and passion and vigour for precious metals, Mr. Sprott is a regular industry commentator. His monthly newsletter, ‘Markets At A Glance’ on investment strategy presents his predictions about the financial market’s state in North America, along with macroeconomic analysis. As a senior portfolio manager, Mr. Sprott has a solid track record managing several Sprott funds including Sprott Hedge Fund L.P., Sprott Bull/Bear RSP Fund, Sprott Offshore Funds, Sprott Canadian Equity Fund, Sprott Silver Equities Class and

Sprott Managed Accounts. His philanthropic efforts and community contributions culminate through the Sprott Foundation – established in 1988 – addressing human need, hunger and homelessness and providing endowments to the Ottawa Hospital Foundation, Daily Bread Food Bank, United Way, among others. During the 2010 Vancouver Olympics, he donated $1.4 million to CanFund in support of Canadian athletes for every gold medal won. In June 2012, the Sprott Foundation donated $25 million in support of the Department of Surgery at the University Health Network. Carleton University, which has also received endowments, renamed its business school – Sprott School of Business – in his honour. MAY 2014 | 33  

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ISABELLE HUDON President Sun Life Financial, Quebec Years in business: More than 20

WHY HOT? Recognized as one of Canada’s Most Powerful Women: Top 100 in 2013, Hudon is leading her industry giant to market-share gains in a province increasingly considered mature. Her sphere of influence has long spilled over provincial boundaries, with Hudon having claimed the same honour in 2012 and 2006.

AWARDS/ACCOLADES: Recognized as one of Canada’s Top 40 under 40 in 2005; Received the Business Woman of the Year by Consumer Choice Award; Francophone Business Woman of the Year by the Réseau des femmes d’affaires francophones du Canada (RFAFC); and recipient of the Queen Elizabeth II Diamond Jubilee Medal for raising awareness of the importance of culture in Canada. When Sun Life Financial Québec took on Hudon as president in 2010, there was no doubt the company was adding a corporate star to its team. Already a leader on the province’s business scene, Hudon brought with her a solid reputation of outstanding leadership skills and corporate experience. Known for her boundless energy, entrepreneurial spirit, and commitment to community building, forging diverse partnerships comes naturally to Hudon. Prior to joining Sun Life, Hudon served as president and CEO of the Board of Trade of Metropolitan Montreal from 2004 to 2008, and president of Marketel up until 2010. She also sits on boards for Hydro-Québec, Aéroports de Montréal, Holt Renfrew Canada, Canada Council for the Arts and Turquoise Hill Resources, and was honorary chair of the 2013 Grands Ballets Canadiens de Montréal Gala. She chairs the board of directors for the Université du Québec à Montréal, the Société du Havre de Montréal and the Collectif de festivals montréalais.

TUULA JALASJAA Managing Director and Head HollisWealth (Toronto, Ont.) Years in the business: 17

WHY HOT? Led the complete overhaul – including the renaming and rebranding – of DundeeWealth to HollisWealth in just four months (Nov. 1, 2013 to Feb. 1, 2014). Heading HollisWealth – and leading more than 900 advisors spread across the country – was a natural progression for Jalasjaa. After four years as president of Scotia Asset Management L.P. – Canada’s fourth largest investment firm with close to $13 billion in assets under management – and Scotia Asset Management U.S., the offer came at just the right time. “I really didn’t have to think too hard about it. When I came into that business, I saw where it would take me and I set goals for myself and by four years I really felt I’d accomplished a lot of that,” Jalasjaa says. “(I was) looking to take on something new where I would learn some new things, a bigger challenge. I’m always looking for how I can develop and grow as a leader.” As part of the intense four-month rebranding overhaul, Jalasjaa travelled across the country meeting face-to-face with more than 600 advisors. Candid conversations she had addressed what advisors were looking for in a brand, their struggles and opportunities, the rationale behind the name HollisWealth (derived from Scotiabank’s historic head office on Hollis Street in Halifax, N.S.) and Jalasjaa’s strategic direction moving forward as a leader.

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“Most importantly, it was my ability to listen to advisors. To really hear what they have to say about their struggles, their challenges, their opportunities. The more you can hear directly from them, that allows me to go back and look at our strategy and really shape our strategic direction going forward.” Having recently celebrated her one-year anniversary in this leading role, Jalasjaa isn’t short of plans moving forward. Her primary goal – cementing HollisWealth as Canada’s top independent dealer on the street – centres around building new and deepening existing partnerships; attracting the finest, growth-orientated financial advisors in the industry – and arming them with the most in-demand and effective tools and resources; and complementing advisor offerings with a full suite of client products and services. Jalasjaa sees an industry shift in motion with increased regulation, the changing advisor/client dynamic and a maturing mutual fund industry. “For advisors, these regulatory changes will perhaps be felt more acutely, as a substantial overhaul to an ageing practice may be necessary.” An aging advisor, and client, demographic will require a two-fold approach, she indicates, with advisors creating sold succession plans; passing their books into the hands of younger, high-calibre financial professionals, who understand how to effectively manage the wealth transfer to ageing clients and help new, younger clients grow their savings. “Clients are becoming more and more industry savvy,” Jalasjaa says. “They know a comprehensive financial plan will help secure their financial future by covering the entire wealth cycle – from growth to transfer – but they often don’t have the expertise to put all the pieces together themselves.” According to Jalasjaa, with the move towards a fee-based approach (HollisWealth alone experienced a growth rate in fee-based accounts of more than 60 per cent in 2013 and expects similar numbers in 2014), the demand is rising for lower-fee products and holistic financial planning. Advisors have no choice but to rethink their market position.

DEBRA HEWSON President and CEO Odlum Brown (B.C.) Years in the business: More than 30

WHY HOT? Odlum Brown is celebrating 15 consecutive years as one of Canada’s Best Managed Companies, an award recognizing companies that excel in all aspects of business management and so define corporate success. That honour comes by way of Hewson’s leadership, as does the firm’s investment portfolio, acknowledged for “quietly outperforming the market for more than a decade.”

AWARDS/ACCOLADES: 2012 Hall of Fame Inductee & one of Canada’s Most Powerful Women by the Women’s Executive Network in 2009; Nominated for the YWCA Vancouver Woman of Distinction Awards in 2005 and 2010; Corporate Executives Award 2010; Finalist for the Association of Women in Finance PEAK Awards in 2003 and 2009. Leading Odlum Brown since 2007, Hewson oversees the operations, compliance, trading and research departments, as well as a retail team of advisors and portfolio managers. She joined Odlum in 1991, and prior to taking on the leadership role, served as COO for seven years. Hewson’s vision and leadership have inspired her peers and colleagues, and she is often sought after for her prudent advice and judicious manner – skills honed by her work with the Pacific District Council of the Investment Dealers Association and as a director of the Mutual Fund Dealers Association, among other key organizations. But like all leaders, she also continues to actively learn. “I had this image of what a woman in business was supposed to be like — dressing a certain way and being really hard-nosed and really forceful. And, so you try and emulate that style and then you realize – for me it was having children, which is a big equalizer when you’re going to work on an hour’s sleep — that you just need to get there,” Hewson said in an earlier interview. “That’s your biggest chore for the day.”

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JACQUI ALLARD Senior Vice President, Head of Operations and CIO, Investment Division Manulife Financial (Toronto, Ont.)

