Wealth Professional 6.09

WWW.WEALTHPROFESSIONAL.CA ISSUE 6.09 | $12.95

ADVISORY TEAMS Discover what the industry’s top teams are doing to set themselves apart from the pack

BLAZING NEW TRAILS

Evolve ETFs CEO Raj Lala on unlocking the potential of thematic ETFs

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ALTERNATIVE UNIVERSE

Mandeville Private Client brings private and alternative options to retail investors

IS A RECESSION ON THE WAY?

What the yield curve, interest-rate moves and major exchanges reveal

19/10/2018 9:24:32 AM

S:7.5”

S:10.125”

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Sharing our expertise is something TD Asset Management takes seriously. After all, with less time and more pressure to deliver for your clients, it’s never been tougher to be an advisor. That’s why we provide our Market Minute Podcasts featuring Bruce Cooper – the CEO and CIO of TD Asset Management – personally sharing insights on the year ahead, so advisors are better prepared to help their clients.

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

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19/10/2018 9:59:26 AM

ISSUE 6.09

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

What long-awaited cannabis legalization could mean for investors

OUTSTANDING

ADVISORY TEAMS

26 22 SPECIAL REPORT

ELITE ADVISORY TEAMS

Nine of Canada’s best advisory teams reveal the strategies that have propelled them to success

FEATURES

40

GOING PRIVATE

Ray Sawicki explains how Mandeville Private Client is opening up private and alternative opportunities for retail investors

INDUSTRY ICON

In founding Evolve ETFs, Raj Lala took a gamble on investors’ interest in thematic ETFs – and now he’s reaping the benefits

18

Are zero-fee ETFs a benefit or threat?

06 Statistics

What does the major exchanges’ yearto-date performance portend for 2019?

08 News analysis

Industry players weigh in on whether a recession is nigh

10 Intelligence

This month’s big movers and shakers

12 Alternative investment update

Liquid alternative funds gather steam

48

SECTOR FOCUS

PEOPLE

04 Head to head

READY FOR RETIREMENT?

Income-focused products can help advisors meet the changing needs of investors nearing retirement

14 ETF update

A new ETF offers infrastructure access

16 Opinion

Should ETF providers be exercising their shareholder rights to effect change?

FEATURES 43 Dividend play

Global dividend-paying funds offer a new avenue for diversification

46 The merits of independence How iA Securities is helping independent advisors thrive

PEOPLE 54 Career path

50

You won’t find Elie Nour on the easy road

56 Other life

Racing against the clock with advisor and cyclist Keith Richards

FEATURES

WOMEN IN WEALTH MANAGEMENT

Find out who’s up for one of WPC’s inaugural Women in Wealth Management Awards

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

1

UPFRONT

EDITORIAL wealthprofessional.ca

Where do we go from here?

O

ctober marked the historic legalization of recreational marijuana in Canada. From an investment perspective, cannabis has been one of the most interesting sectors to watch, based on the incredible volatility stocks have shown (perhaps best encapsulated by Tilray’s run in September, when the stock reached $214.06 a share, only to fall by more than $100 days later).

But with full legalization now in place, the question remains: Where does the industry go from here?

These cannabis-growing companies, which for months have been trading on speculation, will now have to show earnings reports. The real indicator will be whether cannabis producers can keep up with demand. Whether they succeed or fail, it will have huge impacts on investments.

These cannabis-growing companies, which for months have been trading on speculation, will now have to show earnings reports Companies that aren’t able to keep up could look to be acquired by rivals that have amassed large sums of cash, and other industries might get involved to either partner with or absorb smaller companies. The industry has already seen links between Constellation Brands and Canopy Growth, Molson Coors and Hydropothecary Corporation, and Coca-Cola and Aurora Cannabis, but that could be just the tip of the iceberg.

What could make things more interesting is that, in late September, Ontario put forth a bill to make the Alcohol and Gaming Commission of Ontario the regulator for the recreational marijuana marketplace. That means distributors would need to obtain a licence to operate a retail store – and producers would only be eligible for one retail licence, meaning they won’t be able to open a chain of stores. If licences become more difficult to obtain, it could put a halt to producers’ momentum, affecting their value.

While legalization has passed, don’t expect the cannabis sector to be any less interesting going forward. Investors certainly aren’t pulling back: Money continues to pour into the sector, which means advisors must keep their eyes on it.

The team at Wealth Professional Canada

ISSUE 6.09 EDITORIAL

SALES & MARKETING

Managing Editor Joe Rosengarten

Director, Client Strategy Dane Taylor

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

CONTRIBUTORS Talbot Babineau

ART & PRODUCTION Designer 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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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

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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

19/10/2018 9:55:06 AM

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IA Clarington Global Allocation Fund was formerly IA Clarington Global Tactical Income Fund. Effective February 23, 2015, the sub-advisor of the Fund changed from Aston Hill Asset Management Inc. to Loomis, Sayles & Company, L.P. and IA Clarington Investments Inc. IA Clarington Global Allocation Fund, Series F performance for the period ending September 30, 2018, 1 year: 11.4% (1st quartile - 1037 funds in category); 2 years: 11.0% (1st quartile968 funds in category); 3 years: 9.7% (1st quartile - 803 funds in category); 5 years: 7.2% (3rd quartile - 550 funds in category); since inception: 8.2% (2nd quartile - 328 funds in category) The inception date of series F of the Fund was July 19, 2010. Peer group is Morningstar Global Equity Balanced category. Quartile rankings are based on fund returns for periods ending September 30, 2018, and are subject to change monthly. The quartiles divide the data into four equal regions. Expressed in terms of rank (1, 2, 3 or 4), the quartile measure shows how well a fund has performed compared to all other funds in its peer group. Peer groups are defined such that mutual funds are ranked only versus other mutual funds that are in the same category. The top 25% of funds (or quarter) are in the first quartile, the next 25% of funds are in the second, and the next group is in the third quartile. The 25% of funds with the poorest performance are in the fourth quartile. Indicated mutual fund rates of return include changes in share or unit value and reinvestment of all dividends or distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Returns for time periods of more than one year are historical annual compounded total returns while returns for time periods of one year or less are cumulative figures and are not annualized. The information provided herein does not constitute financial, tax or legal advice. Always consult with a qualified advisor prior to making any investment decision. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license. Series F, EF and its targeted payout options are sold with no sales charge and no redemption fee, but are only available to investors through a fee-based account with a full- service investment dealer. There may be a fee negotiated directly between the investor and his/her dealer for services provided. Please speak with your dealer about these fee-based series and whether they are available. Management fees and operating expenses are paid by the Funds. There is no trailing commission paid for these series of the Funds. There may be other fees such as short-term trading fees that may apply to certain transactions. Please refer to the prospectus for a more detailed discussion on the types of fees that exist.

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19/10/2018 9:55:16 AM

UPFRONT

HEAD TO HEAD

What do zero-fee ETFs mean for advisors?

As the race to cut ETF management fees continues to heat up, should advisors be worried?

Jason Pereira

Senior financial consultant Woodgate Financial/IPC Securities Corp.

“With major fund companies driving fees downwards, we are at a crossroads that puts advisors right in the crosshairs.

Product is effectively commoditized.

While every manufacturer has their value proposition, the reality is that the consumer doesn’t see much difference.

That’s why cost of product has become such a focal point.

The next shoe to drop is advisor compensation. The manufacturers are done or nearly done in cutting, yet for the most part, fee-based advisors have yet to budge. They now make up the lion’s share of the client’s total [fees], regardless of product – and the banks see it.”

Christopher Dewdney Principal Dewdney & Co.

“It means very little, I think – since the financial crisis, we have seen a gradual reduction of fees on financial products across the board. What I find unusual about ETFs is this notion that 0% is feasible or sustainable.

My take is that in the short term, it’s simply a strategy to increase market share for the issuer, only to then entice the advisor and/or client into other products with a more traditional fee structure. There is always a cost, whether it is advertised or otherwise – in other words, there’s no such thing as a free lunch.”

Francis Sabourin

Director of wealth management and portfolio manager Richardson GMP “It means that advisors or firms will need to focus more on adding real value to clients in order to remain competitive. When the underlying investment vehicle is free or almost free, the discussion needs to involve assets under supervision [AUS]. AUS might include AUA and AUM, but really it means all the wealth of the client: real estate, investment, liquid assets and all the related complexities, with a holistic view that is updated regularly.

Wealthy people want simplicity, free of conflicts of interest, and are ready to pay for that. So ETFs with very low fees are not an added value proposition anymore.”

THE RACE TO THE BOTTOM This summer, both Horizons ETFs and Fidelity unveiled ETFs with 0% management fees. These announcements came just weeks after BMO Asset Management lowered the management fee on its BMO Aggregate Bond Index ETF to 0.08%, marking BMO’s first fee reduction on one of its ETFs in two years. Not to be outdone, Vanguard also announced this summer that it would no longer charge trading commission fees on ETFs from rival firms; however, that merely brings those products into line with Vanguard’s own ETFs, which investors have long been able to buy and sell for free.

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19/10/2018 10:00:58 AM

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19/10/2018 10:01:46 AM 10-10-18 4:47 PM

UPFRONT

STATISTICS

Exchange student

THE NORTH AMERICAN PICTURE A look at the indices tracking North America’s major stock markets reveals plenty of ups and downs.

The TSX took a dip early in 2018 before rebounding in the summer.

South of the border, the New York Stock Exchange has remained fairly consistent after a spike early in the year. And the NASDAQ had a rough spring but has mounted a steady comeback throughout the summer and fall.

What do the major exchanges reveal about the state of the market cycle and where it might go from here?

