Wealth Professional 2.4

THE 1% WORLD MAKING IT PAY IN THE NEW ERA OF ULTRA-LOW INTEREST RATES ADVISORS TO REGULATORS: SLOW DOWN ON COMPLIANCE! SUN LIFE GLOBAL INVESTMENTS: THE NEW (REALLY BIG) KID ON THE BLOCK

WWW.WEALTHPROFESSIONAL.CA ISSUE 2.4 | $6.95

CERTIFICATION SURVEY 2014

DOES YOUR DESIGNATION COME OUT ON TOP?

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CHARTING YOUR PATH THROUGH THE CE JUNGLE

THE NEWEST, FRESHEST DESIGNATIONS

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do better with a

LEADER IN FINANCIAL SERVICES “I would say my career, in many ways, chose me.”

I specialize in helping women take charge of their money. As a mother of two young girls, I understand the challenges of balancing family, community, career and finance.

I’ve built my career on the core values of trust, integrity and service, as well as my expertise and education.

It’s rewarding when you help someone make it through life’s toughest transitions. I’m proud of the impact I have on my clients’ well-being.

Valerie Schroeder, FCSI®, CIWM, CIM® Portfolio Manager & Investment Advisor CIBC Wood Gundy

CANADIAN SECURITIES INSTITUTE Credentials That Matter.

csi . ca / fcsi

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CONTENTS

30 4 | News/Bits and Bites 6 | Forum 8 | By the numbers Clarification: Canada Protection Plan is the only simplified non-medical provider furnishing a verification process in addition to direct access to underwriters for advisors, and no medicals, APS or doctors reports. A story in the June issue of WP, “Exploring Insurance Options with Canada Protection Plan,” suggests other providers in the simplified non-medical market offer that basket of features.

FEATURES

12 | Q&A: Legendary wealth manager Stephen Jarislowsky explains why you should never put all your client’s money in an RRSP 16 | Making it pay in a 1% world Managing client expectations in an era of ultra-low interest rates 21 | The Numbers Results from our inaugural certification survey 28 | Multiple designations Charting your path to financial literacy 30| Responsible Accreditation Deb Abbey, creator of Canada’s responsible investing sector, launches the Responsible Investing Academy

48 | Profile Rick Headrick takes the helm of Canada’s newest, massive mutual fund firm, Sun Life Global Investments 54 | 5 ways to make your web redesign easier and if they’re saying your website has failed to connect with buyers, it probably has 60 | Motivate to accumulate Why you need motivated and capable employees 62 | Day in the Life Rona Birenbaum

54

34 | Guest Column The Bakish Brothers break down the trust and estate designation

issue

2.4

CERTIFICATION SURVEY 2014

20

COVER STORY Certification Special Our inaugural survey of all things accreditation

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CONTENTS

DESIGNATION DECISIONS COPY & FEATURES SENIOR EDITOR Vernon Clement Jones SENIOR WRITER Jeff Sanford WRITER Olivia D’Orazio COPY EDITOR Rachel Naud CONTRIBUTORS Olivia D’Orazio, Patricia Lebon, Nikki Heald, Maggie Crowley, Mark Oliver, Rona Birenbaum and Claire Gagne

ART & PRODUCTION GRAPHIC DESIGNERS Marla Morelos, Joenel Salvador, Red Redrico

SALES & MARKETING NATIONAL ACCOUNTS MANAGER Dane Taylor ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER SALES John MacKenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries dane.taylor@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 wealthprofessional.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or in part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss.

Forgive me if you’ve already heard this joke — I can’t imagine it’s any better the second time around. An interior decorator walks into a financial advisor’s office for a design consultation, looks at the walls and says: “All this wallpaper has got to go.”

“Wallpaper?” says the understandably miffed advisor.

“Those are my certificates.” (I told you it wasn’t very good.)

But, more and more, advisors are, indeed, plastering their office walls with multiple certificates, having stayed up late, given up weekends and logging hours of classroom time in order to do it. The motivation is largely the same: to increase their attractiveness to clients hungry for expert counsel tailored to their specific financial needs.

Do you have a newly divorced, elderly client, worried about meting out a multimillion-dollar legacy? No problem – there’s a certification for that. Well, actually there are three.

The fact is arming yourself with that kind of multiple firepower makes sense in order to compete with the many other wealth professionals vying for the trust and confidence of investors. But there are only so many hours in the day – and the night – and advisors are having to make smart choices about what designations are best suited to their business models and which, conversely, can be left alone.

Helping you make that decision is the focus of WP’s first-ever Certification Survey, an annual polling of your industry peers on the designations that have paid the biggest dividends and those poised to garner more and more investor respect. The results of 500-plus responses starts on page 20.

As a reader of WealthProfessional.ca, your own opinions have likely factored into the findings, but we’re always keen to hear more. So, drop me an email rather than a letter. It’ll help save paper for more important things.

Cheers, Vernon Clement Jones Senior Editor

CONNECT

Contact the editorial team:

vernon.jones@kmimedia.ca

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do your clients’ portfolios have

CONTENTS

quotential?

FRANKLIN QUOTENTIAL: MANAGED FOR WHAT’S AHEAD In today’s fast-moving world, investors want a portfolio with the flexibility to adapt as markets change. Yet, as an advisor, you know the benefits of sticking to a solid long-term plan.

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Learn more at www.franklintempleton.ca/franklinquotential.

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. © 2013 Franklin Templeton Investments Corp. All rights reserved.

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NEWS /ANALYSIS

MESSAGE TO THE REGULATORS: SLOOOOW DOWN! Advocis and PriceWaterhouseCoopers waded into the debate over industry regulation with a report on the state of the modern Canadian advisor industry. The report came with a warning—regulators need to be careful about the pace of reform.

Sound Advice: Insights into Canada’s Financial Advice Industry, provided a fascinating look at the state of the modern wealth management industry (see big numbers).

The vast majority of Canada’s financial advisors (80%) are small or medium sized businesses. The typical Canadian advisor is over 45 years of age and has been in business 10-20 years. The average practice employs 2-3 employees, serves 200-300 clients and generates revenue of $100,000 to $150,000. The sector now provides more jobs than the aerospace or automotive industries.

But a serious warning is delivered along with the stats: If the pace of reform is too rapid the access to advisor services that the Canadian middle-class enjoys could be eroded. Recent examples of reform in the UK and Australia provide an example. In the UK a large percentage of advisors—up to 25% of the force—left the industry in the wake of reforms there. “The effect of these reforms have

BIG NUMBERS 182,000: number of people employed by small and mediumsized financial advisory businesses in Canada. $19 billion: Contribution of advisor businesses to GDP. 1.4%: Percentage of GDP created by spin-off benefits from the advisory sector.

1.5%: Percentage of total Canadian employment represented by advisors.

80,000: Number of businesses providing financial advice.

12 million: Number of Canadian households.

80%: Number of those households that have less than $100,000 in financial assets and who pay for their financial advice largely through sales commissions (and would be unable to afford fee-only advice).

30%: Increase in compliance costs for advisors in Australia post-reform

been to send the advisor up-market, which takes services away from the middle class, which is where you need advisors,” Byren Innes of PwC told Wealth Professional.

Innes suggests the new transparency rules coming into play—so-called CRM2 rules—will go a long way toward fixing the issues that were the target of the UK reforms. “I think we need to let the dust settle on CRM 2 first. Then we need to do some homework and study our regulations. In Australia the costs of regulation are going to hit a billion and half. Fees have gone up 30%. Is this worth it? I would say, go slow, tread lightly, don’t do a big bang change as Australia did. ” says Innes.

The CEO of Advocis expressed similar thoughts. In a chat with WP Greg Pollock suggested that there are more reforms brewing. “Canada has not gone down this road yet. But there is an expectation there could be something coming in 2015. There is a sense something is in the pipe,” he says. “Let’s get CRM2 done, and then test to see if this is effective. Let’s slow this down and get the new transparency regime in place, and then see where we’re at before we do something drastic. We hope this reports slows down the regulators.”

FPSC INCHES CLOSER TO OFFICIAL DEFINITION OF ‘FINANCIAL PLANNER’ The Ontario government released a new budget in early summer. Cary List, president and CEO of the Financial Planners Standards Council, chatted with Wealth Professional about the importance of the language used in the new document.

The FPSC has long lobbied that the term ‘financial planner’ be enshrined in law, similar to the status of a lawyer or doctor. Following the 2013 Fall Economic Statement and a round of industry consultations in January 2014 the government seemed to recognize this need. When the budget came out the language List was looking for was there. The budget suggested a “tailored approach” toward financial planning, as well as the creation of an expert committee. “This suggests they are looking at financial planning in a different way than has been the case historically. We are very much onside with the government on this. The language around a tailored approach to financial planning is important, as is the mention of the need for a panel of experts,” says List.

“This is what we expected.”

LIVING BIG IN CANADA’S DEEP SOUTH Real estate agents in Windsor Ontario are enjoying success with a program that delivers an instant retirement nest egg and improved quality of life for retiring baby boomers.

For several years now the Windsor-Essex County Association of Realtors (WECAR) has run a program that flies in potential residents to tour a region branded the 100-Mile Peninsula, an area bounded by Lake St. Clair, the Detroit River and the western end of Lake Erie. Essex County, of course, is as south as one can go in Canada. The winters are mild. There is a major urban area a short tunnel trip across the river. Traffic is nothing compared to major Canadian cities. Most importantly, homes in the area are fraction of what they are in the GTA. Smart retirees can generate a retirement reserve just by moving to the region. “Our real estate is 30-60% less than major Canadian cities. Retirees can sell a house in a more expensive region and put away a nest egg. It is a way to retire five years early,” says Krista Del Gatto, the executive director of the WECAR.

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FORUM / NEWS

CRM2 CONFLICT

Comments from WealthProfessional.ca on the news stories making waves in advisor waters ADVISORS HAD ALL KINDS OF THINGS TO SAY ABOUT CRM2 – BOTH GOOD AND BAD

Howls of complaint and avowals of acceptance echo across the industry as advisors examine the new customer relationship management rules brought in effect this summer. But on WealthProfessional.ca, it must be said, complaints far outnumbered compliments The latest phase of the new so-called CRM2 rules are now in place. The new regulatory model will rewire the industry at a basic level, so it’s no wonder the changes have stirred debate on WealthProfessional.ca.

CRM2 IS USURPING THE BROKERS

Advisors alone communicate to clients. Clients don’t have time to read, let alone choose sources to read, study and select funds from the thousands available. The client’s only hope is a good, trusted advisor to guide and protect them from mechanical marketing procures…and to get answers when questions arise, based on the timely decisions made in the past.

-Douglas E Swanson

Clients see the total amount they pay; I went through this in the U.K. 13 years ago, and the skill as an advisor was in explaining what (costs I actually had): overhead, support staff, insurance, software, etc. Most clients realize you have to make a profit to be in business or you won’t be there to look after them in the future they are planning for anyway. There were very large sales forces of people who were part-time. I was a sales manager for a time and on my team had a semi-pro golfer and a semi-pro classical guitarist. Great salespeople based on networking but low level of knowledge. Those guys are gone, and the standard has gone up. Don’t all industries change?

-Kathy Waite

THE LONELY LOVER

Am I the only one who thinks disclosure of fees is a good thing? I think people deserve to see in dollars what they are paying on the advice AND manufacturing side...so I think CRM2 could go a step further. Regulations will be implemented with the effectiveness and grace that only politicians can accomplish, but all in all this is a good thing. Time for investors to see the amounts they are paying and question what they are getting in return. Time for the old-guard of the advisor world to retire.

-Angry Advisor

GOOD ADVISORS ARE BEING LUMPED IN WITH THE BAD APPLES

…when I bring it up, people are like, we’ve known and trusted you for 17 years, why all this now? I suspect there is a core of whiners who didn’t listen to their advisors, bought high, sold to buy mortgage - backed crap, got a DSC fee because they changed their strategy from long-term to short-term, and then complained to the regulators. Head office pays a complaint fee to keep ‘em happy. The good advisors continue doing what they’re told and the bad advisors go sell cell phone plans and hemp investments.

-Cowtown

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BY THE NUMBERS / CERTIFICATION

CLASS IS IN The number of those sitting for certification exams is greater than ever. Below, Canadian and global numbers CFP Testing Examination Level 1 Examination Level 2 took place in 45 testing centres across Canada

A total of

851 candidates wrote the exams

FPE1 was written by 556 candidates. The overall pass rate was 72.5%. Of these candidates, 463 were first-time writers, with a 75.6% pass rate —93 were repeating the exam, of these 57.0% passed.

The FPE2, the second and final examination on the path to CFP certification, was written by 295 candidates. The overall pass rate was 60.7%. Of these candidates, 203 were first-time writers, 71.4% of whom passed—92 were repeating the exam, 37.0% of these passed. *On July 1, changes to the CFP certification program took effect. FPE1 is now known as the FPSC Level 1 Exam. The FPE2 is called the CFP examination.

