Wealth Professional 6.07

WWW.WEALTHPROFESSIONAL.CA ISSUE 6.07 | $12.95

WEALTH TECHNOLOGY Must-have tools that will help you increase efficiency and enhance the client experience

ADVISORS ON CERTIFICATIONS Advisors sound off on which certifications are worth the time and money

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EMERGING MARKETS COME OF AGE New developments that are making emerging markets a safer – but still lucrative – investment

FROM CANNABIS TO BLOCKCHAIN Which cutting-edge trends represent the best bets for investors?

24/08/2018 5:59:43 AM

Invest in Innovation

HMMJ The World’s First Marijuana ETF

MIND The World’s First Global Equity ETF Driven by A.I.

BKCH Invest in the Blockchain Ecosystem

RBOT Canada’s First Robotics and Automation ETF

Learn more at www.HorizonsETFs.com

HORIZONS ETFs

Horizons ETFs is a Member of Mirae Asset Global Investments. Commissions, management fees and expenses all may be associated with an investment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. (the “Horizons Exchange Traded Products”). The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated.

The prospectus contains important detailed information about the Horizons Exchange Traded Products. Please read the relevant prospectus before investing.

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24/08/2018 6:03:27 AM

ISSUE 6.07

CONNECT WITH US Got a story or suggestion, or just want to find out some more information?

CONTENTS

@WealthProCA facebook.com/WealthProCA

UPFRONT 02 Editorial

Why technology is no longer optional

LEADERS IN WEALTH TECHNOLOGY

36

PEOPLE

INDUSTRY ICON

Launching a company during a recession isn’t for the faint of heart, but for Harvest Portfolios president and CEO Michael Kovacs, it’s paid dividends

18

06 Statistics

Given recent volatility, are the top names in tech still worth investing in?

THE NEXT BIG ETF THEME

Horizons ETFs head Steve Hawkins breaks down the latest developments in cannabis, blockchain, AI and more

08 News analysis

The CSA fans the flames of the advisor compensation debate

10 Intelligence

This month’s big movers and shakers

12 ETF update

ETF providers continue to face pressure to reduce fees

SPECIAL REPORT

Wealth Professional Canada takes an in-depth look at eight tech tools that are revolutionizing the way advisors do business

Is oil’s continued recovery bringing advisors back to the energy sector?

FEATURES

24

LEADERS IN WEALTH TECHNOLOGY

04 Head to head

FEATURES

40

EMERGING MARKETS GAIN TRACTION

As countries like China and India continue to develop, they’re becoming even more enticing as investment destinations

CERTIFICATION

SURVEY

44

FEATURES

CERTIFICATION SURVEY 2018

Which designations are essential, and which ones aren’t worth the trouble?

Advisors tell all

14 Alternative investment update

Cryptocurrency inches its way into mainstream investing

16 Opinion

Those who aren’t embracing technology risk being left behind

FEATURES 50 Five myths about purpose

Finding purpose at work means looking beyond some common misconceptions

PEOPLE 42 Advisor profile

Grant White’s success proves that youth can be an advantage for an advisor

55 Career path

Alexandra Horwood builds on her family’s wealth management legacy

56 Other life

Catching a wave with Nova Scotiabased advisor Marc Pinet

WEALTHPROFESSIONAL.CA CHECK IT OUT ONLINE www.wealthprofessional.ca

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24/08/2018 6:01:09 AM

UPFRONT

EDITORIAL wealthprofessional.ca

You can’t ignore technology

T

here’s little doubt that in the ever-changing landscape of the financial industry, technology is becoming more prevalent. Financial technology has proven to be a valuable tool for advisors, whether you’re using algorithms to help manage your clients’ portfolios or using software to streamline delivery of products and services.

While finding a balance between technology and human functions is key, what can’t be denied is the need to embrace and adopt some of these new tools – not only to drive efficiency within your own firm, but also to stay up-to-date on the other options investors have. Robo-advisors, for example, have been around since the financial crisis and have a strong following among millennials

Incorporating the latest technology into your practice will demonstrate to clients that they’re investing with someone who’s on top of the trends for their simplicity, transparency and low cost.

As trends like robo-advisors become more prevalent, how can you stay competitive with those digital platforms? The emphasis needs to be on the quality of service you can offer and what you can do for your clients. Rather than fearing technology, determine the best way to incorporate it. Companies are constantly popping up with new tech offerings designed to appeal to advisors, and there are many options you can take advantage of to streamline different aspects of your business. This month’s feature on wealth technology (starting on page 24) explores a few of those options.

Technology isn’t taking over, but rather becoming a mainstay in the industry.

Incorporating the latest technology into your practice will demonstrate to clients that they’re investing with someone who’s on top of the trends. Rather than a disruptor, today’s technology should be seen as a tool for you to add even more value to your relationships with clients.

The team at Wealth Professional Canada

ISSUE 6.07 EDITORIAL

SALES & MARKETING

Managing Editor Joe Rosengarten

Director, Client Strategy Dane Taylor

Editor Darren Matte Writers Libby MacDonald Leo Almazora Executive Editor Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Steven Furtado

ART & PRODUCTION Designers Joenel Salvador Marla Morelos Pia Marie Tandog Production Manager Alicia Chin Traffic Manager Ella Dayandante

Sales Executive Alan Stewart General Manager, Sales John Mackenzie Project Coordinator Jessica Duce

CORPORATE President & CEO Tim Duce Office/Traffic Manager Marni Parker Events and Conference Manager Chris Davis Chief Information Officer Colin Chan Human Resources Manager Julia Bookallil Global COO George Walmsley Global CEO Mike Shipley

EDITORIAL INQUIRIES

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SUBSCRIPTION INQUIRIES

tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca

ADVERTISING INQUIRIES dane.taylor@kmimedia.ca

KMI Media 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, London, Sydney, Denver, Auckland, Manila, Singapore, Bengaluru

Wealth Professional Canada is part of an international family of B2B publications and websites for the finance and insurance industries LIFE HEALTH PROFESSIONAL joe.rosengarten@keymedia.com T +1 416 644 874O

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Copyright is reserved throughout. No part of this publication can be reproduced in whole or part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as the magazine can accept no responsibility for loss

ADV

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24/08/2018 6:07:30 AM

Great minds think differently.

INTRODUCING

Fidelity Global Growth and Value Class Co-managed by renowned portfolio managers Will Danoff and Joel Tillinghast, Fidelity has created a unique opportunity for Canadian investors.

onlyatfidelity.com Ask your Fidelity representative.

Read a fund’s prospectus and consult your financial advisor before investing. Mutual funds are not guaranteed; their values change frequently and past performance may not be repeated. Investors will pay management fees and expenses, may pay commissions or trailing commissions and may experience a gain or loss.

Fidelity Investments is a registered trademark of Fidelity Investments Canada ULC. 32950-v201866

ADV 32874 Great minds GGV WP Sept 7.indd 1 02-03_Editorial-SUBBED.indd 3

2018-08-16 2:44 PM 24/08/2018 6:08:02 AM

UPFRONT

HEAD TO HEAD

Does oil’s recovery warrant increasing energy exposure?

The commodity has made a slow but steady comeback – but is it enough to entice advisors and their clients?

Eric Nuttall

Partner and senior portfolio manager Ninepoint Partners “Oil is in a multi-year bull market due to lack of investment by 90% of global supply – basically every non-US country – over the past four years on long-lead projects due to cash flow constraints.

We see oil inventories approaching all-time low levels in 2019/2020, requiring the price to rise high enough to rationalize demand.

Given record-low ownership of energy stocks and the 40% divergence in performance between oil and energy equities from the beginning of 2017 to now, we believe this represents an opportunity of a lifetime, with many oil stocks offering over 100% upside.”

Amar Pandya

Michael Hewson

“The price of oil has negligible influence within our investment process in determining our energy exposure. As active fundamental value investors, we focus on building concentrated portfolios of our highest-conviction investment ideas, regardless of sector.

We don’t know where oil prices are going long-term, so we invest in energy companies by focusing on their fundamentals and manage risks by ensuring there’s a large margin of safety.

If we find an energy stock trading at a substantial discount to a conservative estimate of intrinsic value, we’ll consider investing in that stock, regardless of where the price of oil is currently.”

“Concerns about price disruptions have helped drive prices higher – the Iran story being the primary catalyst. Saudi Arabia has sought to offset this, but with the risks of further disruptions around the Middle East, the mood should speak to a higher oil price.

Oil supplies have always been prone to disruption in these regions. The key is to establish how much of this is noise and already priced in.

Another important question is how effective the Iran embargo might be. For now, the key barrier on Brent remains $80 a barrel.”

Senior investment analyst PenderFund Capital Management

Chief market analyst CMC Markets

STRIKING OIL Earlier this summer, the energy sector posted its best quarterly gains in years. Crude oil hit heights not seen since late 2014: At US$69 a barrel, WTI crude was up 14% year-to-date in late summer. But tension in the Middle East and other geopolitical factors have contributed to a typically wild ride for the commodity: Prices spiked in the wake of threats from President Trump to sanction major producer Iran, which led Iran to make retaliatory threats to close the Strait of Hormuz, a key oil shipping route in the Persian Gulf. But OPEC’s refusal to limit output has kept the price of oil far below the market highs of almost US$120 per barrel witnessed in mid-2014.

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www.wealthprofessional.ca

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24/08/2018 6:11:23 AM

$100,000

$93,606

$80,000

$68,08 7 $60,000 $40,000 $20,000 $0

1998

2002

2006

2010

2014

2018

YTD

1 Year

3 Years

5 Years

10 Years

20 Years

Since inception

Sun Life Excel India A

-0.29

8.60

9.07

21.46

9.13

11.65

11.60

MSCI India

2.37

9.63

6.98

16.37

7.70

11.14

9.84

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24/08/2018 6:11:49 AM

UPFRONT

STATISTICS

Sharpening their FAANGs

UPWARD MOMENTUM A look at the year-to-date performance for FAANG stocks reveals that while individual stocks have had peaks and valleys – most notably, Facebook’s precipitous drop in the spring in the wake of its data privacy scandal – the overall trend for FAANG companies continues to be positive.

The world’s largest tech companies continue to grow, despite a series of individual hurdles KNOWN COLLECTIVELY as FAANG, the stocks of tech giants Facebook, Amazon, Apple, Netflix and Google continue to garner interest from investors around the world. However, they’re not exempt from overall market trends, nor have they been immune to their own challenges. The data privacy scandal that hit Facebook in March was reflected in the social network’s Q2 results, Google has been plagued

4.1 billion

$32.1 billion

Number of tech shares traded on the TSX and TSXV

Value of tech stocks traded on the TSX and TSXV

by anti-trust allegations and fines, and Netflix saw its stock price plummet after failing to meet its second-quarter goals for new subscribers.

Despite the perils, three of the five main FAANG stocks continue to grow; only Facebook and Netflix showed regression in August. While some analysts believe the sector’s prosperity has run out, the numbers paint a picture of companies that are quite resilient.

80%

Percentage of FAANG companies among the S&P 500’s top 10

US$3.4 trillion Total market cap of the FAANG companies

Source: TMX Money; Investopedia; CNBC

BIGGEST FAANGS

NETFLIX FALTERS IN SECOND QUARTER

Although they’re often grouped together under the same acronym, Apple, Amazon and Google dwarf the other companies in the FAANG group by market cap.

Netflix got off to a great start in 2018 by adding 7.4 million net subscribers, handily surpassing its 6.5 million target. However, the streaming service fell short of its Q2 subscriber goal, which sent its stock tumbling around 14% when it announced the results in mid-July.

MARKET CAP OF FAANG COMPANIES

International subscribers Estimate Actual

Domestic subscribers Estimate Actual

Quarter 1

$1trn

1.48 million

$0

Amazon

Apple

Alphabet/ Google

Facebook Netflix Source: CNBC; all figures in US$

6

Quarter 2 1.23 million

$166 billion

$605 billion

$500bn

5.02 million 5.46 million

Net subscribers

$836 billion

$896 billion

$938 billion

1.96 million

674,000 5.11 million 4.47 million

0

1 million

2 million

3 million

4 million

5 million

6 million

7 million Source: CNBC; Reuters

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24/08/2018 6:13:05 AM

Facebook

Amazon

Apple

Netflix

Google

$1,400

$1,200 $1,883.42 $1,201.62

Share price

$1,000

$800

$600

$400 $338.02 $215.04

$200

$172.62 $0 January

February

March

April

May

June

July

August

Source: TMX Money, as of August 21, 2018; all figures in US$

ANATOMY OF A SCANDAL

STILL A GOOD BET?

Both Facebook and, to a lesser degree, Google have been rocked by scandals this year, which have had an adverse affect on their stock prices. In particular, the drop that immediately followed Facebook’s report of its disappointing second-quarter results, which wiped out $120 billion worth of value in a single day, demonstrated just how volatile the tech sector can be.

Despite the ups and downs so far this year, many analysts remain bullish on FAANG stocks; a July report by The Street predicted that most will continue to soar throughout 2018.

Price on August 21

Stock price

$181

Facebook announces data privacy sandal

Stock price

$152

Stock price

$210

Facebook reveals lacklustre Q2 results

Stock price

$176

FACEBOOK

Target price

$173 $250

Facebook

$1,883 $2,075

Amazon

January 2

March 17 March 27

January 2

March 25 March 27

July 20 July 17

July 25 July 26 July 25 July 26

$215 $214

Apple

GOOGLE Stock price

$1,065

Britain’s Telegraph newspaper reports that the EU is still considering anti-trust action against Google

Stock price

$1,005

Stock price

$1,199

The EU slaps Google with a $5 billion anti-trust fine

Stock price

$1,065

$338 $420

Netflix

$1,202 $1,350

Alphabet/ Google

$0 Source: BNN Bloomberg; TheStreet.com; all figures in US$

$500

$1,000

$2,000

Source: TMX Money; TheStreet.com; all figures in US$

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UPFRONT

NEWS ANALYSIS

The fee debate rages on A new report on fees from the CSA failed to address much of the industry contention about how advisors are compensated

RELEASED IN late June, the Canadian Securities Association’s latest report on mutual fund fees did little to quiet debate on the subject among advisors. While some industry experts expected the CSA’s proposal to include a ban on embedded commissions, that didn’t come to pass.

The CSA did, however, propose a ban to all forms of deferred sales charges [DSCs], along with a reduction in trailer fees collected by discount brokerages and the establishment of new regulations to address or avoid conflicts of interest. The report also failed to address a best interest standard, something both Ontario and New Brunswick have introduced on their own.