WHILE EXPERTS will never agree on when the current bull market might end, the numbers can provide indicators. A look at exchanges around the world reveals considerable fluctuation in notable economies in 2018.

In North America, the major exchanges have been trending upward since a drop in February.

Canada has shown relative stability in 2018, thanks to the performance of financials, energy

and materials, which make up the lion’s share of the S&P/TSX. Overseas, exchanges have struggled with negative year-to-date returns, particularly in emerging markets and Asian economies, including China. Trade tensions between the US and China are clearly having an effect on markets, and until they are resolved, there might be no end in sight to the volatility.

S&P/TSX COMPOSITE INDEX NYSE COMPOSITE INDEX

16,586

14,786

Highest point of the TSX in the last 52 weeks

Lowest point of the TSX in the last 52 weeks

66%

Proportion of the S&P/TSX composed of financials, energy and materials

19%

NASDAQ COMPOSITE

Proportion of the S&P 500 Top 50 composed of financials, energy and materials Source: TMX Money, as of October 10, 2018

AN EYE ON THE DOW

LOCAL UPS AND DOWNS

As trade tensions continue between the US and China, many experts are keeping close watch on the Dow Jones Industrial Average. So far in 2018, total returns aren’t as impressive as the last two years, but nowhere near the low of 2015.

A glance at the year-to-date performance of Canadian markets in 2018 reveals stability across the board for most of the major fixed-income and equity indices. The notable exception is the S&P TSX Small-Cap Index, which is down by more than 5% so far this year.

DOW JONES INDUSTRIAL AVERAGE TOTAL RETURNS

12.25%

23.28%

INDEX

VALUE ON SEPT. 19, 2018

FTSE TMX Canada Universe Bond Index

1,034.0

-0.28%

FTSE TMX Canada All Corporate Bond Index

1,179.0

0.26%

S&P/TSX Composite Index

16,196.04

-0.08%

S&P TSX Small Cap Index

621.58

-5.89%

11.29% 8.63% 4.21%

Source: SPIndices.com, as of September 19, 2018

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YEAR-TO-DATE RETURN

Source: TMX Money, as of September 19, 2018

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17,000

13,000

9000

5,000

Source: TMX Money, as of October 10, 2018

EQUITIES AROUND THE GLOBE The major equity-market indices around the world also present a mixed bag. In the US, the S&P 500 has continued its bull run, returning more than 8% year-to-date, while the London and European exchanges are down almost 5% for the year. The most notable dip, however, has been in China, where the Shanghai Composite Index has fallen more than 17% so far this year.

INDEX

VALUE ON SEPT. 19, 2018

S&P 500

2,904.31

Euro Stoxx 50

3,357.19

FTSE 100

7,306.87

Nikkei 225

23,672.52

Shanghai Composite

2,730.85

MCSI Emerging Markets

1,019.74

YEAR-TO-DATE RETURN

8.36% -4.20% -4.95% 3.99% -17.43% -11.97% Source: FTSE, SPIndices.com, Bloomberg, TMX Money, CNN Money, Stoxx.com, as of September 19, 2018

EUROPE AND ASIA STRUGGLE Many other exchanges in Europe and Asia have also been down in 2018, furthering the idea that the bull market may be nearing its end.

2 0.98%

0 -2 -4 -6

5.88%

-8

-6.42%

-9.47%

-10 DAX (Germany) CAC 4 (France)

KOSPI (South Korea) Hang Seng (China) Source: Bloomberg, as of September 19, 2018

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19/10/2018 10:02:44 AM

UPFRONT

NEWS ANALYSIS

Is a recession looming?

Advisors weigh in on whether rising interest rates and a flattening yield curve mean a recession is in the cards

THERE HAS been much talk among advisors lately about the flattening yield curve, rising interest rates and whether the combination of the two indicates an upcoming recession. The Bank of Canada kept its rate at 1.5% on September 5; three weeks later, the US Federal Reserve raised its rate to 2.25%, and another Fed rate hike is expected in December. The central banks’ moves have industry experts debating the likelihood of a recession once again.

“I think it’s tricky now with the US more than Canada,” says Jason De Thomasis, a financial planner and chief compliance officer at De Thomas Wealth Management. “The yield curve has flattened, yes, so there are different precursors you can look into. Usually a yield curve flattening precedes a recession.”

“From an advisor point of view, we are trying to determine where to find yield for clients,” he says. “With rates historically low and inching upwards, bonds haven’t done much for clients.”

Brian D’Costa, founding partner of Algonquin Capital, agrees that the flattening yield curve doesn’t necessarily signal a recession.

“We think that the flattening of the yield curve is largely a technical phenomenon linked to a significant demand for 30-year sovereign debt by the likes of pension plans and insurance companies,” he says.

D’Costa adds that a better indicator of a recession is if Treasury bill yields become higher than two- and five-year bond yields.

“That’s a more powerful signal that recession risks are rising. We don’t think the relation

“The flattening of the yield curve is largely a technical phenomenon linked to ... demand for 30-year sovereign debt” Brian D’Costa, Algonquin Capital De Thomasis notes that just because many experts say something will happen, it doesn’t necessarily mean it will, adding that he would have missed huge opportunities if he had positioned portfolios based on that theory a year ago.

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between five- and 30-year yields is a signal.”

While debate about the likelihood of a recession rages on, there’s no doubt that rising rates will eventually affect the economy. Yet both Canada and the US seem to be playing it safe by raising rates at a conservative pace.

“Doing 0.25% instead of 0.5% is one aspect,” D’Costa says. “It is also the pace of the hikes. [Canada] last had a hike in July, and [we] are expecting 0.25% on October 24, then probably nothing until January. There is a lag effect on the economy; as rates go up, the consumer doesn’t feel it instantly. It takes a while for the impact to bleed into the other rates a consumer faces.

“Both the Federal Reserve and Bank of Canada are aware that the economy might be more sensitive to interest rates than it has been in the past,” D’Costa adds, “especially in Canada, given the high level of consumer debt.

They are moving very slowly, compared to periods before 2008.”

Both D’Costa and De Thomasis believe rates in Canada will eventually settle between 2.5% and 3%, and between 3% and 3.5% in the US. “How high can the Canadian economy

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19/10/2018 10:03:11 AM

HARBINGER OF A RECESSION? Earlier this year, 30-year bond yields were one point lower than five- and 10-year yields, sparking fears that a flattening yield curve could portend a recession. However, 30-year bond yields recently re-established themselves higher by one basis point.

Advisor Brian D’Costa believes that rather than the flattening yield curve, a more accurate indicator of an upcoming recession is if Treasury bill yields creep higher than two- and five-year bond yields; currently, there’s plenty of breathing room between them.

Government of Canada bonds 2.5% 2% 1.5%

Treasury bills

2.42%

2.43%

10-year

30-year

2.17%

1.55%

1% 0.5% 0%

3-month

2-year

Source: Bank of Canada, as of Sept. 18, 2018

take?” De Thomasis says. “I’m not sure because rates have gone up, and how much will that affect people with huge amounts of debt? I think the people taking second and third mortgages will be hit hard to cover

signed in early October. “We [have seen] the market responding to the headlines,” D’Costa says. “When they thought we were close to a deal, Canadian bond yields moved a bit higher, and the reverse when a deal didn’t look like it

“You have to look at what is pushing the economy forward … At a certain point, we have to raise rates to control future issues” Jason De Thomasis, De Thomas Wealth Management those loans, and that will have an effect on the economy and the actual growth.”

Much of the speculation surrounding Canadian rates has been closely tied to uncertainty around NAFTA negotiations, which finally came to an end when a new deal was

was going to happen.” However, he predicts that the removal of NAFTA uncertainty “will only have a modest impact” on bond yields.

D’Costa also points out that the current rising-rate environment is a sign of economic strength. “It is a good economic news story,”

he says. “The central banks would only raise interest rates because the economy is doing well and is expected to do well. They are trying to prolong the recovery and have healthy economic growth.”

“You have to look at what is pushing the economy forward,” De Thomasis adds.

“Raising rates is a tool that central banks have to use to control inflation and different aspects of the economy. At a certain point, we have to raise rates to control future issues. You can’t do it without any strength, but you have to raise rates to meet other objectives.”

One thing is clear: Speculation about a potential recession is far from over. While there are varying opinions on what central bank strategy could mean for the investment landscape, good advisors know that the best plan is to be prepared for all potential outcomes.

www.wealthprofessional.ca

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19/10/2018 10:03:22 AM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET MD Financial Management

Scotiabank

ACQUIRER

TARGET

PRODUCTS COMMENTS The finalized acquisition, first announced in June, adds more than $49 billion to the bank’s AUM

COMMENTS

CPPIB Credit Investments

Sound Point Capital Management

The CPPIB subsidiary will invest US$285 million in a vehicle for collateralized loan obligations over the next few years

Financial Planning Standards Council

Institut québécois de planification financière

The two bodies are teaming up to lay the groundwork for a unified financial planning standard across Canada

FirePower Capital

Arena Investors

The firms have created a $100 million joint venture to provide capital for private Canadian companies

Genus Capital Management

Social Venture Connexion

The Genus-SVX Impact Investment Counsel will facilitate impact investing for organizations and high-net-worth investors

Raymond James

Buduchnist Credit Union Wealth Management

The deal provides BCU Wealth Management advisors with access to Raymond James’ wealth management platform

IPC unveils ETF-based mutual fund portfolios

Investment Planning Counsel [IPC] has launched a family of lower-cost, globally diversified ETF-based mutual fund portfolios that use downsideprotection strategies and currency risk management to maximize returns. Billed as no-frills, no-fuss solutions, the offerings include the IPC Income Essentials Portfolio, IPC Balanced Essentials Portfolio, and IPC Growth Essentials Portfolio. “An ETF-based mutual fund … can combine certain elements of active management with the simplicity and cost of passive ETF investments,” said Sam Febbraro of Counsel Portfolio Services.