CSI Testing Total number of exams written in 2013 at the Canadian Securities Institute:

68,325

Total number of Fellow of CSI holders:

6,100

Total number of Chartered Investment Manager (CIM) designation holders:

3,760

Total number of Certified International Wealth Professional (CIWM) designation holders:

513

Total number of Personal Financial Planner (PFP) holders:

4,380

Total number of Estate and Trust Professionals (MTI):

103

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1334_

WEALTHPROFESSIONAL.CA

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BY THE NUMBERS / CERTIFICATION

CFA Testing

10,161

The Toronto testing center is the largest in Canada hosting

10,025 in 2013.

Toronto is one of the largest CFA testing centres globally.

In Canada candidates sat for the CFA Level III exam this year. This is up slightly from

Of the 26,882 candidates that sat for the Level III CFA exam in June of 2014, 54 per cent passed the third and final exam. This brings the total number of CFA charter holders worldwide to more than 125,000.

5,300 of the candidates.

Around the world almost

55,000 candidates passed Level I, II, and III exams.

42% 44,796

Of the candidates who took the Level II exam, 46 per cent passed.

47,005 42 per cent passed.

Of the candidates who took the Level I exam,

The overall pass rate for all three levels was 46 per cent.

Over the years the pass rates for CFA tests have been falling. Historical Past pass rates: 2004

64%

1984

1964

95% 84% 1974

81%

1994

73%

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WEALTHPROFESSIONAL.CA

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See the broad range of solutions at tdadvisor.com Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. TD Mutual Funds are managed by TD Asset Management Inc. a wholly-owned subsidiary of The Toronto-Dominion Bank and are available through authorized dealers. Epoch Investment Partners, Inc. (“Epoch”) is a wholly-owned subsidiary of The Toronto-Dominion Bank and an affiliate of TD Asset Management. ® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank.

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NEWSMAKER INTERVIEW / JARISLOWSKY

STEPHEN JARISLOWSKY TO YOUNG ADVISORS:

LISTEN UP WP sits down with one of the most respected industry pioneers. His advice for professionals still looking to make their mark in a frustrating market is invaluable Few names carry more respect and admiration in Canadian wealth management than Stephen Jarislowsky. A living legend, he has been called the moral voice of Canadian capital markets. Born in Berlin, Germany, in the early part of last century, Jarislowsky grew up in the Great Depression. When his stepfather was targeted by the Nazis for hiding Jews he fled Europe in 1942. He ended up in Montreal where he enjoyed a long and successful career managing the money of many faithful clients.

His firm, Jarislowsky Fraser, manages over $40 billion today and is a legendary voice for shareholder rights.

Over the years, Jarislowsky has waded into many a proxy fight. His actions have shaped the culture of Canadian capital markets. His book, The Investment Zoo, is a must-read for any young advisor.

In a recent interview he burnished his reputation for not being shy about taking on controversial topics. He can hold forth on market dynamics, Canadian politics and the deep cycles of human history in a single conversation. Oh, and he can explain why it doesn’t make sense to hold large stock portfolios in an RRSP. Which might sound heretical to the average modern advisor. But, as Jarislowsky might put it, you just haven’t thought it through yet. Now in his 90s, his deep growl of a voice still carries a European-accent as it transfers the deep wisdom of a passing generation.

WP: What about the stock market today. Is it overvalued like so many say?

SJ: Stocks are not cheap. But then interest rates are so low that if you invest in bonds or cash you will lose money against inflation and taxes. So it all depends on your outlook on interest rates. If interest rates rise ... obviously, the market is high. If interest rates stay like this for twenty years, the market is still cheap.

I don’t think bonds are the place to be. The only place to be is some cash reserves, so if the market goes down 20 per cent you can buy 20 per cent cheaper. Any increase in inflation, or an increase in interest rates on a long-term bond will kill you. If you earn 1.5 per cent on a five-year bond and inflation is 2 per cent, you lose money by owning the bond.

Owning cash is even worse.

It’s not a tough world. It’s an unfair world. The people who have saved are being punished and the people who have been profligate are being rewarded.

That is the opposite of ethics and of fairness.

WP: But these low rates are stimulating the economy.

SJ: The stock market is high because real estate is high—far too high. If interest rates go up, real estate will become far cheaper, I can assure you. People will lose their homes. The whole Canadian real estate market is based on these low interest rates.

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WEALTHPROFESSIONAL.CA

I don’t think bonds are the place to be.

The only place to be is some cash reserves, so if the market goes down 20 per cent you can buy 20 per cent cheaper

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NEWSMAKER INTERVIEW / JARISLOWSKY

CANADA’S ‘WARREN BUFFETT’: THE LIFE AND TIMES OF STEPHEN A. JARISLOWSKY, CC GOQ. 1925: Born September 9, in Berlin Germany. He is the stepson of a steel mill owner ousted by the Nazis for harbouring Jews 1941: Emigrates to the United States, studies mechanical engineering at Cornell University. During the Second World War, he finishes basic training, studies Japanese at the University of Chicago and serves in counterintelligence in Japan after the war.

1949: MBA from Harvard Business School, goes to work at Alcan Aluminum in Montreal.

1955: Starts Jarislowsky, Fraser & Company Limited.

The business goes on to become one of this country’s most successful money management firms, overseeing $40 billion in assets.

2002: An outspoken defender of business ethics, Jarislowsky co-founds the Canadian Coalition for Good Governance with former head of Ontario Teachers Pension Plan Claude Lamoureux.

2005: Publishes The Investment Zoo: Taming the Bulls and the Bears.

The book sells more than 15,000 copies in Quebec, and pushes the French edition of The Da Vinci Code out of the top spot on the bestseller list.

2011: Jarislowsky’s personal wealth is estimated at $1.3 billion.

If you have a mortgage coming due and you have to renew it at five or six per cent rather than three, in places like Vancouver and Toronto, where you would be paying more than 80 or 60 per cent of your money on lodging, you are going to be against the wall unless you have outside help.

WP: Do remember any other time interest rates were this low?

SJ: I do. After World War Two, the interest rates were this low. In 1949 debt was being issued at one and three quarter per cent. [But] the problem today is that we can source anything from everywhere on earth ... especially the international companies.

What is holding the economy back right now is that we can’t raise labour rates [wages]. Labour rates are going to become far more of one commodity than they ever have been. If manufacturing, and even a lot of service jobs, are outsourced to low wage countries, wages all around the world will continue to converge. The average person in Canada is making $57,000, and the average person in China is making $6. The average person in Japan is making $30,000 and the average person in Korea might make $20,000. As our wages come down, you are not going to have a rich middle class. A lot of jobs are being eliminated in many, many industries, especially in the manufacturing and communication industries. So there is very, very low inflationary pressure.

WP: You are a well-respected investment advisor. What do you think of the current Canadian investment advisory industry?

SJ:I think it’s much too expensive. Our maximum fee is one-half of one per cent on an individually managed portfolio. To go to a mutual fund, they’ll take two and half.

WP: What about fee-based advisors?

SJ: It depends on fees. You still have to pay commissions; you still have to pay capital gains tax.

If you have somebody who likes to make a commission, they can take your account. I hardly ever take money for the stocks I buy. I buy stocks I can keep for 20 years. I don’t buy things that are going to go bankrupt in five years.

WP: What advice would you give to someone starting out in the industry today?

SJ:: I think it’s hard to get started unless you make money. If you want to get started, and not charge a high fee to clients, in the early years you will make very little money. We hardly ever made any money for seven years. We never charged more than we charge now. And you hardly have any clients. [But] if you charge higher fees, you are really not professional because you are taking money away from the people you are supposed to be a fiduciary for.

WP: What are the differences between the time you started and today?

SJ: Canada was a smaller place in terms of money.

You paid five cents for a coffee, now you pay two dollars. We’ve suffered from a hell of a lot of inflation in that time.

You have to add inflation to the taxes you pay.

The biggest beneficiary of inflation is the government. It is the debt that is being devalued in [terms of ] purchasing power. If you make 9% return, you pay 2.5% to your broker. That leaves 6.5%. Then you pay 30% tax on that, that’s almost 2%. Now I’m down to 4%. Then you have 2% inflation and I’m down to 2%. I take all the risk for 2%. How are you going to double your money with that? It’ll take 50 years to double your money. You’ll only have one real double in your life. If half of your portfolio is in bonds, you’re losing. Half of what you would have made would get eaten by the loss you would take on bonds, even at low rates of inflation. The average guy on the street isn’t told that.

WP: These aren’t the things that get into the Globe and Mail.

SJ: You can prove that anyone with relatively large means, an RRSP is something you should never buy.

Once you start paying out of your RRSP you pay as income. You don’t get any benefit for the lower capital gains tax or the dividend tax. If you take the capital gains tax, you only pay half tax. If you have a two million dollar RRIF, only one million belongs to you, the rest belongs to the government. If you make 9%, as our firm has done for private clients, I can assure you, if you paid the capital gains you would make more money than if you took it out as a RRIF. The only reason for a RRSP is to get someone to save. But other than that there is no advantage for a person who is disciplined.

You don’t hear any of these stories in the Globe and Mail. People don’t think enough. The phrase,

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WEALTHPROFESSIONAL.CA

‘I think therefore I am’, is not one most people consider. Except for the very poor, who don’t pay a high rate of tax. The government will get most of it. The poor won’t do badly. Anyone under $60,000 will be all right.

WP: What about the coming retirement of the boomers? Are you worried?

SJ: People live much longer than they used to, so if they don’t have a decent amount of money they’re going to run out. When I look at people around me, people hardly have any money. They spent it on all kinds of things throughout their lifetime. They never learned how to save. There were all kinds of missionaries telling them to spend their money on cars, vacations and restaurants. The saving economy is gone. Nobody encourages saving. Even the government wants people to spend to get out of the recession. But if people spend how are you they are going to be get out of the recession? At the end of the

recession people will be in debt. So that’s just stupid.

You have to pay off your debts and then they can start spending again.

Every generation thinks their generation can do better. It is people looking and thinking they can do better. But read the history. The politician buys the votes … whatever gets them re-elected. They want to be elected. Their career is based on being subject to the worst emotion we are subject to as human beings, short-termism. They are not being rational, logical. They are getting elected by a shortsighted population. When you look at Montreal and the islands, the governments have done nothing but buy votes of the employees of the municipalities.

There was massive turnover over hundreds of millions of dollars to these people. The whole thing has not made sense. It hasn’t made an economy. It was a buying of votes. People always think of the short term without ever looking at the long-term.

But this is how we are.

Do you take a balanced approach to generating income for your clients?

TD Asset Management certainly does.

Balanced income solutions With TD Asset Management’s balanced income solutions, your clients can gain from a broad range of asset classes, risk tolerances and global markets.

See the broad range of solutions at tdadvisor.com Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. TD Mutual Funds are managed by TD Asset Management Inc. a wholly-owned subsidiary of The Toronto-Dominion Bank and are available through authorized dealers. ® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank.

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Job Description:

Mechanical Specifications:

Contact:

Client: TD

Bleed: None

Acct. Mgr: Christian / Genevieve

Colours: 4C

Producer: Barry D

18/08/2014 9:20:25 PM

Surviving the

It’s harder than ever to generate riskadjusted return through a standard portfolio made up of stocks and bonds. But expert advisors continue to work out how to keep the pension promise in this odd, weird era of radically low interest rates Everyone knows the score: Rates on a 10-year government bond are just a bit over three per cent; the Bank of Canada rate has been at 1 per cent for years; the low rates mean the typical fixed-income segment of an investment portfolio is generating barely any cash; when you add inflation to the mix, bond portfolios are losing money. It’s no overstatement to say that it has never been tougher for the average advisor to keep the pension promise.

“There’s no yield out there,” says Jason Abbott, a financial planner and the principal of WEALTHDesigns.ca. “If portfolio is making 2 per cent but you’re taking out 5 per cent to fund your

Interest rates—a long, slow slide 3

3

2.8

2.8

2.6

2.6

2.4

2.4

2.2

2013-08-30

2013-10-31

2013-12-31

2014-02-28

2014-04-30

2014-06-27

2.2

Up but mostly down: Red represents the downward movement of Canadian rates, with green representing the rarer move skyward.

$ $

ULTRA-LOW INTEREST RATE SQUEEZE

$

FEATURE / BOND STRATEGY

retirement, well, there’s a problem there. People without large portfolios run the risk of outliving their portfolio. It’s tough.”

The radically low interest rates are good for some, of course. People buying a home or taking out a loan are benefitting. This is the stimulus central bankers tell us will save the economy. But the dark side of the low-rate story is that investors hoping to retire on payments from fixed-income have to re-think those plans. A $1 million “risk-free” bond portfolio generated up to $50,000 per annum several years ago but now generates just $25,000 year. That is, yearly income from fixed-income has been halved.

No wonder some are beginning to re-think assumptions about risk.

Today, modern portfolio theory is based on the idea that investors should have a portfolio split 60/40 between stocks and bonds. The stocks provide the growth, while the bond piece provides capital protection and income. This deeply held tradition is based on the long-held assumptions that bonds are risk-free, an assumption being challenged in this weird world of ultra-low interest rates.