Greg Pollock, president and CEO of Advocis, was pleased to learn that embedded

advice,” Pollock says. “We were delighted that the regulators have listened to those concerns and comments.”

However, Pollock and others were concerned by other aspects of the report, including the CSA’s stance on the issue of banning DSCs. “We are going to more closely examine the DSC proposal,” he says. “On the discount brokerage issue that was raised in the consultation, we certainly have sympathy for that argument and suspect we will support the direction of the CSA.” Tony De Thomasis, president of De Thomas Wealth Management, also sees some positives in what the report proposed, but he believes there are many other issues that need to be addressed. “I think they are trying to do something that is more transparent and

“We have ... been cautioning the regulators across the country that it is important that clients have choice” Greg Pollock, Advocis commissions will continue to be an option for investors.

“We have, for quite some time, been cautioning the regulators across the country that it is important that clients have choice when it comes to how they pay for financial

8

something that is good,” he says, “but I don’t think they really understand the industry as well as they say they do.”

Specifically, De Thomasis would like to see guidelines to ensure those who need advice the most continue to have access to it.

He also believes that more importance needs to be placed on the quality of advice. While he recognizes that a fee-based system will encourage more transparency, he believes it could lead to negative repercussions for advisors, who could try to undercut their competition by devaluing themselves when they should be proving their worth.

“They are spending so much time talking about fees, whether embedded or not,” he says. “They should make the investor aware if they are getting full value and what a typical advisor should do.”

For the opponents of embedded commissions, the argument revolves around whether trailer fees inherently prevent an advisor from putting the best interest of their client first – after all, a hefty commission could entice an advisor to suggest a mutual fund that

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KEY TAKEAWAYS FROM THE CSA PROPOSAL

Bans all forms of deferred sales charges

Keeps embedded commissions

Reduces trailer commissions collected by discount brokerages

Establishes new regulations to address or avoid conflicts of interest

No recommendation for a nationwide best interest standard might not be the best fit for the client. But De Thomasis finds little merit in that argument.

“The idea becomes that if a fund is trailerbased, and there are funds out there that

an advisor fee.”

While Advocis has been vocal on its position on embedded commissions for some time, Pollock doesn’t criticize the other side of

“I don’t think [the CSA] really understands the industry as well as they say they do” Tony De Thomasis, De Thomas Wealth Management don’t pay trailer fees, an advisor won’t recommend the [non-trailer-fee] product, but that’s not true,” he says. “As an independent advisor, I can mix and match trailer funds with non-trailer, and if the funds I recommend don’t pay trailer fees, I would charge

the argument. “We are not saying one is better than the other – the key point is choice,” he says. “If you are an investor out there using an embedded structure, and you are upset that it isn’t being eliminated, I would strongly encourage seeking another advisor with a

different type of compensation model.”

On the issue of a nationwide best interest standard, Pollock believes it would be a positive development for the industry – as long as it’s regulated by the right body.

“We do believe that a best interest standard is important for financial advisors,” he says. “What we opposed was this best interest standard being by applied through statute overseen by the CSA. We want a panel of financial advisors to determine if an advisor acted in their client’s best interest. They are the ones who understand the ins and outs of the business.”

After releasing its report on June 21, the CSA opened up a 120-day comment period, which will run until October. If the industry’s feedback so far is any indication, this debate is far from over.

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24/08/2018 6:15:18 AM

PRODUCTS

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Scotiabank

BBVA Chile

The deal is part of Scotiabank’s strategy to increase its presence in the Chilean market and the Pacific Alliance countries

TD Bank

Greystone Capital Management

The cash-and-stock transaction will make TD the largest manager of Canadian assets for investors

ACQUIRER

TARGET

COMMENTS

Hillcore Group

AlphaDelta Management

The strategic partnership will allow the two companies to cultivate a suite of innovative financial products

Neuberger Berman

University of Waterloo

The two institutions have partnered to study and develop data-driven investment management techniques

RBC

Espresso Capital

The partnership will provide best-in-class capital and banking solutions and industry expertise to support Canadian tech entrepreneurs

Investors Group expands RDSP solutions

Investors Group has broadened its range of investment options for clients with registered disability savings plans [RDSPs]. The firm’s RDSPeligible portfolio solutions now include the Alto Monthly Income Portfolio, Alto Monthly Income and Growth Portfolio, Alto Monthly Income and Enhanced Growth Portfolio, and the Investors Cornerstone Portfolio. Investors Group has also extended its lowerfee pricing structure to these RDSP-eligible funds.

“We’ve expanded our investment options for RDSPs to give investors seeking additional portfolio solutions, and those with higher asset levels, greater flexibility,” said Investors Group SVP Jon Kilfoyle.

TD to become Canada’s largest money manager

TD Bank has agreed to acquire Saskatchewan-based Greystone Capital Management for a net purchase price of $792 million. A privately owned institutional asset manager with a record of strong investment performance, Greystone provides multi-asset-class capabilities, including integration of traditional and alternative investment solutions and a specialty in real estate investments.

The acquisition of Greystone’s diversified portfolio is expected to add $36 billion in AUM to TD’s existing $357 billion, which will make TD Asset Management the largest money manager in Canada.

“Greystone’s leadership in alternative investments is a perfect complement to TDAM’s traditional investment products,” said Leo Salom, group head of wealth management and insurance for TD Bank Group. Greystone CEO and CIO Robert Vanderhooft added that “joining forces with TD will add tremendous value to Greystone clients interested in expanding and diversifying their investment portfolios.”

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Vanguard’s low-cost active funds arrive in Canada

Vanguard’s four low-cost, actively managed global investment funds are now available to financial advisors in Canada. All four funds have a management fee of just 0.5%. The lineup includes the Vanguard Global Balanced Fund, which invests in fixed income and equities worldwide; the Vanguard Global Dividend Fund, which targets dividend-paying companies around the world; the Vanguard US Value Windsor Fund, which invests in undervalued large- and midcap US companies; and the Vanguard International Growth Fund, which focuses on companies located outside Canada and the US.

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24/08/2018 6:16:28 AM

PEOPLE

PEOPLE Sun Life launches international equity fund Sun Life Global Investments has partnered with JP Morgan Asset Management to add a new fund to its international equity product lineup.

The Sun Life JPMorgan International Equity Fund will invest primarily in equities outside of Canada and the US and has a management fee of 1.9%.

“The international equity market continues to see strong growth as more and more clients look to build well diversified portfolios with international exposure,” said SLGI CIO Sadiq Adatia. “This new fund will be an excellent complement to our existing international equity products.”

CI to lower preferred pricing minimums

CI Investments has adjusted its preferred pricing program for Class A, F and P funds, allowing investors with at least $100,000 invested to have their fees automatically reduced. CI will apply high-watermark protection to ensure that negative performance doesn’t drag investors down to another fee tier. The firm is also introducing a new minimum of $100,000 on Sentry-branded funds for family group pricing, which aggregates assets from multiple eligible accounts of family members. “These are significant fee changes that will benefit hundreds of thousands of our investors,” said Roy Ratnavel, EVP and head of sales for CI Investments.

NAME

LEAVING

JOINING

NEW POSITION

Mark Aldridge

N/A

MCAP Financial Corporation

CEO

Kenan Dizdarevic

Deloitte Central Europe

FirePower Capital

Director, investment banking

Merri Jones

N/A

Canaccord Genuity

Independent director

Karen Rowe

CPPIB

CIBC Mellon

Chief financial officer

Richard Talbot

RBC Dominion Securities

Bristol Gate Capital Partners

CEO

Eduard van Gelderen

University of California

Public Sector Pension Investment Board

Senior vice-president and chief investment officer

Bristol Gate welcomes new CEO

Bristol Gate Capital has appointed former investment banking executive Richard Talbot as its new CEO. Talbot will take over for Richard Hamm, who co-founded the firm and has become its executive chairman. Talbot is moving to Bristol Gate after nearly three decades at RBC, where he was instrumental in helping RBC Capital Markets achieve the number-one ranking in Canada from institutional investors.

“Our goal at Bristol Gate is to deliver industry-leading investment performance for our clients by owning high-quality companies with the best dividend growth prospects,” Hamm said. “We are confident that Richard will help us achieve this objective as we expand our suite of client solutions.”

PSP Investments names new CIO Mackenzie and Quadrus add high-net-worth series

Mackenzie Investments and Quadrus Investment Services have announced several changes to their fund lineup. The two firms are adding two new series options, QFW and HW, to their funds, designed to meet the needs of highnet-worth investors. The pair is also launching the Global All Cap Equity Fund (Setanta), targeted toward investors seeking a unit-trust mutual fund alternative to the current corporate class fund. The Global All Cap Equity Fund seeks long-term capital growth by investing primarily in equities of companies located anywhere in the world.

The Public Sector Pension Investment Board has selected Eduard van Gelderen as its new senior vice-president and chief investment officer. Most recently, van Gelderen served as the senior managing director at the Office of the Chief Investment Officer of the University of California. At PSP Investments, will be responsible for overseeing multiasset-class investment strategies, total fund allocations and exposures across asset classes, geographies and sectors for PSP’s Total Funds Strategy Group.

“Eduard has the precise combination of strong global expertise and leadership skills we were seeking,” said PSP Investments president and CEO Neil Cunningham. “With his proven ability to think both as an investor and as a strategist, I’m confident he has the edge required to take our Total Fund operations to the next level.”

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24/08/2018 6:16:54 AM

UPFRONT

ETF UPDATE NEWS BRIEFS Horizons ETFs ventures into emerging market bonds Horizons ETFs has launched the Horizons Active Emerging Markets Bond ETF (HEMB) on the TSX. The first active emerging bond ETF in Canada, HEMB invests in fixed- and floating-rate debt securities of emerging-market issuers.

HEMB is subadvised by both Fiera Capital, which oversees the portfolio’s global asset allocation and sovereign bond selection, and Mirae Asset Global Investments, which manages selection of corporate issuances. “With the constantly evolving conditions within emerging bond markets, we believe active management is the only way to go for this sector,” said Horizons ETFs president and co-CEO Steve Hawkins.

Arrow Capital fires second shot with new ETF series Arrow Capital has launched its second actively managed ETF series, trading on the TSX under the ticker symbol EGIF. The new ETFs provide an additional access point to Arrow’s Exemplar Growth and Income Fund, which strategically shifts asset classes to target the best opportunities. The fund’s managers aim to manage risk from market turmoil by using various hedging strategies. “We have entered an era where investors are looking for better access to well structured investment solutions, and this ETF fits that criteria,” said Arrow’s Mark Purdy.

Canada’s ETF sector sees investment pullback Canada’s ETF industry experienced a minor setback in June as investors pulled a net total of $434 million. Canadian equity funds shed $1.4 billion, while

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US and international equity ETFs saw inflows of $217 million and $119 million, which marked a drop compared to previous months. Emerging market ETFs retreated for the first time, losing $24 million in assets, although fixedincome ETFs gained $506 million. In spite of the outflows, the industry managed to end the month ahead with just over $157 billion in assets.

WisdomTree Canada launches Asian ETF invasion WisdomTree Canada has listed two new Asia-focused ETFs on the TSX. The WisdomTree Japan Equity Index ETF (JAPN and JAPN.B) tracks the WisdomTree Japan Equity Index and provides exposure to dividend-paying Japanese companies, particularly those that get less than 80% of their revenue from outside the Japanese market.

The WisdomTree ICBCCS S&P China 500 Index ETF (CHNA.B) tracks the S&P China 500 Index, composed of the largest 500 eligible companies from the S&P Total China BMI Index. As of June 30, around 48.5% of the fund’s underlying index was invested in China A-shares.

ETF titans trip on investors’ fears of a global trade war According to ETF research firm ETFGI, worldwide ETF industry inflows for the first half of 2018 reached US$223 billion – a figure that’s down more than a third from the flows documented over the same period last year. BlackRock’s global ETF inflows through June were down 63% compared to the first half of 2017, while Vanguard’s global totals were down 48%. Experts attribute the widespread decline, which bucked a four-year trend, to investors pulling out of markets they believe will be hurt in a trade war.

Fees remain under pressure Management fees are still falling, and the lowest-priced funds continue to be in demand Investors are continuing to cast their voting dollars to keep low-cost products in power – and even ETFs, long considered the darling of low-cost funds, aren’t immune to fee pressure.

In a recent analysis of the US ETF market, FactSet’s Elisabeth Kashner found that in the first half of 2018, three ETF issuers – BlackRock, Vanguard and Charles Schwab – accounted for a whopping 81% of the inflows in the US market. The average management fee amount among these three industry giants? Just 0.16%.

“Investors are all but demanding free access to portfolio management,” Kashner wrote in her analysis, published in mid-July.

“ETFs that once held market share by offering unmatched liquidity are now losing ground to cheaper equivalents.”

ETFs continue to outperform mutual funds, too. Looking at data for the broader industry, Kashner found that equity ETFs took in US$70.7 billion in assets in the first half of 2018. Equity mutual funds, meanwhile, bled to the tune of US$47.6 billion.

Kashner attributed this to the wide disparity in fees: Equity mutual funds carried an assetweighted fee of 0.59% at the end of 2017, as opposed to the 0.21% for equity ETFs. “The ETF space has become ground zero for the fee war,” Kashner wrote. ETFs gaining market share generally boasted a mere 0.19% fee on an asset-weighted basis, while those

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losing investors cost an average of 0.27%.

The exceptions, Kashner said, were alternatives and short-term-use geared funds, both of which gained market share despite their higher fees.

As for niche funds that focus on emerging trends such as robotics and artificial intelli-

“ETFs that once held market share by offering unmatched liquidity are now losing ground” gence, Kashner found that fund companies have some wiggle room to charge higher fees, but not much.

“While many of the newer strategies … charge multiples of what their vanilla competitors do, nearly all are facing the same cost pressures,” she wrote. “So far in 2018, as in 2017 and 2016, investors have been rewarding asset managers who offer rock-bottom costs and punishing those who charge a premium.”

Indeed, less than two weeks after Kashner published her analysis, Fidelity made waves in the industry by announcing the launch of two new index-tracking mutual funds with a 0% management fee. Fidelity’s competitors wasted no time in responding: BlackRock said the move will provide “greater access to iShares ETFs” on the Fidelity platform; a Vanguard spokesperson told ThinkAdvisor that it “will continue to lower the cost of investing on our index and active funds, as we have for the past 40 years”; Schwab said it is staying “laser focused on delivering straightforward, transparent and low-cost products” to investors.

But so far, none of the largest issuers of ETFs in the US market have announced lower fees in response.