WHY HOT? Recognized as one of Canada’s Most Powerful Women: Top 100 in 2013, Allard is better known for transforming her division’s operations, reporting and analytics systems to outperform industry peers. Joining Manulife in 2008, Allard is responsible for the global operations and information systems functions for Manulife’s Investment Division, which includes Manulife Asset Management, Private Asset Management and the General Fund investment businesses of Manulife. In the words of Manulife’s Senior Executive Vice President and CIO Warren Thomson, “Jacqui’s exceptional intelligence, her strong leadership skills and unwavering commitment to Manulife have been invaluable to the firm.” Prior to joining Manulife, Allard was Senior Vice President and Head of State Street’s Corporation’s Global Technology Services (Americas). In addition to serving as chair of the Advisory Council of “Serve!” and as treasurer and board member of the Portfolio Management Association of Canada (PMAC), she is also a member of the Advisory Committee of Women in Capital Markets - a committee dedicated to the advancement of women in the capital markets field.

SUE REIBEL Senior Vice President, Business Development, Group Benefits and Retirement Solutions Manulife Financial Years in business: More than 20

WHY HOT? Reibel continues to win recognition for taking Manulife’s already impressive group retirement business to the number one sales position in Canada, a position it has held for three years under her leadership. She has also been honoured as one of Canada’s Most Powerful Women: Top 100 in 2013 (Corporate Executive category) Since 2008, Reibel has led Manulife’s group retirement savings business in Canada, guiding teams responsible for the benefits and retirement needs of employers and their employees across the country. According to Senior Executive Vice President and COO Paul Rooney, “Her contributions to the industry are not confined to Manulife. Sue helped revolutionize retirement savings policy in Canada and was a thought leader in the area of Pooled Registered Pension Plans (PRPPs), an issue of great importance for Canadians,” Rooney said. Joining Manulife in 1994 in the individual insurance area, Reibel moved up the corporate ladder, taking on several senior leadership roles along the way. She brings to the table an extensive background in strategic planning and financial management, as a speaker and panelist at industry events and forums, a contributor to several trade publications, and an active participant in retirement income reform initiatives via various industry associations. Reibel sits on the Board of Governor and Investment Oversight Committee for Wilfrid Laurier University and chairs the University’s Pension Committee.

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The intelligent choice for your portfolio PowerShares Canada offers you a broad suite of ETFs and mutual funds that delivers access to specialized assets classes, intelligent indices and innovative strategies. Join the intelligent investing revolution. Visit

Commissions, management fees and expenses may all be associated with investments in mutual funds and exchange-traded funds (ETFs). Trailing commissions may be associated with investments in mutual funds. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated. There are risks involved with investing in ETFs and mutual funds. Please read the prospectus for a complete description of risks. Copies are available from Invesco Canada Ltd. at Ordinary brokerage commissions apply to purchases and sales of ETF units. PowerShares Canada is a registered business name of Invesco Canada Ltd. This piece was produced by Invesco Canada Ltd. Invesco速 and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence. PowerShares速, Leading the Intelligent ETF Revolution速 and all associated trademarks are trademarks of Invesco PowerShares Capital Management, LLC (Invesco PowerShares), used under licence. 息 Invesco Canada Ltd., 2014

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Canadians are calling on their advisors to ferret out ways to capitalize on a rising greenback. But increasingly the success of any currency play in U.S. equities – particularly ETFs –depends on hedged or unhedged positioning. WP’s Sophie Nicholls uncovers the traps advisors are steering clear of

It may sound unpatriotic, but a falling loonie can reap higher returns. For your clients holding U.S. equities, that is. It’s something, of course, you already know and thought about as Canada saw the dollar drop below $US0.90– compared to just over a year ago when the currencies sat virtually at par. Those clients holding U.S. stocks have won substantial gains against the loonie– upwards of 10 per cent in 2013. That trend line is expected to continue. The Royal Bank announced in March that it expects the Canadian dollar to fall to 87 cents U.S. by the end of this year, and down to 85 cents by the end of 2015. The crystal balls of many economists are forecasting the same.

OPPORTUNITY SEIZED Still, the resulting opportunities haven’t been lost on investors, with a growing number now turning to their advisors with specific instructions: Make me money off that currency swing. Wealth professionals haven’t been slow to answer, although they are weighing the options and educating clients about the differences between hedged and unhedged positioning, especially given their ETF holdings. “There are always options for investing in U.S. and foreign stock,” says Barry Gordon, CEO and president of First Asset, one of Canada’s leading ETF providers. “There are a range of choices available to the investor. It’s getting more and more sophisticated, for sure.” A prime area where foreign currency exposure (or foreign exchange) is on the rise is in that same ETF segment as options expand and both U.S. and Canadianlisted ETFs grow their global investments. But the risks for these securities, as advisors point out, lie in their exposure to changes in the value of the loonie against those of the greenback. There’s also the problem of the penalties incurred from currency-conversion costs. According to Gordon, there are two roads advisors are taking their clients down when investing in foreign-exchange ETFs – hedged and unhedged. The former – no surprise – is the most commonly used of the two, effectively making currency irrelevant given the investment is, at the end of the day, in Canadian dollars. “If you think about it, the logic behind that is, you are a Canadian investor, you

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earn Canadian dollars, you spend money in Canadian dollars, you want exposure to foreign equities, why would you add the currency risk to that equation?” Gordon asks. “There is a strong philosophy and history behind that.” But the alternative is also finding its way into advisor-client discussions and, indeed, action plans. With unhedged investments, if your client, for example, invests in a Canadian ETF, which trades in Canadian dollars but holds stocks based in U.S. currency, they are subject to the fluctuation on the price of U.S. stock, but also affected by the value of the U.S. dollar versus the Canadian dollar. But if the stock value and currency both go up, bingo! “If you are bullish on the U.S. market, then there is reason you should be bullish on the U.S. dollar, so you can benefit both ways,” says Gordon. “Not only do you get the appreciation of the U.S. stocks, but you get the U.S. currency appreciation relative to the Canadian dollar. There’s some logic there as well.” But advisors are actively pointing out the flip side for investors gung ho on both the greenback and the idea of a quick U.S. recovery; namely, if the U.S. stock goes up, but the currency dips, currency-related losses are inevitable.

For example: “A conservative investor that owns a U.S. bond fund with an expected total return of 5 per cent might have that entire return washed away by a decline in the U.S. dollar against the Canadian dollar” – Michael Cooke, head of Distribution, PowerShares Canada at Invesco LEAD BY EXAMPLE That’s why advisors are erring on the side of caution with clients, ensuring they understand the impact of currency exposure and are weighing the potential losses against the more immediate profits before leading them down the unhedged path. Rohit Mehta, First Asset’s senior vice president, applauds that kind of active guidance on the part of advisors, suggesting it’s absolutely key that they clients through the benefits of owning stock in companies in different markets, relative to the currency risk. “If they (advisors) say, we are investing in these U.S. companies because we like the U.S. market recovery and we want to participate in it, full stop,


The Canadian dollar has trended up and down in relation to the greenback, although the expected trajectory in the short-term is southward

then they should buy the hedged version and not care where the currency exchange rate in the U.S. goes,” He offers. Furthermore, when pursuing an unhedged approach, Mehta says, good advisors are investigating the foreign currency at hand, before making any recommendations to clients. “Anytime you buying a Canadian ETF that is investing outside of Canada and you’re buying it on an unhedged basis, you must have a view on the other currencies that that ETF is being exposed to,” he says. “If you don’t have a view on those currencies, don’t take on that risk.”