Dean Owen, a Saskatchewan-based advisor, a past chair of Advocis and owner of Cherry Financial Services, explains the new thinking: “Investors have learned a troubling lesson...Bonds are not as risk-free as so many have come to assume.” Today, people are living longer than ever. At the same time, bond portfolios are returning less fixed income than ever.

The facts have Owen asking, “Where is the risk today?”

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WEALTHPROFESSIONAL.CA

The big risk today, according to Owen, is one an increasing number of advisors are now dealing with: “The big risk is that you outlive your funds. Capital preservation is what everyone is worried about. But you also have to make some money so that you don’t run out of funds in retirement.”

In the wake of the recession of 2008, many investors were scared into conservative investments.

Abbot has a name for these scarred investors, “GIC refugees.”

“They panicked. They have seen the worst of the worst and they are concerned it’s coming back. They want to be invested conservatively,” he says. But these same investors, scared back into fixed-income, now face what experts call longevity risk—the risk that they may outlive their retirement money. “There is a real risk in not having enough money to retire.

Remaining in GICs in an era of interest rates that are just two per cent is a risky move in itself now. To reduce interest rate risk you have to accept a little

risk,” says Owen. “To reduce risk, you should have some equity. Put equities back into the bond portfolio.

A little equity, that’s the key. You need risk to reduce risk.”

This is not to say anyone near retirement should be taking a flyer on penny stocks. Balanced mutual funds, which include fixed-income and stocks, make sense for the conservative investor these days. “A managed bond fund has greater risk than a balanced fund,” says Abbott. “There might be a little more volatility in the balanced fund. But you are protected a little bit better. You have to be creative.” Some of the other options are also providing shelter for refugees: A solid, conservative dividend fund; if you have to be in debt, provincial debt (which has slightly better interest rate, but is still relatively risk-free); steady and stable infrastructure investments have also been popular among those looking for yield and safety in this day and age.

Bay Street has been quick to answer the challenge

Some think low volatility always implies lower returns.

TD Asset Management suggests otherwise.

Low Volatility Equities TD Asset Management’s low volatility funds aim to deliver competitive returns with less volatility than their relative benchmarks.

See the broad range of solutions at tdadvisor.com Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed or insured, their values change frequently and past performance may not be repeated. TD Mutual Funds are managed by TD Asset Management Inc. a wholly-owned subsidiary of The Toronto-Dominion Bank and are available through authorized dealers. ® The TD logo and other trade-marks are the property of The Toronto-Dominion Bank.

0007020_M4544_4D.indd 1

8/12/14 5:37 PM

AUGUST 2014 | 17

3

M4544-4D.indd

Round

16-19_Bond.indd 17

Job Description:

Mechanical Specifications:

Contact:

Client: TD

Bleed: None

Acct. Mgr: Christian / Genevieve

Colours: 4C

Producer: Barry D

18/08/2014 9:20:52 PM

FEATURE / BOND STRATEGY

“Looking forward credit spreads can’t tighten any further.

Looking ahead, rates have to rise.

We’re at an inflection point. I call it that. We are cycling into a new rate cycle” Christine Horoyski

posed by six years of ultra-low rates. A new flood of products designed to deal with this low-rate environment have come onto the market. So-called floating rate funds, which compile various debt instruments into a security (and shift in terms of interest rates generated), have been mentioned as a possible investment. But some are wary of what’s in these funds. Dylan Brown is a certified financial planner with Brown & Associates in Windsor Ontario.

He worries banks have been off-loading subinvestment grade debt to fund companies, and this junky debt has ended up in some of the floating rate funds now on the market. “I’ve been doing this for 15-20 years. And I wonder what’s in these things. If I was going with a floating rate bond, it is perceived as low risk because we want to minimize the risk.

But I want to investigate this stuff. I wonder if we’re just getting packaged, non-investment grade debt the banks are getting off their books by sellig it out to various funds. That’s my concern. What’s in this stuff? As advisors we have to investigate this stuff for our clients,” he says.

Another option are so-called “go anywhere” bond funds. These funds see managers actively shifting among sectors, bond durations and types of debt as a way of balancing currency, credit and interest rate risk in the hope of generating steady risk-adjusted yield. That is, a bond fund that is constantly shifting its investments according to “whatever works.”

Christine Horoyski, head of the fixed income team at Aurion Capital, is the lead manager on one of these so-called “unconstrained” bond funds. “This is why we launched this total return fund. We recognized this a few years ago, this inability to create efficient bond solutions,” she says. By closely managing the

Step up and take your pick!

• “go anywhere” bond funds • managed bond fund • A solid, conservative dividend fund • provincial bonds • steady and stable infrastructure investments Advisors are encouraging their risk-averse clients to explore some relatively safe but higher yield alternatives to options in

portfolio, by “going anywhere,” the team has been able to pull out some wins. A well-timed investment in Australian government debt saw the fund generate five per cent return from a triple-A government credit (unheard of here in North America). “We made the same return you would in high-yield corporates. So you can find possibilities. But you have to look over the whole world,” says Horoyski.

But she also thinks the rate cycle is at a key point.

Interest rates are likely to move up, at least a bit, in the year to come. “Looking forward credit spreads can’t tighten any further. Looking ahead, rates have to rise. We’re at an inflection point. I call it that. We are cycling into a new rate cycle,” says Horoyski. She says rate rises traditionally come six to nine months after good economic data starts to appear. If good economic data begins to arise through the summer, there could be a rise in rates this winter and the spring of 2015. “We think we’ll see the end of quantitative easing by the Fed in the fall or middle of 2015,” she says. This shift in market direction will have consequences.

The dynamics of the bond market are basic: If interest rates rise, older bonds paying lower rates drop in face value. Newer bonds with higher rates of interest increase in value. As investors abandon lower-rate bonds, there could be a cratering in the price of existing bonds as the investing herd gets back into equities, moves to higher rate bonds. “My concern is that we see many holders begin to sell and get out. Eventually people will say they don’t want to be in the market. There could be a liquidity crisis,” says Dylan.

There are many considering such a scenario. The big brains at Russell Investments recently modelled what could happen to bonds in the case of an interest rate rise. Keith Pangretitsch, director of national sales at Russell, described the unsettling possibilities.

Modeling a rapid rate rise (an admittedly, unlikely scenario) a rapid one percent rise in rates would see an eight per cent decline in the value of existing, lower-coupon bonds. A rise of 200 basis points, or two points, would lead to a 17 per cent decline in principal. A three per cent rise would knock 24 per cent off the valued of portfolios “This is what people are worried about,” says Pangretitsch. “Sure, you can hold the bond to maturity, cut the coupons, and get the principal back. But there is a lost opportunity cost in staying invested in bonds.” That is, step carefully in the new world of ultra-low rates.

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18/08/2014 9:21:00 PM

Become a Certified Necessity.

TM

Helping people plan for their future financially isn’t just a way to make a living. It’s a way to make a difference.

When you become a CERTIFIED FINANCIAL PLANNER® professional you have the opportunity to give clients peace of mind. Research shows that Canadians who work with a CFP® professional feel their financial goals and retirement plans are more on track, their ability to save has improved, and they’re more confident they can handle the inevitable bumps in life.

Learn how to earn the CFP designation. It’s the industry gold standard in financial planning—don’t settle for less.

To learn more about CFP certification, visit beafinancialplanner.ca

CFP®, CERTIFIED FINANCIAL PLANNER® and are certification trademarks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB). Financial Planning Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB. All other ® are registered trademarks of FPSC, unless indicated. ©2014 Financial Planning Standards Council. All rights reserved.

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CERTIFICATION / SURVEY

CERTIFICATION CERTIFICATION SURVEY

SURVEY 2014 2014

The number of designations available to Canadian wealth professionals is daunting, if not confusing. How to make sense of what can sometimes seem a large vat of alphabet soup? From the CFP, to the PFP, to the CIWM, to the CIM, the MTI and all the rest, the list goes on. And on.

Or so it seems.

But these designations are more than just letters. The coursework that goes into gaining accreditation is the skill set an advisor brings to the client’s table. It is the designation that makes the advisor. And so understanding what it is all these letters represent is no small thing. Over the past few decades Canadian capital markets and cultural institutions have evolved to the point that these institutions play a key role in the life of the population, today more than ever. “Equity culture” blossomed in the 1990s, and Canadians have become dependent on financial assets – and their advisors – to effect and live their life.

In June we posted a survey on our website. Over the next month hundreds of advisors filled it out, replied and made their voices heard on the subject of certification – which ones carry the biggest bang for the buck, which ones the public recognizes, etc. Wow, did

Wealth Professional asked financial advisors what they thought about Canadian financial planning designations. And you, the industry, answered.

we ever get an earful.

Turns out there are as many opinions about certification as there are designations in this country, although not all are positive. There are real grievances. It seems there is a real sense of dissatisfaction with the certification industry that is sprawling, expensive, profit-driven, according to some advisors. With Canadian boomers retiring in ever greater numbers, the importance of this nation’s wealth managers will only increase. So the importance of the industry will grow in the years to come. But, if our inaugural survey is suggestive of reality – and we think it is – there is some serious work to be done to get the certification process up to speed.

The industry has matured. The designation process in this country must do the same. This was a message many advisors delivered through their comments. Sure, there were some glitches and oversights in this survey. We heard you on that, and we’ll tweak the survey for next year. But don’t overlook the message advisors are sending in their answers to our 14 questions – it’s time for this maturing industry to get serious about certification.

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WEALTHPROFESSIONAL.CA

1. What designations of the following do you currently hold?

87.4%

16.5%

12.9% Personal Financial Planner

With more than 16% of respondents holding either or both the CIM and CLU, they come closest to challenging the pervasiveness popularity of the CFP, held by 87.4% of those who took the survey

16.3% 8.5%

Chartered Investment Manager

PFP

CIM

Chartered Life Underwriter

CLU

CFC

Chartered Registered Financial Financial Planner Analyst

CFA

Certified Financial Planner

4.9%

4.4%

3.2%

Chartered Financial Consultant

RFP

Chartered Accountant

CA

TEP

4.9% Trust and Estate Practicioner

1.7%

1.7%

Certified Management Accountant

Chartered General Accountant

CMA

CGA

Honourable mentions: Our survey specifically asked advisors for their opinions on 11 of the best-known designations in the industry. But respondents offered feedback on some of the many other certifications they hold: yy yy yy yy yy yy yy yy yy yy

Certified International Wealth Manager Certified Divorce Financial Analyst Elder Planning Counselor Certified Health Specialist Associate Institute of Canadian Bankers (discontinued) Fellow Life Management Institute Academy of Life Underwriting Fellow Canadian Securities Institute Financial Divorce Specialist Certified Professional Consultant on Aging

yy yy yy yy yy yy yy yy yy yy

Certified Life Underwriter Registered Retirement Consultant Chartered Strategic Wealth Professional Chartered Financial Services Broker Fellow of the Credit Union Institute of Canada Associate of the Institute of Canadian Bankers Group Benefits Associate Family Enterprise Advisor Registered Retirement Consultant Chartered Alternative Investment Analyst.

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CERTIFICATION SURVEY 2014

CERTIFICATION / SURVEY

2. What certification gives the most value for money?

COMMENTS FROM SURVEY CFP 65.3% CA 8.3% CFA 7.8% CLU 5.3% CIM 4.9% RFP 2.4% CGA 1.7% TEP 1.7% PFP 1.2% CFC 1.0% CMA 0.5%

65.3%

“Clients have no idea what any of these mean except for the CA.” “The MBA has the most value.”

“Elder Planning Counselor – I have learned how to talk to three generation and not be misunderstood!”

“Not sure the designation is worth anything except that they collect my fees every year.”

Certification speeds the learning curve to compete with experienced advisors ... and shows commitment to serving your clients and professionalism. I just finished my CLU – Chartered Life Underwriter – and am already half way into my CFP. As I continue my career I can assure you there will be more certifications added —Victor Godinho, senior financial planner, mortgage agent, VTAG Financial Group

3. What certification has been most useful in your career?

69.6%

CFP 69.6% CLU 7.4% CA 4.9% CIM 4.9% CFA 3.6% PFP 2.8% RFP 2.3% CGA TEP CFC CMA

1.5% 1.3% 1.0% 0.8%

COMMENTS FROM SURVEY ”Staying informed has been the most useful thing.

Read a wide variety of news about the markets has been the most useful, common sense.”

“CFP has become the entry requirement for a number of professional groups; however, there are far too many people calling themselves financial planners, which confuses the public.”

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WEALTHPROFESSIONAL.CA

CERTIFICATION SURVEY 2014

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CERTIFICATION / SURVEY

CERTIFICATION SURVEY 2014

4. Is the current certification regime in Canada adequate in terms of training and education?

COMMENTS FROM SURVEY “The regime is adequate; however, clients don’t know which credentials to seek for particular needs.”