Q&A

Raj Lala

Taking stock of emerging trends

President and CEO EVOLVE ETFS

Years in the industry 24 Fast fact Evolve recently polled 150 independent advisors to find out their views on the current ETF landscape and get their outlook on the future of ETFs

The advisors you surveyed identified AI, blockchain and cybersecurity as the top three trends that will impact the ETF market in the next two years. What are your thoughts?

We launched Canada’s first cybersecurity ETF at the inception of our business, and it’s performed phenomenally. The thesis is pretty simple: Demand for cybersecurity is only going to go up as the global economy is projected to lose US$6 trillion to cybercrime.

Blockchain had it tough earlier this year because it’s been tied to cryptocurrency prices. But I think people are starting to appreciate its other uses, particularly as IBM, Amazon and other large companies explore different applications. It could replace the internet as a more decentralized, secure way to transmit data, though there’s no crystal ball saying how far down the road that will be.

I found it extremely interesting that AI was number one, which I’d boil down to the fact that it’s getting more understood. Considering the improvements in AI – virtual assistants have gotten better and more prevalent, for example – a positive outlook isn’t so surprising.

But it’s not clear whether advisors see it as an area to invest in or something with an expanding role in financial services.

More than half of the advisors you surveyed said socially responsible investing isn’t on their radar. What would it take for them to jump in?

I launched a green fund earlier in my career; even though people wanted to inject their environmental views and ethics into their investments, very few bought the fund. I have friends in the fund business who’ve had similar struggles with their ESG mandates.

I’ve come to realize that most investors don’t believe all the data showing that ESG leads to better returns.

Having said that, I think there’s big institutional appetite; it was just a while ago when US$23 trillion out of the world’s US$100 trillion in investable assets was in ESG. There’s also the impending transfer of wealth from boomers to millennials, many of whom are prioritizing ESG and impact investing. So I think within the next 10 or 20 years, we’ll see ESG carry a lot more weight.

Advisors projected a greater role for ETFs in their books going forward. Do you expect that to precipitate a shift toward active management in the ETF space?

I think active will become even more important, particularly in certain asset classes. Market cap weighting doesn’t make sense in fixed income because it exposes people to companies with the most debt. Last year, 40% of the flows in fixed-income ETFs went into active funds, and it could get a lot bigger. I also think that at some point there will be a market pullback, so you’ll have people looking for more active management and advice. And active management has seen average growth of 40% annually, compared to the broader Canadian ETF industry’s 20%.

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UPFRONT

ALTERNATIVE INVESTMENT UPDATE

Finding a place for cryptocurrencies The path toward widespread adoption of the new asset class is slowly growing

plans to add cryptocurrencies and blockchain to its fintech curriculum to help arm advisors with knowledge as clients continue to ask questions about a type of asset totally alien to any security advisors have typically dealt with.

“I think the knowledge about crypto is generally low,” says Ken Ono, chief technology officer at BCM.Exchange. “This is complicated by the fact that it is a quickly evolving space.”

“The people who can figure this out faster are going to get a leg up”

From a layperson’s perspective, cryptocurrencies might look like a risky space for investors.

The price volatility is one thing; shortly after approaching US$20,000 in December, the price of Bitcoin plunged and hasn’t broken US$10,000 since February. High-profile heists at exchanges around the world also have regulators concerned.

But experts agree that stories of breaches shouldn’t distract from the potential of the technology. “They have absolutely nothing to do with the cryptocurrencies themselves,”

NEWS BRIEFS

says Chris Horlacher, president and CEO of Equibit Group. “The protocol behind cryptocurrencies, such as the one behind Bitcoin, has never been hacked and is unlikely to be hacked.”

Major financial institutions are starting to get on board with this new asset class, too.

In May, Goldman Sachs launched its own cryptocurrency; JPMorgan, whose CEO famously decried Bitcoin as a fraud, launched a crypto strategy that same month.

The CFA Institute has also announced

VC activity stays strong in first half of 2018

Venture capital activity in the first half 2018 was strong across the country, according to the latest MoneyTree Canada report by PwC. The number of deals rose to 116 in the second quarter, although total VC funding slipped 7%. Companies specializing in artificial intelligence saw a 104% rise in funding in Q2, while mobile and telecom companies’ funding surged 167%. Fintech companies collected US$79 million, down 10% from the previous period, although deal activity jumped from eight deals in Q1 to 13 in Q2.

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Horlacher agrees. “With thousands of different cryptocurrencies and tokens, it’s easy to see a full-time job for someone, or even an entire department, to understand the market and how the different coins could become relevant to their client base,” he says.

While many advisors and investors remain reluctant to dive into this asset class, Ono believes cryptocurrencies will eventually earn a place in people’s investment portfolios.

Horlacher, meanwhile, sees a future where they’ll become the preferred medium for cross-border settlements. But regardless of how or when cryptocurrencies will be adopted in the mainstream, financial professionals shouldn’t wait to educate themselves.

“It’s going to be important for advisors to give sound and thoughtful answers when people ask about it,” Horlacher says. “The people who can figure this out faster are going to get a leg up.”

Georgian Partners raises Canada’s largest VC fund

Georgian Partners, a Torontobased venture capital firm specializing in financing deals for fast-growing startups, has succeeded in raising the largest independent VC fund in Canadian history. The Georgian Partners Growth Fund IV raised around $715 million, amassing 47% more than its predecessor did in 2016. According to PE Hub Canada, the latest version of the fund saw new and returning investors, mostly from North American endowments, family offices, funds of funds, pension funds and wealthy individuals.

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Q&A

Sanjil Shah

An active advantage in student housing

Managing partner ALIGNVEST STUDENT HOUSING [ASH]

Years in the industry 7 Fast fact Launched in July, ASH is a real estate investment trust focused on Canada’s highly fragmented purpose-built student accommodation sector

What kind of research was done prior to the launch of ASH? For over three years, my partner, Jonathan Turnbull, has been doing extensive research on student housing in Canada to understand how the opportunity set in Canada differs from developed markets like the US and the UK. As part of that, we’ve taken an inventory of all the properties that are available and in existence nationwide, as well as built relationships with owners, developers and real estate professionals in each market. After putting a lot of effort into looking at all the universities to understand any supply-demand imbalance, we’ve determined markets where student housing is most needed and where we feel the REIT will be most successful.

How is student housing different from traditional multi-family and apartment markets?

Student housing is operationally intensive. Unlike apartment tenants, students stay for a maximum of three years with an annual turnover of approximately 40%, which means the leasing function must be actively managed. In addition, students are quite particular about their living experience; they want to feel like they’re part of a community, so they look for student-oriented amenities like high-speed internet, fitness facilities, game rooms, study halls, lounges and places for organized activities. An attractive student community environment will increase occupancy and de-risk top-line revenues.

The operational aspect in student housing makes it

Crypto platform Coinberry axes trading fees

Coinberry, a platform that uses proprietary algorithms to secure the best cryptocurrency prices from trusted exchanges, has become the first to eliminate fees on crypto trading. The decision was based on a survey it commissioned, which found that while 39% of 18- to 34-yearolds felt cryptocurrencies were high-return investments, 42% cited the high cost of fees as a major concern. “Based on our research, Coinberry’s 0% fees will remove a major barrier for Canadians to invest,” said Coinberry president Andrei Poliakov.

less interesting for traditional multi-family apartment investors. Some local investor groups built properties but did not appreciate how involved they needed to be to maximize NOI. We have a unique advantage, given our understanding of the operational elements of the sector, which lets us acquire assets from willing sellers for fair value and realize attractive long-term returns.

What are the elements behind your industry advantage?

We have invested substantial time to exclusively focus on the sector and are ahead of the learning curve. We can leverage our parent company’s stable of M&A and private equity professionals to pursue opportunities, as well as our firm’s successful track record of capitalraising and relationships to secure the capital needed to consolidate the sector. Additionally, we are excited about the increased operational elements to the business – it reminds me of my previous experience in managing a high-growth self-storage business. We believe we can differentiate ourselves to our tenants and our investors with our operating focus and initiatives.

What returns can investors in ASH expect?

Because it’s structured as a REIT, we’ll have quarterly distributions, initially targeted at 6% and expected to grow. With capital appreciation, we expect to deliver a 15% IRR to investors over five years. That’s assuming cap rates remain stable at a 150-bp premium to comparable multi-family – cap rate compression would let us realize better returns.

Northern Trust launches alternative funds service

Chicago-based asset manager Northern Trust has launched North America Alternative Fund Services to support some of the world’s most sophisticated hedge funds, PE managers and managed account platforms with matters like complex valuations, collateral and liquidity management. “Bringing private equity and hedge fund services together leverages Northern Trust’s strong footprint in both sectors and enables us to deliver increasingly innovative solutions for this dynamic market,” said group head Peter Sanchez.

Real estate activity dips on supply shortfall

According to a recent report from Morguard Corporation, low asset availability is weighing on Canadian commercial real estate investment, causing a slowdown in overall transactions in the second quarter. The trend was bucked in the multi-suite residential segment, where transaction volumes grew by 17.5% yearover-year. Prices in key markets and asset types rose, driven by the supply-demand imbalance. Due to strong leasing activity, most regions saw low vacancy rates in the office and industrial sectors.

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? Email wealthprofessional@kmimedia.ca

Embracing the future The key to remaining relevant in a rapidly evolving industry, writes Steven Furtado, is leaning into the change EVOLUTION IS a fact of life. Defined as any process of formation or growth, evolution is visible in much of what we do on a day-to-day basis.

The financial services industry is no exception. Over the last decade, we’ve seen rapid advancements in the way information is processed, the platforms we operate on, the way we stay organized and how we market ourselves as professionals.

For example, while many of us read a newspaper, we usually do so via a phone or tablet; information today is instant and in the palms of our hands. You can even find programs that integrate with Bloomberg and social media to scrape for keywords anywhere in the world so that trades can be made before the information prompting them has reached the mass media.

Some look at this technological evolution in our industry and see a threat. ““How can I be replaced by an algorithm?” these fearful observers ask. “Surely robo-advisors can’t service my clientele the way I can.” Yet companies offering user-friendly, interactive, algorithm-based solutions continue to grow their AUM by the millions.

To remain relevant, you should embrace this change – because it’s happening, with or without you. Embracing and integrating something like a robo-advisor platform into your practice can keep it from becoming a threat to you. Furthermore, it can potentially open the door to an entirely new prospect pool. This fact might provide the most compelling argument for even the most

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intransigent Luddite to embrace technology.

The biggest shift of wealth from one generation to another is looming; the advisors who are better equipped to serve the tech-savvy heirs of this wealth transfer will have a higher likelihood of retaining their assets. While baby boomers might have been content to meet their advisors for a finan-

cost-effectively on a visually pleasant mobile platform, something that was beyond my scope to provide.

I’ll never forget the way it played out. He said, “Steven, I need to be able to pull my phone out of my pocket and know exactly how my assets are performing on the spot if I so choose.” Although disappointed, I agreed, and from that moment on, I’ve been in constant pursuit of new and innovative ways to make the client experience more customizable and efficient.

Today, a growing number of my clients are business owners, many of them in tech startups. My experience with the tech CEO was crucial in the evolution of my practice and service offering. The outcome could have been vastly different had I not chosen to accept the fact of a very real demand for technology in our industry today. Such a factor could well be the differentiator that ultimately makes an advisor more referable.

Despite this demand for technology, the future won’t solely involve robots managing

“The biggest shift of wealth from one generation to another is looming; the advisors who are better equipped to serve the techsavvy heirs of this wealth transfer will have a higher likelihood of retaining their assets” cial review once or twice a year and receive the odd letter or statement in the mail, the generation that will succeed them is turned off by physical mail and annoyed by outdated investment information or projections that can’t be seen in real time on their mobile device. This generational shift guarantees that the advisor with the most user-friendly and interactive platform will be the most sought-after.

For my part, I only began making a point of integrating technological tools into my practice after losing an opportunity to work with a very affluent individual due to my lack of technology. In this instance, the client – the CEO of a tech startup – needed a solution that allowed him to index and rebalance

vast amounts of wealth; there will always be a place for the human touch. The advisor’s role must evolve to encompass all other aspects of the wealth management process so that clients can engage with someone who understands how their investments affect their estate, their tax liabilities and their needs for insurance as they progress through life.

At some point, you must either evolve or get left behind.

Steven Furtado is a Montreal-based investment advisor at Peak Financial Group, where he landed after a stint trading futures at a startup trading school and venture capital firm.

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24/08/2018 6:22:06 AM

PEOPLE

INDUSTRY ICON

THE LONG-TERM APPROACH Harvest Portfolios president and CEO Michael Kovacs tells WPC how he built the fund manager into a $600 million force in the ETF space FOR MORE than three decades, Harvest Portfolios head Michael Kovacs has been involved in the financial industry. His path has taken him on a unique journey, from beginning his career as a stockbroker, then moving into mutual fund sales and ultimately starting his own company. Along the way, he’s learned a lot of lessons, but he says the biggest one was realizing the need to take a long-term approach to investing.

“I was two years into the business when the stock market crashed in October 1987, and it was a great lesson for me,” Kovacs says.

“I was young and learned quickly that the quality of investments is important. I saw my own accounts and the accounts of my clients get hit hard, and I thought there had to be a better way to invest.”

In 2009, Kovacs put those lessons into action when he founded Harvest Portfolios with the principle of remaining focused on the long term.

“I wanted to start a company focused on owning great businesses, investing for longterm performance and growing with those companies over time,” he says. “Harvest is built on long-term capital growth, while generating steady attractive income for our holders. Developing the different funds and portfolios we have, we are predominantly equity, and that ties down to the belief that owning great equities, great companies over

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the long term will get you great growth.”

To do that, Kovacs and his team have identified key areas to invest in. They focus on large, well established global businesses that have a track record of earnings and paying dividends, have good management teams, and are leaders in their industry. The process begins with a few thousand companies, which

the same since its origins, one key change occurred a couple of years ago. “In October 2016, we adopted the ETF structure, building our products around ETFs,” Kovacs says. “A lot of our success has been in the ETF business. It is really where we have focused and where we continue to work.”

When building Harvest’s core ETFs,

“We are long-term believers in great companies and great organizations and that they will transcend time, markets and cultures. We believe the companies we own will come through good and poor markets” the Harvest team quickly pares down using quantitative metrics.

“You boil it down to 50 or 60 pretty quickly,” Kovacs says. “At that point, we roll up our sleeves and get more subjective about what companies we want to position our portfolios with. We look at their position in the industry, their management teams, the products provided and how globally diversified they are.”