THE END RESULT Whether pursuing a hedged or unhedged approach to foreign exchange investing, the result, if properly managed, remains the same – a diversified portfolio for the client. “Canadian investors that own investment vehicles such as mutual funds or ETFs with unhedged exposure to other currencies such as the U.S. dollar assume foreign currency risk in their portfolios,” says Cooke. “By viewing foreign exchange as a distinct asset class and by prudently allocating capital as with any other asset class, foreign exchange can improve portfolio diversification.” But, as Cooke and others points out, advisors already diversify client portfolios by blending different asset classes such as stocks, bonds and commodities based on it’s the risk factors peculiar to any specific investment. Inevitably, even in the wild world of currency plays, the same holds true. MAY 2014 | 39  

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Exchange-traded funds continue their ascent in the Canadian marketplace –increasingly perceived as a transparent, low-cost, highliquidity option for investors. Fitting into a variety of portfolios, these funds have appeal for the cautious buy-and-hold investor to those with a more aggressive bent. But they are continuing to evolve. NEW KID ON THE BLOCK There is a fairly new type of ETF on the street – one that looks beyond systematic risk (beta) to other factors that tend to impact relative performance. It is called “smart beta.” All smart beta ETF providers share one belief: market capitalization does not capture all of the relevant information about a company’s value and potential. “Smart beta solutions are a logical extension for the ETF industry,” says Rohit Mehta, senior vicepresident at First Asset Exchange Traded Funds. “By taking a disciplined, rules-based approach, smart beta ETFs have shown that they can effectively and efficiently deliver value-added returns that were once only thought possible via active management.”

DOWN TO DETAIL Smart beta ETFs – also known as “factor-based” ETFs – strive to deliver superior risk-adjusted returns for investors, while addressing concerns that capweighted indices will potentially expose them to overvalued stocks and higher volatility. As a result, the smart beta market segment is growing rapidly. Some of the most well-known index providers in the world, including Morningstar, MSCI, and Russell Investments, are focused on creating sophisticated, smart beta indices to meet the evolving needs of investors. “Smart beta ETFs are an ideal core or complement to any diversified portfolio,” says Mehta. “Using smart beta ETFs as the building blocks in the construction of your clients’ portfolios allows you to build models that truly reflect your short- and long-term market (and geographic) outlook. You can also tilt a portfolio to help emphasize yield, growth or value, and all with a level of transparency that you do not get from

traditional mutual funds.” This transparency makes combining smart beta ETFs more efficient – investors always know exactly what’s in their portfolio, how each holding complements one another, and how they are all being managed. The chart below shows where smart beta ETFs can fit into a client’s overall portfolio.


Market Return

Transparent & CostEffective

Cap-Weighted Indexes

Active Return

Factor-based Indexes

Active Value Add

Active Management

Several of these First Asset ETFs are built using Morningstar® CPMS™—Morningstar’s proprietary equity research platform that integrates fundamental and technical data with analysts’ earnings estimates for over 3,600 Canadian and U.S. stocks. First Asset has created ETFs that aim to replicate Morningstar® Indexes using quantitative models that capture value, momentum, or dividend effects for Canadian investors.

ON THE HORIZON While debate over the term “smart beta” may remain a topic of conversation for some time, the benefits of incorporating smart beta strategies – or factor-based ETFs – into your clients’ investment portfolios are clear. When seeking an indexing strategy that offers the potential for superior risk-adjusted returns, smart beta works.

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This c be eva fund w before for use sponso a more




First Asset introduces four new factor-based ETFs that aim to replicate indexes from MSCI, one of the world’s leading index providers. ■ First Asset MSCI USA Low Risk Weighted ETF (RWU) ■ First Asset MSCI Europe Low Risk Weighted ETF (RWE) ■ First Asset MSCI World Low Risk Weighted ETF (RWW) ■ First Asset MSCI Canada Low Risk Weighted ETF (RWC) The First Asset Low Risk Weighted ETFs aim to deliver superior risk-adjusted returns by capturing a broad equity opportunity set with lower risk attributes than comparable market cap weighted indices. CAPTURE BETTER RISK-ADJUSTED RETURNS. VISIT WWW.FIRSTASSET.COM CONNECT WITH US:

This communication is intended for informational purposes only and is not, and should not be construed as, investment and/or tax advice to any individual. Particular investments and/or trading strategies should be evaluated relative to each individual’s circumstances. Individuals should seek the advice of professionals, as appropriate, regarding any particular investment. There is no assurance that an exchange traded fund will achieve its investment objectives. Commissions, trailing commissions, management fees and expenses all may be associated with investments in exchange traded funds. Please read the prospectus before investing. Exchange traded funds are not guaranteed, their values change frequently and past performance may not be repeated. MSCI is a trademark of MSCI Inc. The MSCI indexes have been licensed MAY 2014 | are 41   not for use for certain purposes by First Asset. MSCI is a trademark of MSCI Inc. The MSCI indexes have been licensed for use for certain purposes by First Asset. The funds or securities referred to herein sponsored, endorsed, or promoted by MSCI, and MSCI bears no liability with respect to any such funds or securities or any index on which such funds or securities are based. The prospectus of the funds contains a more detailed description of the limited relationship MSCI has with First Asset and any related funds. The exchange traded funds are managed by First Asset Investment Management Inc.

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ETFs poised to take over? The fee-only guys may think so, and if they’re right, should transactional advisors be moving to get ahead for the curve? WP finds out

Most clients insist on knowing exactly how much something costs and with the coming of CRM2, they’re poised to soon get that intel — from an itemized breakdown of what their transactional advisor does for them to a greater understanding of the MERs attached to the mutual funds he or she sells. And human nature being what it is, argue some industry analysts, if there is indeed a cheaper, equally viable option available, investors will go for it. In a nutshell, that’s the debate and, quite frankly, the anxiety swirling around the growing strenght of exchange traded funds — ETFs — and the sprouting awareness among even the most retail of retail clients of the cost-effective alternative they present to triedand-true mutal funds.

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Still, for the vast majority of Canadians, when it comes to investment funds and the fees tabbed onto them, there is a lack of understanding around costs even when there’s a 1.5 per cent gap in fees. While all investors have heard mutual funds largely mirror ETFs, many still fear those relatively new offerings to Canada. That’s mostly because of a lack of knowledge. But a growing number of advisors are leading the charge to break through that ignorance and better connect clients with a low-MER alternative. Surprisingly, not all those financial planners are devotees of the fee-based model. Transactional advisors are among that group, trying to get ahead of the curve. Although fee guys are undoubtedly the chief proponents. “Managing their costs of investment is something that every individual investor is coming to learn that

“Transparency is important in volatile markets because you want to know what you own so that you know where you are vulnerable. With mutual funds you don’t know what you own until it’s usually too late” they have to grab this issue and lower their costs and ETFs are the easiest way,” says Mike Yamada, president and CEO of Pur Investing in Toronto. “We have chosen to focus on strictly using ETFs for client portfolios because they are a pre-diversified group of securities, so they are already risk-dampened. An individual can put them together and get an institutional-like portfolio at a much lower cost.” John Tabet, senior financial advisor with Industrial Alliance Securities Inc. in Oakville, Ont. agrees and his firm uses ETFs for exactly that reason.