“Much of the ‘education’ we end up paying for multiple times.”

63.1% Yes

”The financial services industry needs mandated professional standards from the government. The CFP is the logical choice.”

37.1% No

“Certifications are unequal in their rigour, which makes them confusing for clients. Also, the CLU certification is woefully misnamed. It has far more to do with estate planning and wealth transfer than life insurance and underwriting. “

5. How long did it take to achieve your current level of certification?

30

28.6% 25.5%

25

23.1%

1 year 2 year 3 years

20 15 10

“It’s difficult to find easy-to-access, inexpensive training for CE requirements.”

“The mainstream professional certifications are fine. However, there are a number of want-to-be designations that are confusing to clients and not up to the same professional standards of CFP, CIM, CFA, and CPA. “It’s all over the map, overdone. It’s a money grab.”

4 years

13.1%

5 or more years

9.7%

“There are too many marginal designations.”

5 0

6. What will be the next designation that you will try to achieve?

33.5%

TEP CLU CIM CFP CFA RFP CFC CMA CA PFP CGA

33.5% 17.5% 16.0% 10.9% 10.7% 3.9% 1.7% 1.7% 1.5% 1.5% 1.2%

COMMENTS FROM SURVEY Question Six: What will be the next designation you try to achieve?

”Certified International Wealth Manager (CIWM)” “Not sure - maybe TEP or the new certified executor program given the age of many of my clients.”

“I have enough qualifications to lead me through my final 10 years at most of working.”

“No interest in paying more in annual dues to maintain all these certifications!”

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WEALTHPROFESSIONAL.CA

The Trimark way

CERTIFICATION SURVEY 2014

In 1981, Trimark began with a vision that we could create wealth for our clients by investing in great companies with strong growth prospects at undervalued prices, whose true value would be realized over time.

Today, we remain committed to our patient, time-tested discipline.

Great investment ideas are rare.

Our portfolios are not closet index funds.

Trimark

When Trimark uncovers a great idea, we demonstrate our conviction by investing heavily.

Index

Trimark challenges conventional wisdom to find out-of-favour, misunderstood and overlooked businesses. We see what others miss.

We do our research the hard way.

We dig deeper. We scour the globe to uncover investment opportunities and personally visit companies to develop an informed opinion.

Clients are best served when investment teams share research.

Great investors are extremely price conscious.

At Trimark, we support a culture of collaboration and rigorous debate to uncover what we believe are the very best investment ideas.

Trimark invests in quality businesses that are temporarily undervalued. We will not overpay, even for a great business.

Market fluctuations are your friends, not your enemies.

Trimark takes advantage of short-term market downtrends and invests in businesses that have been oversold.

We invest with our clients.

Trimark investment managers invest their personal savings in their own funds − aligning their interests with our investors.

Our culture is our competitive advantage.

Great businesses reach their true value over time.

Our independent thinking gives us the courage to invest differently in the short term in pursuit of strong results over the long term.

The faces may change, but the Trimark investment philosophy is timeless and will remain the underlying strength of our portfolios.

We define risk as losing the capital you have entrusted to us.

Trimark protects your capital by avoiding and striving to eliminate investments where we see a danger.

Get to know our discipline.

Visit www.knowingpays.ca.

Connect with us:

Trimark

Commissions, trailing commissions, management fees and expenses may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the simplified prospectus before investing. Copies are available from your advisor or Invesco Canada Ltd. Invesco® and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence.

AUGUST 2014 | 25 Trimark®, Knowing pays® and all associated trademarks are trademarks of Invesco Canada Ltd. © Invesco Canada Ltd., 2014

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CERTIFICATION / SURVEY

7. Have you ever failed a certification exam?

”Those of us who are ethical pay for everyone else’s problems by being overburdened with ridiculous policies”

80.3% No

19.7% Yes

800

8. For each of the designations you hold, rate its accreditation-granting organization in terms of ability to effectively police and censure errant advisors.

No. of respondents

700

500

1 - Not Well 2 - Adequate 3 - No Opinion

400

4 - Sufficient

600

5 - Very Well

300 200 100 0

CFP

PFP

CGA

CMA

CA

CFA

CFC

CIM

CLU

RFP

TEP

"All (certifications) have the issue of non-members claiming to have this knowledge. One of the most egregious areas is in fee disclosure - the insurance industry continues to have NO requirement to disclose any fees that they earn. That we are only introducing proper disclosure of MER for investments and starting the process of eliminating commissions altogether is long overdue.

This is a major policing issue that is not addressed at all by most of these bodies”

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WEALTHPROFESSIONAL.CA

CERTIFICATION SURVEY 2014

THE IMPORTANCE OF MULTIPLE DESIGNATIONS How the elite advisors get to the top and stay there: Stacked certification Cyrilla Saunders is a self-described knowledgeseeker. The head of Saunders Wealth Advisory Group, a division of CIBC Wood Gundy based in Charlottetown, PEI, she has five designations on her wall. She is currently working on a sixth. To Saunders, her designations have given much more than some letters after her name. “The amount of knowledge that is currently warehoused in my brain as it pertains to the financial services industry, and which pieces of that warehouse I go to, to source information as it pertains to the individual client, is superior to if I had never taken all those courses,” she says.

Reg Jackson, co-CEO of the JMRD Wealth Management Team, a division of National Bank, also has five designations. To him, it’s all about building credibility with your clients, and “setting yourself apart from the masses.”

But with more than a dozen Canadian designations to choose from, and others offered in the United States and internationally, knowing which ones to go after can be overwhelming. The good news is, you don’t have to decide everything at once. Some of the designations build on work you’ve already done, and as your career progresses you’ll be able to see what types of designations will best serve your client base.

GETTING STARTED Jackson says when someone starting out in the industry asks him which designations to pursue, his question back is: “What do you want to do in your practice, and do those things that you want to do in your practice require a licence?” Of course, the first step to conducting business as a financial advisor who deals with securities is to become licensed through the Canadian Securities Institute.

This means taking your Canadian Securities Course, the Conduct and Practices Handbook course, going through 90-day internship at your firm, and then,

within 30 months of being licensed, taking the Wealth Management Essentials course, also offered by the Canadian Securities Institute. If you want to deal with options or futures, there are additional courses to take to become licensed in those areas.

From there, if you want to help clients with overall financial strategies, you might decide to pursue either the Certified Financial Planner (CFP) designation from Financial Planning Standards Council or the Personal Financial Planning (PFP) designation from the CSI. (Jackson holds the PFP designation.) For people whose interest is more in portfolio management, the Chartered Investment Manager (CIM) designation is one step towards being able to trade securities on behalf of a client.

(You also need to get endorsement from your firm.)

Another route towards portfolio management is the Chartered Financial Analyst designation (CFA) but it’s a very comprehensive designation that might AUGUST 2014 | 27

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CERTIFICATION SURVEY 2014

CERTIFICATION / MULTIPLE DESIGNATIONS

be more than you need as a personal financial advisor (and better-suited for those who want to manage money for institutions). Jackson, for one, specifically chose not to go after the CFA designation, as he simply didn’t feel he needed it to do his job.

For those interested in wealth transfer and estate planning, the Chartered Life Underwriter designation offered by Advocis is available.

In Jackson’s experience, one strategy is to keep writing as many exams as you can after writing your licensing exams. “There is tremendous overlap in the content,” says Jackson. “Asset allocation is asset allocation. If you’ve studied, keep going.”

STANDING OUT As you move forward in your career, both Saunders and Jackson say, it’s important to find something that differentiates you from others. For Jackson, he feels that’s his Fellowship of the Canadian Securities Institute. To achieve this title, an advisor will have to have at least one other qualifying designation, complete coursework and have at least seven years of Canadian work experience. Jackson also feels his Certified Investment Management Analyst (CIMA) designation, from Wharton business school in Philadelphia, gives him an edge over his competition.

“It’s always about the degree of difficulty. It’s going to give you tools to provide a level of service to clients that’s above and beyond somebody who does not have those designations,” says Jackson (he is also licensed to work in the United States).

Saunders feels her work to get her Certified International Wealth Manager designation has helped her better service her clients with a full package of tools and skills. This designation, formerly the Chartered Strategic Wealth Professional, is suited for people who work with high-net-worth clients. It brings together both the financial planning side and the investment side of the business. “I am really passionate about helping people on the full gamut of wealth management.

Some of this is about investable assets, another part is ensuring that their business is structured appropriately and managed to benefit themselves and their families, in terms of real estate holdings, personal assets, etc.”

ADDING VALUE While prestigious designations might bring potential clients in the door, it’s the quality of the services you offer them that will keep them coming back.

“The requirement for knowledge and credibility in the industry is large today compared to even a few decades ago. The ability to grow within this industry, without that credibility, is very difficult,” says Saunders. Because her client base includes many independent women, business owners and other high-wealth individuals, her CIWM designation helps her serve those people. She also has her Elder Planning Counselor designation and is currently studying for her Chartered Financial Divorce Specialist designation. A final designation she wants to pursue before putting away the books for good is the Trust and Estate Practitioner designation (TEP). “Most of the people we service have large enough wealth that we really should be incorporating the benefits of trust,” she explains.

BALANCING ACT While studying and writing exams for the various designations can be time consuming, the work doesn’t stop with the end of classes. Most designations require that you do ongoing continuing education credits. “You have to stay on top of your designations,” says Jackson. “The downfall to having too many designations is that it leads to even more continuing education credits.” Saunders says she gives up a minimum of one week (cumulatively) for study time. She says the key to getting your coursework done is to block time off in your calendar and stay focused on the task at hand. To balance your career, continuing education and family life, says Saunders, it’s important to know what you’re capable of doing with the time you have, “and then really compartmentalizing the pieces as they come through.”

SPREADING THE WORD Having the designations is one thing, but it’s also important to promote your credentials to your clients and the community at large. On Saunders’ team of two associates and two admin, everyone is licensed and one of her associates has two designations while the other has one. “We showcase, promote and provide accolades to every one of my team members as we receive a new designation,” she explains. She mentions another professional class: A doctor doesn’t need to convince people to come through his door. But in the financial advisor business, “there’s a kabillion of us out there trying to differentiate ourselves. My designations show my clients that I’m not asleep at the switch.”

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WEALTHPROFESSIONAL.CA

CERTIFICATION SURVEY 2014

Superior risk-adjusted returns. Lower volatility. We’re not casual about anything.

Sentry, Sentry Investments and the Sentry Investments logo are trademarks of Sentry Select Capital Corp.

AUGUST 2014 | 29

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18/08/2014 11:59:19 PM

CERTIFICATION / CLIENT CARE

SHOW YOUR CLIENTS YOU REALLY CARE Finally, Canadian advisors can get a designation in responsible investing. It’s no surprise that this new certificate comes from Deb Abbey, the heart and soul of RI in Canada

Deb Abbey’s approach to the investment advisor business has always been a bit against the grain.

Perhaps that’s because in a previous career, Abbey was the project director for the David Suzuki foundation. “While I was there I developed an interest in investing capital to the benefit of shareholders and stakeholders,” she explains. Her interest in looking at shareholder and stakeholder value with a broader lens would lead Abbey down a new career path as a socially responsi-ble financial investment advisor. She went on to become an expert in the field and is now the CEO of the Responsible Investment Association. Her knowledge and passion has helped shape the responsible investing industry in Canada today. What began as a fringe investment strategy has become one of the world’s fastest growing investment categories, with approximately $600 billion in RI assets in Canada.

“It’s not just about my values and your values anymore,” says Abbey. “It is about managing risk to shareholder and stakeholder values. Companies don’t operate in a vacuum.”

When Abbey left the David Suzuki foundation in the mid-90s and obtained the requirements she needed

to become a financial advisor, it was a time, she says, when, “hotshot CEOs” would come in to a company, strip out middle manage-ment and focus solely on bottom line profitability. At the same time, issues such as climate change, water scarcity and the global supply chain were starting to dominate the business pages.

“I found it quite fascinating and wondered if there was an approach to investing that really looked at the long term,” recalls Abbey. She was hired at Wood Gundy in 1995 and around the same time she attended a social investment conference in Vancouver. There she met a man by the name of Michael Jantzi, who was providing environmental, social and governance (ESG) research on the TSE 300 companies. (Jantzi Research is now Sus-tainalytics, a leading global provider ESG investment research and analysis.) “I used that research to really screen out the laggards and identify the leaders in the portfolios that I was recommending to the clients.” Within about five years Abbey was managing assets for a number of different charities and other organ-izations. In 2000 she decided to strike out on her own, and launched Real As-sets Investment Management, the first investment

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management firm in Canada to focus exclusively on socially responsible investment. (Abbey sold that company to VanCity in 2005.)