Pivoting toward ETFs While the firm’s strategy has remained

Kovacs says he looks to use the same underlying strategy in long-term equity growth.

Specifically, areas such as healthcare and technology are where he sees some of the best long-term outlooks.

“If you look at demographics around the world, healthcare is an area that’s going to continue to grow as the population ages,” he says. “Technology is only going to become a larger part of our lives. Companies have gone from speculative growth companies to technology giants that continue to build and have become part of our day-to-day,

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PROFILE Name: Michael Kovacs Title: President and CEO Company: Harvest Portfolios Group Based in: Oakville, Ontario Years in the industry: 33 Career highlight: Starting Harvest Portfolios and seeing the success it has had

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PEOPLE

INDUSTRY ICON

whether transactions, social or whatever it may be.”

Even with his success, Kovacs admits there have been challenges along the way, especially when establishing his business.

“When you are a smaller player, you have to differentiate yourself,” he says. “You need to go out, have a value statement, educate clients as to where you are adding value and how you can be part of their portfolio, and work on that space.”

By doing that, Kovacs was able to build his business from the ground up; Harvest now boasts an ETF business worth $600 million.

Short-term market fluctuations or interest rate directions do not influence how we manage money.”

Even if the market slows, as Kovacs and many others have predicted for 2019, he feels that by investing in those great organizations, Harvest will be able to weather the storm. It’s something he learned from his biggest influence: Warren Buffett.

“I’m a big believer in what he does,” Kovacs says. “He built a tremendous amount of wealth owning great companies and investing in great businesses over many years. That stuck with me throughout my career. I think I stum-

“Avoid the noise and stick with long-term fundamentals … I think when we get into hot markets, like we have had recently, people go too far out on the risk curve to get returns, and you don’t need to” “It’s working because we are growing,” he says. “Since launching the ETF business, we have had net sales consistently every month.

People like what we are doing and continue to support us and grow our business.”

Buffeted by Buffett When it comes to the market, Kovacs considers himself an eternal optimist, as his long-term approach allows him to adjust to whatever happens.

“I started Harvest in March 2009 and was told I was crazy because it was the bottom of the financial crisis,” he says. “In hindsight, it was the perfect time to start. We are longterm believers in great companies and great organizations and that they will transcend time, markets and cultures. We believe the companies we own will come through good and poor markets. Going back to our longterm philosophy, we are long-term bulls.

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www.wealthprofessional.ca

bled across him in a Forbes article in the late ’80s about being a successful investor. I went from there and started reading more about him and how he invests. I have been down to Omaha a number of times to attend the annual meeting, and I have been a personal shareholder of Berkshire Hathaway for a number of decades.”

Kovacs has taken the lessons learned from Buffett and his own experiences and applied them to his current strategy. The main thing he feels investors get too caught up in today is all the noise in the industry.

“The key is patience,” he says. “Avoid the noise and stick with long-term fundamentals because at the end of the day, you will win that way. I think when we get into hot markets, like we have had recently, people go too far out on the risk curve to get returns, and you don’t need to. If you average 8% or 9% year in and year out, you will win in the end.”

HARVEST PORTFOLIOS AT A GLANCE

Established in April 2009

Specializes in ETFs, mutual funds and publicly listed structured products

Launched Harvest ETFs in October 2016

Offers 11 ETFs: 10 Core Equity Income and one Specialty Equity Index

Also has four structured products and two mutual funds

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2018-03-28 12:00 24/08/2018 6:24:01 AMPM

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SPECIAL REPORT

WEALTH TECHNOLOGY

LEADERS IN WEALTH TECHNOLOGY The ever-changing landscape in the financial industry has made technology increasingly important for advisors.

So what are today’s essential tech tools?

AS THE wealth management industry has evolved, so have investors’ expectations.

Technology is vital in reaching the next generation of investors who have grown up in an on-demand world. Making information easily accessible and understandable to investors will be essential for any advisor looking to grow their business in the future.

With that in mind, Wealth Professional Canada sat down with some of the biggest names in wealth technology to find out what their products can do to allow advisors to maximize their business and help investors achieve their goals.

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TECHNOLOGY LEADERS INDEX COMPANY

PAGE

Advicent

25

Broadridge Financial Solutions

30

Croesus

27

Hootsuite

32

InvestCloud

35

Maximizer CRM

33

ModernAdvisor

34

Snap Projections

28

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Brought to you by

A holistic approach to financial technology Advicent’s NaviPlan offers a robust platform to help advisors accomplish investor goals Advicent Solutions traces its origins back to the late ’60s, when the company – then known as Financial Profiles – developed some of the first financial planning software. In the 1990s, the company introduced NaviPlan, a product it has continued to evolve into a cloud-based application that helps to service advisors and investors.

“What we shoot for is holistic, omnichannel financial planning,” says Tom Burmeister, Advicent’s director of financial planning. “It supports all types of client conversations, whether it’s retirement, assessments or any hurdle that a client might need to navigate in their financial planning.”

NaviPlan helps advisors identify and plan for whatever financial goals investors might have, including retirement, education, tax and estate planning, and insurance.

“NaviPlan is able to handle those topics with its robust cash-flow engine,” Burmeister says. “We want to be able to keep the advisor and their value proposition top of mind throughout the planning experience.”

One of NaviPlan’s unique features is its client portal, which gives clients the ability to see their financial information instantly.

The portal refreshes daily so investors can always see the most up-to-date information.

Investors can also make changes to their financial plan and interact with their advisor through the portal.

“If investors would like to get into their year-by-year breakdowns, they can do that, but what we have seen is that folks log in from any device and just check if they are financially OK,” Burmeister says. “They can do

that by logging in and seeing anything that is linked to their account, whether from a financial institution or a financial advisor.”

For advisors, NaviPlan helps them ensure they have the appropriate data to create a financial plan with digital fact-finding tools that help them gather information quickly.

“We know that generation x, millennials and even baby boomers are getting more tech-savvy and are used to more digital interactions in many parts of their lives,” Burmeister says. “The fact-finding process allows clients to provide information digitally and then work with the advisor to set up the plan.”

As a goal-based application built on top of a powerful cash-flow and taxation engine, NaviPlan can also support tax-sensitive inflows and outflows that relate to a client’s goals. It goes right down to the holding level on both accounts and annuities, including all types of taxable and non-taxable accounts.

“When it comes to capturing what a client has going on, we have the ability to support all of that data in a manner that is teed up to mimic reality when it comes to tax treatment and timing,” Burmeister says.

The platform also aids in accumulation and retirement distribution strategies by identifying deficits and ways to address them via a precise calculation engine that allows the software to create projections and answer questions for investors.

For Burmeister, what separates NaviPlan from other financial planning software is its flexibility and the quality of its calculations. “Whether it’s timing, taxation, specific

ABOUT THE SPONSOR

Advicent is the leading provider of SaaS technology solutions for the financial planning industry, servicing the world’s largest financial institutions.

Our software is trusted by four of the top five Canadian banks and five of the top six Canadian life insurance firms with millions of financial plans created across the globe. Through our innovative product capabilities and dedicated services, we help thousands of financial professionals and their clients through every step of the financial planning journey.

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SPECIAL REPORT

WEALTH TECHNOLOGY

account types, incomes or outflows, there is very little NaviPlan can’t do when it comes to modelling a client’s exact situation,” he says.

Another selling point is the fact that NaviPlan pinpoints exact details and allows them to be added to a financial plan. “The holistic nature of the planning capabilities are what we see as a differentiator,” Burmeister says, “and now we are looking

sales, and client satisfaction and retention are all positively impacted by a solid financial planning tool,” he says.

Burmeister believes holistic financial planning technology is valuable because it gives advisors unparallelled flexibility, accuracy and the ability to enhance the client experience while freeing them up to pursue more clients.

“This type of technology is going to

“This type of technology is going to become more important as we see investment management become more commoditized … Planning and datagathering are great ways for advisors to show why they can do better”

A BRIEF HISTORY OF ADVICENT

1969 Emerging Information Systems Inc. [EISI] purchases Financial Profiles to complement NaviPlan

2011

Tom Burmeister, Advicent Solutions to take that to the next generation of technology with our digital tools, client portal and fact-finder capabilities.”

While there has traditionally been some apprehension in the industry around adopting new technologies, Burmeister believes NaviPlan has been able to succeed based on its long-term history. “The more people who are exposed to NaviPlan and the more studies we show, we see that client retention, assets under management, product

become more important as we see investment management become more commoditized,” he says. “Advisors need to show their value beyond their rate of return, and that’s where holistic planning comes into play. Planning and data-gathering are great ways for advisors to show why they can do better. People are thinking about their situation all the time.

Being able to access your own personal advice at any time enforces the value proposition of that advisor.”

Zywave releases Advisor Briefcase

2013 Advicent acquires leading Dutch financial services provider Figlo

2015 26

Gus Hansch creates Financial Profiles

1996 EISI is acquired

by Zywave, a provider of software-as-aservice [SaaS] technology solutions for the insurance industry

2012 Zywave rebrands as Advicent Solutions and divests its insurance division to focus exclusively on financial services

2014 Advicent releases the Narrator application builder and Figlo interactive planning tool

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Partnering for portfolio management Croesus partners with advisors to provide portfolio management software with a collaborative approach Croesus has a long-standing history in financial technology: The firm has been providing wealth management solutions to financial institutions since 1987. With more than 14,000 users and more than $1 trillion in assets managed, Croesus software has become a mainstay in the industry.

“Our goal is to ensure the long-term

folio data online through the investor portal Croesus Investor.

Croesus Data Analytics is the company’s business intelligence module. It was launched in 2017 to help advisors make informed decisions, manage the profitability of their business and identify opportunities for growth.

Finally, Croesus APIs and Widgets are used

“We want to make sure we break out of the traditional client/provider paradigm by developing a real partnership approach with clients where we share goals and risk” Sylvain Simpson, Croesus success of our clients,” says Croesus president Sylvain Simpson. “We provide them with the ability to transform data into information.”

Croesus’ mission has always been to provide innovative and reliable fintech wealth management solutions and services, which it accomplishes via three core products: Croesus Advisor, Croesus Data Analytics, and Croesus APIs and Widgets.

Croesus Advisor, which launched in 1987, is integrated portfolio management software. It includes various features like portfolio rebalancing and an order-entry module. Croesus has also created a mobile app that gives advisors easy access to clients’ data. Financial institutions can also improve the client experience by giving advisors access to their port-

for integration with other tools. For a number of years, clients have been using Croesus APIs to integrate with third-party vendors and proprietary websites. These integration tools allow developers to enhance the client experience by adding Croesus data to their current applications.

According to Simpson, Croesus’ main points of difference are its extensive experience in financial technology and its willingness to form partnerships with advisors.

“We want to make sure we break out of the traditional client/provider paradigm by developing a real partnership approach with clients where we share goals and risk,” he says. “We want to create a win-win partnership where we improve our services through collabor-

FAST FACTS: CROESUS

Founded in 1987

Headquartered in Montreal, with satellite offices in Toronto and San Diego

180-plus employees

$1 trillion in client assets

14,000 users

ation. Being one of Canada’s first fintechs has allowed us to develop and foster highly specialized knowledge and expertise in financial services and ensures we create success stories for our clients.”

It’s that partnership with clients that allows Croesus to continually evolve its products and services. Users are at the core of Croesus’ development and are often asked for their feedback, which informs the company’s roadmap for its products. Through that collaboration, Croesus helps advisors remain competitive in the wealth management industry by enhancing productivity, efficiency and providing a turn-key experience all in the same application.

“As a market leader with 55% market share, Croesus is at the front of new market trends that propel development forward,” Simpson says. “Advisors can take advantage of the technology to simplify their day-to-day tasks.

Croesus Advisor and Croesus Data Analytics provide the tools to be more competitive and strategic.”

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SPECIAL REPORT

WEALTH TECHNOLOGY

Making the planning process easier By providing answers to common investor questions, Snap Projections helps advisors get the ball rolling As Canadians approach retirement, they are faced with a number of questions about their finances that are often difficult for advisors to answer. That’s what Pawel Brzeminski, founder and CEO of Snap Projections, observed when he began having conversations with advisors.

“There was too much complexity and not enough logic in helping address these questions from clients,” Brzeminski says.

“Financial planning software would generate 50- to 70-page reports that didn’t help investors make better decisions.”

Brzeminski, a software engineer, wanted to create something that would allow advisors to have practical conversations with their

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clients. So he built Snap Projections, which uses projection plans that answer investors’ core questions based on variables like income, personal and corporate assets, cash, benefits, debts, and insurance.

“We can take the information and create a projection that the client can see on one page,” Brzeminski says. “If we enter it in to address the question ‘How long will my money last?’ and the answer comes out to 85 years old, then an advisor can now easily have that conversation with the client and ask them, ‘Is that enough?’”

Snap focuses specifically on retirement planning and asset decumulation, which Brzeminski believes is a key issue in finan-

ANSWERING THE TOUGH QUESTIONS Snap Projections seeks to provide datadriven answers to the tough questions advisors need to address with investors.

The software’s projections make it easy to answer questions like: How long will my money last?

How much can I spend so I won’t run out?

When should I take my government benefits?

Which of my assets should I spend first?

Am I saving enough?

How much can I pass on to my children?

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cial planning today. However, he says it’s the practicality of the software that sets Snap apart from other options on the market.

“It combines what advisors want and what they need,” he says. “The software answers questions quickly. We designed it so that investors can see their life on one page and advisors don’t have to jump to different screens. It’s easy to show what areas an investor and advisor need to focus on.”

That simplicity, he says, can help advisors differentiate themselves. “Financial planning is not about long reports – it’s about the impact of service,” Brzeminski says. “Snap is quick; it helps educate the investor, and its reports are easily understood.”

Brzeminski says that while Snap can help

different investor groups, its target audience is advisors who serve clients in the $100,000 to $1 million range. So far, Brzeminski has received positive feedback from the industry.

“Many have told me that if Snap didn’t exist, they wouldn’t use anything else because there is nothing like it,” he says.

Brzeminski believes Snap offers a solution for an area of financial planning that hasn’t received as much attention as others. He sees education as a critical aspect of planning and Snap as a shortcut to provide that education.

“Snap is the shortest path to value,” he says. “If you are an advisor who only oversees investments, this is a way to start looking at financial planning and answer the biggest questions for your clients.”