“Being fee-based advisors, ETFs fit into a fee-based strategy because they allow us to lower cost to the underlying client,” he tells WP. ETFs make up about 30-40 per cent of the firm’s client portfolios. With CRM implementation chugging along, “it will be transformative for the industry,” he says. Transparency is also another benefit of ETFs over mutual funds, argues Yamada. “That’s important in volatile markets because you want to know what you own so that you know where you are vulnerable. With mutual funds you don’t know what you own until it’s usually too late.” He suggests that level of knowledge of a client’s exposure to Canadian bank stocks, for example, would be in short supply were a mortgage crisis to occur, causing the stock’s value to drop. “You would have to guess your exposure,” says Yamada. That kind of analysis has traditionally rubbed “mutual fund” advisors the wrong way, but a surprising number tell WP that they see the market moving in the direction of ETFs. They’re actively tweaking their own models to accommodate those clients looking for a fee system — whether they’re new to the firm or existing clients turned fee-based admirers. Those commission advisors are also conceding that the enhanced liquidity of ETFs is another feature attracting their customers. “There is less liquidity in a mutual fund than an exchange-traded fund,” says Tabet. “ETFs have intraday liquidity, which means I can buy and sell it during the day, whereas a mutual I can only buy and sell once a day, at closing.” Being able to trade throughout the day can come in handy, especially in volatile markets, says Yamada. “If the world comes to an end today at noon and the markets are down 40 per cent by the end of the day, you can’t get out and you’re down 40 per cent.” On top of transparency, lower costs and liquidity, ETFs are also more tax efficient, compared to mutual funds. “With a mutual fund even if you don’t sell your shares, but someone else does, the mutual fund manager has to sell stocks, which creates capital gains MAY 2014 | 43  

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and the capital gains tax is shared among all the unit holders. “You have to pay tax even if you don’t want to get out and that’s not very tax efficient.” With ETFs, what institutions often do is a swap the underlying securities (in-kind transfer), which is a tax-free transfer. “If you’re trying to accumulate money for retirement over time you want all of your money riding on the horse every day that the market is open and you don’t want to pay taxes along the way,” says Yamada. He also believes that the use of exchange-traded funds will only continue to grow and that advisors who are exclusively using mutual funds for their clients won’t have that option for much longer. Using the theory of the diffusion of innovation as an example, Yamada says a tipping point is coming in the next five years where ETFs may overtake mutual funds in the Canadian marketplace.

“ETFs are about 12 per cent of the Canadian mutual fund market right now and 15 to 18 per cent is the tipping point according to the theory and adoption will jump by 30 per cent over the following 18 months.” But while mutual fund proponents may take issue with some or all of that. Many concede the exchangetraded end of the market is, indeed, building steam. Still, they also point to enough potential disadvantages to ETFs — intraday pricing issues, unfavourable bid-ask spreads, the higher management costs for ETFs over regular stocks, etc. — as support for the idea that mutual funds will continue to offer a fair return for their clients even with or without the loss of embedded commissions and the typically higher MERs of mutual funds. Yamada may not buy it. He points to the early adopters of ETFs — CEOs of major companies who felt they were the cheapest, most cost-effective way of getting access to broad markets.

The same will happen with advisors and wealth management professionals, he predicts. Still all may not be rosy in the ETF future Tabet sees.

“The concern I have is that there are going to be too many ETFs, which doesn’t solve the problem of complexity, it actually increases the problem of complexity for investors.” It’s why wealth professionals have to work more diligently to make these funds easier to understand and have to do a better job of educating clients, he says. But the kind of sea-change where mutual funds come second to a glut of ETFs, is likely some time off, although a growing number of traditional, embed advisors are now prepared to hedge their bets by incorporating fee-based business into their transactional portfolios. It is, in fact, what the wealth management arms of the Big Five — the independent advisor’s biggest competitor — are already doing.

REVOLUTION BY THE NUMBERS $50,000 IN AN RRSP WITH 5% RETURN OVER 15 YEARS »Mutual » Fund with 2.2% MER »Return » = $74,455 »Fees » = $21,000 »Opportunity » cost = $8,492 »ETF » with a 0.10% MER »Return » = $102,398 »Fees » = $1,124 »The » opportunity cost is just $424

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Advisors routinely come across clients who want to give more than a monthly charitable donation, but what about those looking to integrate that largesse into their wills? Knowing the most tax-efficient way to help them share the love – from the ideal disbursement method to the right third-party partnerships – is key to protecting relationships even with heirs. So why aren’t more advisors good at it? John Tenpenny reports Making a difference in other people’s lives is something that everybody aspires to, but the reality of turning wishes into cold, hard cash is something many clients have a hard time conceiving, beyond donating a small amount each year to a charity of their choosing. Planned giving, done with the guidance and advice from a financial advisor, can in certain circumstances allow not just wealthy individuals but also those with average financial resources to achieve larger gifts than they ever thought possible and to make a great difference in the world in which they live. “Planned giving is a very rewarding part of the financial planning process,” says Andrew Sheppard, a financial advisor with Sun Life Financial in Toronto, “and it’s amazing how many of my clients appreciate the effort that I put in to that part of it and in to giving them opportunity to see how they can do it.” And how it’s done involves an inordinate amount of teamwork, with the potential to deepen the

relationship not only with the client but their beneficiaries – but familial and non-profit. “Everything I do starts with a full financial plan and planned giving is definitely one of the topics that should come up,” says Sheppard, adding that it’s also important to make sure that everyone involved is clear on what the intentions are. “That may seem obvious, but I’ve had conversations with couples where at some point they have a difference of opinion and I have to step out of the room so that they can get on the same page. “Once I know that planned giving is one of the client’s goals, then from there we have to build it into their financial plan because we want to make sure they are doing it in the most intelligent manner possible and that they’re not sacrificing their quality of life or retirement or putting themselves into a vulnerable position because of their planned giving.”

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PLANNING THE GIVING Many advisors – even seasoned professionals – give planned giving short shrift, but for Mark Blumberg, a partner with Blumberg Segal LLP in Toronto, bringing up the issue is critical to the client/advisor relationship. “For some people, philanthropy is really important and advisors shouldn’t be afraid to bring it up. They may see some of their most interesting discussions come up from the (philanthropy) discussions and in fact develop a much better relationship with their client. If their wish is that their estate should go to a charitable institution, then you want to help them with that. “When it comes to all those involved with wealth management, they should be thinking in terms of the philanthropic side. It can be very important in terms of cementing the relationship between the advisor and their client.” According to Sheppard, the number one goal is to avoid is unnecessary erosion of the gift through poor planning. “We want the clients to do their due diligence on

the charities and organizations their giving to so they understand what they’re giving to, how it will be handled once it gets there and to make sure it qualifies under CRA guidelines, to make sure the charity is getting the actual benefit the client is intending. “So once I’ve answered the questions of what they want to do with the money and how much they need to leave in their estate for surviving relatives, my job is to recommend the most tax-efficient way to pass on whatever cash flow is left over to the intended receiver of the gift.” The ways to vouchsafe vary from bequests in wills, to transferring or donating life insurance policies, setting up private foundations and donor advised funds at a community foundations and setting up charitable remainder trusts (CRTs). All have their advantages and disadvantages, but this is where it becomes important for the advisor and the client to expand their team to include estate lawyers and accountants. “It’s really important that the client is involving people who are experts in the different areas that

85,000+ charities registered with the CRA

Help create a better future for everyone touched by cancer. Research is our Foundation. When your client remembers the BC Cancer Foundation in their will, they’ll be supporting world-renowned research in BC that is shaping the future of cancer care. Please be sure to use the full legal name of our organization:

BC Cancer Foundation Registration Number: 11881 8434 RR0001 For more information, please contact Isabela Zabava, LL.B at 604.877.6040 or

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PLANNED GIVING, THE OPTIONS Different planned giving techniques used in Canada include:


There are a number of ways this can be accomplished in a will, including leaving a dollar amount to a charity, leaving a percentage of the client’s estate to a charity, or in some circumstances leaving the whole estate to one or more charities. The advantages of leaving a bequest in the will includes the flexibility of later changing either the beneficiary or the amount of the gift as financial or personal situation changes.