Scotiabank extends reach to physicians

Scotiabank has added more than $49 billion in assets to its wealth business with the finalization of its acquisition of MD Financial Management, Canada’s leading provider of financial services to physicians and their families. In line with the acquisition, Scotiabank has entered into a 10-year collaboration with the Canadian Medical Association to support philanthropic initiatives and programs for physicians and the communities they serve. The CMA will also exclusively promote MD and Scotiabank as the preferred providers of financial products and services to physicians.

“We look forward to strengthening our relationship with Canada’s physicians and their families by delivering wealth management and banking solutions that are truly customized to their unique financial needs,” said Scotiabank president and CEO Brian Porter.

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Mackenzie seeks to simplify fund lineup

Mackenzie Investments is looking to simplify its product shelf for investors by merging the Mackenzie Canadian All Cap Dividend Fund into the Mackenzie Canadian Large Cap Dividend Fund and the Mackenzie Canadian All Cap Dividend Class into the Mackenzie Canadian Large Cap Dividend Class.

Mackenzie also hopes to change the investment objective of the Large Cap Dividend Class to allow it to invest in mutual-fund securities. Martin Downie and Tim Johal, who currently manage Mackenzie’s largecap dividend mandate, would manage both funds.

Mackenzie has also proposed mergers for seven funds it manages for Quadrus Investment Services; all proposals are up for a unitholder vote on January 18.

www.wealthprofessional.ca

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PEOPLE NEO Connect welcomes Bitcoin fund

The first open-ended Bitcoin fund approved by the Canadian regulators has been added to the NEO Connect fund platform. Units of the First Block Capital Bitcoin Trust (FBCBT) are available to accredited investors only and can be placed in a self-directed registered account such as an RRSP or TFSA. “We provide investment exposure to Bitcoin by removing the complicated barriers to investing directly in the cryptocurrency,” said First Block co-founder and CEO Sean Clark. “We are very happy to make our fund more accessible to the accredited investor community.”

Sentry merges funds into CI platform

In the final step of its 2017 acquisition of Sentry Investments, CI Investments has officially added Sentry-branded investment funds to the CI administrative platform. According to Roy Ratnavel, CI’s EVP and head of sales, the move will improve investors’ ability to switch among CI’s funds, managed solutions and investment platforms, and it will provide improved access to CI’s diverse lineup of portfolio management teams. “Investors will also benefit from a pricing perspective, as eligible investments in CI and Sentry funds can be aggregated to qualify for further fee reductions,” Ratnavel said.

Starlight Capital bursts into the Canadian market

Six months after its formation, independent asset manager Starlight Capital has made its debut in the Canadian investment fund space with two products designed to target under-represented real-asset sectors in Canadian investors’ portfolios.

Starlight’s first two ETFs, the Starlight Global Real Estate Fund (SCGR) and the Starlight Global Infrastructure Fund (SCGI) began trading on the NEO Exchange in early October. According to Starlight, the two funds will provide investors with access to publicly listed global real assets through concentrated portfolios of high-quality businesses, and will offer regular and growing cash-flow streams, capital appreciation, and inflation protection.

NAME

LEAVING

JOINING

NEW POSITION

Paul Allison

N/A

IIROC

Chair

Alex Bellefleur

N/A

Mackenzie Investments

Chief economist and strategist, multi-asset strategies team

Shane Clifford

EnTrustPermal

Franklin Templeton

Senior managing director, alternative strategies

Robert Duncan

BlackRock Canada

Forstrong Global Asset Management

Senior vice-president, institutional strategy

Kevin McCreadie

N/A

AGF Management

Chairman and CEO

Neil Ross

Sentry Investments

Ninepoint Partners

Managing director, national sales

AGF names new chairman and CEO

AGF Management has announced that president and CIO Kevin McCreadie will step into the firm’s top job on December 1. McCreadie succeeds Blake Goldring, who is transitioning into a new role as AGF’s executive chairman.

McCreadie has more than 30 years of experience in the investment industry, including more than a decade of combined experience as CIO for two major financial services firms in the US. He joined AGF in 2014 with a focus on driving strategic change in the firm’s investment-management capability.

“I strongly believe in the power of change to drive long-term growth and innovation,” Goldring said. “Kevin is ideally suited to lead the new AGF, given his extensive experience in investment management and his past four years of dedicated and proven leadership with AGF.”

Forstrong selects SVP for institutional strategy

Forstrong Global Asset Management has appointed Robert Duncan as its new senior vice-president of institutional strategy. Duncan comes to Forstrong from BlackRock Canada, where he served as vice-president of its iShares institutional business. In his new role, Duncan will be responsible for Forstrong’s relationships with pensions, foundations, and other institutional clients and intermediaries. He will also be charged with developing a strategic plan to organize and expand Forstrong’s sales team to ensure consistently high standards of service.

“We will rely on Robert’s extensive experience in the asset management industry to provide valuable insight into product development, distribution channel strategy, and Forstrong’s overall marketing and business development activities,” said Forstrong president and CIO Tyler Mordy.

www.wealthprofessional.ca

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19/10/2018 10:04:03 AM

UPFRONT

ALTERNATIVE INVESTMENT UPDATE NEWS BRIEFS Interest rising among US advisors for alternative funds

According to a recent survey from Cerulli Associates, nearly 40% of USbased advisors are using alternative investments, while 37% are using liquid alternatives. Cerulli found that alternative mutual-fund assets saw a 7.2% increase in 2017 and a further 2% rise in the first quarter of 2018. The top three drivers of asset managers’ interest in alternative investments were expectations regarding future capital market returns (61%), the need to optimize the risk-adjusted performance of investors’ portfolios (58%), and the need to diversify product lineups (57%).

Climate change makes green buildings a smart investment

In a recent white paper, global investment manager Nuveen highlighted how climate change will impact long-term real estate investment. Nuveen posited that green buildings will represent some of the best investments in the sector, citing energy-efficiency regulation and legislation in Europe and the US, along with a call from the World Building Council for all buildings to become “net zero carbon” by 2050 in support of the Paris Agreement. “The evidence continues to mount that these buildings are easier to sell, more attractive to tenants and less vulnerable to obsolescence,” Nuveen concluded.

Bridging Finance purchases assets from Ninepoint Partners

Bridging Finance has entered into a definitive purchase agreement with Ninepoint Partners to buy certain Ninepoint assets, including rights and obligations under co-management agreements for the Ninepoint Bridging

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Income Fund LP and the Ninepoint Bridging Income RSP Fund, as well as Ninepoint’s ownership in the SB Fund GP. As of October 15, Bridging Finance is the sole manager of the partnership and fund, as well as sole shareholder of the GP. Bridging Finance CEO David Sharpe said investors and advisors should not see any changes in the day-to-day management of the fund.

Creativity will be key for private equity in 2019

In a survey of 100 senior private equity executives conducted in conjunction with Mergermarket, global privateequity advisory firm Dechert reported that general partners are thinking more creatively about deal types and structures. Facing stiff competition for assets, 97% of respondents said they’re inclined to pursue vertically integrated portfolio companies, as opposed to horizontal combinations. Another 95% said they were likely to pursue acquisitions based on industry or market differentials, while 73% said they were likely to partner with strategic buyers.

Picton Mahoney adds to Fortified Alternative Funds lineup

Picton Mahoney Asset Management has expanded its Fortified Alternative Funds lineup with three new funds for retail investors. The Picton Mahoney Fortified Active Extension Alternative Fund, Picton Mahoney Fortified Market Neutral Alternative Fund and Picton Mahoney Fortified Multi-Strategy Alternative Fund use the same investment process as the firm’s original Alternative Hedge funds.

They also incorporate its proprietary Fortified Investing method, a rules-based technique that focuses on managing risk by mitigating downside exposure while seeking to build long-term wealth regardless of market conditions.

Reducing risk with liquid-alts When used properly, liquid alternative strategies can be effective portfolio riskmanagement tools For Jason Mann, the co-founder and chief investment officer of EHP Funds, the availability of liquid alternatives to Canadian investors and advisors could hardly have come at a better time.

“We’re nine years into a bull market,” Mann says. “You’ve got an environment where investors tend to have a lot of equity risk, and bonds have low absolute interest rates that are rising. With all those factors together, the traditional 60/40 balanced model of diversification might be broken.”

That’s where liquid alternative funds can help. While some advisors and investors might view alternatives as gambles that should be reserved only for the ultra-rich, Mann says that impression is left over from hedge funds of old, which sought long-only exposure via excessive leverage.

“The core feature of any good alternative is the ability to use tools that traditional long-only funds can’t,” he says. “We’re able to short stocks and use moderate amounts of leverage. Those activities have been viewed as ‘risky,’ but they actually reduce the risk in funds, particularly versus a traditional fund.”

After years of consideration and study, Canadian securities regulators have opened the floodgates for liquid alternatives – non-traditional strategies with daily liquidity and transparency. EHP Funds is catching the early part of that wave with its new offering of six liquid alternative funds,

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all based on mandates the firm has run effectively for years.

“Historically, the requirements around qualified investors getting into these funds – high minimums and high regulatory hurdles – have made access very difficult,” says EHP Funds co-founder and portfolio manager Ian Fairbrother. “For the first time, you’re getting [what was an] offering-memorandum-based product available in prospectus format.”