“We designed [the software] so that investors can see their life on one page … It’s easy to show what areas an investor and advisor need to focus on” Pawel Brzeminski, Snap Projections

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SPECIAL REPORT

WEALTH TECHNOLOGY

End-to-end tech solutions With products that help front-, middle- and backoffice operations, Broadridge Financial Solutions is all about increasing efficiency for advisors Since 2007, Broadridge Financial Solutions has been focused on how its platforms can help advisors with key issues in regard to modernization, transformation and growth.

Broadridge has two main lines of business: investor communications and global technology and operations, which includes security processing and transactional books

business and a full suite of back-office books, records and asset-servicing solutions.”

Broadridge also offers products that help advisors with client communications, performance engines, statement confirmations and tax reporting. Bristow sees Broadridge’s line of products as a way for advisors to manage more clients more efficiently.

“Giving advisors more capabilities through technology will allow them to be more successful. Clients will be stronger because they will have more tools and insights into their investments while working with an advisor” Donna Bristow, Broadridge Financial Solutions and records for capital markets and wealth.

Over the last couple of years, Broadridge has focused its wealth strategy on being able to provide end-to-end agnostic solutions.

“From a wealth management perspective, we offer solutions to clients from front-, middle- and back-office perspectives,” says Donna Bristow, managing director of North American wealth at Broadridge. “We offer solutions from helping advisors with prospecting and onboarding, through to middle solutions for asset collection, transferring onboarding and cash to be invested. We have workflow engines to help advisors do their day-to-day

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“We have a very integrated approach where we provide integration across all our own products,” she says. “As well, we have focused on leveraging technology through API and web services, which allows for easier integration of the Broadridge products and services to a third party.”

This ability to integrate is a key benefit of Broadridge’s offerings, Bristow says. “Advisors get our wealth strategy that will enable them to focus on what the enterprise firm wants to use from a middle- and back-office perspective,” she says. “Broadridge provides the ability to integrate any proprietary capabilities

BROADRIDGE’S THREE TIERS OF SUPPORT

Front-office solutions Prospecting, onboarding

Middle-office solutions Asset collection, onboarding transfers, cash to be invested

Back-office solutions Back-office books, records, asset-servicing solutions

already being used. The advisor can pick and choose the tools they like or want to use while still following the enterprise mandate, and Broadridge can facilitate that collaboration between the two.”

Typically, Broadridge sells its products at an enterprise level. However, its integration capabilities give advisors the ability to use Broadridge products with their existing software. Moving forward, Broadridge plans to remain focused on integration to allow firms to continue to use their proprietary capabilities along with Broadridge’s solutions in an easy, cost-effective matter.

“We offer flexibility so that if a firm has 5,000 advisors, we can give each advisor a different experience based on third-party integration of other tools such as a CRM or whatever they’re accustomed to using,” Bristow says.

As advisors seek to expand their client base, Bristow feels that technology will become even more crucial to their day-to-day operations. “Giving advisors more capabilities through technology will allow them to be more successful,” she says. “Clients will be stronger because they will have more tools and insights into their investments while working with an advisor.”

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SPECIAL REPORT

WEALTH TECHNOLOGY

Social media is no longer an option Hootsuite makes it easier for advisors to communicate in today’s digital world There’s no doubt that an active social media presence is a necessity for companies that want to compete in the modern world. While social media might be something advisors are reluctant to focus on, Amy McIlwain, global industry director for financial services at Hootsuite, says sitting on the sidelines is no longer an option.

“Social media is not just a tool – it’s a skill set,” she says. “I look at it like learning a foreign language. You can have an app on

tion,” McIlwain says.

Hootsuite isn’t just a solution for corporate marketing teams, a platform for advisors or a tool that allows employees to share pre-approved content; rather, it enables all of the above. Firms are using Hootsuite to leverage social media across their entire business, providing a single source of social data and governance that can then connect with other business tools such as analytics, CRM or compliance platforms.

“[Social media] is now the primary means of communication in today’s digital world. If you don’t get on board, someone else will be getting in front of your clients” Amy McIlwain, Hootsuite your phone that helps translate, but until you take the time to learn the language, you’ll never communicate fluently.”

Hootsuite looks to help teach advisors the language of social media with its one-stop digital platform for social media channels and its education programs, which help clients familiarize themselves with social media and develop their skills, depending on their comfort and experience levels.

“Hootsuite for advisors is designed to enable agents and advisors to leverage social media to grow their business while remaining compliant with industry regula-

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Hootsuite has three main areas of focus: driving revenue, decreasing expenses and managing risk. Hootsuite’s platform aims to help advisors drive sales and recruit new talent using social media, while also reducing costs related to customer care.

“There’s a study out there that when companies shift to a social customer care approach, it is four times more cost-effective than call centres,” McIlwain says.

As for managing risk, McIlwain identifies social media as one of the main areas that can harm an organization’s reputation.

“Whether your company is on social with

a formal advocacy program in place or not, employees are on there, talking to the brand’s name,” she says. “Channels like LinkedIn and Facebook prompt you to say where you work, so people are out there representing your brand whether you have a program in place or not.”

Even more dangerous, she says, is the issue of brand misrepresentation. “We are seeing more impersonation accounts of a brand or executive,” she says. “For us, the best defense is a good offence.”

McIlwain stresses that it’s important for advisors to get ahead of this. If advisors don’t have official social media handles, it increases the opportunity for others to impersonate them and potentially cause harm.

Of course, getting in front of clients is the other main impetus for advisors to create a robust social media presence.

“When it comes to embracing social, it is now the primary means of communication in today’s digital world,” McIlwain says. “If you don’t get on board, someone else will be getting in front of your clients. Clients are engaging on social. They are looking for you and if they don’t find you, who are they finding and who are they listening to?”

BOOST YOUR SOCIAL MEDIA PRESENCE Hootsuite makes it easy to schedule posts and campaigns across numerous social media and web platforms, including: Twitter

WordPress

Facebook

Instagram

Google+

YouTube

LinkedIn

Pinterest

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WHAT DOES A CRM SYSTEM OFFER? Maximizer CRM combines a variety of features to help advisors with numerous aspects of their business, including: Contact management

The evolution of CRM technology A leader in CRM, Maximizer CRM has constantly evolved and tailored its product for advisors Maximizer CRM is a pioneer in CRM technology. The company first introduced its product in 1987, and it has evolved from the original MS-DOS version to its current cloudbased iteration. But its core function remains the same: Maximizer is designed to help advisors and their teams build deeper client relationships and drive operational efficiencies.

and email tracking, all of which are backed by enhanced security. To cater to businesses’ specific needs, Maximizer customizes each user experience and offers its software to be deployed through the cloud or an organization’s own pre-existing network.

Maximizer CRM comes loaded with nearly 1,000 industry-specific data fields to record

“Advisors willing to leverage new solutions like robo-advisors and CRM can expand their book of business while understanding each client and delivering phenomenal client care” Jan Carter, Maximizer Maximizer CRM for Financial Advisors, designed specifically for the wealth management industry and used across hundreds of practices in Canada, boasts numerous features, including process automation, a cloud-based calendar, recording logs, data cleanup, search filters, and automatic call

client data in line with KYC requirements. “We also set it up with pre-configured workflows that advisors and their team perform every day, from onboarding new clients to setting up new accounts,” says Jan Carter, head of product and development. “With Maximizer coming fully pre-configured with workflows in place, users

Sales automation Marketing Reports and dashboards Cloud and on-premise CRM Setup and onboarding

can rest assured they are carrying out their job according to best practice, while the hotlist function and follow-up reminders ensure they never miss an important client task.”

In addition, Maximizer has added an app directory, complete with free, easy-toinstall integrations with apps like Outlook, Gmail, Word, Excel, Hubspot, Marketo and MailChimp. This is one area where Maximizer solicits feedback from its users to continually add apps to the library.

And while “Maximizer comes installed with everything you need to start delivering exceptional care to your clients on day one,” Carter says, it can also be customized to fit an advisor’s individual needs. All of this, he adds, helps advisors enhance the client experience.

“Maximizer CRM for Financial Advisors takes the heavy lifting out of everyday operations so advisors and their teams can focus on what matters most – their clients,” Carter says.

As a new generation of investors accustomed to on-demand service begins to seek the counsel of advisors, Carter believes embracing CRM and other technology will become vital.

“Advisors willing to leverage new solutions like robo-advisors and CRM can expand their book of business while understanding each client and delivering phenomenal client care,” he says.

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SPECIAL REPORT

WEALTH TECHNOLOGY

Serving clients of all sizes ModernAdvisor’s platform encourages advisors to streamline investment management so they can focus on other business elements When ModernAdvisor CEO and co-founder Navid Boostani noticed a technological void in the investment industry, he felt compelled to come up with a solution.

“The systems and client onboarding were archaic,” Boostani says. “It was done mostly on paper, which wasn’t efficient and led to higher costs.”

while most of the admin work is done through the platform,” Boostani says. “An individual is mapped into one of 10 risk levels and can choose between core or socially responsible, based on preference. Each model portfolio is designed by CFA charterholders with the help of a computer algorithm to optimize risk and return.”

“If advisors are working with an MFDA dealer, they are paying 20% to 30% to the dealer. On our platform, they keep 100%” Navid Boostani, ModernAdvisor He felt the current landscape was pushing advisors to move upmarket and either eliminate or neglect smaller clients.

So he developed ModernAdvisor to make onboarding seamless and give advisors the option to use the digital platform to effectively service clients of any size.

ModernAdvisor offers ETF portfolios – 10 core and 10 socially responsible – that are tailored to an individual’s goals, risk tolerance and preferences, and are automatically rebalanced. ModernAdvisor poses a number of questions to clients to help determine which portfolio is right for them. Advisors and insurance agents also have access to the platform and can offer their clients the same globally diversified ETF portfolios.

“It allows advisors to manage relationships

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Although ModernAdvisor uses passive index ETFs, the firm has an investment committee that is actively involved in constructing the portfolios.

“There’s still important differences between where the concentrations are in terms of the sectors and countries they have exposure to,” Boostani says. “We look at all of those factors with an investment committee and pick what we believe is the best fund for that specific exposure.”

ModernAdvisor comes with a cost advantage for advisors, too: Not only do they save on dealer fees, but they also receive a referral fee for using the platform. ModernAdvisor charges the entire amount (its investment management fee and the advisor’s fee) on the account so that it’s transparent to both the

advisor and client.

“A lot of times, advisors moving to our platform can reduce client fees by 0.5% to 0.6%, on average, while increasing their own revenue,” Boostani says. “If advisors are working with an MFDA dealer, they are paying 20% to 30% to the dealer. On our platform, they keep 100%.”

While many in the industry remain skeptical of robo-advisors, Boostani says ModernAdvisor is working hard to build partnerships with advisors, rather than compete with them.

“We want to partner with advisors and help them grow and grow with them,” he says.

“We don’t want to impose any platform fees or minimums. We welcome all advisors, even if they are just starting out.”

Boostani is proud of the ModernAdvisor platform and its ability to help advisors focus on more important aspects of their business.

“It reduces compliance, creates higher payout, is much better technology and results in more seamless client onboarding,” he says.

“Advisors can rest assured that all portfolios are well thought out and designed by CFA charterholders and tailored to the specific risk and return parameters the client is looking for.”

THE MODERNADVISOR APPROACH ModernAdvisor uses four key factors to help clients understand how their money is being invested and what they’re paying for financial advice: • A methodology that includes algorithms and analysis to find the best investment options for users • Low fees to help investors keep more of their money • A transparent fee structure • Unbiased decisions on funds that aim to meet the investor’s needs

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Creating your own app portfolio InvestCloud allows clients to pick and choose the best apps to enhance their digital experience Enhancing a client’s digital experience is becoming more and more important for advisors, but figuring out the best solution can often be a challenge. That’s why giving individuals the ability to pick and choose the services they need is at the core of InvestCloud’s philosophy.

“We saw the value of fintechs but also the problems they had,” says Mark Trousdale, InvestCloud’s chief marketing officer, of the company’s roots. “They were slow, monolithic, and a lot was done wrong in building them.”

InvestCloud’s digital warehouse is a data warehouse native to the cloud. It manages structured data such as securities and tax information – the things advisors need to run their practices. It also manages unstructured data, such as news and Twitter feeds, that enhance an advisor’s digital presence.

The hyper-modular apps are InvestCloud’s go-to-market strategy. The 250-plus apps (which cover everything from client portals to trade processing) are grouped by colour blocks to help clients determine which ones

“A lot of advisors still rely on email, phone calls and quarterly meetings, but those things don’t cut it anymore. What differentiates you is your digital experience” Mark Trousdale, InvestCloud So InvestCloud took a different approach from the start, laying a foundation built on three core concepts: Programs Writing Programs [PWP], a digital warehouse and hyper-modular apps.

“PWP is a code generator, a tool kit to be used by non-technologists and technologists as well,” Trousdale explains. “Our claim is that one designer can do the work of 50 programmers with PWP. It is quite an expediter when it comes to putting together apps and allows the user to control what the experience will look like.”

are right for them.

“We cover a lot on the life cycle,” Trousdale says. “We clustered apps that we thought would service the industry together, but apps can be combined from different colours. We start with a functional study of our clients and find the right apps for their needs. That can include one colour, but also the ability to pick and choose from others to create a customizable portfolio of apps.”

That customization and flexibility, along with the ability to integrate into other thirdparty apps and software, helps InvestCloud

A CLOSER LOOK AT INVESTCLOUD’S APP OPTIONS Blue: Client portal, advisor portal, digital onboarding, digital advice, content management, integrated CRM Orange: Digital warehouse, data aggregation, data queries, billing, models/rebalancer, compliance Black: Performance, risk, liquidity, exposure, document management Green: Trade processing, accounting, IBOR, ABOR, SBOR, reconciliation

create options for all types of clients. Giving advisors easy access to more data allows them to cut costs while making better decisions about their clients. And by providing a more customized experience for investors, Trousdale believes InvestCloud can help advisors retain clients.

“A lot of advisors still rely on email, phone calls and quarterly meetings, but those things don’t cut it anymore,” he says. “What differentiates you is your digital experience. It needs to be as good as possible and highlight the way you look after money.”

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24/08/2018 6:45:53 AM

SPECIAL PROMOTIONAL FEATURE

EXPERT ADVICE

What’s the next big ETF theme?

Horizons ETFs president and Co-CEO Steve Hawkins spoke to WPC about the latest disruptive investment opportunities, from marijuana to blockchain

HORIZONS ETFS has always been a company that likes to take calculated risks and push boundaries. Since he took on the role of president and co-CEO in 2015, Steve Hawkins has been a driving force behind the company’s innovative strategies. He sat down with WPC to discuss where the ETF industry is headed.