Today, the term socially responsible investing has been replaced with the more encompassing “Responsible Investing.” “It represents socially responsible in-vestment, ethical investment, sustainable investment, community investment, mission-based investment and more recently, impact investment.” says Abbey. “That term reflects the revolution from just screening out the companies we don’t like to integrating environmental, social and government criteria into the selec-tion and management of all of our investments.” Anyone who thinks these fac-tors don’t matter just needs to look back to the collapse of the Rana Plaza gar-ment factory in April 2013. When news broke that Loblaws’ Joe Fresh clothing was among the brands sewn at the factory, “overnight people were checking the tag in their T-shirts to see if they were wearing Joe Fresh clothes,” says Abbey. “Loblaws did some very responsible things around that incident,” she adds.

“Other companies haven’t done as well as far as protecting their own brand.” However, arguably the biggest ESG issue facing companies today is climate change. “We’re finding companies are really having to adapt quickly to address some of the worst impacts of climate change,” says Abbey.

A 2011 Ipsos Reid survey (conducted for Standard Life) showed more than half of Canadians would be interested in responsible investments if their performance was the same or better than the alternative.

CERTIFICATION SURVEY 2014

“Most advisors don’t talk about this to their clients and many clients would like them to” Deb Abbey

But at the same time, only 15 per cent said they were knowledgeable about this type of investment. Of those that had spoken with their financial advisors about responsible investments, more than half had brought it up in conversation themselves. “Most investors don’t talk about this to their clients and many clients would like them to,” says Abbey. Abbey says some clients are led to believe that responsible investing means poorer performance, but insists that’s not the case. The Jantzi Social In-dex, which is made of up 60 Canadian companies that pass a set of environ-mental, social and governance criteria, has outperformed the TSX by about 28 basis points a year (annualized since inception.)

“Our world is too complex and the tools that investment managers have traditionally used to manage risk simply aren’t up to the job any more. We need to know how these companies are managing the future. It’s just common sense.”

To help Canadian investment advisors incorporate responsible investing into their practices, the Responsible Investment Association recently launched the Responsible Investment Advisor certification program. To become certified, you must complete the RI Essentials course, be a member of the Responsible Investment Association and industry regulatory bodies in good standing, agree with the Responsible Investment Association statement of purpose and complete an annual continuing education update.

RI ESSENTIALS ÎÎ 10 to 12 hour course ÎÎ uses real-life case studies to illustrate the materiality of ESG issues in business ÎÎ introduces strategies for identifying and managing new approaches to ESG risk ÎÎ identifies methods for integrating sustainability data into financial modelling Source: http://www.standardlife.ca/en/media/press/news/2011/oct27_2011.html

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CERTIFICATION / CERTIFIED FINANCIAL PLANNER

NEW PATHWAYS TO THE CFP The Financial Planning Standards Council updates the CFP program When it comes to designations in Canada, the Certified Financial Planner designation is considered by many the gold standard in personal wealth management. It also takes a heck of an effort to achieve. A recent revamp of the program will see previous experience count towards achievement of the designation.

As of July 1st of this year the Financial Planning Standards Council announced two new “pathways” to the CFP program that will make it much easier for those with relevant experience or other designations to gain certification as a CFP. Key among the shifts: Those with existing designations, in particular the personal financial planner, or PFP designation, will allow a candidate to skip some basic course material on their way to accreditation as a CFP. Joan Yudelson, vicepresident of professional practice at the Financial Planning Standards Council (FPSC), explains, “Existing formal policy was that other designations weren’t considered, including the PHP, which is held by many advisers working in banks. We had an opportunity to reconsider policy...we needed to consider that there is not one path to the CFP. The PFP is a very relevant designation. We’re acknowledging that a lot of people have that designation.”

In the past, the first step toward CFP certification was to attain status as FPSC Registered Candidate program. This was a sort-of junior CFP status that gave

candidates basic skills in financial planning. The new pathway to full CFP accreditation will let those with a PFP skip this step and go straight into the Capstone program, which is the preparation course for full accreditation as a CFP. Holders of other relevant designations like the Pl. Fin., or a CFP from another member territory, can also apply to become an FPSC Level 1 Certificate in Financial Planning (the new category that replaces the old FPSC registered candidate status).

The other new pathway toward the CFP will acknowledge those with relevant professional qualifications. Registered CAs, CGAs, CMAs, CPAs, CFAs, CLUs, Fellows of the Canadian Institute of Actuaries (FCIA), lawyers and Quebec notaries, will be able to apply for exemption from the core curriculum education program. Those applying through this new “relevant professional qualification” pathway will have to have a minimum of five years of financial planning work experience, as well as attestation from their governing professional body confirming their qualifications and good standing.

The “standard route” for achieving the CFP still goes through core curriculum. Those taking the the traditional route now have to pass the FPSC Level 1 examination, submit an application, successfully complete the Capstone course and then pass the CFP examination. Throw on three years of qualifying financial planning work experience, and you’re there.

According to Yudelson there are still many going through the full process. Becoming a financial planner is increasingly an option for younger people. “People are looking at this as a profession now right out of high school. It used to be people started in banks and then came over to financial planning,” she says. “But now some are taking this up right away as a career, which is heartening. There is a desperate need for financial planning all over the globe.”

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CERTIFICATION SURVEY 2014

CERTIFICATION / NEXT DESIGNATION

TAKING THE NEXT STEP: OK, so you have your CFP, but what should your next designation be? Very well certified Montreal advisors Joseph and Nick Bakish are so glad you asked

In our opinion, experienced financial planners (that is, those who have obtained their CFP or plan Fin in Quebec) often wonder what the next best program is to undertake. With the alphabet soup of designations out there this decision is a daunting task.

Unsurprisingly, the short answer is “it depends.”

Factors that should affect this choice should be based on the type of practice the financial planner wants to achieve. The CFP designation should be looked upon as the basic educational requirement the financial planner needs. Subsequent designations should provide a specific focus on an area of financial planning.

For example, the Chartered Financial Analyst (CFA) should be undertaken by those interested in focusing their practice on investment planning. The Chartered Life Underwriter (CLU) deals with wealth management and insurance planning. The Trust and

Estate Practitioner (TEP) focuses on the use of trusts and legal work in estate planning.

Should a planners want to focus their practice on dealing in the realm of estate planning, a growing segment (and income producing line) of financial planning, the TEP represents an ideal choice. But planners beware: this designation has three routes to choose from, all of which are quite challenging.

The first route involves course work, the second route involves proven work experience and essay writing, while the third route requires an invitation from local board members and at least 10 years of experience in the trust and estate planning fields. (writer’s note: I elected to take the course route as I preferred tests to essay writing and didn’t have the 10 years of work experience at the time).

Obtaining the TEP designation confers several advantages over peers attempting to capture the

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CERTIFICATION / NEXT DESIGNATION

THREE PATHS TO STEP CERTIFICATION

Nick Bakish: CFA, F. Pl, CLU, TEP Scoring in the top 10 – No. 6 to be exact – on WP’s Top 50 Advisor’s in Canada list, released in January, Nick has received numerous awards. He obtained his CFA, along with the Trust and Estate Practitioner, Chartered Life Underwriter and Financial Planner designations. Nick is a member of the Financial and Estate Planning Council of Montreal and the Society of Trust and Estate Practitioners.

He participated in the Million Dollar Roundtable.

Joseph Bakish CFA, CFP, CLU, CHS In 2005, Joe began working with Investors Group and has received the Investors Group Pillar award – recognizing an advisor’s outstanding efforts at the beginning of their career – not once, but twice. Joe earned the Certified Financial Planner (CFP) designation, the Chartered Life Underwriter, the Certified Health Insurance Specialist and the Chartered Financial Analyst designation. He volunteers with the Financial Planning Standards Council marking and designing exam questions for the CFP exam. He also serves on the board of the Financial and Estate Planning Council of Montreal.

The Trust and Estate Practitioner may be the next best thing in designations for advisors looking to carve out a larger share of the ageing baby boomer market.

But first you’ll have to decide which of three routes to get you there Course work

Proven work experiencte and essay writing

estate planning market. Knowledge, as always, is one of the main benefits, but networking and credibility are not to be overlooked. The body administering the TEP, the Society of Trust and Estate Practitioners (STEP), is an international organization made up of local chapters. This allows for exchanges with peers on a global scale, and with colleagues in the local jurisdiction. Furthermore, many of the members of STEP are also practicing law directly, creating a great opportunity for meeting and building a list of centres of influence to assist in bringing your plans to fruition.

Finally, a client who sees that you have obtained the TEP designation will have more confidence in your abilities and advice, that it also provides an opportunity to discuss this element of financial planning.

With a potential 1 trillion dollars in assets transferring from the boomer generation to the next, the TEP is surely to become a cornerstone in building a successful practice in this area and of course, those who are prepared and properly educated will be in the best position to capitalize on the opportunity.

An invitation from local board members and at least 10 years of experience in the trust and estate planning fields

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CERTIFICATION / SURVEY

CERTIFICATION SURVEY 2014

800 700

9. For each of the designations you hold, is the cost of certification and maintaining that certification excessive or reasonable

No. of respondents

600 500

Excessive Reasonable

400 300 200 100 0

CFP

PFP

CGA

CMA

CA

11. More generally, do the costs of maintaining multiple certifications as an advisor outweigh the benefits?

CFA

CFC

CIM

CLU

TEP

RFP

COMMENTS FROM SURVEY Question Ten: How much time and/or money are you currently spending to maintain your certifications?

“”Approximately $1,000-$1,500 per year when factoring in association dues as well as cost of CE courses.”

“Thirty hours per year or more. It is vital to remain informed and current.”

54.1%

No

45.9%

Yes

“I have not formally tracked either issue as I feel it necessary to maintain them and I believe in continuing education.” “$ 1,500....About one meeting a week.”

“Lots of time and money.”

“The cost is increasing as the courses I used to take for free can only be used for 25% of my CE credits.”

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CERTIFICATION / CSI

SOMETHING FOR

THE ELITE ADVISOR The Canadian Securities Institute moves into the global wealth management pool with an elite designation targeting advisors who serve high-net-worth clients

Of the 80,000 advisors in this country, most are focused on the broad Canadian middle class, a task for which common designations like the PFP or CFP make perfect sense.

But what about the ambitious advisor focused on that juicy market segment of ultra high-net-worth clients? Where to go for the skills necessary to manage a jet-setting lifestyle and the complex international tax needs that come along for the ride?

For those looking for the designation that delivers the high-end skills necessary to lift their careers, look no further than the new Certified International Wealth Manager designation from the Canadian Securities Institute.

When it comes to servicing clients with homes in different countries, private banking and complex international tax situations, financial planners need to load up on a whole new set of skills. Recognizing a gap in the market, this past February, the Canadian Securities Institute began offering the Certified

International Wealth Manager (CIWM) designation.

Designed to instill advisors with the knowledge necessary to handle the wealth of well-off internationally based high-net-worth clients, it can been seen as the Cadillac of designations.

Harp Dhillon, is the principal of the Harp Dhillon Group at RBC in White Rock, British Columbia. He originally did a CFP. But he has acquired the CIWM designation as well. He finds the designation works for the many well-off clients in this community. White Rock is not far from the U.S. border his client base includes both loggers and tech types who commute to Seattle. There is also a big retirement community in the city. “These people like living here. They want stability and reliability,” says Dhillon. A growing segment of his business is made up of non-Canadians.

The Great Recession of 2008 confirmed that Canadian banking institutions here are among the best in the world. “When it comes to high -net-worth individuals, Canadian financial institutions come out on top of the list of stable institutions. I believe that’s where the

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CERTIFICATION / CSI

It’s years’ worth of work, getting to that level. You need work experience to do the CIWM, and so it takes time growth is.” They are affluent, looking for complex financial solutions from planners, says Dhillon. The CIWM provides the skills he needs to manage these clients, even if the coursework is rigorous.

“It’s years’ worth of work, getting to that level. You need work experience to do the CIWM, and so it takes a long time. But then I’m committed to education,’” says Dhillon.

Marshall Beyer, CSI’s senior director of academic standards, recently explained to WP how the new designation came together.

Over the past year, CSI forged a partnership with the Association of International Wealth Management (AIWM). Based in Switzerland this globally focused organization can be found in 10 different countries.

Beyer was able to forge a deal with AIWM that set CSI as the singular provide of the CIWM in North America.

“We haven’t gone into the United States. But once we figure out how to do it, we’ll be going in there,” he says. The move could be a lucrative one.

In an era when capital and people are more mobile than ever, there is a need for a designation that can help advisors develop the skills necessary to deliver the kinds of services that the modern high-net-worth types require. “With financial planning, you’re the relationship manager, the QB of the individual’s affairs, but you’ve got to be conversant in all these other issues.

Managing the money of elite, high-net-worth individuals – these are the individuals more apt to have to complex issues,” says Beyer.

The CIWM program covers things like offshore investing and international tax issues. No surprise, but there has been a lot of interest from the private client divisions of the big banks. “They’re going after the same type of client,” says Beyer.

One component of the course involves the use of credit in a wealth portfolio. This is not an issue the average advisor is likely to deal with. At the high-net

worth level there is, as Beyer says, “in-money,” that is the cash that the client brings in. But there is also often use of so-called “out-money,” funds provided by a bank to leverage an existing portfolio. “With this designation, the intent is to cover both,” says Beyer.