If your client has public company shares that have increased in value, then it is more tax efficient to transfer the actual appreciated shares to a charity directly, rather than selling the shares and then donating the after-tax cash amount. If a donor sold his/her shares and donated the after-tax cash amount, the donor would have to pay about 24% tax on the amount the shares have appreciated in value, but if the donor donates the shares directly to a registered charity the donor pays no capital gains tax.


In some cases, a donor can for a relatively modest amount purchase a large life insurance policy to benefit his/her favourite charity. If the donor will have substantial taxes that he/she has to pay at death, the tax receipt for the death benefit can assist the estate.


If the client owns a RRSP or Tax Free Savings Account (TFSA) then they can generally designate a charity as beneficiary so that the charity receives the funds in the RRSP or TFSA upon their death. In the case of the RRSP, remember that at death the estate will have to pay the income tax on the funds in the RRSP but the estate will receive a tax credit from the charitable contribution which will offset some or all of the taxes owing in respect of the RRSP.


Community Foundations have become quite popular because the client can have their own ‘foundation’ without the administrative burden of a private foundation. In some cases they want to benefit the local community or to have the funds targeted to a particular concern within the community. Other times a donation is provided to the community foundation (or bank donor-advised fund) to set up a donor advised fund and they receive an immediate tax receipt.


an annuity.

Some charities sell either self-insured or reinsured annuities, which provides the donor with a stream of income while they are alive in return for the donor purchasing


With a private foundation all the funds can come from one person, or several, and the board of directors can be related to one another, although it does not have to be so. When funds are donated to a private foundation the donor can receive an immediate tax benefit. A private foundation has registered charitable status and therefore, in addition to the corporate/trust requirements, the private foundation has annual CRA reporting requirements.


Property, such as a house, or investments and artwork, can be placed in a trust, sometimes referred to as a charitable remainder trust, for the benefit of a Canadian registered charity. The donor can use the property during his/her lifetime, obtain a charitable receipt today for the present value of the residual interest and the property would, upon the death of the taxpayer, be used or sold by the charity. Source: Blumberg Segal LLP

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apply,” says Sheppard. “By having your financial advisor quarterback the planned giving process can be extremely useful because the estate lawyer, accountant and financial advisor should be on the same page. All three have to be in line, otherwise you’re leaving the executor of your will to figure it all out.” Bequests are the most common way for charities to receive large donations, says Blumberg. They allow a greater gift to be made than one could achieve annually because in some cases the donor knows that at his or her death, or the death of the donor and his or her spouse, the funds are not needed anymore. It is especially attractive for those who are older and do not have children or have children who are selfsufficient.

DON’T SAVE THE BEST FOR LAST Blumberg cautions that if the client plans to leave a large amount to a charity, it is probably a good idea to not leave it all as a bequest, but to make some major gifts during their lifetime. “With a bequest you can only reduce taxes for the donor’s income in the

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preceding two years. You can get a slightly better tax impact and you can give more money to charity if you give away money earlier and use the gifts to offset taxes.” Private foundations can be costly and complex to administer. According to Blumberg, CRTs, where property or investments can be placed in a trust for the benefit of a charity, are popular in the U.S., they are used far less frequently in Canada. Establishing a CRT involves substantial time and expense in terms of legal, accounting and valuation services and advice, as well as the ongoing cost of administration. Sheppard recommends life insurance. “Using a permanent whole life insurance policy is the most tax-efficient way to transfer money to a charity because you’re taking a taxable benefit and by passing the estate it goes directly to the intended receiver of the gift.” Blumberg encourages advisors to learn more about planned giving. “One of the best ways is to get involved and volunteer with the charities themselves,” he says.

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Advisors get little enough shut-eye, but it’s their company websites that are up all night and day. Still, as marketing expert Maggie Crowley cautions, some of those hard workers may nonetheless be shirking their responsibilities Have you ever thought about buying a boat? It’s a major purchasing decision and for those, we tend to find ourselves weighing the pros and cons before jumping into the deep end. Ask any boat owner – it’s not just the initial purchase that gets factored into the final deliberations but everything from seasonal upkeep to the maintenance a boat requires for years of smooth sailing. Investing in a firm’s long-term success can be pretty similar to buying a boat; the return on the investment is worth it if you’re willing to maintain it. Your website can be your most powerful marketing tool for generating leads and establishing your credibility and expertise. But, in order to reap the benefits you’ve got to keep up the maintenance.

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ON-SITE INSPECTION 1. A POORLY DESIGNED WEBSITE Let’s keep riding the boat analogy. There are quite a few things to consider when buying a boat - one of the most important is its quality and existing condition. Evaluate your existing website: does the site’s design draw in visitors? Does the site create a positive impression of your firm in the mind of your consumers? Today, people viewing your website typically form a first impression of your firm in as little as three seconds. We’ve worked with many advisors who, in person, appear extremely polished, professional and qualified – but you’d never know it based on their website. A large majority of consumers perform research online before making buying decisions. When it comes to financial services, many of your prospects (especially referrals) go online to learn about your firm before they pick up the phone. What kind of message does your website send to visitors who haven’t yet met you in person? Your website is a direct reflection of your firm and those using your website will invariably base their impressions of your firm on the quality of that site. A well thought out, easy-to-use site helps prospects find the information they’re looking for and creates a positive impression of your firm. Also worth noting is that about nine out of 10 web visitors will leave a site within 30 seconds and not return if they can’t find the information they came for. That’s significant.

2. OUTDATED CONTENT If your advisor website hasn’t been updated for months or years, it’s time for a makeover. Many advisors seem to have a ‘set-it-and-forget-it’ mentality when it comes to the firm’s website, but why waste such a powerful opportunity to draw in new prospects and leads? Equally as important as a bad design, outdated web content can be just as harmful. When web visitors notice that a site hasn’t been updated in

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An advisor’s website must meet the following criteria to attract but also retain prospective and existing clients, says Crowley:

1. Looks count. Visual appeal is the hook to catch leads

2. Update. Update. Update. Old content spells neglect

3. Smartphone savvy. Sites must be formatted and mobile device

months or even years, it sends a message of neglect or laziness. Keeping an advisor’s website up to date is one of the simplest yet most effective methods of marketing your firm. In fact, your website is the only member of your marketing team representing you 24 hours a day, seven days a week. The message sent by your advisor website can make or break a prospect’s enthusiasm for your firm. Once again, consider your prospects who are learning about who you are and how you can help before they have a chance to meet you in person. A clean website with fresh content is one of the easiest ways to validate your existence as well as create relevance and timeliness in the minds of your consumers. If your office moves or your contact information changes your website should be updated immediately. Is your team growing? Are you offering new services? Make sure your website viewers stay informed. From a technology perspective, fresh website content is one major contributing factor of SEO (search engine optimization). A website that is optimized for search engines means that the site ranks highly in search engines such as Google. As a result, a website with strong SEO makes it much easier for the people who are looking for you online (your ideal clients) to find you. Search engines and humans alike love fresh, unique content. Almost every website will have stagnant content (or instance the ‘About Us’ or ‘Services pages’) but, it’s the fresh, new content that will keep visitors coming back. Financial advisors