WPC: At Horizons ETFs, you’ve become internationally renowned for your Marijuana Life Sciences Index ETF (HMMJ). What do investors need to know about that sector right now?

Steve Hawkins: Given that legalization is only a few months away, we’re really interested in what happens in the space after October 17 and what that will mean for investors. For instance, we’ve seen a flurry of consolidation recently, and we think that will continue in a bigger way.

We expect to see big tobacco, big pharmaceuticals and big alcohol all vying for a piece of the action. When you have these companies sitting on the sidelines, watching emerging cannabis companies eat their lunch, so to speak, they’ll have to react. At this stage, it would be difficult for them to achieve market share through an organic building process, so they’ll likely do it by acquisition. That will likely drive equity markets for the cannabis sector as well.

With the situation still dynamic, there’s inherent risk in picking the winners in the space prematurely. That’s why I think ETFs are the answer for investors looking to get exposure to marijuana – you can experience

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sector growth without having the risk of losing everything on a single company.

Right now, we’re working on a new product we’re very excited about: leveraged marijuana ETFs, another Canadian first. Oil, gas and gold stocks are traditionally the most actively traded ETFs we provide to investors. Marijuana stocks fall under the same trading philosophy, providing sufficient volatility to make it interesting for day-trading speculators.

WPC: What other big investing themes do you see Canadian investors embracing right now?

SH: Canadian investors are embracing the investment potential that Industry 4.0 has brought – the industrial evolution that’s occurring as the digital world merges with the physical. Emerging, disruptive technologies like robotics, automation and artificial intelligence [AI] are evolving rapidly, and Canadians want a way to invest in that change. We believe we’re creating products that will capitalize on the growth of those industries.

For instance, we offer the Horizons Robotics and Automation Index ETF (RBOT).

It provides exposure to the performance of equity securities of companies that are involved in the development of robotics and/or AI. This burgeoning industry is rapidly approaching $100 billion in annual sales globally.

It’s not an easy space for investors to access on their own. Many of these companies have little overlap with major stock market indices,

given that these are relatively new industries with companies spread throughout the world.

But the technologies that are critical for our advancement are thankfully very investable.

Now we can all participate through ETFs.

WPC: Your firm actually launched the first AI-driven ETF in Canada – the Horizons AI Global Equity ETF (MIND).

What was behind your decision to allow an AI system to actively run an ETF portfolio?

SH: Imagine a portfolio manager who doesn’t tire, can digest millions of data points instantaneously and is immune to cognitive biases, performance anxieties and isn’t letting their bonus compensation affect their decisionmaking. That’s Alpha-10, our AI system that manages MIND. Alpha-10 is a deep neural network learning system – meaning it’s more than just a calculator. It’s digital intelligence that gets smarter and better over time as it observes and learns from its own choices. With MIND’s global equity mandate, Alpha-10 is 24/7, consuming data from across the world and deciding asset allocations and regional exposures.

Increasingly, we’re seeing AI being used to manage complex, data-driven processes across industries. While we were among the first to apply AI to an ETF’s portfolio management, I don’t expect we’ll be the last. The potential of AI to revolutionize the way we invest and manage our money is one of the biggest disrup-

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possible will continue to have a role to play in the future.

WPC: What are some other innovative products you’re planning to launch?

“The potential of AI to revolutionize the way we invest and manage our money is one of the biggest disruptions coming” Steve Hawkins, Horizons ETFs tions coming in the world of finance.

WPC: Another area of potential disruption we hear a lot about these days is blockchain. Your firm has a new blockchain ETF, but you’ve taken a different approach than other providers. Can you explain?

SH: Like AI, the blockchain is another technology that has the potential to significantly transform the way we do business. However, not everyone understands it. For those who don’t, the blockchain is fundamentally a hardcoded digital ledger that can be used to record transactions or data interactions. It’s not just for cryptocurrencies – virtually any process can be improved with blockchain technology. That can include trade processing and settlement, smart contracts, medical records, and so much more.

With our blockchain ETF, the Horizons

Blockchain Technology & Hardware Index ETF (BKCH), we’re providing a way to invest in the blockchain with pure-play exposure, but without the risks of buying unknown, earlystage technology companies. Ultimately, it’s the infrastructure behind the use of blockchain technology that we believe is the best-case prospect for growth.

Looking back at the early days of the internet, you never knew who was going to survive. Yes, winners eventually emerged, like Google, Yahoo and eBay, but if you invested in the Ciscos and other services that provided the infrastructure for the internet and its use, you would have made big money. It was Apple and Microsoft that did well because people using the internet needed computers.

We don’t know what blockchain technology variant will stand the test of time, but we do know that those building the tools that make it

SH: One of Horizons ETFs’ guiding principles is accessibility. We empower investors with access to the information and tools they need to make investing decisions, whether they’re based on data or core beliefs. That’s why we’re in the process of developing our first socially responsible investing [SRI] ETF. Right now, the demand for SRI products in the Canadian marketplace has been primarily from institutional investors. That’s largely because public pension funds have mandates to invest with environmental, social and governance tenets as part of their portfolio strategies.

But individual investor assets directed toward responsible investing are growing – doubling, according to the Responsible Investment Association. We think it’s important to lead the way and bring ETFs to market that correlate with investors’ principles. We want to give investors access to investments they believe in and want to support, not just in terms of a return on investment. We’re aiming to launch at least one SRI ETF before 2019, so stay tuned.

Another ETF we’re excited about is one we just launched: the Horizons Active Emerging Markets Bond ETF (HEMB). It’s another firstin-Canada product for us – a title we’re always proud to achieve because it means we’ve given Canadian investors access to opportunities they otherwise wouldn’t have.

Emerging market bonds are an underserviced sector, particularly from an active management standpoint. From a fixed-income perspective, there is a lot of institutional investing in this sector and a lot of potential retail growth. The emerging market fixedincome network, both from a government and corporate perspective, pays higher yields, which goes along with the slightly higher credit risk to investors. However, with an increase in risk and lower duration, you can get access to higher yields, which we believe is generally a good investment decision. HEMB gives investors a way to participate in global growth through budding economies.

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24/08/2018 6:46:55 AM

EXCLUSIVE FEATURE

EMERGING MARKETS

Emerging markets gain traction Christine Tan of Sun Life Global Investments discusses how emerging market opportunities have evolved and why gaining global exposure should appeal to Canadian investors EMERGING MARKETS continue to be a new frontier for many Canadian investors, but that’s not the case for Christine Tan, Sun Life Global Investments’ assistant vice-president of portfolio management. As a specialist in emerging markets, Tan has seen their

spending and rising domestic consumption.

EM countries are witnessing a demographic shift from rural areas to cities, leading to increased government spending on infrastructure. This increase is being funded in part by global institutional investors

“Investing directly in emerging markets and getting exposure to different economies could be a way for an investor to truly diversify their portfolio” Christine Tan, Sun Life Global Investments economic fundamentals steadily improve to the point where many of these countries are now as economically sound as their Western counterparts. And, she says, investors might want to consider investing in EM equities as part of a diversification strategy.

Growth in emerging markets is being driven by urbanization, infrastructure

38

attracted to the higher interest rates offered by emerging market nations.

Another key growth driver is the ‘demographic dividend.’ Because the average age in EM countries is still relatively young, income levels and domestic consumption should continue to steadily increase. “This growing domestic consumption as income levels rise

is why you are finding that many EM countries are more resilient and domestically oriented than they were in the 1980s and 1990s,” Tan says.

Tan began her career in 1997 during the Asian financial crisis, and since that time, she has noticed a great deal of change. “When you go to places like India, Indonesia, Brazil, Peru or Chile, infrastructure still needs to be built,” she says. “That’s why global pension funds and longer-term investors are looking at these countries for infrastructure opportunities.”

A world of opportunity For Tan, one of the more compelling emerging markets right now is India, due in part to the fact that 50% of the country’s population is under 27 years old. India has also seen major changes to its economy since the election of Prime Minister Narendra Modi in 2014.

Modi, a former chief minister for the state of Gujarat, brought a pro-business approach when he took office. He began by implementing a long-discussed harmonized GST that replaced more than 20 different taxes.

“It simplified business for local companies,” Tan says. “You don’t have to have a manufacturing facility in every state.

Before, you couldn’t move goods easily across borders with the complex tax regime.”

The second major reform was demonetization, which occurred in 2016 when Modi announced that 87% of cash in circulation would become non-legal tender and would become worthless unless it was deposited into bank accounts. This bold step accelerated the digitalization of what was a cash-dependent economy and has resulted in millions of households being brought into the financial system.

This was an important outcome, Tan says, “because the government provides subsidies, especially to rural areas, and now there is more certainty that these are getting to the intended people through direct deposit, as opposed to being lost in transit.”

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While there were short-term disruptions, Modi’s reforms have led to a more positive outlook on the future of the Indian economy.

“That’s why we think it’s exciting that these changes are happening in India,” Tan says.

The growth in emerging markets has been overshadowed lately by escalating trade tensions between the United States and the largest emerging market: China. While there is some uncertainty, Tan isn’t overly concerned that it will lead to a significant decline in EM growth.

“With respect to China, we expect the actual impact to be relatively small in GDP terms,” she says. “But in terms of tariffs on China, the countries that might be more impacted are Latin American commodities producers like Peru and Chile. Their markets are more dependent on China’s growth than

GEOGRAPHIC ALLOCATION OF THE SUN LIFE EXCEL EMERGING MARKETS FUND Korea Other Cayman Islands China Taiwan Hong Kong Brazil Russia India South Africa

Source: Sun Life Global Investments Fund Facts, as of May 31, 2018

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EXCLUSIVE FEATURE

EMERGING MARKETS

COMPOSITION OF THE SUN LIFE EXCEL EMERGING MARKETS FUND 26.1%

68.9%

International equity Emerging market equity Cash Other

4.3%

22%

0.7% Source: Sun Life Global Investments, as of June 30, 2018

TOP 10 INVESTMENTS IN THE SUN LIFE EXCEL EMERGING MARKETS FUND Samsung Electronics Tencent Holdings Alibaba Group Holding

Untapped diversification

Taiwan Semiconductor Manufacturing Co. China Construction Bank Corporation Lukoil Cash Sberbank of Russia China Petroleum & Chemical Corporation AIA Group Sun Life Global Investments; as of May 31, 2018

40

China is itself.”

Some EM countries could also be hurt by rising interest rates and a strong US dollar.

“Most EM countries, other than perhaps China, need external capital,” Tan says. “So as interest rates go up globally, the cost of capital goes up, meaning they can’t spend as much on infrastructure or services.”

Even with interest rates gradually increasing, Tan notes that the price of capital is nowhere near where it was prior to the 2008 financial crisis. She’s keeping a close eye on the situation but doesn’t see any reason to downgrade the immediate outlook.

Tan believes China is the most stable emerging market, due mainly to its size and ability to deal with trade tensions in the short term.

She also highlights the stability of India, where two-thirds of the economy is domestically focused and does not rely on exports.

When asked about emerging European countries like Hungary and Poland, Tan says, “I view them as relatively more stable because they are growing at a slower pace than the Asian emerging economies and the Latin American countries, and therefore don’t fluctuate as much.”

Tan believes it’s time for Canadian investors to give emerging markets closer consideration. Emerging markets used to be small and heavily influenced by China and the US, but that’s the case anymore.

“EMs have grown up,” Tan says. “They are now teenagers as opposed to toddlers, which means they have a domestic component.

These economies are more resilient and can drive themselves to some extent.”

Previously, attractive investment options in Canada meant there was no reason to look abroad. Now, with domestic growth slowing, the potential for new investment opportunities might lie in emerging markets.

“When you look at developed countries, generally one comment we hear is that it is getting harder to diversify because traditional assets are highly correlated,” Tan says.

“Today, you have to have that diversification, and I think investing directly in emerging markets and getting exposure to different economies could be a way for an investor to truly diversify their portfolio. We are in a stable, slow-growth environment, which is good in many respects, but it also means our returns and volatility profile for domestic assets will be lower than before. As investors, we need to think of alternate sources of growth and income.”

Tan stresses that investments in emerging markets should be for a complete economic cycle, not just a year or two, because emerging markets can change drastically in a year.

That’s why for her, actively managing EM investments is key.

“We are active managers, specific to EMs,” she says. “We feel it’s important because depending on the world you are in, some countries and some industries will do a lot better, while others will see headwinds.”

Tan notes that one concern Canadian investors have with emerging markets is that they don’t know a lot about the companies in these countries. However, she adds, “you are starting to see emerging market companies become international players, especially in tech. At the same time, consumer brands are local in these countries. By owning only what you recognize, you are missing out on great opportunities.”

Tan sees a timely opportunity to expand the conversation when it comes to EM investments. “The biggest change is that we are telling the story to a much larger audience in a global context,” she says. “I think it adds to the depth and nuance of the discussion, which we hope will ultimately benefit our investors in the long term.”

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forstrong.com/learnmore forstrong.com/learnmore forstrong.com/learnmore info@forstrong.com info@forstrong.com info@forstrong.com 38 - 41 Sector focus - EMS-SUBBED.indd 41

G L O B A L G L O B A L G L O B A L

24/08/2018 6:49:09 AM

PEOPLE

ADVISOR PROFILE

Making waves White Hewson Wealth Advisory Group’s Grant White is proving that younger advisors can be big players in the financial planning game

AT JUST 33 years old, Grant White is young for a financial advisor. Yet with 12 years of experience already under his belt, he’s demonstrating that youth isn’t always a stumbling block in this industry. After graduating from the University of Manitoba’s Asper School of Business, White made stops at Wellington West and BMO Nesbitt Burns before starting his own practice, White Hewson Wealth Advisory Group, under the National Bank umbrella.

White’s interest in the industry was piqued while he was working in retail sales during university. His father, a financial advisor himself, told White that if he enjoyed working with people, he should consider becoming an advisor because it was a great way to help people achieve their goals. It didn’t take long for White to realize that the industry would be a perfect fit.

“I realized how much I enjoyed the market and investing in companies,” he says. “It was a combination of two passions: working with people and helping them succeed while diving deeper into investing.”

Entering the business wasn’t easy, though, even with familial support.

“I started as an advisor at 26 years old,” he says. “My challenge was picking up new clients as a young advisor and getting credibility in the industry.” But White was eventually able to learn the ropes and has now established his own mentorship program for

42

new advisors at his firm, whom he encourages to pick one strategy, follow through and keep working at the business.

During more than a decade as an advisor, White has seen a number of changes, but the main one has been increased transparency.