“Even at full capacity, we can fully liquidate our funds within a week” CIBC and Morgan Stanley have estimated that the current $11 billion in alternative assets in Canada could rise to $100 billion within five years. Mann points out that Canadian advisors have less than 1% of their portfolio assets in alternatives, as opposed to their US counterparts, who are closer to 10%.

Investors are protected by stringent rules governing the amount of shorting and leverage that liquid-alternative fund managers can use, as well as where the funds can be held. The mandates at EHP Funds are also run with limits on sector allocations, position concentrations and directional exposure. “Even at full capacity, we can fully liquidate our funds within a week,” Mann says.

Advisors can certainly benefit from an additional means of diversification, but Mann cautions advisors that they need to become familiar with the strategies these funds use before diving in. “It’s going to require a lot of education from the dealers, the associations and industry publications to help advisors understand how they can use these tools,” he says.

Q&A

Alexandra Katz Client portfolio manager GREYSTONE MANAGED INVESTMENTS

Years in the industry 12 Fast fact Greystone’s history of providing stable income from a diversified mortgage portfolio extends back to 1988

Moving into commercial mortgages What are the main risks private-debt managers face?

Yields generated by private-debt instruments typically consist of three risk factors – duration risk, credit risk and illiquidity risk – which occur in different combinations, depending on the sub-sector. In commercial mortgages, the illiquidity risk tends to be harvested effectively through the corresponding premium, though the risk-return profiles within that space still vary widely.

Ultimately, it’s critical to choose a private-debt strategy with a risk and return profile that matches an investor’s long-term objectives.

What are some strategies in the commercial mortgage space that are useful in managing these risks?

I would argue that the most significant risk associated with commercial mortgages is the underlying real estate. When underwriting a mortgage, we want to make sure the collateral is sound and is characterized by strong fundamentals.

The borrower we partner with is also crucial; aside from their financial situation, we examine their reputation in the market for executing effectively, because that can reflect their ability to service their debt. We’d also want to look at the loan fundamentals, which are reflected in how a loan is uniquely structured to maximize risk-adjusted returns. That includes characteristics such as the loan-to-value ratio and the debt-service coverage. We also find it’s useful to consider reducing a mortgage’s risk profile by including protective covenants.

There are also top-down considerations. Diversifying across borrowers, locations and markets, maturities, and property types helps ensure the portfolio isn’t exposed to any particular risk.

We also look at where we are in the interest rate cycle to assess whether it’s time to shift our portfolio to a longer- or shorterduration risk profile.

What’s your outlook on the commercial mortgage market in the short to medium term?

There are certainly many opportunities, generally speaking. The commercial mortgage market in Canada is quite strong right now, as it’s been fuelled by an active underlying real-estate market.

That said, yields in the commercial mortgage space have declined along with other fixed-income asset classes. We believe in having strong working relationships with borrowers and brokers, as well as being flexible with borrowers to find mutually beneficial loan structures and increase the likelihood of accessing new and attractive opportunities down the road. In segments that tend to have fewer lender participants like construction lending, having a deep understanding of the underlying real estate opens up lucrative opportunities from a risk-return perspective.

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19/10/2018 10:04:50 AM

UPFRONT

ETF UPDATE

An active-ETF ticket to infrastructure AGFiQ’s Enhanced Global Infrastructure ETF gives investors diversified, direct exposure to the space

reveals a portfolio that spans the real estate, energy, industrials and utilities sectors; geographically, it includes names from Canada, the US and Europe.

“If you invest in a market index, you’re getting market performance – which, these days, is fantastic,” Narine says. “But an actively managed ETF … will also bring to bear risk parameters and other considerations that

“This provides liquid access to what has really been relegated to institutional investors”

Eight months after launching the AGFiQ Enhanced Global Infrastructure ETF (QIF) on the NEO Exchange, AGF Investments has gathered a respectable $267 million in AUM for the fund. One likely driver of that success is the fund’s approach: In contrast to other Canadian-listed infrastructure ETFs that follow an index, QIF uses a multi-factor, quantitative investment strategy.

“I think infrastructure indices tend to be limited in the breadth of companies used

NEWS BRIEFS

in the construction process,” says Florence Narine, SVP and head of product at AGF Investments. “While they certainly meet a need, our multi-factor approach gives the client a much broader exposure to companies around the world.”

As an active manager, AGF can set a broader definition of infrastructure than index-tethered strategies can, providing clients with diversified but direct exposure to the space. A look under the fund’s hood

New emergingtech ETFs hit the TSX

Coincapital, the investment and portfolio management arm of Coinsquare, has launched two funds on the TSX that provide access to emerging technologies.

The algorithm-driven Coincapital Stoxx Blockchain Patents Innovation Index Fund (LDGR) invests in global companies that perform R&D to innovate or adopt blockchain technologies. The Coincapital Stoxx BRAIN Index Fund (THNK) invests global companies that delve into four technology mega-trends: biotechnology, robotics, AI and nanotechnology.

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certainly help to support and balance a fully formed portfolio.”

QIF is part of the multi-factor, quantitative ETF suite on the AGFiQ investment platform, which was created to give investors access to investment areas beyond plainvanilla ETF fare. Likewise, QIF taps into an asset space that’s been largely inaccessible to individual investors.

“For the private investor, this provides liquid access to what has really been relegated to institutional investors,” Narine says. “We think infrastructure should be in most portfolios, particularly with the need for income, which is a strong continued theme in Canada.

With QIF, people can buy it at a much smaller allocation and not have the institutional redemption restrictions that would lock their money up for multiple years.”

RBC GAM expands its fixed-income ETF suite

RBC Global Asset Management has added two new funds to its RBC Target Maturity Corporate Bond ETF lineup. The RBC Target 2024 Corporate Bond Index ETF (RQL) and the RBC Target 2025 Corporate Bond Index ETF (RQN) each track a unique FTSE index with a portfolio of Canadian corporate bonds structured to mature in the same year as the ETF. “RBC Target Maturity Corporate Bond ETFs offers investors and advisors the flexibility to tailor their bond laddering strategies to the maturity date of their choice,” said Mark Neill, head of RBC ETFs.

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Brought to you by

Q&A

Andrew Clee

A factor approach forged over time

Vice-president, ETFs FIDELITY CANADA

Years in the industry 8 Fast fact Fidelity Canada recently launched six dividend-factor ETFs with various geographic and currency exposures

Inflows into Canadian ETFs seem to be slowing compared to the massive levels seen last year. What are your expectations for Fidelity Canada’s new ETFs against that backdrop?

We see the landscape as still very nascent. There are just over $160 billion in assets in Canada, which is slightly more than a tenth of what’s on the mutual fund side. I think there’s still a lot of opportunity for the ETF industry to grow. With the differentiated portfolio construction techniques we’re bringing to market, we’re looking forward to taking part in that.

Your new funds are all dividend-factor strategies. How can Canadian investors benefit from these products?

Over the last 30 or 40 years, a lot of baby boomers have amassed assets to get ready for retirement; I think we’ll see a broad move to the decumulation phase in the next few decades, so they’ll rely more on portfolio income. The high yields, low management fees and monthly distributions for our ETFs will be very attractive, given that.

Through a back-test study that spanned more than 30 years, we also found that dividends in general outperformed the broad US equity market by just over 2% on an annualized basis. The long-term, younger investor can benefit especially with that compounded power from reinvested dividends, which we address through dividend reinvestment programs for our ETF lineup.

ETF providers unveil fixed-income offerings

Two players in the Canadian ETF space have announced new fixedincome funds. WisdomTree Canada has launched the ONE North American Core Plus Bond ETF (ONEB) on the TSX, which will focus on North American fixed-income securities from corporations, governments and government-related entities. Meanwhile, Evolve ETFs has filed a preliminary prospectus for the Evolve Active Global Fixed Income ETF (EARN). The fund uses an active strategy and invests primarily in global debt securities of corporate issuers.

Can you talk about the expertise you have in place to manage these funds?

I think it goes back to 1965, when Fidelity hired its first quantitative analyst to figure out what impact the computer would have on investment management.

That laid the path for our first quantitative strategy in 1988 down in the US, and later on the formation of a dedicated quant research team in 2006. Originally, the team supported our portfolio managers by identifying buy and sell candidates and identifying risks that might have been overlooked in portfolio construction. Over the next decade, they were able to gather and quantify insights from the active managers to build out our factor ETF business.

Which strategy are you most excited about?

We’ve got high hopes for the US Dividend for Rising Rates ETF, which was awarded ETF of the Year down in the US. It’s also very differentiated as one of the first rising-rate equity strategies in the Canadian ETF market.

Since decent dividend yield tends to require exposure to defensive sectors like telecoms and real estate, which tend to be more interest-rate strategies, it invites slight underperformance compared to growth or momentum strategies when rates rise. We’ve included a correlation to 10-year US Treasury yields, which helps us focus on less interest-rate-sensitive stocks. Aside from that, we sector-neutralize back to the broad index to tilt some exposure back toward best performers in rising-rate environments, like technology and industrials stocks.

Desjardins bolsters responsible investment products

Desjardins is increasing its lineup of responsible investment products with 11 new products, including six ETFs that seek exposure to companies aiming for a lower carbon footprint. In addition, the firm plans to roll out a multi-factor, low-CO2 ETF focused on emerging markets, as well as a global multi-factor ETF that excludes fossil-fuel companies. “Desjardins is a natural leader in the responsible investing movement,” said president and CEO Guy Cormier. “We’re determined to keep pace with other leaders in the sector.”