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are catching on to one trend that helps feed the content frenzy: financial blogging. A blog is simple: it’s a section of your website where relevant, valuable information is published regularly. There are two huge benefits to maintaining a financial blog and both are critical in getting the right traffic to your website. First, blogging adds tons of value in respect to SEO. The more blog posts you publish, the more indexed pages you create for search engines to display in their results. According to financial SEO expert Phil Laboon, “when new content is posted on your website, it’s like lighting up an open sign to search engines and letting them know that someone is still minding the shop. If you are already happy with how your current website is set up, a blog is a great way to keep content fresh.” In short, search engines love fresh content and blogging provides the perfect platform for sharing great content and increasing your sites’ SEO. Financial blogging also gives you a way to deliver the right information to the right people. A blog offers the opportunity to expand on the services your firm offers, current events and financial tips. In short, your blog can be an asset that introduces you as a thought leader in the financial planning community. Sharing industry-specific information regularly by way of blogging helps advisors earn trust and stay top-of-mind of prospects and existing clients. Even if you only publish a new blog post once a month, the fresh, value-added content will boost your SEO and help establish your credibility as an advisor.

3. MOBILE FRIENDLY If your website doesn’t work properly on mobile devices (such as smart phones and tablets) you are missing out on a huge portion of web traffic each month. Companies such as Microsoft, among others, predicted that by 2014 (translation: today!) more people will access the web via a mobile device,

rather than a personal desktop computer. Marketers call this the “mobile takeover,” but, however you refer to it, it’s vital to your online presence. It’s no longer an option to have a mobile friendly website, it’s a must for growth-minded firms. According to stats published by Google Canada last year,

89 per cent of smartphone users look for local information on their phone and 88 per cent take action on that intel such as making a purchase or contacting the business. As a result, Google Canada reports, “smartphones help users navigate the world. Appearing on smartphones is critical for local businesses.” If you’re not sure how your website looks from a mobile device, find out. You can see exactly how your advisor website appears from any smart phone or tablet using free tools such as or There are a few important differences that create a really great experience for users viewing your website from a mobile device. Here are three key questions to ask when deciding whether your website is accessible to mobile viewers: yy Can viewers read the text without zooming? yy Can links and buttons be clicked with a thumb? yy Is your location and phone number visible and clickable? yy Can users tap the phone number to initiate a call? The experts at Google Canada also suggest making sure your phone number and address can be clicked directly from a search engine’s results page to make it really easy for your target audience to connect directly with your firm.

Maggie Crowley (@crowleymaggie) is the Marketing Coordinator for Advisor Websites where she manages the company’s online presence and educates financial services professionals on how to maximize the potential of a strong web presence.

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Conspicuous consumption doesn’t necessarily look good on an advisor – well, not from the perspective of many clients. Here, according to one longtime investor, is why. Spoiler alert: trust has something to do with it PARTING WAYS If cruising around in a fancy car, top down and sporting Harry Rosen suits sounds just like you, you won’t be adding this client to your book of business. Oscar Johnston left an advisor for this very reason, not to mention the fact that his investments weren’t delivering the returns he desired. With unfilled expectations, he wrote a letter, made a phone call and was out the door. “The financial results were not satisfactory, and I was being charged more than was warranted,” Johnston says. “Also, his office set-up was too posh, and he was wearing very expensive suits that I was paying for!”

DOWN TO BUSINESS An investor for the last 30 years – 25 of which have been under a financial advisor – Johnston, 72, is what some might call a savvy client. He knows what he likes – “common stocks, REITS, ETFs, preferreds and closed-end funds”. He is also aware of what he doesn’t understand, such as the bond market, and doesn’t shy ...doesn’t shy away from the DIY-approach. “Investing style has become much more important to me,” he says. “Rather than just buying stocks, I think of it as buying companies.” Before tossing in his cash, Johnston looks at the dividend history of a company and the ability for these to increase. There has to be a reasonable pay-out ratio, he says. Right now, Johnston takes a practical approach by finding conservative, blue-chip, non-cyclical investments most attractive. “Companies that produce goods and services that are needed every day,” he says, adding that he looks to charts to inform his investment decisions. “I have moved away from a focus on growth to the above.”

VALUE IN ADVICE When seeking out an expert, Johnston is attracted to advisors who have their eyes on the future. He wants

someone who is educated, experienced and pragmatic; keeping the costs down and the drama to a nil. “I only want to work with an advisor who takes a long view of investing,” Johnston says. “I value having an advisor due to the lack of emotional involvement they bring to the process. They help me stick to my investing plan regardless of what the markets are doing.” What does Johnston value in his current advisor? She does not work on commission and is not employed by a high-priced brokerage firm. “She meets with me on a regular basis and keeps me well informed. The fee charged by her company is reasonable,” he adds. From one client to an advisor, Johnston has a few words of wisdom. “Communicate regularly, in good times and bad,” he says. “I know most of these guys are under pressure to move product, but don’t try to churn the client. If you’re only a salesperson, and don’t really have the client’s well-being at heart, find something else to do.”

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If you want innovation and growth, you need to engage your people on a whole new level, argues Therese S. Kinal Management is in need of a revolution. And not just one on glossy academic paper, but one that actually changes how organizations think and act. Despite the inspirational stories we read about companies like Zappos, Innocent Drinks and Google, the truth is that most of us are using outdated management practices and failing to get the most out of our people. Not convinced? Consider this:  65% of people are unhappy at work (Right Management, Manpower Group, 2012 online survey)  Only 14% understand their company’s strategy (Smither, J.W., and London, M. (2009), Performance management: putting research into action)  75% are seeking jobs as we speak (Jobvite’s Social Job Seeker Survey, 2012)

Today’s leaders face increased complexity and ambiguity, and employees and customers alike are demanding engagement, transparency and responsibility. One billion people are now on Facebook, and 500 million tweets get sent every day. Customers don’t want to be sold to. They want to connect with brands and play a role in the development, sales and marketing of products.

If we ever thought we had control, it’s definitely gone now. All of this presents a new challenge for how we think about and practise management and how we develop leaders that can excel in this brave new world. But before we look at the future, let’s take a look in the rear-view mirror and see how we got to where we are today:

1910S–1940S: MANAGEMENT AS SCIENCE Management as science was developed in the early 20th century and focused on increasing productivity and efficiency through standardization, division of labour, centralization and hierarchy. A very top down management style with strict control over people and processes dominated across industries.

1950S–1960S: FUNCTIONAL ORGANIZATIONS Due to growing and more complex organizations, the 1950s and 1960s saw the emergence of functional organizations and the human resources movement. Managers began to understand the human factor in production and productivity, and tools such as goal setting, performance reviews and job descriptions were born.