Many of the advisors getting into this program will be fee-based. “Obviously, the IIROC member firms are well-represented,” says Beyer. “The way the industry is moving, particularly with the IIROC member firms, they are moving to a more fee-based business. These are the skills they need.”

Fee-based advisors only really work for the highnet-worth segment, which is someone Beyer defines as a client with at least $1 million in investible assets.

“You cannot do a fee-based biz for a small client. You just can’t. Fees on a $50,000 portfolio are too small.

You would have to take on hundreds. You can’t service them,” says Beyer.

There will be debate about just what defines a high-net-worth client. Beyer points out that he or she is also a client with potential. “The young physician coming out of school with debt, but is going to generate great income in the years ahead, is also in this class,” he says. “It’s not the wide end of the funnel. This isn’t frontline banking. This is a niche credential. Not everyone deals with HNW. The market size is less than it would be for the financial planner in the mainstream, but it’s growing.”

Beyer describes how he sees the new CIWM fitting in along the spectrum of designations in Canada. “The CFA, the designation for the institutional money managers, is at one end of the spectrum. The CFP—the designation for the financial planner in the mid-market client—is at the other. The CIWM holder takes attributes of both sides. We want the designation to fall in the middle,” says Beyer.

Today, there are worldwide somewhere between 2,000 and 2,500 holders of the CIWM. If all goes according to plan, there will be many more in North America in the years ahead. AIWM is already in India, Hong Kong and Europe. “Hopefully the U.S. will follow. It’s an exciting time to be partnering with the AIWM,” says Beyer. “This was our intent, to create the next major designation of the wealth management area. We would really love to establish an international standard for wealth managers, similar to CFP and CFA. The hope is to launch in the U.S. in the year ahead.”

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CERTIFICATION SURVEY 2014

12. Was your overall experience with a certification granting institution positive or negative?

10% 90% POSITIVE 10% NEGATIVE "I believe that, as mentioned before, with the increase in popularity of the advisor position among younger people, it can be difficult to “stand out,” which make designations more appealing. For example, I find myself going toe to toe with senior advisors for business, and am often asked ‘so what degrees do you have?’ Do I think they are absolutely necessary? No. But I do think they show commitment to the profession and to your clients, as long as they understand what they mean and how they benefit your career. If you are obtaining these designations to better serve your practice, I think it is a great idea. I am currently in the process of obtaining my RRC (Registered Retirement Consultant) with the end goal of obtaining my CFP. On the other hand, ‘alphabet soup’ after your name can be confusing to the clients, and I have seen advisors take these courses as a form of procrastination of the real business building activity " — Tanner Holtman, associate consultant with Mike Kucherawy CFP, Investors Group

AUGUST 2014 | 43

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CERTIFICATION / WOLTERS KLUWER

GETTING TO THE HEAD OF THE CLASS Wolters Kluwer offers up-to-date coursework focused on building knowledge integral to achieving the CFP

Advisors looking to advance their careers and take on the CFP program have a wealth of resources available to them today. One provider is the global information services provider Wolters Kluwer, which offers the Advocis CFP Education Program.

This program is one of the largest FPSCaccredited courses of its kind. Based on the CFP certification requirements, it allows advisors to gain the knowledge that will help them succeed in obtaining the designation. The course incorporates

mini-cases to explain concepts and additional exercises, problems that help students integrate concepts presented in individual modules. The entire program consists of five courses, containing 28 modules of current content. The program is offered online in partnership with Advocis and post-secondary institutions across Canada.

The program also incorporates changes following from the introduction of new CFP certification requirements this past July 1.

The five basic courses are as follows:

Financial Planning Fundamentals: An introduction to the fundamentals necessary to the discipline of financial planning. Students acquire an understanding of the concepts and applications associated with financial calculations and the analysis of financial statements.

planning.

Contemporary Practices in Financial Planning: Introduces students to basic income tax laws, as well as a more advanced study of the laws that relate to financial Comprehensive Practices in Risk and Retirement Planning: Provides students with a comprehensive understanding of the

principles and applications related to the concepts of managing risk and retirement planning.

Wealth Management and Estate Planning: Covers the fundamentals important to the topics of economics and investing as they relate to key areas of financial planning.

Wolters Kluwer/Advocis FPSC-approved Capstone Course: This is the key course. The content profiles the Canadian financial planning industry, and reviews the professional Code of Ethics, Practice Standards and six areas of technical knowledge. The CFP Professional Competency Profile and CFP Examinations are covered along with examination writing techniques.

44 | AUGUST 2014

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19/08/2014 27/03/201412:07:07 12:01:34AM AM

CERTIFICATION / SURVEY

800 700

13. Identify what you think are the top three designations in terms of serving the client

600

No. of respondents

1st 2nd

500

3rd 400 300 200 100 0

CFP

PFP

CGA

CMA

CA

CFA

CFC

CIM

CLU

RFP

TEP

14. Identify what you think are the top three designations in terms of public name recognition and marketing 800 700

No. of respondents

600

1st 2nd

500

3rd

400 300 200 100 0 CFP

PFP

CGA

CMA

CA

CFA

CFC

CIM

CLU

RFP

TEP

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CERTIFICATION / CFA

CERTIFICATION SURVEY 2014

A NEW CERTIFICATION FOR THE REST OF YOUR OFFICE The CFA Institute introduces the Claritas Investment Certificate. Training your back-office employees in the basics of modern finance just became easier Advisors, by necessity, build up a vast base of knowledge about the financial industry over the course of their careers. That knowledge, in fact, defines their practice.

But what about the rest of the staff in an office— shouldn’t they know what they’re talking about? It would be no small embarrassment for a client to overhear a junior employee questioning the difference between a mutual fund and an exchange-traded fund.

For anyone working in the business, even if they occasionally get the coffee, there are some basics that need to be understood.

The CFA Institute, home to the infamously-toughto-achieve CFA designation, has a new junior accreditation that just might be what the support staff needs.

For those looking to instill basic skills in junior employees, the CFA Institute now offers the Claritas Investment Certificate, a new program imported from the U.K. that was developed in partnership with the British Bankers Association. The new course is designed to inculcate in students the essentials of finance, ethics and investment roles. For those working in a financial services organization, but who may not be on the front lines, this is the designation for them.

“Claritas, is Latin for clarity,” says Stephen Horan, managing director and co-lead of education at CFA Institute. He explains the course is more basic than the full-scale CFA program. But then it is designed for employees in client services, compliance, human resources, IT, sales, marketing and legal services — anyone who might not understand the basics of modern finance. This is not a stepping stone to the designation of certified financial analyst. “It’s not for investment decision-makers, so much as it is for the

folks that work alongside investment decision-makers, that need some clarity about how the industry works,” says Horan.

The course covers off the essentials someone working in the finance industry should understand.

What are common terms and concepts? What are the theories involved in modern finance? “What we heard when we were going around the world, not only did the rank and file not necessarily have a common vocabulary, but there were tremendous variation in standards in terms of understanding. This certificate is designed to level the playing field and create a common culture. It also helps to dispel the myths around the industry and instill a different sense of what the industry is all about … why do markets work?

How do markets make society a better place? How do markets work to distribute capital through the economy?” Horan explains.

But does this designation makes sense for an assistant or employee in an advisory practice? He’s unequivocal in his answer: “Absolutely. A lot of the people in those roles come to the industry from some other place. They don’t come from a financial industry background,” says Horan.

No prior experience or education is necessary to complete the course (though applicants should be comfortable with English). The program can be completed within six months. The computed-based infrastructure makes it easy on the student. A single exam is given to every candidate across the globe. The total study time is about 85 hours, which is much less than the 950 hours of study necessary to achieve designation as a CFA. So while the juniors in the firm won’t be able to challenge the boss – they will know what the boss is talking about.

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19/08/2014 12:16:41 AM

SUN LIFE FEATURE

THE VIEW FROM THE TOP: Sun Life Global Investments rises under the watchful eye of its President

One of Canada’s oldest companies recently created this country’s newest, largest mutual fund manager.

But how the heck did Rick Headrick end up in the top spot?

By Jeff Sanford

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WEALTHPROFESSIONAL.CA

It is, as the saying goes, a long way to the top. But the speed of ascension for this country’s top mutual fund manager has been nothing short of break-neck.

In the wake of the Great Recession of 2008, mighty global insurance organization Sun Life Financial reorganized its disperate, scattered mutual fund business, creating Sun Life Global Investments.

Today, SLGI, as it is known, launched a private client division that the new company hopes will help its massive network of Sun Life advisors better compete in today’s tougher industry. Taking on the top job at SLGI, is Rick Headrick, a prodigal son of Saskatchewan, and another one of the many Canadian financial executives born far from the pit of Bay Street. It was long ago he heard and answered the siren call of the Big Smoke.

Over coffee in downtown Toronto, Headrick tells WP the story of how an ambitious kid picked himself up out of the canola fields of rural Saskatchewan to journey east and, ultimately, to the top spot of Canada’s largest, newest mutual fund company. The conversation comes on the eve of a major crosscountry road trip to explain to thousands of Sun Life advisors how it is SLGI is going to help make life easier for them in this period of nervous anticipation. Today, IAs deal with everything from ultra-low interest rates to stifling new regulations.

Headrick’s long journey to the C-suite of SLGI will be comforting to advisors; as it turns out, the boss knows a thing or two about long-term toil and struggle.

It was way back in 1977 that the young Headrick was living in a town of just 700 people, 13 miles west of Saskatoon. The first time he saw the Toronto Blue Jays on television he knew the Big Smoke was for him. “Toronto might as well have been Paris.

But I wanted to challenge myself,” he says.

His dad was the classic serial entrepreneur, opening and closing business after business. Early on Headrick pumped gas at his parents’ retail operation to pay for university, a customer-oriented occupation that taught him the value of building relationships in a competitive environment. He

“Toronto might as well have been Paris. But I wanted to challenge myself” Rick Headrick once sold his textbooks before his exams to cover his rent. Eventually, working his way east, he followed up a B comm. with a law degree, making it to Toronto just in time to see the Blue Jays clinch the 1992 World Series.

They were heady, but tiring days. Working as a corporate litigator, Headrick was spending day after day in court on behalf of corporate clients. When “partner conversations” began to crop up, he looked within, realized he didn’t have it in him to stay with the law. Falling back on his entrepreneurial roots, Headrick pulled up stakes and moved on to new territory. “It’s in the blood,” he says.

Headrick had previously achieved a CFP on his own time, worried as he was about what his advisor was or wasn’t telling him. But the grounding in financial planning opened up a new career direction.

With the blessing of an obliging wife, he left law, took a pay cut, began climbing the ladder in the investment industry. By 2004, Sun Life asked him to join their group retirement team. He hesitated, but “Sun Life can be persistent”; Headrick joined the massive North American insurer, working toward his true potential at a company that demands excellence.

There are few corporations in Canada older than Sun Life. The organization is more than a century and a half into a history that is epic in terms of success and longevity. Today, it ranks 236 on the Forbes Global 2000 and offers insurance, retirement and investment solutions for individuals and businesses the world over. There are offices across the globe, an astounding $494 billion in assets under AUGUST 2014 | 49

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SUN LIFE FEATURE

management, 28,000 employees and a network of 147,590 advisors in 22 countries serving more than 25 million customers. On home turf, Sun Life is the leader in Canada of defined-contribution pension plans, group RRSPs and deferred profit-sharing plans.

But the latest chapter in the corporate history is Sun Life Global Investments.

For years, Sun Life contracted the many various mutual fund managers that steer its funds through each different division in the company. That is, the process of contracting fund managers was chaotic, uncoordinated. The overlap resulted in a scattershot approach to fund management. A plan began to come together. When Sun Life unloaded a 37 per cent stake in CI Financial to Scotiabank in 2008, then-CEO Donald Stewart floated an intriguing idea: “Why don’t we start our own mutual fund company?” he asked.

The new company reorganized its mutual fund business over the last couple of years, giving birth to Sun Life Global Investments (SLGI), a mutual fund company that wraps up Sun Life’s formerly uncoordinated mutual fund business into a massive new firm that is a dominant force in the Canadian DC industry. Headrick was heavily involved in the genesis of the company.

Putting together a comprehensive business plan, he sent a detailed email off to the higher-ups. His plan: Create an in-house mutual fund company that would be the “single window” through which Sun Life would contract with many different fund managers, a way of facilitating the massive mutual fund business the company does.

The idea turned out to be a homerun for Headrick. He was tagged for the top

48-51-Sun Life1.indd 50

spot. But getting the company to home plate was a scramble.

In 2009, then-new Sun Life Canada President Kevin Dougherty went on BNN to say that the new company would be ready to go in just months. To Headrick the comment felt like a line-drive to the gut. The Great Recession was still working through the system. Investors were spooked. But here he was tasked with creating a new and massive investment company. “It was an exciting time,” says Headrick.

In October 2010, with just 40 employees and zero assets under administration, Sun Life Global Investments was launched. Since then it has grown rapidly.