Invesco adds to equal-weight ETF lineup

Invesco has launched a new ETF that provides equal-weight exposure to companies in the S&P Europe 350 Index. The Invesco S&P Europe 350 Equal Weight Index ETF (EQE) expands the firm’s equal-weight offerings and is the first of its kind in Canada. “Investors seeking low-cost exposure to European equities through a cap-weighted index may inadvertently take on substantial concentration risk,” said Invesco Canada’s Jasmit Bhandal, adding that the new ETF can help mitigate that risk.

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19/10/2018 10:05:25 AM

UPFRONT

OPINION

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

Passive gets aggressive For passive products, ETFs are starting to have quite an effect on corporate boardrooms, writes Talbot Babineau THE RECENT news that Fidelity will offer a zero-fee index fund all but confirms what many investors have expected for some time: Passive investment products and ETFs have truly become the low-cost, autopilot investment option they were designed and intended to be.

The ETF industry has been enormously successful in attracting capital that puts investors’ money into investments without the usual expenses and forwards those benefits to investors in the form of returns. What has not been part of the ETF mandate has been using the voting and proxy powers that come with being a shareholder – until now.

As active investors ourselves, our focus is to find companies with unrealized value and, in select circumstances, work collaboratively with management and boards to extract that value for the benefit of all stakeholders. While it’s rare for us to be the only ones at the table, we have found ourselves increasingly noticing some significant players: ETF providers.

Indeed, a theme we’re seeing repeatedly is the same few ETF providers, which together enjoy double-digit ownership holdings, quietly but firmly exerting their influence in the boardroom.

For years, institutional shareholders, including hedge funds, have sought to amass large stakes in companies to force boards and management to do what they feel is best to unlock value and drive returns by divesting assets, streamlining operations and, in many cases, replacing boards and management themselves and bringing in new people to run the company. ETFs were never part of

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this group. Sticking to their passive roots, they would simply track indexes and sectors, buying or selling shares to match the investment dollars they received.

The reason for this approach initially was that the ETF industry was relatively small.

In 2008, ETF strategies had a collective $700 billion in assets under management.

Today, that number has mushroomed to well over $4 trillion and is estimated to grow to

Equally important, is a passive strategy that’s active in the boardroom still a passive strategy? I’d suggest that it’s not: Being actively engaged in the boardroom to effect change is the pinnacle of active management.

BlackRock’s announcement was a watershed moment in the passive investment space.

Their active involvement on any social issue places them directly on top of a slippery slope.

It also raises a larger dilemma of potential conflict of interest within BlackRock. Today, the company holds $4.1 trillion in passively managed products. It is well within its rights to use the voting influence of its products to achieve self-serving objectives.

In fairness, my concern is not specific to BlackRock. In 2017, the top three ETF providers controlled more than 70% of global ETF assets. Since I see the boardroom as a place where value can be either created or destroyed, this new market structure translates into an even bigger consideration: the potential consequences of the consolidation of voting power in equity markets.

Over the course of the past few years, the investment community has encouraged the

“Is a passive strategy that’s active in the boardroom still a passive strategy? I’d suggest that it’s not: Being actively engaged in the boardroom to effect change is the pinnacle of active management” more than $7 trillion in the next two years.

This, in turn, has emboldened ETF providers to use their might to influence companies into doing what they feel is right.

Case in point is BlackRock CEO Larry Fink, who earlier this year penned a letter indicating he would use the full reach of his firm’s ETFs’ voting power to address social change – starting with pressing firearms retailers and manufacturers on their sales and manufacturing processes. At first blush, this might seem like a positive. Who wouldn’t like to see less gun violence in America? However, what if BlackRock’s social views don’t mimic the views of their investors?

creation of a few 800-pound gorillas and then unleashed them into boardrooms around the world. Up until now, these behemoths have been relatively docile. Now that they’re displaying a willingness to exert the full extent of their influence, perhaps it’s time for the rest of the financial system to pause and consider the long-term consequences of this evolutionary market change.

Talbot Babineau is president and CEO of IBV Capital, which he co-founded in 2014 after amassing more than a decade of value investing experience.

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CORP

In the world of global investing, there’s no such thing as a local market.

By 2024, China will add nearly one billion citizens to its middle class, creating an equally strong surge in global consumer goods markets. So, as the Chinese population rises, we’re watching the rising demand for product manufacturing, technology, and transportation beyond China. At AGF, our global perspective and shared intelligence deliver stability for your investments, whatever tomorrow may bring.

AGF.com/discipline ™ The ‘AGF’ logo and ‘Invested in Discipline’ are trademarks of AGF Management Limited and used under licence. Investment advice should be tailored to the specific needs of an investor. We strongly recommend you consult with a financial advisor prior to making investment decisions. The information is general and not to be considered as an offer or solicitation to buy or sell securities. Source: The Ballooning Middle Class, AGF Investments Inc., February 2018. Publication date: October 26, 2018.

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19/10/2018 10:06:18 AM 2018-10-12 5:16 PM

PEOPLE

INDUSTRY ICON

FILLING THE VOID Evolve ETFs’ Raj Lala has built a $300 million ETF company in less than a year by focusing on active management and thematic ETFs

EVOLVE ETFs is one of the fastest-growing ETF companies in Canada. That’s largely due to the work of president and CEO Raj Lala, who noticed some holes in the country’s ETF market and used them to his advantage.

“I have always enjoyed structuring products that fill gaps in the marketplace and creating something that helps advisor and client portfolios,” Lala says. “I look for those gaps and put products in place to fill them.”

Lala has quite the background in the industry. After graduating from the University of Toronto with an honours degree in economics, he started his career as a telemarketer for a financial advisory firm before moving on to positions at AIC Planning and Berkshire. He then shifted to the product side, making stops at Excel Funds and Jovian Capital before starting Propel Capital.

At Propel, he raised close to $1 billion in AUM before selling to Fiera Capital, where he oversaw the retail division. After a stop at WisdomTree, Lala again decided he wanted to build his own business. He put together a business plan for Evolve in 2016 and launched an initial suite of products in September 2017.

But not everyone thought his new venture would be a success. “A lot of my friends in the industry didn’t feel there was room for another ETF manufacturer,” he says. “They said there were already a lot of ETFs, and the current providers had more resources than me.”

His counter was that he would fill in the

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gaps. “I said we would use active management in asset classes that would have the most benefit,” Lala says. “I wanted to focus on thematic ETFs and long-term trends that are going to shape the world and structure products around them. That’s how we would differentiate ourselves – and while it’s early, the market has told us we were right.”

Evolve has carved out a clear niche in the

Finger on the pulse Evolve’s suite of thematic ETFs is blazing trails in the industry. Its cybersecurity (CYBR), automotive innovation (CARS), innovation (EDGE) and gender diversity (HERS) ETFs were all firsts in the Canadian market.

“We launched CYBR just at the right time, and it is now the top-performing equity ETF in the country,” Lala says. “When we created

“I am a firm believer that active management is something that will continue to grow to include more investments … As we enter a more challenging market, people are going to realize that active management is more important than ever” industry by doubling down on active management and thematic ETFs. “I am a firm believer that active management is something that will continue to grow to include more investments,” Lala says. “I realized certain asset classes can benefit from good active management, and a good active manager can generate performance. As we enter a more challenging market, people are going to realize that active management is more important than ever.”

these products, we really looked at what the long-term trends were going to be. For CYBR, cybercrime is only going to increase, so the demand should go with it. Companies are never going to reduce their budget on cybersecurity, even if they report losses in a quarter.”

That same logic applies to Evolve’s other thematic ETFs, such as HERS. “I don’t see businesses reducing their efforts for gender diversity,” Lala says. “Thematics are great because they are relevant from a topical

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19/10/2018 10:06:55 AM

PROFILE Name: Raj Lala Title: President and CEO Company: Evolve ETFs Based in: Toronto Years in the industry: 23 Career highlight: Growing Evolve ETFs to $300 million AUM in a year

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PEOPLE

INDUSTRY ICON

perspective. The next five to 10 years should be the most interesting in our history. It is an exciting time and should create more opportunities and options for investors.”

When it comes to structuring the products, Lala says it’s a bit of a combination between art and science. His three-step process involves first identifying a trend, then determining whether it’s just a fad or if there’s a good case to invest, and finally researching if there’s a market for the trend.

“The third step is really important,” Lala says, “because sometimes there’s a great thesis with a product, but if there’s no demand, you’re just spinning in the wind. If a product checks all three, then we begin to structure it.”

work with someone who has a proven track record. While it may be less profitable initially, we are hoping it will result in more volume.”

The strategy is working so far, and Lala doesn’t foresee any lags on the ETF industry anytime soon. “I compare ETFs to Spotify and mutual funds to CDs,” he says. “ETFs are the natural evolution of the industry – they are cheaper, easier to use, liquid and, in my opinion, a better way to invest. All indicators point to growth.

“When you look at numbers in the US,” he adds, “they are usually 10 times the size of our industry, but for ETFs, they are 20 times bigger. So our ETF industry has an inherent doubling to get up to that point.”

“I compare ETFs to Spotify and mutual funds to CDs. ETFs are the natural evolution of the industry – they are cheaper, easier to use, liquid and, in my opinion, a better way to invest. All indicators point to growth” Tapping into the needs and wants of investors and advisors has always been key for Lala, and it’s something he feels his background has given him a step up on.

“I have always had an advantage in the marketplace because of the relationships I have with advisors,” he says. “I have always been in front of them, dating back to my days in sales when I would hit the road to visit as many as I could. Building client relationships is very important because it helps you understand product needs.”

Staying active Once he has established a product, another important aspect for Lala is finding the right external manager.