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1990S: PROCESS OPTIMIZATION Benchmarking and business process reengineering became popular in the 1990s, and by the middle of the decade, 60 per cent of Fortune 500 companies claimed to have plans for, or had already initiated such projects. TQM, Six Sigma and Lean remained popular, and a more holistic, organizationwide approach and strategy implementation took the stage, with tools such as Strategy Maps and Balanced Scorecards.

2000S: BIG DATA 1970S: STRATEGIC PLANNING In the 1970s we changed our focus from measuring function to resource allocation and tools such as Strategic Planning (GE), Growth, Share Matrix (BCG) and SWOT were used to formalize strategic planning processes. After several decades of ‘best practice’ and ‘one size fits all’ solutions, academics began developing contingency theories.

1980S: COMPETITIVE ADVANTAGE As the business environment grew increasingly competitive and connected, and with a blooming management consultancy industry, competitive advantage became a priority for organizations in the 1980s. Tools such as Total Quality Management (TQM) Six Sigma Lean were used to measure processes and improve productivity. Employees were more involved in collecting data, but decisions were still made at ​​ the top, and goals were used to manage people and maintain control.

Largely driven by the consulting industry under the banner of ‘Big Data,’ organizations in the 2000s started to focus on using technology for growth and value creation. Meanwhile, oversaturation of existing market space led to concepts such as Blue Ocean Strategy and Value Innovation.

A WHOLE NEW LEVEL After a century of trying to control people, processes and information, we have come to a point in organizational history where we need to recognize that what worked before just simply isn’t enough anymore. Traditional management is fine if you want compliance, but if you want innovation and growth, you need to engage your people on a whole new level. In our research, we looked specifically at the evolution of the management approach and the approach to innovation/problem solving, and at how

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We need to recognize that what worked before just simply isn’t enough anymore

these would develop in the future (see graph, The evolution of management): Organizations of the future are neither consensus driven nor top down. They aren’t dictatorships, nor

workforces is not about team-building exercises or lucrative benefit packages but about creating a working environment that offers purpose, mastery, challenge and autonomy, which in turn creates more business value than the traditional approach. Recently, Steve Denning wrote about the management revolution that’s already happening at In the article, he discusses organizations like Apple, Zara and Whole Foods that have successfully forged ahead despite the increasingly challenging environment: “None of these organizations has arrived at any final state or equilibrium: in each case, management practices continue to evolve. Nor are any of these organizations perfect, as they have to cope with a context that is filled with contradictions. Their virtue lies in the creative energy with which they are pioneering new ways of adding value.” Steve makes some excellent points about the need to constantly reinvent ourselves, but I’m not sure if the revolution is already happening. In fact, I think it might be more of an evolution. And herein lies the problem. We need a revolution, not an evolution. We are armed with tons of research that supports a more holistic, human way of doing business. It is up to us to stop simply following best practices and translate our know-how into how we develop leaders and organizations that are more agile, innovative and purpose-driven, and in doing so, breed the pioneers and market leaders of tomorrow.

1. Management approach: the style of top management, ranging from: a. Control (ie your boss tells you what to do and how to do it); b. Set goals (ie your boss sets goals and expectations, but you have more freedom with regard to how you achieve them); c. Inspire (ie your boss gives you scope and freedom to innovate on both the what and the how) 2. Approach to innovation/problem solving: how leaders solve strategic problems and develop new products and services. This ranges from: a. Top down (ie solutions are created and come from the top); b. Top down with bottom-up data (ie the rest of the organization contributes information and experiences, but solutions are still created at the top); c. Participatory (ie solutions are created collaboratively and throughout the organizational levels)

are they anarchies. They’re not merely occupied with increasing shareholder value or making their people happy. Leaders of the future know that the two go together, and that having happy and productive


Top down w/ bottom-up Participatory data


Top down

Therese S. Kinal is the CEO and co-founder of Unleash, a disruptive innovator in the management education and consulting industry. She is the co-author of Unleashing: The Future of Work. She writes, runs workshops and works with clients on a range of management issues.




Unleashing Big data Competitive advantage

Process optimization

Strategic planning Functional organization Management as science







2013 ->

Source and copyright: UNLEASH SPP LTD. For more information, go to

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Wealth Professional is Canada’s newest source for news, opinion and analysis focused on financial advisors and investment professionals.








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WEALTHPROFESSIONAL.CA • The latest news with a direct impact on you, your clients and your business • Strategies to deliver better outcomes for your clients • The latest business intelligence • High-quality video content, delivering exclusive insights • Intel on what the major players are doing • Updates on regulatory reform and products • Have your say in our polls • Tell us what you think in our forums • Coverage of industry events FOR MORE INFORMATION CONTACT: Dane Taylor, National Accounts Manager 416.644.8740 ext.249

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SKILLSand the

art of persuasion

If you want to make a compelling case to a client or business associate and persuade them to do what you’re asking, it’s vital to hone your communication skills and use them to support your case. Cindy Tonkin offers seven essential strategies for making a world-class professional presentation You probably spend a large chunk of your life getting others to do things for you: persuading your boss to give you time off; influencing your spouse to spend time with you; convincing the kids to go to bed. But right now we are talking about major deals. You have to stand at the front of the room, take a deep breath, and make such a compelling case that they can’t say no. Here’s how you can do this:


Take a breath First off, it is important to start breathing. When you’re nervous you can hold your breath. This makes your brain stop thinking. It triggers a fear response in the brain: you retreat into defensiveness. You just want to run away or punch someone. So breathe. Practice deep breaths right down into your belly as you rehearse your presentation. Unclench your fists. Move your elbows away from your rib cage. If you find it hard to breathe, here’s a tip: speak lower and slower and your breath will slow down. 60 | MAY 2014

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Prepare the words Begin as you mean to end — calmly. Prepare the first two sentences. Practice them until they sound natural and normal. Then the rest will flow. You should also prepare the rest of the presentation, of course!


Use images and props If you stand up and use visual aids, your audience is more likely to be onside. And, according to research, they will spend 26 per cent more on your product. Examples of visual aids include posters, photographs, PowerPoint images or actual props. If your audience tends to fiddle with pens or rubber bands or phones, give each person a prop; it will keep them focused as they listen. And if the prop promotes your business, that’s even better.


Practice what you will say It may seem obvious, but practice what you will say. It feels silly, but the more you do it the less it becomes so. Practice not just the words but how you will say them. People read your intention from your gestures. Consider what gestures you want to use, and choreograph your presentation. If you want to come across as open, open up your gestures. If you want to be seen as thoughtful, adopt the pose of the thinker. But you must practice this so it comes across naturally, not like a kid doing show and tell at kindergarten.


Don’t read to me In case you haven’t heard, there is an epidemic of death by PowerPoint. Your PowerPoint slide is not a substitute for palm cards. Do not put every word you will say on the slide. Choose an image that prompts you to remember what you need to say, or an image that intrigues the audience. If you must read to me, then read me something significant. If you feel you must have all the words on a slide, then pause so people can read the words for themselves. Then say what you want to say.


Focus on them, not you Working with hyper-confident, powerful people, I am constantly surprised to find how much some of them dread public speaking. Consistently, they focus on themselves and their shaking voice, their wobbly knees and whether someone will find out that they are fake.

To calm your nerves, focus on the audience. The old advice of picturing them naked is just one device for doing this. I suggest you pay attention to the small signs that tell you they are listening and interested. When your focus is on them, the room and its energy, then you can give them what they want. As an aside, know you always have the option to say: “I don’t know—I’ll get back to you.” You don’t need to know everything. In the age of the Internet most information is available with a quick Google search. People do not expect you to be the Internet. Take a moment upfront to clarify the audience’s ‘WIIFM’ (what’s in it for me). When you know what they want out of it, you know how to sell them rather than tell them.