“I started on the MFDA side – a world where fees were very opaque and people didn’t have a clue as to what they were paying for an advisor’s services,” he says. “I have seen a lot more transparency, but I think it needs to go even further.”

Another major change has been the advances in technology. “I think the advantage that artificial intelligence gives us in this business is incredible,” White says.

“Technology will have a great benefit in terms reducing manpower costs going forward and helping us be more efficient.”

While many advisors are wary of new technology like robo-advisors, White sees them as a helpful tool, pointing out that “they

are part and parcel of being able to manage more clients and provide more advice.”

In providing that advice, White takes a planning-focused approach. He starts by determining what’s most important to a client and then working backwards, saving any talk of specific investments until after a plan is in place. That approach has been a hit with White’s clients, many of whom are fellow small business owners in Winnipeg.

“Wealth management is a family business, but we have owned and operated a number of [other] family businesses here for decades,” he says. “We work with a lot of small business owners and feel we can speak on the same level with them.”

In terms of strategy, White keeps the focus on value-based investing. Recently, he has been building up cash investments in anticipation of an inevitable market correction – something he views as an opportunity rather than cause for alarm.

WHY ADVISORS SHOULD EMBRACE TECHNOLOGY Grant White takes a different approach to technology than many advisors: He tries to use as much of it as he can. Whether it’s a CRM system or financial planning software, White sees tech capabilities as a crucial tool in his toolbox.

He also sees the benefit in leveraging a robo-advisor platform to scale up and serve even more clients. “If I can manage 200 families today,” he says, “with new technology and artificial intelligence, I will be able to effectively manage 1,000 in the future.”

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FAST FACTS: GRANT WHITE

Lead partner and portfolio manager at White Hewson Wealth Advisory Group

Based in Winnipeg

Has been a financial advisor for 12 years

Graduate of the University of Manitoba Asper School of Business

“In an industry dominated by older people, it’s nice to be recognized and respected for the work we’re doing. We have a good vision of how we’re going to make an impact on the industry” “We are planning for that and welcome it because we think we will take advantage of good companies at lower prices,” he says.

White’s investment philosophy seems to be paying dividends so far: In May, he was named Young Gun of the Year at the Wealth

Professional Awards.

“In an industry dominated by older people, it’s nice to be recognized and respected for the work we’re doing,” he says. “We have a good vision of how we’re going to make an impact on the industry.”

Holds CFP and CIM designations

Received the Young Gun of the Year Award at the 2018 Wealth Professional Awards

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FEATURES

CERTIFICATION SURVEY 2018

CERTIFICATION

SURVEY 2018 Which designations are most valuable in 2018?

Advisors weighed in on that question and more in Wealth Professional Canada’s annual Certification Survey

THE FOURTH annual Wealth Professional Canada Certification Survey reveals a lot about the industry’s changing attitudes toward certification. While the Certified Financial Planner [CFP] continues to be the benchmark – 85% of respondents said they have this designation – other specialized designations continue to grow in popularity. In particular, the number of advisors holding a Chartered Investment Manager [CIM] designation jumped from 7% to 29%, while Fellow of the CSI [FCSI]

44

grew from 6% to 21%. Both Trust and Estate Practitioner [TEP] and Registered Financial Planner [RFP] also saw a healthy increase.

Cary List, president and CEO of the Financial Planning Standards Council [FPSC], has seen a recent push for advisors to acquire at least one designation. “In the last year, there has been a move to up the game in the industry,” List says. “Certification is becoming a requirement to give advice. Those who only have a licence are being pushed towards certifi-

cation in some capacity. We are noticing a greater importance on financial planning. It is taking the forefront more than ever, so CFP certification is becoming more of a table stake in the industry.”

Moving forward, List sees specializations taking on increased importance for advisors as they seek to differentiate themselves in an industry where general certifications like the CFP are becoming commonplace. “I think you will see more people saying, ‘I need to go

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beyond that,’” List says. “You will see some of the specialty designations getting more focus post-CFP certification.”

As for what specializations will become dominant, List says that while nothing is emerging as a clear front-runner yet, “I think the obvious area, with an aging population and baby boomers, is wealth transfer. Anything in the area of trust and estate is probably going to be pretty important. Right now, I think everyone is focused on that foundational, baseline professional certification, and it will be a couple of years before we see an emergence of any one area of specialization.”

There are plenty of certification options to choose from, and while List doesn’t see the quantity as a bad thing, he feels it’s key to maintain the line between general and specialized certifications. “We at FPSC are not concerned with there being too many specializations,” he says. “The concern becomes when people blur credentials of something that is a specialization, being promoted or positioned as an alternative to financial planning credentials.”

What’s most important, of course, is that investors know what they can expect from an advisor based on the designations they hold.

“From a consumer perspective, everyone is a professional and should have the CFP or Level 1 certification,” List says. “The specialization should be distinct from that. When you look at doctors, they don’t position themselves as a better kind of doctor or something instead of

is no official benchmark credential required for Canadian advisors, but List believes the industry is getting closer to introducing such a standard. Pointing to the progress made in Ontario in this regard, he notes that “sometimes things take longer than we’d like, but in

“In the last year, there has been a move to up the game in the industry.

Certification is becoming a requirement to give advice” Cary List, Financial Planning Standards Council an MD. They are all MDs that have a particular specialization. What we should say is, ‘If you are a financial planner, get your CFP certification. Then, through specialization, branch off.’”

One thing the FPSC is currently investigating is whether specializations could become part of the CFP, which would mean investors could click on an advisor’s digital CFP to see what specializations they’ve been accredited in.

Of course, the underlying issue is that there

the interest of consumers, it has to come.”

List also believes that increased regulation and consolidation of certifications would ultimately benefit consumers, who often have trouble deciphering a long list of acronyms.

“We are getting to the point where regulators and governments recognize it is not in consumers’ interest to have a list of letters beside people’s names,” he says, “when some mean a lot and others nothing.”

WHICH DESIGNATIONS DO YOU CURRENTLY HOLD? The Certified Financial Planner designation continues to be the most widely held in the wealth management industry. However, many other designations are growing in popularity as advisors move toward specialization as a way to differentiate themselves.

85%

Certified Financial Planner (CFP) Chartered Investment Manager (CIM)

29% 21% 21%

Fellow of CSI (FCSI) Chartered Life Underwriter (CLU) Chartered Financial Consultant (ChFC) Personal Financial Planner (PFP) Registered Financial Planner (RFP) Trust and Estate Practitioner (TEP) Chartered Accountant (CA) Certified International Wealth Manager (CIWM) Certified Management Accountant (CMA) Chartered Financial Analyst (CFA) Chartered General Accountant (CGA)

11% 11% 8% 8% 7% 5% 4% 2% 1% 0

20

40

60

80

100

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FEATURES

CERTIFICATION SURVEY 2018 WHAT DESIGNATIONS DO YOU PLAN TO GET IN THE FUTURE? In line with Canada’s aging population and upcoming generational wealth transfer, it’s hardly surprising that the Trust and Estate Practitioner [TEP] designation continues to see growth as an area of specialization for advisors.

32%

Trust and Estate Practitioner (TEP)

17% 17% 15%

Chartered Life Underwriter (CLU) Chartered Investment Manager (CIM) Certified Financial Planner (CFP)

12% 12%

Fellow of CSI (FCSI) Chartered Financial Analyst (CFA)

4% 3% 3% 3% 3%

Registered Financial Planner (RFP) Personal Financial Planner (PFP) Chartered Accountant (CA) Certified Management Accountant (CMA) Certified International Wealth Manager (CIWM)

1%

Chartered Financial Consultant (ChFC) 0

20

40

60

80

100

WHAT CERTIFICATION HAS BEEN THE MOST USEFUL IN YOUR CAREER? While there was little change from last year in the number of respondents who named the CFP the most useful designation in terms of furthering their career, the value of another certification experienced a marked increase: 10% of advisors said the CIM designation was most helpful, up from 4% in 2017.

63%

Certified Financial Planner (CFP) Chartered Investment Manager (CIM)

10% 7% 4% 3% 3% 2% 2% 2% 1% 1% 1% 1%

Chartered Life Underwriter (CLU) Chartered Accountant (CA) Personal Financial Planner (PFP) Certified Management Accountant (CMA) Fellow of CSI (FCSI) Registered Financial Planner (RFP) Trust and Estate Practitioner (TEP) Certified International Wealth Manager (CIWM) Chartered General Accountant (CGA) Chartered Financial Analyst (CFA) Chartered Financial Consultant (ChFC) 0

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20

40

60

80

100

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WIWM

The first industry awards recognizing the women inspiring excellence and shaking up the wealth management industry

LAST CALL FOR NOMINATIONS 7 categories open to women in wealth management and the teams and organizations they run:       

Female Executive of the Year Women-Led Advisory Team of the Year Excellence in Philanthropy & CSR Woman Innovator of the Year ETF Champion of the Year Young Gun of the Year Marketing & Communications Team of the Year

Finalists will be announced in WP magazine and online, and across national media outlets. Winners will be revealed and celebrated at the Women in Wealth Management Awards reception on Wednesday, November 21 at The Beanfield Centre Toronto (during the evening of the Women in Wealth Management Summit).

Be a part of making wealth management a more empowering and rewarding field for women

NOMINATE NOW Hurry! Entries close on 9 September

Visit women.wealthprofessional.ca/awards or email us at events@keymedia.com to know more.

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FEATURES

CERTIFICATION SURVEY 2018 HOW LONG DID IT TAKE TO ACHIEVE YOUR CURRENT LEVEL OF CERTIFICATION? Advisors are putting in the time to earn their acronyms. Close to half of advisors say they’ve spent five years or more achieving their current level of certification.

IS THE CURRENT CERTIFICATION REGIME IN CANADA ADEQUATE IN TERMS OF TRAINING AND EDUCATION? Nearly three-quarters of advisors believe the certification regime in Canada is on the right track, yet their comments (at right) suggest there’s still some frustration.

WHAT ADVISORS HAD TO SAY “There should a mandatory requirement for practicing advisors to be certified” “The bar to enter the profession and manage client assets is way too low”

1 year 8% 2 year 17% 3 year 16% 4 year 10% 5 or more years 49%

HAS THE VALUE OF DESIGNATIONS BEEN DIMINISHED BY THE PROLIFERATION OF TITLES? The majority of advisors remain frustrated by the high number of certification options available and their varying quality.

Yes 72% No 18%

WHAT ADVISORS HAD TO SAY “There are too many certifications with really varying degrees of professionalism”

“High-school dropouts can market themselves on equal footing with universitytrained people. The education streams are haphazard, and the public has no idea what designations mean”

DO DESIGNATION-GRANTING BODIES DO ENOUGH TO MARKET TO THE PUBLIC WHAT THEIR CERTIFICATION MEANS? In general, advisors feel much more needs to be done to inform potential clients about the value of an advisor’s credentials.

“Everybody and their dog has come out with a certification program”

Yes 84% No 16%

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“Any more than a few designations muddy the waters and devalue the ‘higher-standard’ credentials”

Yes 14% No 86%

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TOP THREE DESIGNATIONS IN TERMS OF SERVING THE CLIENT

TOP THREE DESIGNATIONS IN TERMS OF PUBLIC NAME RECOGNITION AND MARKETING

The CFP was far and away the most valuable designation in terms of serving the client; it received 10 times as many first-place votes as the next-highest-scoring designation, the CLU.

The CFP also continues to lead the pack when it comes to name recognition, although CA was a close second.

2ND

1ST

(Chartered Life Underwriter)

(Certified Financial Planner)

CLU

CFP

3RD

CIM

(Chartered Investment Manager)

2ND CA

(Chartered Accountant)

1ST CFP

(Certified Financial Planner)

3RD

CFA

(Chartered Financial Analyst)

WHAT’S KEEPING YOU FROM GETTING THE FOLLOWING DESIGNATIONS? Across almost all designations, the top two reasons for skipping out were overlap with other designations and lack of relevance to the advisor’s practice.

Lack of time and money Insufficient client recognition

Repetitive of other designation Poor-quality coursework

Insufficient value add for clients

Outside of my interest/practice

Certified Financial Planner (CFP) Certified International Wealth Manager (CIWM) Certified Management Accountant (CMA) Chartered Accountant (CA) Chartered Financial Analyst (CFA) Chartered Financial Consultant (ChFC) Chartered General Accountant (CGA) Chartered Investment Manager (CIM) Chartered Life Underwriter (CLU) Fellow of CSI (FCSI) Personal Financial Planner (PFP) Registered Financial Planner (RFP) Trust and Estate Practitioner (TEP)

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FEATURES

PURPOSE

Five myths about purpose Everyone wants and needs to find purpose in their work. But according to Aaron Hurst, doing so requires shattering some common myths

MOST OF what we understand about purpose at work comes from Hollywood.

Stories are a powerful way to learn, but most of the stories we see on screen give us a romanticized view of the role of purpose in our work. They build myths about purpose that actually make it harder for us to focus on what matters. But perhaps the most unfortunate aspect of these myths is that they imply that purpose is not something for everyone, which – based on my experience working with thousands of professionals, as well as emerging research on the topic – couldn’t be further from the truth.

Myth 1: Purpose = cause In working with thousands of professionals seeking purpose, the greatest barrier has been the ubiquitous belief that they have to find their cause. When business professionals leave Taproot’s pro bono consultant orientations, they are usually fired up and want to get on a project immediately. They can’t wait.

That being said, on one of our earliest projects, we were having a difficult time getting any of our largely gen-x, pro bono marketing consultants to join a team. The project was branding and naming work for a critical organization serving low-income

50

seniors in one of San Francisco’s most challenged neighbourhoods, the Tenderloin. When I pitched the project to our pro bono consultants, they begged for a different project.

“I totally get that seniors are important, but I’m 32, and it really isn’t an issue that gets me excited,” they said. “Do you have anything focused on kids or the environment? I am really passionate about helping kids and the

Francisco. It turned out they had not only done a world-class job with the organization’s brand, but they had become an ongoing marketing committee for the organization, and several of them had become donors.

So many of us who are looking for a cause think we have to find our one true calling. We want to know that our mission is to help save one-legged kittens or find a cure for cancer.

Purpose is about finding a direction, not a destination … We may never find one true calling, but we can understand the color of our purpose, which can help us have much more meaningful careers and lives environment. That’s our future.” We shared with them the dire needs of the organization and asked them to be open-minded and give it a try. If, at the end, they were unsatisfied, we would give them first dibs on the next round of projects. They reluctantly agreed.