“We identify good external active managers for the asset class,” he explains. “Most providers do this internally, but we prefer to

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Add to that the significant wealth transfer the market is about to experience: Lala believes millennials will want to use ETFs as their means to invest and sees them driving consistent demand for thematic ETFs. But for now, Lala is focused less on product development and more on allowing the market to digest Evolve’s current funds. He does have plans to release one or two funds in the next year, but he wants to continue to help advisors fill gaps in portfolios.

In a long and distinguished career, building and growing Evolve has by far been the highlight for Lala. “I have never been more proud of the people and products that we have assembled and that I get to lead,” he says. “My goal for the business is that all supporters benefit, not just one person. So far everyone – us, advisors and investors – has had a good experience, which has made this a successful business.”

EVOLVE ETFS AT A GLANCE

Evolve’s first suite of ETFs was launched in September 2017

The firm has 15 total ETFs: six active and nine index-based, two with covered-call strategies

Evolve’s thematic ETFs – CYBR, HERS, EDGE and CARS – were all firsts for Canada

CYBR is the top-performing equity ETF in Canada in 2018 with a YTD return of 32%

In October, Evolve filed a prospectus for a new global bond ETF, the Evolve Active Global Fixed Income ETF (EARN)

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19/10/2018 10:07:15 AM

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19/10/2018 10:07:33 AM

SPECIAL REPORT

ELITE ADVISORY TEAMS

ADVISORY TEAMS Wealth Professional Canada caught up with nine of Canada’s leading advisory teams to find out what has made them so successful

THE FINANCIAL industry is constantly changing, and an advisor’s role must continually evolve with it. Today, more and more advisors are looking to carve out a niche, either in the types of clients they serve or the areas they specialize in. From targeting certain professions to embracing new strategies and philosophies, top advisors are finding ways to stand out and provide a unique service to clients.

At the same time, the advisor’s role continues to expand as the

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planning process becomes more in-depth. Advisors need to navigate compliance, incorporate new technologies and deal with their own challenges to be successful – and many advisors find that being part of a team relieves some of that burden. On the following pages, Wealth Professional Canada takes a closer look at nine of Canada’s leading advisory teams to discover what they’ve done to find success in a competitive and constantly shifting environment.

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KASPARDLOV & ASSOCIATES Dealer: Manulife Securities Location: Windsor, Ontario Year established: 1995 Employees: 9 Target clients: Affluent families, business owners and professionals Having a diverse team can be a strength for any wealth management firm, and it’s what Kaspardlov & Associates has established as the core of its foundation. Specializing in cash-flow planning, all members of the Kaspardlov & Associates team work together to provide top-notch service to clients. This has helped the firm create a family approach that garnered recognition at the 2018 Wealth Professional Awards, where Kaspardlov & Associates won the Engagement, Loyalty and Client Care Award.

“Everyone likes to say they’re holistic, but we really take that to heart,” says president Dessa Kaspardlov. “We start with the plan, get a handle on where our clients are and where they want to get. We try hard to have conversations with their accountants and lawyers.

We have three CFPs and a CFA on staff, and all of the plans we write are team-based.

Everyone’s eyes look at it, and we all speak to the client at different times.”

While Kaspardlov & Associates was officially incorporated in 1995, its roots go back to the 1980s. In 1998, Kaspardlov purchased a business from one of her colleagues and has since worked to expand the firm’s services.

“Originally, the business focused on providing GICs, annuities and a little bit of life insurance,” she says. “As we grew, we added more services and transitioned to become a full-service investment office.”

As the firm expanded, Kaspardlov began to focus on cash flow and RRSP loans, which eventually became the basis of Kaspardlov & Associates’ approach.

“That loan business started to grow into

restructuring cash flow,” she explains. “Over time, restructuring cash flow built a process that was highly efficient for clients. As time went on, we added more to the cash-flow process, and it became systemized. We built a whole process and branded/trademarked it Dessanomics. That process, focused on cash flow, took us from the wealth creation area to those planning for retirement.”

As the system grew, Kaspardlov added more experts to her team, aiming to bring in people of different specialties who could all contribute something different.

“We have been fortunate to hire well – people whom we have hired have remained here,” she says. “I think that continuity filters down to the clients. They get the same people and the same answers. I think it really helps in our success because it feels like a family. The amount of knowledge we all have about our clients really adds to that.”

One area where Kaspardlov has been able to benefit from her team members’ expertise is technology. One of her partners, Pat McHugh, brought portfolio management software with him when he joined the firm.

“He brought CPMS from Morningstar,” Kaspardlov says. “We understand that he is amongst the earliest users of this software and has won numerous awards in the investment industry for using it. We believe it puts us ahead in terms of managing assets and is a huge competitive advantage.”

Another benefit for Kaspardlov has been

WPC: What’s the biggest challenge you face with clients?

Dessa Kaspardlov: I think one of the biggest challenges is that clients don’t understand the efficiency of cash flow versus the top line, how tax impacts their bottom line and how estates can be set up more efficiently so we can pass on legacy from one generation to the next. There is tons of information out there on the internet, but I think because there is so much information, the consumer can get confused, and it inhibits them from making the right decisions. We try to educate and help them understand what to do with that information they’re getting. working with Manulife Securities. “The benefits of working with Manulife are the brand recognition, trust, strength and stability,” she says. “When clients see Manulife is our back office, they get that comfort that they would with a major bank or firm.”

With that support, Kaspardlov is hoping to grow the firm’s level of expertise. “We are always looking at ways to enhance service and ways to support the financial universe of our clients,” she says. “There are many moving parts, and we hope to add more talent and services for our clients.”

“We have been fortunate to hire well – people whom we have hired have remained here. I think that continuity filters down to the clients. They get the same people and the same answers” Dessa Kaspardlov, Kaspardlov & Associates www.wealthprofessional.ca

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SPECIAL REPORT

ELITE ADVISORY TEAMS

LAWTON PARTNERS

Location: Winnipeg, Manitoba; Regina and Prince Albert, Saskatchewan Year established: 1974 Employees: 56 Target clients: Business owners/professionals and retirees As of 2016, there were more than 1.14 million small businesses in Canada, according to Industry Canada. With such a large portion of the population owning or working for one of these businesses, it’s an area that can’t be ignored by advisors. Lawton Partners has recognized this and is aiming to provide solutions to those individuals.

Lawton Partners traces its roots back to 1974, when it was founded primarily as a planning firm – something that was unique at the time, says Jamie Townsend, Lawton Partners’ wealth manager.

“Back then, most firms were focused on investing,” he explains. “Now we pride ourselves on being on the cutting edge of planning, especially when it comes to tax rule changes for our business-owner clients.”

It’s that focus on small business owners and retirees that has become the primary vision for Lawton Partners.

“On the small business side, someone

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has worked incredibly hard at their craft,” Townsend says. “We have done the exact same things and know what they are going through. Whether it’s growing the business or dealing with challenges, we have been in those shoes. When it comes to retired clients, it follows the same idea. We take the responsibility very seriously of managing someone’s money and being transparent. People who have their life savings and need to live off of that tend to gravitate to what we do.”

combine all data points efficiently so we can be proactive in making decisions.”

That comes in handy when the firm is dealing with a small business. “If we look forward 12 months from now, for a business owner, given all the rules that are changing in regards to tax, we need to be proactive in managing how that person is taking income or what they need to have happen on investments,” Townsend says. “We are not accountants, but we need to have conversations with accountants so we can plan for that individual going forward.”

Lawton Partners’ projections use consolidated data to build a living model of an individual’s business, giving advisors the opportunity to test ideas ahead of time and help individuals run their businesses more efficiently.

“If you are a successful business owner, you are busy; you are focused on your craft,” Townsend says. “But how do you make sure that the investment and insurance components, along with the tax plan, are in place?

Our challenge is putting all of those pieces of the puzzle together.”

“If you are a successful business owner, you are busy; you are focused on your craft. But how do you make sure that the investment and insurance components, along with the tax plan, are in place? Our challenge is putting all of those pieces of the puzzle together” Jamie Townsend, Lawton Partners To help those clients with their planning, Lawton Partners has turned to technology to enhance its processes. “There is so much data out there – everything from tax returns to insurance statements to investments,” Townsend says, “but what we do is

For Lawton Partners, recognizing that their clients have worked hard for their money, and taking seriously the responsibility of managing those assets, have been key to success. The firm tries to help its clients by simplifying the complicated issues around

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wealth management. To do that, Lawton Partners advisors make their relationships with clients a top priority.

“We have had people working with us for 30 years,” Townsend says. “Our clients enjoy knowing who we are, and we have intimate relationships with them. We are very grateful for the relationships we have.

The number-one thing is continuing to focus on clients. If we can add value, simplify their lives, be there in the moments that are hard and celebrate success, this firm will continue to thrive for another 100 years.”

WPC: What’s the biggest benefit to being an independent firm?

Jamie Townsend: The biggest benefit is you can plot your own course and make this what clients value most, not what is dictated by a parent company.

That idea allows us to take a long-term approach. If we look five, 10 or 15 years out and determine what our clients need, we can build towards that.

One thing our firm has embraced is the concept of a team. The most successful planners are not on their own; they are in teams, and that idea is perfectly married here. Our teams have different skill sets, which allow us to accomplish things you can’t do on your own. Every advisor at our firm has a CFP, but we also have individuals with MBAs, CFAs and even two chartered business evaluators to help clients evaluate their businesses.

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SPECIAL REPORT

ELITE ADVISORY TEAMS

POPOWICH KARMALI ADVISORY GROUP

Dealer: CIBC Wood Gundy Location: Calgary, Alberta Year established: 2010 Employees: 8 AUM: $500 million Target clients: Baby boomers (retired and those approaching retirement)

Retirement is a big area of the financial planning industry. Many people invest as a means to prepare for retirement, and clients entering or nearing retirement often require added attention from advisors. That’s precisely what the Popowich Karmali Advisory Group at CIBC Wood Gundy aims to provide.