Tell stories People will forget facts. They remember stories. Tell a ‘once upon a time’ story or a ‘funny thing happened on the way to the forum’ story — like a case study. Make it relevant and follow the three-step formula:

1. Incident (what happened) 2. Point (the punchline or payoff) 3. Benefit (why I am telling this story) Telling a story alone has an impact. Telling an enjoyable story and then making it relevant to the audience lifts you to professional level. If you can read, illustrate, and engage your audience, you’re well on the way to convincing everyone. MAY 2014 | 61  

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Day in the life of... Karin Mizgala, CEO, Money Coaches Canada “What we usually do at the beginning of the meeting is catch up on the challenges or success stories that the associates have and answer any questions that they’ve got that they want to share with the rest of the group” 6:00 a.m. I get up around 6:00, and I spend about an hour doing yoga and meditation practice. I do this for about an hour. 7:30 a.m. This is when my workday begins. It’s not much of a commute because I work from my home office on Salt Spring Island, B.C. I spend the next hour or so checking emails, planning the day and doing any background work that needs to be done for the meetings I have during the day. 9:00 a.m. I have a conference call with our Money Coaches Canada associates team. There are 16 of us in total across the country. What we usually do at the beginning of the meeting is catch up on the challenges or success stories that the associates have and answer any questions that they’ve got that they want to share with the rest of the group. It’s our chance once a week 62 | MAY 2014

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to have a conversation with the full team. We generally have a guest speaker on those calls as well. Our most recent speaker was a family lawyer who was speaking to us about a recent update in divorce legislation. 10:00 a.m. I have a team financial planning call with our CFP Money Coaches. In our last call, we shared ideas about best practices on how to vet investment advisors we refer our clients to. 11:30 a.m. I have a business planning meeting with my business partner, Sheila Walkington. We do this once a week so we can plan the strategy for our company and deal with any issues that come up for our associates and training programs. We also plan marketing strategies for our company. 1 p.m. After back-to-back meetings, I don’t have very much time for a lunch break. I rustle around in the

fridge for something to nibble on quickly, and then head back to my desk. 1:30 p.m. Today, I have a conference call with an advisor who is interested in becoming an associate of Money Coaches Canada. We talk about the current challenges in the investment industry, and we discuss how the fee-for-service model is becoming more popular for financial planners. The advisor decides that they want to sign up for the program. 2 p.m. I have a client meeting, and I give the clients news that they are on track with their retirement plans, so long as they follow the spending and savings plan that we’ve designed for them. We talk about the challenges they have around spontaneous spending and suggest they use our ‘credit-card condom’ for safe spending to stay on track. 4 p.m.-6:30 p.m. I head out my back door for a minihike. It’s beautiful on Salt Spring Island; there are lots of hills and great views of the ocean, so it’s a nice way to get some fresh air and exercise. No gym needed for me! When I get back, I do my afternoon yoga and meditation. 6:30 p.m. I thank my blessings that my husband has made me a wonderful dinner. I got away without cooking dinner yet again! 8 p.m. I try to find a movie that my husband and I can agree on. No chick flicks allowed! 10 p.m. Lights out for me. I don’t do any networking or work in the evening. MAY 2014 | 63  

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TOO LITTLE When you’re Goldman Sachs’s CEO Lloyd Blankfein, you can get away with wearing a simple sports Swatch. (Indeed, you should be wearing a simple sports watch.) But for most advisors, that $66 watch won’t necessarily engender client confidence.


Watch your image Your image is everything in a business dependent on building client trust and what you wear, even on your wrist, can cement those relationships or weaken them. The temptation is always to go big or go home, to flaunt your own financial success as a way of showing how successful you’ve made your clients. But there is a fine line to walk when it comes to the watch you wear on your wrist. Cross it and you run the risk of alienating a client’s affections. Here is WP’s take on what’s too much, what’s too little and what’s just right in terms of wrist wear for a trustworthy advisor.

If bling is your thing like American business magnate Lynn Tilton, with her diamond-dusted timepiece by Jacob the Jeweler, forget it. Advisors need to keep that conspicuous wealth under wraps. Clients don’t like to think their money is going straight to your jeweler.


Keep it classic like billionaire Warren Buffet, who is committed to his Rolex Day-Date. It says understated establishment.


Caring for Clients, Inc. financial advisor Rona Birenbaum swears she would never have bought this Breitling Galactic 36 Automatic Diamond Ladies Watch. This luxury item was a Christmas gift from Birenbaum’s late husband. “It’s a ridiculous amount of money,” says the Toronto advisor. “I preach frugality to my clients. The millionaire’s guide to building wealth is avoiding conspicuous consumption. But if somebody wants to give you a gift, I think you should accept it.”

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How to add $229,715 to a portfolio Start by lowering the fees. Vanguard ETF fees are 86% lower than the average Canadian mutual fund. And that difference could add $229,715 in value to the typical Canadian portfolio over the next 20 years. TM

Compare your mutual funds to Vanguard ETFs

Winner - Canada Vanguard Investments Canada Inc. 2013 Morningstar ETF Provider of the Year 2013 Morningstar Best Equity ETF

Morningstar Awards 2013 Š. Morningstar, Inc. All Rights Reserved. Awarded to Vanguard Investments Canada Inc. for Morningstar ETF Provider of the Year and Best Equity ETF, Canada. For further information about the Morningstar Awards, including information relating to the criteria upon which the awards are based, please visit Source: Vanguard calculations using data from Morningstar, Inc. as of December 31, 2012. The hypothetical examples do not represent the return of any particular investment. The example above assumes a 6% annual return of the underlying investments and an initial investment of $250,000. For the ETF MERs we used the following MERs of the Vanguard ETFs as of December 31, 2012: For Canadian equity, 0.11%, Vanguard FTSE Canada Index ETF; for Canadian fixed income, 0.26%, Vanguard Canadian Aggregate Bond Index ETF; for emerging markets equity, 0.54%, Vanguard FTSE Emerging Markets Index ETF; for global equity, 0.31%, average of MERs for Vanguard FTSE Developed ex North America Index ETF (CAD-hedged) and Vanguard S&P 500 Index ETF (CAD-hedged); for international equity, 0.43%, Vanguard FTSE Developed ex North America Index ETF (CAD-hedged). The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of a Vanguard ETFTM or returns on investment in a Vanguard ETF. MERs for the Vanguard ETFsTM are as of December 31, 2012, and are based upon actual audited expenses including waivers and absorptions. Without waivers and absorptions, MERs would have been higher. Vanguard Investments Canada Inc. expects to continue absorbing or waiving certain fees indefinitely, but may, in its discretion, discontinue this practice at any time. The MER for the mutual funds is the average MER for Series A Funds as of December 31, 2012. For more detailed information visit, Š 2014 Vanguard Investments Canada Inc. All rights reserved. VAN064_Q1_229_WP_8.25x10.875_rev1.indd 1 IBC.indd 1

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Wealth Professional 2.2  

The 2014 WP Hotlist; ETFs on the advisor's blotter; what your watch says about your business

Wealth Professional 2.2  

The 2014 WP Hotlist; ETFs on the advisor's blotter; what your watch says about your business