Nine months later, I received a surprising email. The leader of the pro bono consulting team was urging me to attend a session at City Hall to protect funding for seniors in San

Hollywood stars helped popularize this notion with their high-profile focuses on particular issues, such as George Clooney (Darfur), Brad Pitt (New Orleans), Angelina Jolie (refugees) and Matt Damon (water).

I’m also guilty of feeding into this way of thinking. When you are seeking resources or attention, being able to point to your success as part of your destiny works incredibly well.

People want to hear that you knew you were

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money and security. Purpose is a universal need, and even those in challenging situations still make it a priority.

Arguably, the most famous advocate for purpose in history is Viktor Frankl, who wrote about the importance and presence of purpose in Nazi concentration camps, where he lived during the Holocaust. He found that purpose was key to his survival. “Everything can be taken from a man but one thing: the last of human freedoms – to choose one’s attitude in any given set of circumstances, to choose one’s own way,” Frankl famously wrote in Man’s Search for Meaning.

It turns out that in many ways, the prioritization of purpose is inversely correlated with wealth. Money often conflicts with finding purpose, as it creates a false substitute for defining success.

Myth 3: Purpose = revelation going to be a doctor/basketball player/president/entrepreneur the minute you took your first step, still wearing diapers. Once you’re successful, you’re expected to tell a version of your biography that supports this mythology.

Destiny makes for a powerful story, but this concept is not only misleading, it also does the next generation a great disservice, as it sets unrealistic and unhealthy expectations.

Nearly all the early-career professionals who seek an informational interview with me lament that they haven’t found their cause yet. And while there are certainly people who are driven in this singular manner about a cause, it is almost always the result of a personal tragedy or an experience that inspired them to act. Maybe they were touched by the death of their mother from cancer, or their child died from gun violence.

Still, this holds true only for a very small percentage of people, and it is by no means the only way to find purpose.

For the rest of us, seeking our purpose is about finding a direction, not a destination.

Purpose is a verb, not a noun. We may never

find one true calling, but we can understand the colour of our purpose, which can help us have much more meaningful careers and lives.

Myth 2: Purpose = luxury Why do the poorest Americans donate 3.2% of their income to charity, compared to the wealthiest, who donate only 1.3%? Why do people living in wealthier neighbourhoods appear to be less generous?

Why also are those with the least money, education and prestigious jobs more likely than their wealthy counterparts to say that they would keep their job even if they suddenly were financially set for life? Why would a janitor continue to work if he won the lottery and an investment banker take an early retirement?

If you talk to people in less prestigious jobs and in poorer communities, they aren’t surprised by these facts. They see it every day and experience it firsthand. As a reverend in south central Los Angeles told me, “Being poor isn’t so bad; it’s just inconvenient.”

Purpose isn’t a luxury only for those with

Connected to the myth that purpose is about a cause is the myth that we discover our purpose in one fell swoop. We’re just walking along, minding our own business, when – bam! – our life’s calling is transmitted to us like a bolt of lightning from above.

True, this is usually how superheroes find their purpose. Batman saw his parents murdered, and it became his purpose to fight crime in Gotham City. Superman discovered that his people were wiped out because of civil war and found his purpose in fostering peace and civility. But the reality is that this is not how it usually happens for us mere mortals.

“We don’t receive wisdom; we must discover it for ourselves after a journey that no one can take for us or spare us,” Marcel Proust famously observed. When I shared this insight with a group of international graduate students at Oxford, they suddenly became visibly disturbed. Noticing the change in mood in the room, I asked them what had happened.

After an awkward pause, one woman raised her hand and answered that she had come to graduate school looking for a revelation. She

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FEATURES

PURPOSE

didn’t know what she wanted to do in her career but figured that she would leave with clarity about her purpose.

Slowly, everyone started nodding their heads. They had had the same realization – that one of their main reasons to attend graduate school (and go into debt) was to have a revelation.

Most of us will work for 45 to 50 years.

Think about that for a second. That’s the same amount of time it would take to attend college 12 times. And it’s increasingly true that during that time, we will hold many different jobs, and for more and more of us, those will be in a range of fields. We have so many opportunities to find the work that best suits our perspective on the world and the way we most enjoy contributing.

Myth 4: Purpose = only some work Administrative assistants spend their days supporting executives and have little autonomy or control over their workflow. Much of their work is repetitive and stressful, but it pays the bills and enables them to have the income they need to support the rest of their lives. It’s just a job – a 9-to-5, right?

Well, yes and no. It turns out that this is true, but only for about a third of administrative assistants, and perhaps more surprisingly, it’s also true for about a third of every occupation. What we do is not nearly as important as how we do it and what attitude we bring to the work. As the saying goes, “Wherever you go, there you are.” What we get from work has more to do with us than the work itself.

Work plays very different roles in people’s lives. For some people, a job is simply a job.

For them, work is a paycheck, and they don’t seek anything else from it. It enables them to have the money to enjoy their lives outside their job – they aren’t looking to derive meaning from their work. Those with careers

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care more deeply about their work as a way to get ahead within their profession or function.

It brings social status and power, which boosts their self-esteem. Finally, those with callings fully integrate their work into their lives and values. They see work as integral to who they are and part of their lives.

Amy Wrzesniewski and her colleagues found that across occupations, there were

monotonous practice. Winning the race or game is amazing, but their satisfaction stems from their deep investment.

With athletes, the relationship between pain and gain is clearest, but the same holds true of doing any work where we are experiencing high levels of purpose. Even when doing work that is making a big impact, if there is no skin in the game, the depth of

Purpose isn’t a luxury only for those with money and security. Purpose is a universal need, and even those in challenging situations still make it a priority fairly even divides between people who saw their work as a job, career or calling. It reinforced previous research that demonstrated that the ways individuals view work may be more tied to their psychological traits than to the work itself.

Another study by Wrzesniewski showed correlations between experiencing work as a calling and overall well-being and health. This implies something very important: It is in your best interest to see work as a calling, and as a society, we need to shift more toward calling-based work.

Myth 5: Purpose = easy Running a marathon hurts. There are the blisters, the chafing, the body aches. And yet, completing a marathon is something that many report as being incredibly meaningful. It pushes runners to their limits, both physically and emotionally.

Professional athletes make it look so easy.

When we watch them, they appear natural and effortless. In reality, athletes work incredibly hard and endure tremendous pain to be successful. As fans, we rarely witness the injuries or watch the thousands of hours of

purpose is diminished. Viktor Frankl also said, “Man’s main concern is not to gain pleasure or to avoid pain, but rather to see a meaning in his life.”

As Jennifer Benz put it, “Purpose doesn’t free you from working hard and being challenged – it will actually inspire and drive you to put yourself further out of your comfort zone. The falls will be harder, but the wins will feel so much better.”

The truth about purpose Purpose is for everyone, regardless of our profession or socioeconomic status. It is not about a cause or something that we discover by revelation. It is a challenging and rewarding journey.

Aaron Hurst is the foremost expert on the science of purpose at work. In 2014, he brought global awareness to the rise of the fourth economic era in history, the purpose economy. He is the author of The Purpose Economy: How Your Desire for Impact, Personal Growth and Community Is Changing the World and the co-founder and CEO of Imperative, the technology platform for leaders in the new economy. For more information, visit imperative.com

www.hrmonline.ca

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24/08/2018 6:57:44 AM

NOVEMBER 21, 2018 | BEANFIELD CENTRE | TORONTO

Join us at Canada’s premier event for women in wealth management - a one day event addressing key challenges in the Canadian wealth management space

Tea Nicola

Fotini Iconomopoulos

Julia Chung

Christine Fortin

Chief Executive Officer & Co-Founder WealthBar

Negotiation Consultant Forward Focusing

Co-Founder & Sr. Financial Planner Spring Financial Planning

Vice-President, Senior Wealth Advisor and Financial Planner BMO Nesbitt Burns

WHO SHOULD ATTEND?

WHAT WILL YOU LEARN?

 Women advisors and wealth professionals in the wealth management industry who want to advance and grow their careers

 Practical strategies for women advisors and entrepreneurs who are looking to grow their businesses

 Successful advisors, entrepreneurs and senior business executives in the industry who’ve made names for themselves  Firms, networks, practices and financial services companies who want to hire more women (HR people and senior executives)

 Learn from the most successful women in the industry and have a chance to network with them in person  Get practical strategies for overcoming the barriers facing women in the industry  Best practices for companies who want to attract and hire more women including how companies can support, coach and help women succeed in the industry

Register today at women.wealthprofessional.ca or call 416-644-8740 ext 243

#WPWomenInWealth WealthProCA

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@WealthProCA

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PEOPLE

CAREER PATH

PURSUIT OF EXCELLENCE Numbers, sales, entrepreneurism and educating clients – these are a few of Alexandra Horwood’s favourite things Growing up as the child of two wealth managers, Horwood took her place in the family business early. Together with her sister, Rosemary, she helped host client events and often accompanied her father into the office on weekends “I’ve been around this my entire life. My parents put us to work early, whether it was serving appetizers or sending out Christmas cards. It was always a big part of life”

1995

LEARNS THE BUSINESS

2005

LEADS THE CLASS Noticing her 98% average, Horwood’s statistics professor asked her to lead a study group.

She found the experience of imparting knowledge intensely gratifying “This was a big part of why I got into wealth management. The group started with three people, and by the end of the course, there were 50 – it was crazy to see the improvements in their grades.

People were going from failing to getting B’s”

2010 GETS A FEEL FOR THE FIELD Despite receiving a job offer from Microsoft upon graduation, Horwood opted to take a three-month contract with her family’s business to get a feel for wealth management “It was very entry-level administrative assistant work, but I was able to start learning about the business and meeting with clients, and realized I enjoyed it. I completed all my securities exams and became an associate”

2017 WINS RECOGNITION During her time in the industry, Horwood has racked up a number of accolades – including spots on WPC’s Young Gun and Women of Influence lists and Bay Street Bull’s Power 50 list – but the distinction that means most to her was being the top female investment advisor on WPC’s 2017 Top 50 Advisors list “That’s something I’m really proud of and find it resonates with a lot of people. Eventually I’m going to be the number-one investment advisor in Canada, not just number one among the female advisors”

2004

EXCELS AT SALES Horwood’s entrepreneurial streak surfaced during her university days – in partnership with her roommate, she ran online auctions of her used clothing from their dorm room. Later, a retail position resulted in her winning the distinction of number-one salesperson “I’m competitive by nature. My boss set his expectations high, and I loved reaching them. It was fun because I’m goal-oriented”

2009

WORKS DAY AND NIGHT As a co-op student, Horwood had the opportunity to work for several multinational companies, including PwC, RIM, Microsoft and IBM. The latter liked her so much that her four-month co-op placement turned into a full-time job, leading Horwood to wake up at 4am every day to keep up with her studies “I was the first non-engineering, non-computerscience major they hired. What made me stand out in the interview was being among the few able to manipulate Excel pivot tables”

2012

FINDS HER OWN CLIENTS The experience of snagging her own clients really sold Horwood on life in wealth management

“The constant business-building was addictive. One of my first clients dropped off his paperwork for $2.5 million – I was shocked; it seemed like so much money. I started crying and laughing hysterically at my desk!

That amount is my average now” www.wealthprofessional.ca

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24/08/2018 6:59:26 AM

PEOPLE

OTHER LIFE

TELL US WHAT YOU GET UP TO! Email wealthprofessional@kmimedia.ca

Client: Radius Financial Education

Pinet continues to surf in Nova Scotia Phone: 416-723-4229 into Dece mber, sometimes walking Email: sanfelice@radiusfinancialeducation.com across ice to reach Publication: Wealth Professional Full Page ad the water Contact: Tony Sanfelice

Ad Size: full page 8.25” x 10.875”

File due date: Wednesday, August 15, 2018

CHAIRMAN OF THE BOARD Issue: September

Art Director: Vic Finucci Phone: (416) 605-7729

Email: finucci@radiusfinancialeducation.com

There’s nowhere advisor Marc Pinet would rather be than on his surfboard MARC PINET has the year he spent living in Australia to thank for his love of surfing. Pinet, a wealth management advisor at Assante Capital Management, fell in love with the sport after participating in a group lesson. He was so enamoured with surfing, in fact, that he delayed his return to Canada so he could hitchhike along Australia’s eastern seaboard and hit all the surf beaches.

Luckily for Pinet, his native Nova Scotia is known for good surf, and he says waking at 5 a.m. a couple of times a week to ride the waves has kept him sane amidst a demanding career. “Work is constant calculations; surfers constantly assess winds and waves – the practice allows your brain to sort things more quickly,” he says.

Pinet credits surfing with addressing all four components of wellness (mental, spiritual, emotional and physical), in part because the time spent silently staring at the horizon waiting for waves “lets you think; the meditative process forces itself on you [and allows you to] search your emotions. Surfing is also way more physical than you might expect.”

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Seconds Pinet spent riding the longest wave he’s ever surfed 56

5mm

Thickness of Pinet’s winter wetsuit

$375

Amount (in Australian dollars) Pinet paid for his first two boards

www.wealthprofessional.ca

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24/08/2018 7:00:20 AM

17TH ANNUAL PREMIER EVENT

CANADA’S FLAGSHIP INVESTMENT CONFERENCE!

WAIS

2018 CANADA

Showcasing Alternative Investments, ETFs, and more.

Toronto ~ Hilton Toronto

Thursday, September 13 & Friday, September 14

A few Hot Topics - Not to be missed!

• Millennials: The Next Wave of Impact Investors • Current Trends in Blockchain, Big Data & Cryptocurrencies • • Identify & Manage the Cyber Security Risks in this New Technology Age •

te Featured Keyno

Speakers

GUEST SPEAKERS

Managing Director, Head of Global Macro Strategy, ACGA Securities Corp.

Creator of The Bear Traps Report

SEAN MORAN

Interim CEO, Bermuda Business Development Agency

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NICK KYPRIANOU

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President & Chief Investment Officer, Tacita Capital Inc.

CIO, Avenue Living Asset Vice President, State Street Management & CEO, Global Advisors, Ltd. & Avenue Living Real Estate Head, SPDR ETF Business Opportunity Trust Development for Canada

CEO, LifeStyle Service Group 10 year veteran of the NBA’s New York Knicks

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CEO, Timbercreek Financial

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24/08/2018 5:55:20 AM

THE FIRST OF ITS KIND IN CANADA

ALTERNATIVE STRATEGIES. FOR BETTER OUTCOMES. Introducing the Mackenzie Multi-Strategy Absolute Return Fund – the first mutual fund in Canada to use alternative investment strategies based on the proposed alternative funds framework by Canadian regulators.

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