Popowich Karmali was created in 2010 when David Popowich and Faisal Karmali merged their practices. “Dave is more of a preservation-of-capital, income type of individual who wants to make sure clients are receiving income on a long-term basis,” says Karmali, who serves as first vice-president, portfolio manager and investment advisor at the firm. “I am a growth investor and look at ways to have more pension-style growth.

We came to the conclusion that merging our investment philosophies would be a good fit.”

The partners adopted a strategy from the University of California, Berkeley, called asset dedication. The strategy designates assets

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into four main buckets: income, which people need to live; growth, to make sure assets grow to hedge against inflation; healthcare, to support individuals and their families in the event of a healthcare need; and legacy, which determines how individuals will pass on assets in the way they want and with the least amount of tax.

Using this strategy, the firm has been able to find success with its target demographic.

a big impact by providing greater convenience. One of the ways they’ve done this is by harnessing technology to find new ways to communicate with clients.

“More of our clients are travelling around the world, so being able to communicate with them, even if it isn’t face-to-face, is huge,” Karmali says. “More and more, they are using their phones versus desktops and are going paperless. Our clients are not necessarily the leading edge of technology users, but they are often happy to embrace things that make their lives simpler. We try to be adaptive and support those technologies so that what we offer fits within the scope of what they are already familiar with.”

Since the merger, the Popowich Karmali Advisory Group has evolved to assist clients in all aspects of retirement – not just money management. “We look at all the things they want to do in retirement and help couples navigate the big change of going from being fully engaged in careers to no longer being

“We look at all the things they want to do in retirement and help couples navigate the big change of going from being fully engaged in careers to no longer being engaged in that career but still engaged in their lives” Faisal Karmali, Popowich Karmali Advisory Group “We understand the game and the challenges people go through not only from a financial aspect, but from a life aspect,” Karmali says, “so we understand this big transition people go through with retirement.”

Popowich and Karmali have become “retirement coaches” who help their clients focus on enjoying their retirement as opposed to worrying about their assets. Sometimes this involves introducing small changes that have

engaged in that career but still engaged in their lives,” Karmali says.

Being under the CIBC Wood Gundy umbrella has helped the firm offer a wider range of services to its clients. “They have been a fantastic partner,” Karmali says. “They are evolving what they offer to this demographic, meeting their needs, and that is just fantastic.

To see a firm like CIBC Wood Gundy moving toward helping these individuals – beyond

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just portfolio management and banking services, but by providing services and access to things they never have had – is something I am proud to be a part of.”

Moving forward, Karmali says the team wants to expand the range of services it can offer to clients by moving into areas such as succession planning and divorce. However, even with these new offerings, Karmali says his firm’s focus will remain the same: ensuring their clients fully enjoy their retirement. “We want to make sure, even though our clients may stop working, their lifestyles never retire,” he says.

WPC: How do you handle compliance demands?

Faisal Karmali: Because we work with clients in or around the retirement stage of their lives, we take an extra step in doing our due diligence, because our clients generally cannot accept a lot of risk. Transparency is the key. We take the time to understand what the individual client’s goals and needs are and review them regularly in multiple formats: written, email, face-to-face meetings and recording conversations in our notes. All help to build a complete picture of our clients and help them understand what we’re looking at when we make recommendations. The compliance side has become a larger portion of our job every day, but we understand the need to protect our clients. I am glad to see the industry take more steps towards transparency, because I think clients deserve a full understanding of how their finances are being managed.

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SPECIAL REPORT

ELITE ADVISORY TEAMS

RGF INTEGRATED WEALTH MANAGEMENT Location: Vancouver, British Columbia Year established: 1973 Employees: 65 AUM: $1.85 billion Succeeding as an independent firm can be difficult in today’s wealth management industry. Yet Vancouver-based RGF Integrated Wealth Management has been doing it for more than 40 years – and they plan on being around for at least another 40.

After beginning as a co-op that focused on splitting cost within its own insurance agency, RGF evolved into a mutual fund dealer and now comprises an IIROC financial planning firm that does portfolio management, as well as the insurance agency. RGF has found success by focusing on the clients’ needs and offering a base level of expertise from all

we have the right product. We believe it’s a combination of all products out there. There isn’t a bad product, just bad implementation.”

Getting to know clients is another part of RGF’s holistic approach. “We believe you can’t do proper wealth management unless you know the client’s situation,” Gillespie says. “It’s what the client wants to achieve for our integrated wealth management approach.”

While RGF has a baseline educational standard for each of its 17 advisor teams, Gillespie notes that all advisors are also specialized in individual areas, which he feels adds to the firm’s advantage.

“It’s hard to brand our firm because we have a bunch of niches underneath,” he says.

“That’s why we support each advisor in their expertise. We let the advisors deal with their niche but make sure they are not a lone wolf.”

That team support is what Gillespie believes sets RGF apart from other firms.

“I think as soon as you are happy where you are or think you’ve achieved everything, that’s the day you start failing.

We are never happy because we want to do something different” Clay Gillespie, RGF Integrated Wealth Management advisors, along with individual specializations.

“If you put the client’s interest first and make sure your advisors are accredited and educated, then you build a firm with stability,” says managing director, financial advisor and portfolio manager Clay Gillespie.

For RGF, finding the proper solution for clients is key. “As a dealer, product isn’t an issue for us,” Gillespie says. “We want to make sure for every solution we recommend,

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“When advisors come here, they are part of the firm,” he says. “We all want to enjoy where we work. If we have an environment where one advisor is competing with another, or they are not part of the firm, they can’t stay. If the advisor beside me does well, it helps me, and the success of everybody is important to everyone else.”

Another advantage of RGF, Gillespie says, is that clients always know who they’re

WPC: How has technology changed the way you work?

Clay Gillespie: We are always trying to be more efficient and eliminate manual intervention and double entry. A lot of our technology is making sure our clients can get the data they want, when they want it and how they want it. Everyone wants something slightly different, so we use our CRM extensively to tailor engagement to each client based on what their needs are. dealing with. “Our strength is our independence,” he says. “The reason clients deal with us is because we aren’t the big monolithic organization. My clients can call or see me specifically rather than a 1-800 number.”

That independence is important to RGF, which has remained an independent IIROC investment dealer in order to retain control over its environment. Gillespie admits that there are challenges to being independent, specifically in regard to technology and compliance costs and implementation, but these are obstacles RGF is willing to take on to continue to offer a personal approach to clients.

Gillespie notes that when RGF constructed its most recent strategic plan, it changed its main objective to monitoring client outcomes.

He explains that if RGF strives for success there, the firm will succeed.

“We want to be the best planning firm,” he says. “I think as soon as you are happy where you are or think you’ve achieved everything, that’s the day you start failing. We are never happy because we want to do something different – we are always striving to be better and work as a group to get there.”

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SPECIAL REPORT

ELITE ADVISORY TEAMS

MLD WEALTH MANAGEMENT GROUP

Dealer: Canaccord Genuity Location: Calgary, Alberta Year established: 2004 Employees: 10 AUM: $700 million Target clients: Those with three qualities: assets, attitude and advocacy MLD Wealth Management Group’s Chad Larson is no stranger to national recognition.

Earlier this year, he topped Wealth Professional Canada’s Top 50 Advisors list and was featured on the WPC Hot List. He also made news when his practice moved from National Bank to Canaccord Genuity. Yet despite the headlines, Larson says MLD Wealth Management’s goals haven’t changed – the firm is still looking to grow and enhance the client experience.

MLD was formed as a partnership between Larson and his mentor, Curtis Mayert, in 2004.

The firm grew quickly and eventually became part of Wellington West. A few months later, Wellington West was acquired by National Bank Financial, and MLD spent the next seven and a half years there. In March 2018, the firm transitioned to Canaccord Genuity.

“We decided we needed a more entrepre-

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neurial platform to look after our clients that was less rigid than the bank’s,” Larson says.

“Our decision to leave did not come lightly.

As we were building our people, processes and philosophies, we noticed the bank was more interested in building scale with internal product and homogenous solutions, and that wasn’t something I would tolerate. I wanted to ensure we had a clear runway that would allow us to do the business we wanted to do.”

Part of Canaccord Genuity’s value proposition is a high importance on incorporating technology, something Larson embraces.

“I am a big believer in technology,” he says. “Technology adds incredible value and choice. We have a full-time SEO manager who manages our web presence and our digital strategy. We are on Facebook and LinkedIn and are using an artificial intelligence email minder in our strategy, along with a myriad of

other tools to help clients and our business.”

Larson notes that part of MLD’s strategy includes monitoring its website and login portal so they can see if someone has looked at their portfolio. “If the Dow or TSX has dropped and someone is checking their portfolio at 11 p.m., it means they have a concern and are not sleeping,” he explains. “It allows me to call that person the next morning and address those concerns. Our proactive service model really helps clients control their emotions, as market noise can be irritating and confusing.”

That personal relationship is paramount at MLD. The firm encourages a focus “on people, processes and philosophy rather than products, prices or performance,” Larson says.

When MLD looks at new clients, they’re looking for people who meet three criteria: assets, attitude and advocacy. “We want to make sure they buy into our process,” Larson

WPC: How has your focus changed since your firm was founded?

Chad Larson: The swath of wealth is with the baby boomers, and our business tailors to that. Fifteen years ago, our clients were still ladder-climbers in their 40s and 50s, still building their wealth. So the focus then was on asset accumulation and growth. Now goals have shifted to capital preservation, and we have evolved with that. It hasn’t changed our investment outlooks, but our clients’ risk tolerance and other KYC aspects had to evolve.