Today, the organization employs 200 people who manage over $8.7 billion in assets. The company’s Toronto-based portfolio management team designs funds, then draws on the expertise of key global fund managers like Beutel Goodman, Blackrock, MFS, Dynamic, Schroders and Sentry to manage the funds. The outside managers are signed to short six-month mandates to keep anyone from getting complacent. The fund catalog now features 87 funds

“Headrick was heavily involved in the genesis of the company.

Putting together a comprehensive business plan, he sent a detailed email off to the higher-ups”

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WEALTHPROFESSIONAL.CA

“I think advisors are in a strange position. I think that many advisors are having these tough conversations” in any kind of style. Fifty three of those, series E and O, focus on the retail market for advisors. the first of April this year, SLGI announced the launch of a private client division for those with higher investable assets. (Cindy Crean is managing director of that.) Sadiq Adatia, the chief investment officer, has emerged as a regular voice in the Canadian media and has been decidedly non-reticent about speaking out on controversial topics. That is the company managed to shrug off the Great Recession and is settling into a new routine as a major component of the modern Canadian mutual fund industry. “In the midst of the economic recovery and a competitive market ... 2010 was tough, 2011 was a challenge,” says Headrick. But the company made it, has since prospered. “It goes back to entrepreneurial roots. It’s been busy, but it’s been fun,” says Headrick. “It’s been an amazing journey.”

But even as SLGI gets up to speed, the firm arrives on the scene at a time when Canadian advisors find themselves working harder than ever to maintain profitable practices. Increasing regulation, historically low interest rates and the challenges that seem to come from every side are conspiring to challenge the sustainability of current business models. Headrick recognizes there are real headwinds in the industry. “I think advisors are in a strange position. I think that many advisors are having these tough conversations,” says Headrick. But he is confident the firm will protect the advisor network. After all, this is a company that has survived almost a century and a half of business ups and downs. It was way back in 1918 that the global influenza pandemic saw Sun Life

flirt with bankruptcy as an unexpected number of insurance claims flooded the company. Headrick is confident the business will survive whatever challenges come up today.

A roadshow in the early summer of 2014 saw Headrick travel across Canada. Talking to advisors he explained to thousands how it is Sun Life was the only North American insurer that didn’t take government money in the Great Recession, didn’t have to go to market to raise capital while continuing to pay dividends. “I think the market recognizes we were the only North American insurer to do that,” says Headrick. That is, the company is a survivor over the long-term, always has been. Those at the top are acutely aware of the need to maintain the company’s good reputation. The historical legacy of the company is never far from mind for those working in the executive suite. There is a heritage and reputation to uphold. “No one wants to be the one to mess that up,” says Headrick. “We are very lucky to have these opportunities.” That is, he understands a long and tough journey. He understands that even if the way forward is cloudy, hard work and perseverance can cut through that uncertainty. All of which is a good way of getting back to that Headrick’s beloved Blue Jays baseball team.

For the first time since 1992 the team has an outstanding line-up of players and could challenge for top spot.

The team had faltered a bit through the summer. But Headrick had not lost hope. When asked about the chances of the team he replies with the cautious optimism befitting a top exec at a century-and-a-halfold insurance company: “I don’t want to jinx anything ... but I’m hopeful,” he says.

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FEATURE / 5 MYTHS

5

MYTHS

about affluent clients

Patricia LeBon is a personal lines manager for Burns & Wilcox, the nation’s largest independent wholesale advisor and underwriting manager. A wealth management advisor who has consulted with many of the Forbes 400, she is an expert in managing risk for multigenerational, multistate clientele. For more information visit www.burnsandwilcox.com

A volatile economy, coupled with technology advancements and the sustained success of e-commerce and social media, has caused a dramatic shift in the landscape of wealth in the US. Within this new landscape, affluent clients are no longer a niche group of people with a net worth of more than $50m.

This shift has a tremendous impact for our business and forces us to ask: In the current climate, what makes a client ‘affluent’?

I define today’s affluent client as someone whose net worth makes them a possible target for liability lawsuits, and it’s likely that many of your existing clients fall into this category. We often fail to identify affluent clients because we haven’t asked the right questions.

Affluent clients require a careful review of their assets and lifestyle so that a personalized insurance program can be constructed to adequately protect their family and long-term financial well-being.

Initiating this process means we need to throw out our preconceived notions of ‘who’ an affluent client is and instead take a complete risk management approach in evaluating the type of coverage those clients need.

MYTH: NET WORTH IS REFLECTED IN PHYSICAL ASSETS It may seem obvious, but don’t judge a book by its cover. While high net worth clients are easily recognizable by their homes, cars and accessories, today’s affluent client may only be identifiable by what you can’t see, such as a substantial investment portfolio. Asking the right questions is critical in gaining a clear picture of all assets, from properties and investments to jewelry, art and expensive toys.

MYTH: RISK EXPOSURE IS DETERMINED

BY A CLIENT’S PROFESSION Clients don’t need to be a celebrity, professional athlete or CEO of a Fortune 500 company to become

the victim of a superfluous liability lawsuit. A client’s lifestyle and public presence can also contribute to their risk profile. Remember to consider social circles, volunteer work, board memberships and the risks associated with these responsibilities when evaluating the coverage required.

MYTH: SPECIAL RISK ASSESSMENTS ARE ONLY REQUIRED FOR HIGH NET WORTH CLIENTS When working with an affluent client, agents must go beyond the act of quoting policies and become a true risk management adviser. In doing so, we can uncover risks, quantify their impact on the insured and ultimately provide solutions to protect the client.

MYTH: YOU ONLY NEED TO WORRY ABOUT THE CLIENT AND THEIR EXTENDED FAMILY Liability risks don’t end with family members.

Many affluent clients consider their household staff an extension of their family—and you should too. Housekeepers, landscapers and nannies all have risks associated with their employment, which must be taken into account when building an insurance package.

MYTH: IT’S DIFFICULT TO MAINTAIN A LONG-TERM RELATIONSHIP WITH AN AFFLUENT CLIENT In my experience, agents who can provide comprehensive risk management services in addition to cost-effective policies become a highly valuable and important long-term resource. Offering to sign a confidentiality agreement can be a great first start in building trust with the client. As the relationship develops, the agent will gain an unparalleled understanding of the spectrum of risks the client faces. In addition, a trusted adviser benefits from an intimate knowledge and confidence that helps to lock out future competition.

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BUSINESS STRATEGY / RELATIONSHIPS

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FEATURE / WEB REDESIGN

5

Ways to Make Your

Web (re)Design Easier The numbers don’t lie and if they’re saying your website has failed to connect with buyers, it probably has, writes Maggie Crowley

Advisors often talk about being unhappy with their existing websites. While it’s not realistic to redesign your firm’s website annually, the gaining pace in the tech world makes every website a constant workin-progress. Taking on a new website project may not sound like a walk in the park, but a site redesign can have a lasting positive impact on any firm.

How do you know when it’s time for a complete uphaul of your site? Here are three tell-tale signs:

1

LOW TRAFFIC AND CONVERSIONS

Numbers don’t lie. The biggest reason to give your website a refresh is when no one is using it. Best practice is to track and measure numbers on a monthly basis using Google Analytics. If you notice a drop in traffic or stagnant numbers over the course of at least one quarter - looks like it’s time to try something new.

2

IT’S NOT A PROPER (OR REALISTIC OR POSITIVE) REPRESENTATION OF YOUR FIRM

Prospects who have never met you can make an impression of the firm based on its website - in less than three seconds. Your website is the only

member of your team working 24/7 to promote and advocate your firm … does it send a positive message to your target audience? If you don’t even like the way it looks, chances are neither do consumers.

3

IT’S NOT RELEVANT IN 2014

While, I’m not suggesting a complete website redesign is necessary every year, consider some of the major changes in technology in the past five years: more people access the Internet from a mobile device than a desktop computer; Flash animations are no longer a “thing;” Google is the new Yellow Pages.

If it is time for a website rehaul, the best way to get ready is to do a little prep work. Many advisors find web design quite daunting and complicated, and with good reason. It can be challenging to assemble the necessities to get started, but, with the right people on the job it’s not nearly as difficult a challenge as it may seem.

The biggest obstacle advisors run into when tackling website design or redesign project is a general lack of focus and direction. As a result, they aren’t usually prepared to make decisions about the site, and generally that leads to a delay in the entire

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process.

Start by taking a step back and looking at the big picture. What are you trying to achieve? A strong plan now will make for a smooth process along the way. If you’re considering a new website in the near future, begin by planning now. Consider these ideas in order to streamline your upcoming web design project.

1

DO SOME RESEARCH

Take a critical look at websites you love (and loath) to help you figure out what you want your website to be like. Are there certain colors you find appealing online? Start by doing a Google search of other financial websites to analyze the landscape. Having a good idea of what you want the site to look like will help your web design team produce a site that matches your expectations.

Find several different layouts you’re comfortable with. What types of navigation do you like best?These are all questions that the team building your website will ask. Make the design process easier by answering these questions on your own, first.

2

HIRE A PHOTOGRAPHER

High-quality photos of real people (opposed to stock images) are one of the best touches you can add to your website. Web visitors are more inclined to trust companies that provide a personal touch by showing who is operating behind the company.

Highlighting pictures of your team (high-net worth individuals love working with teams) throughout the site is a powerful way to engage an audience of potential prospects. Doing this in advance ensures that the images will be ready to go when your web design process begins.

3

WRITE CONTENT

Ready-to-go content is often the number one element that delays the website creation process. Whether you’re writing your site’s content

in-house or working with a copy writer or marketing, definitely start in advance. Have some content prepared before you commence the process. This will ensure that the design team will be able to deliver your website quickly and efficiently.

What are the essentials? An up-to-date biography (this should be updated every 3-5 years) and information about your company, team members, and your services are all useful to have readily available.

4

DETERMINE FUNCTIONALITY

What should your website achieve? Ideally, who will be visiting your website? What should they do when they get there? It is worth brainstorming and setting goals so you have a clear direction for your site.

If you want your website to act as an online business card to validate your firm and provide contact information, that requires different kinds of information than a website where clients will be engaged and regularly logging in. Determining how you want to use your website should be part of the cornerstone of your firm’s’ marketing plan.

5

BE PREPARED TO SPEND A LITTLE TIME ON IT

There’s no way around it: your web design project will require time. In order to get a website that is reflective of your firm, assign someone from your team to lead the project but expect everyone to get involved at some point. The goal of any great web design team is to make the production process as seamless and easy for you as possible. However, in the end it is your website and it needs your input.

A website redesign can be a daunting task, but partnering with a good web design firm can make the process a lot easier (and even fun!). Remember, a well-designed website is one of the most effective marketing tools you’ve got – make the most of it by keeping it fresh, up-to-date, and easy to use.

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.

Connect with her on Twitter: @ advisorwebsite or visit us online: www. advisorwebsites.com

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FEATURE / BUSINESS STRATEGY

How to deliver

EXCEPTIONAL SERVICE It’s the little things you do that create a great customer experience, explains Nikki Heald Often we’re so intent on making the sale that we have a transactional view of our clients, rather than taking time to build relationships or demonstrate service excellence. We use them (to increase our profits), abuse them (by giving them inferior service), and then treat them like a one-night stand — attentive today, neglectful tomorrow!

Sounds silly? Well, complaints such as “you never call,” “you’re always too busy,” and “why were you late?” are legitimate gripes made by disgruntled clients. In today’s competitive market, client service expectations have increased. Clients are savvy, realize they have a multitude of choices, and expect to be treated exceptionally by their mortgage brokers.

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DID YOU KNOW? It’s

6–7

So what is exceptional service? Exceptional client service is about going beyond what is realistically expected of you. It’s about surprising and often delighting clients, turning them into enthusiastic referral sources who will stick with you not only because you do great work but also because of the value you bring. Imagine if you could get existing clients to tell others about how wonderful you are. It would certainly save on many of those marketing and networking costs.

Great service is not about just doing your job, it’s also about establishing connections on an emotional level. It’s about adding value and finding ways to be unique. Interestingly, research suggests that emotion influences purchasing decisions six times as often as rationale. Think about it: when something makes us feel good, we are more inclined to buy.

Exceptional client service is about going beyond what is realistically expected of you. It’s about surprising and delighting clients, turning them into enthusiastic referral sources Unfortunately, many businesses believe that delivering standout service will cost them too much in staff time, in training and in developing service standards and procedures. These in-focused

organizations are only concerned with company profit and cutting costs, and little thought is given to how to make clients happy. Additionally, staff recognition and retention are low, which can also impact significantly on growth and profit.

When you think about it realistically, bad service is actually more costly to your brokerage than great service. Bad service creates more than just a negative customer experience — it reduces revenue and drives up costs. It damages public perception, credibility and market reputation. As we all know, a dissatisfied client is more likely to spread the word about a poor service experience than a positive one.

Providing exceptional service is not overly difficult, and it’s important to recognize that even little things count with clients. So what are some simple things you can do to ensure your service is exceptional?

1

times more expensive to gain a new client than it is to retain an existing one It’s not safe to work on the premise of “no news is good news.”

Chances are, if your client is not happy they’ll walk, and won’t even forewarn you of their departure

RESPOND AS SOON AS YOU CAN

Speed is everything, so try to reply to your clients as soon as you can and keep them in the loop as to your progress. Procrastination doesn’t help anyone, and you’re going to have to respond sooner or later.

May as well do it now!

2

LISTEN TO YOUR CLIENTS

Avoid speaking, and really listen to what they’re saying. It’s important you understand what your clients are communicating to you. That way, you will be able to meet their needs successfully and provide the correct product or cover.

3

93%

KEEP PROMISES

One of the biggest gripes in business today is that people simply don’t do what they say they are going to do. If you say you’re going to do something, then make sure you do it. It enhances your professionalism and personal brand, and demonstrates that you value your client.

of customers indicated that quality customer service was vital to maintaining brand loyalty

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FEATURE / BUSINESS STRATEGY

If you say you’re going to do something, then make sure you do it. It enhances your professionalism and personal brand, and demonstrates that you value your client DELIVERING EXCEPTIONAL SERVICE • Lower cost to manage and service client base — higher profits • Increased customer loyalty — raises revenue, lowers marketing fees • Increased staff loyalty — better service culture

SERVICE EVALUATION What systems do you have in place to determine whether your clients are happy? Try to gather feedback — but remember, feedback is only useful when acted upon

4

KNOW YOUR STUFF

5

GIVE A LITTLE

The perception of your client is that you are the paid expert. That’s why they have come to you. So it is imperative that you keep yourself up-to-date and on top of the game within your profession. Be ready to answer client questions — unfortunately, if you convey a lack of knowledge, then you risk ruining your credibility.

If a client asks you to do something that really won’t cost you a lot in time or money, then treat it as an opportunity to go the extra mile.

By doing so, you will not only have a contented and indebted client, but someone who is more than happy to refer others to you.

6

USE YOUR KNOWLEDGE

Once you’ve built an emotional connection with your client, you will have figured out how they prefer to communicate. Some clients are not detail driven and won’t require excessive information. On the other hand, some prefer to know every step of the process. Learn to gauge your client’s preferences and use this knowledge appropriately in the service experience.

Finally, within the mortgage and financial services professions, brokers really should view their book of clients as their most valuable asset and take good care of them. More than that, they should take the time to develop long-lasting relationships by keeping in touch regularly, both in good times and bad. It’s not sufficient to wait until renewal time to contact your client; instead, the communication should be ongoing.

Remember, you’re not just selling a product but providing expert advice that can significantly impact on people’s livelihoods. So, if you haven’t given much thought to your service levels, then perhaps it ’s time to conduct a self-audit.

Remember, if you don’t make the client feel valued, respected and important, your competitors will!

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19/08/2014 12:10:19 AM 1/04/2014 4:27:32 AM

BUSINESS STRATEGY / MOTIVATION

WHY YOU NEED MOTIVATED AND CAPABLE EMPLOYEES Mark Oliver explains why even money-focused businesses need to understand the basics of human motivation in order to increase employee satisfaction and productivity Motivation combined with capability tends to lead to effective behaviours, and behaviour underpins performance. To get the right answer to the question above, it helps to ask the right question, and the question in this case would be: how do we get our employees to perform better? If someone has the capability but not the motivation to do something required to perform, then the necessary behaviour is very unlikely to arise and they will not perform; similarly, if someone has the motivation but not the capability. You need both motivation and capability for performance.

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WHY MOTIVATION IS KEY The second question that follows on from this is: which is most important with regards to performance – motivation or capability? At first it would seem that the more important of the two would be capability, and there is often a great emphasis on training in the workplace to enhance that. The appropriate training is important and, after all, motivation is not trainable, so one might wonder what is the use in focusing on human motivation? But look more deeply and you will realize that motivation is much more important than capability in the wider context of both professional and personal lives. In short this is because of two facts:

1 2

Motivation determines what you do; in many ways it determines the path you take at work (and in life).

If you do not have the motivation, your capability becomes largely irrelevant.

Not surprisingly then, motivation precedes capability and often leads to capability.

Given all this, the third question becomes very important: what can we do to increase motivation?

To answer this you can split the factors affecting motivation into two parts: internal and external to the individual.

Internal factors: The internal factors include a person’s personality (values, beliefs, etc.). An important time to look at this is when recruiting individuals, and it is wise to use good psychometric instruments to help increase the accuracy of your decisions, such as the Universal Hierarchy of Motivation Professional Report (see accuratesurveys. com), especially as they are so cost-effective.

External factors: Key external factors are the systems and structure of the organization. But it is often difficult to predict how these affect human motivation. Consider the real-life example of a daycare centre that encountered tardy parents at closing time each day. This situation led to anxious children and frustrated carers. A solution put in place by several daycare centres in Haifa, Israel, was to fine parents $3 if they were more than 10 minutes late. Rather surprisingly, this solution had the opposite effect and the number of late parents

If you do not have the motivation, your capability becomes largely irrelevant.

Not surprisingly then, motivation precedes capability and often leads to capability more than doubled after the fine was introduced. It turned out that the guilt the parents felt in being late was motivating them to be on time, but now the payment of a small fine assuaged these feelings and they were less motivated to be punctual.

A good model on human motivation is helpful because it helps you to predict better what the actual outcomes will be. The Universal Hierarchy of Motivation (UHM) provides the basis for a complete understanding of human motivation so that you can accurately predict what behaviours will result from system or structural changes. For instance, many people still believe that bonuses make employees work harder and more effectively. Alfie Kohn, a teacher-turned-writer, found that the more you reward a person with grades or incentives, the lower the person’s productivity. In this context, individuals become less intrinsically motivated.

Bonuses (extrinsic motivators) actually reduce people’s performance on complex tasks because they limit individuals’ capacity to fulfil the task by changing their focus to how to get the best bonus.

INTRINSIC MOTIVATION American psychologist Edward Deci observed that tangible rewards inevitably reduce the intrinsic motivation of individuals. He stated: “the facts are absolutely clear, there is no question that in virtually all circumstances in which people are doing things in order to get rewards, external

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BUSINESS STRATEGY / MOTIVATION

UHM LEVEL

MOTIVATIONAL DRIVE

INTRINSIC MOTIVATOR

EXTRINSIC BEHAVIOUR

7

MEANING

OPTIMISM

GRACE (COURTEOUS GOODWILL)

6

WISDOM

UNDERSTANDING (LISTENING) FEEDBACK (NOT CRITICISM)

5

COURAGE

EMPATHY

ACCOUNTABILITY

4

COMPASSION

SYMPATHY

COOPERATION

3

POWER

PRAISE (GENUINE)

COMMITMENT

2

PLEASURE

HUMOUR

INVOLVEMENT

1

SURVIVAL

BELIEF

SATISFACTION

How much an employee is ‘engaged’ to the organization has been shown in many studies to have a direct correlation with productivity

Mark Oliver is managing director and CEO of MarkTwo Consulting, and author of The Seven Motivators of Life.

Visit marktwoconsulting. com or lulu.com.

tangible rewards undermine intrinsic motivation.”

(There is one exception to this observation. This involves jobs where there is little intrinsic motivation, such as simple repetitive manual tasks, and in that case rewards do tend to increase output or productivity.)

The UHM helps you to understand human motivation comprehensively and so makes the most accurate predictions on what people’s motivation (and hence resulting behaviour) will be, given a set of system or structural changes. The higher UHM level we are at, the more impact we have on our own and others’ lives. The UHM levels are shown in the table above, correlated with the relevant intrinsic motivator and extrinsic behaviour.

How much an employee is engaged (feels an emotional bond with the organization) has been shown in many studies across industries to have a direct correlation with productivity. That research found employees who were fully “engaged” in their work were almost 50 per cent more productive in terms of revenue generation and 300 per cent better at delivering value than their disengaged (disaffected) colleagues. The “extrinsic behaviours” in the table correspond to increasing levels of positive engagement, going up the table, and starting with the lowest one:

satisfaction at work. The UHM theory explains the observations that paid bonuses at work are poor motivators because they only move employees’ motivation to the level of pleasure, which renders them less able to deal with greater and more complex challenges, which are best dealt with at a higher level.

CONCLUSION So to get the best performance (or combination of people’s motivation and capability) from those employees you currently have in the organization, it is critical that you provide the structures and systems (including pay systems) that will help to motivate them at the higher levels. To be able to understand and predict what these are, you have to have a very good model or framework describing human motivation.

Once you have set up the environment in your organization that achieves this, only then is it worth investing time and money in training your employees.

If you do it the other way around, the risk is that not only will the employees not use the new skills they acquire in their training but also they are more likely to leave the organization, which means someone else is likely to get all the investment you have made in them!

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WEALTHPROFESSIONAL.CA

Day in the life of...

Rona Birenbaum, President, Caring for Clients coaching for my entrepreneur clients.

The noon hour. I either spend lunch at my desk working or lunch with clients or business contacts.

1:00 - 4pm Most of my time is spent preparing for, or participating in, client meetings. Each day involves some amount of research. Because our firm provides comprehensive financial planning, we have to stay current on issues related to all aspects of financial and lifestyle management. This will include, but not be limited to, reviewing new government budgets and CRA decisions, reviewing recent court decisions on the subject of family and estate law, surveying the mortgage market, reading investment commentaries and meeting with portfolio managers.

6 a.m. or earlier Up an at ‘em! If I’m taking my daughter to school, we get ready and I drop her at her dad’s house and head to work; otherwise I get to the office at around 7:30am.

7:30 a.m. Respond to emails and prepare for the day.

This quiet time is perfect for writing blog posts, client newsletter material or pieces like this! My assistant, Jenny, starts early each day and usually greets me with a range of documents that require my review and signature.

9 a.m. - noon Monday morning is the weekly Caring for Clients team meeting. My three staff and I meet to discuss our individual objectives for the week and how we can support one another in meeting those objectives. We touch base on outstanding client supporting tasks and review any compliance-related changes that will impact our operations and client servicing. We also chat about major life changes for clients and how we can acknowledge and support those big life events.

Client meetings and meeting preparation. This might include the delivery of financial plans, portfolio reviews, discussions regarding major life events such as cash flow concerns, career changes, issues with children, real estate transactions, and business

5:00 p.m. Pick up my daughter and head home.

6 p.m.- 9 p.m. Twenty four years ago, when I first entered the financial advisory business, I worked evenings and weekends. That was necessary to get my practice off the ground. For the last ten years or so, evenings and weekends have been family and personal time. One of my primary goals in working with clients is to help them strike a balance that respects the importance of both. In this regard, I practice what I preach.

9:00 p.m. - 10 p.m. I read in bed with my cats cuddled up with me. Right now I’m reading Investor Behavior – The Psychology of Financial Planning and Investing by Victor Ricciardi and H. Kent Baker. Our clients will tell you that we put as much emphasis on the psychological dynamic of financial decision making as we do on the technical aspects. As with most things, it’s not what you know, but what action you take as a result of what you know that makes the difference.

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IMAGE CONSULTANT

The advisor uniform The days of blending in with bland pantsuits may be over. As more and more women achieve success as wealth professionals, they’re reshaping client and employer expectations around appropriate attire for advisors. We asked leading female financial planners across the country to share their thoughts on professional wear in 2014 THE SUIT

THE NEW CLASSIC

A safe bet: This is the go-to for female advisors, concedes Dartmouth, N.S., advisor Stephanie Holmes-Winton. The pantsuit or skirt suit in black, gray and navy speaks professionalism, but may lack personality.

Dress for success?

The dress – even a floral – is increasingly finding its way into advisor work wear, especially as women get higher up the industry’s corporate ladder. But advisors will still need to be careful:

“In the male-dominated financial industry, it’s possible that ( female advisors) could be seen as less credible or less intelligent if they dress more to the feminine side as opposed to the gender neutral side,” says Leony deGraaf Hastings, a WP 50 advisor based in Burlington, Ont.

“A navy jacket and pants or a skirt, that’s the business look,” says Nancy Shewfelt, an advisor with the Shewfelt McMillan Group in White Rock, B.C. But that uniform standard seems to be more prevalent in the city, where, she says, there is more competition among advisors.

“A floral dress is fine as long as you have a jacket over it,” says Nancy Shewfelt, an advisor with the Shewfelt McMillan Group in White Rock, B.C. “But the flowy shape of (some) dresses might be too informal.”

“I think it’s possible that others could perceive you as less serious if you’re dressed too casually,” adds HolmesWinton. “But, these days, you can make something look more formal if you want to.”

THE PERSONAL-ITY TOUCH deGraaf Hastings: Small touches – like accessories – can make an outfit more approachable, but they should never distract from the advice being offered. “ “I think women are lucky; we have way more flexibility than men do,” Holmes-Winton says. “But we have to take care how we present ourselves to the clients and our colleagues. If we do, we can still show personality.”

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