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says. “We are not all things to everyone; we are all things to a very select group of people.”

For Larson, dealing with clients is all about simplifying the process. “We try to be real people – the complicated things don’t need to be complicated,” he says. “There is so much data out there, and clients get nauseated with jargon in our industry. We have built our business around why we are doing things, not how we are going to do them.”

MLD’s approach of simplifying information, building deep relationships and incorporating technology has helped it become the success it is today. Larson believes the

“We have built our business around why we are doing things, not how we are going to do them” Chad Larson, MLD Wealth Management firm will continue to grow by staying true to these values.

“We want to continue to make sure that we are congruent to our philosophy, build and maintain our premier multi-level family platform, lead the industry, and impact people’s

lives positively,” he says. “When a client leaves our office and they feel better about their financial situation because they understand, feel empowered, are not worried, and can approach the future with anticipation, not apprehension, that is our goal.”

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SPECIAL REPORT

ELITE ADVISORY TEAMS

SHORTFINANCIAL

Location: St. John’s, Newfoundland, and Toronto, Ontario

“We continue to move into that mindset of simplifying lives as our clients go through retirement and learn to deal with challenges”

Year established: 1988

Larry Short, ShortFinancial

Dealer: HollisWealth, a division of Industrial Alliance Securities

Employees: 9 AUM: $203 million Target clients: Business owners, established investors with complicated financial requirements

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Not all of a client’s needs are cut-and-dry.

Some investors have multiple layers and options to their strategies that can make things more complex for advisors. For the team at ShortFinancial, dealing with that complexity has become their specialty.

The three partners who comprise the ShortFinancial team – Larry Short, Kimberley Short and Curtis Porter – are portfolio managers with decades of experience, holding numerous certifications and licences. Thanks to that, they have been able

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to help clients with difficult situations and assist families in planning for the future.

“We have traditionally dealt with business owners, but our client base has become broader,” Larry Short says. “Now we find the clients who are coming to us are older, very established and with complicated financial situations that need our designations to simplify their circumstances.”

ShortFinancial has begun to build expertise in helping families where all of the financial knowledge rests with one individual who must, for a variety of reasons, quickly educate other family members.

“We get calls from people whose parents are slipping,” Larry says. “Maybe it is a small family business and Dad has all of the financial knowledge of that business. No one else knows where the money is or what the plan is. It’s all just in his head and was never really written down. We help the rest of the

challenges is when a family comes to us with an aging parent and the family doesn’t understand the finances of a business. We need to bring awareness to the other family members and get them up to speed quickly.

It’s our job to find a good way to bring that financial literacy level up so the entire family can be comfortable.”

ShortFinancial has worked to simplify things on its end as well. The team’s approach to financial planning includes a 42-question assessment for clients, which helps to initiate the kinds of conversations that investors might not think about or want to have.

“We take the time to say, ‘Here are all of the topics that affect your financial lives,’” Larry says. “We go through them and make sure they can check off the topics on the list.”

That approach has allowed the firm

“Our goal is to have a holistic approach when looking at money from a multigenerational perspective – not just in terms of wealth transfer, but how to support families through multiple generations” Kimberley Short, ShortFinancial family put the pieces together.”

The ShortFinancial team has the depth of knowledge needed to deal with different segments of the population, which is becoming increasingly valuable when it comes to helping families, particularly with transfers of assets.

“We have learned that not all clients want to be communicated with in the same way,” Kimberley Short says. “One of our bigger

to thoroughly understand its clients and build the best portfolios to fit their needs.

Only after the client has a fully developed plan in place does the team begin to focus on investments.

ShortFinancial’s position as an inde­ pendent firm backed by HollisWealth (a division of iA Securities) has allowed it to maintain control of the business and continue to focus on areas that best suit its

WPC: How has the financial industry changed since you started?

Larry Short: Being in the industry as long as I have, I have seen a lot of change. In the old days, to buy a share of Bell, I had to write it on a three-copy form, get it time-stamped and then give it to the wire order entry operator, who then typed it into where I was buying. Then the reverse had to happen to give me a fill. For me to buy or sell $2 million worth of shares, one account at a time, would take me a day. Now I can do it for all my clients in a matter of seconds.

team members’ expertise. “Our goal is to have a holistic approach when looking at money from a multi-generational perspective – not just in terms of wealth transfer, but how to support families through multiple generations,” Kimberley says.

“We continue to move into that mindset of simplifying lives as our clients go through retirement and learn to deal with challenges,” Larry adds. “In that aging generation, we typically see that money management was dominated by men. When the husband starts to slip, the burden falls to the wife, who may have to learn about it for the first time.

“Our team recognizes that bias,” he adds, “and with our multiple levels of knowledge, we help communicate to them and plan for the future in their time of need.”

Larry and Kimberley Short are portfolio managers with HollisWealth®, a division of Industrial Alliance Securities Inc., which is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

The opinions expressed herein are those of the portfolio managers alone and may not be aligned with the opinions and values of Industrial Alliance Securities Inc. or any of its affiliated companies.

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SPECIAL REPORT

ELITE ADVISORY TEAMS

WISE RIDDELL FINANCIAL GROUP

Location: Oakville, Ontario Year established: 1989 Employees: 16 AUM: $221 million Target clients: Physicians

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Like many financial planning firms, Wise Riddell Financial Group traces its roots back to the insurance business. The firm began by providing insurance solutions to physicians; over the years, that business evolved to include wealth management.

Wise Riddell has retained many of those initial clients and now offers them full

financial planning services.

The firm’s connection to physicians goes back to a chance meeting between a member of the Ontario Medical Association [OMA] and Wise Riddell founder Kevin Riddell.

The OMA had its own group for life insurance products but was looking for someone to recommend additional options. OMA

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selected Wise Riddell; the firm went on to form relationships with individual physicians, many of whom remain clients to this day.

“Over the years, we developed relationships with clients who couldn’t get what they were looking for from the OMA,” says Mark Winson, partner and EVP of wealth management at Wise Riddell. “What increasingly was happening was the insurance solutions they were looking for had an investment wrapper, such as an overfunding universal life policy.”

Canadian Medical Association and run as a not-for-profit, meant Wise Riddell had to prove its value.

“There was a feeling that if they dealt with their own organization, their money would be safe,” Winson explains. “However, many realized they were only being presented limited solutions. We demonstrate that we understand their issues and concerns and can bring something different to the table.”

Establishing credibility was another key for Wise Riddell. “Our average client has just under $2 million in investable

“I think a lot of our success is having a focus on clients with similar interests.

We understand them and the issues they are facing. Our experience goes a long way in dismissing any concerns they may have” Mark Winson, Wise Riddell Financial Group In order for those insurance products to function properly, they needed to be managed from an investment perspective. That realization inspired Wise Riddell to transition into full financial planning. Winson was brought in to manage those funds and provide additional solutions.

“Clients kept saying, ‘Can you do more?

I’ve got RRSPs and tax structuring that needs to be managed,’” Winson recalls. “We recognized the opportunity that existed and built the firm around it with people who had experience.”

Servicing this specific demographic came with some unique challenges. The fact that physicians have their own industry investment network, MD Financial Management, which, until recently, was owned by the

assets,” Winson says. “To go to them and say, ‘Invest that with me,’ we really have to prove our worth.”

To do that, Wise Riddell uses an approach it refers to as the Integrated Management and Planning System [IMAPS], which involves multiple meetings with clients to gather information, understand their goals and present recommendations.

“We don’t want reluctant clients,” Winson says. “If they haven’t bought in, it won’t lead to a good long-term relationship. We are willing to invest the time so we can decide if they are the right client for us, but at the same time, we want to make sure we are right for them.”

The approach has been quite successful; the firm boasts a number of long-term

WPC: How do you deal with the ever-changing landscape of compliance?

Mark Winson: We are very fortunate. The firm we are associated with as our dealer is Aligned Capital Partners, so compliance is very accessible to us. It is very easy for us to talk to someone face-to-face and say, “How do we deal with this?”

I think everyone’s frustration is that the landscape keeps changing. IIROC keeps addressing new issues as new problems arise and new levels of compliance come into play. There is an overwhelming amount of paper to establish a relationship with a client that gets signed and filed, but other than ticking the box to say you did it, I don’t know if it accomplishes a lot. We work within compliance; it is there for a reason. Hopefully it keeps the bad guys out, but I think most of it gets put in place after the horse is out of the barn.

clients. “I think a lot of our success is having a focus on clients with similar interests,” Winson says. “We understand them and the issues they are facing. Our experience goes a long way in dismissing any concerns they may have.”

Wise Riddell hopes to maintain that approach going forward. The firm has seen its AUM grow by 15% each year, but now it’s looking to measure growth by meaningful relationships. “We want to continue to grow without watering down what we have created,” Winson says. “We want bring in people we want to work with and who want to work with us.”

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SPECIAL REPORT

ELITE ADVISORY TEAMS

LUFT FINANCIAL Dealer: HollisWealth, a division of Industrial Alliance Securities Location: Vancouver, British Columbia Year established: 2006 Employees: 10 AUM: $330 million Target clients: Clients of all asset levels Luft Financial portfolio manager Robert Luft has been in the financial industry since 1998.

In 2006, he made the decision to expand his sole proprietorship. Since then, Luft’s Vancouver-based team has seen its assets under management grow from $40 million to $330 million.

Luft’s decision to make the leap to a team was based on his focus on growth. “[I thought], ‘How am I going to get this 10 times bigger than it is today?’” he recalls. A desire to maintain independence while tapping into the resources of a larger company led him to align with HollisWealth (a division of iA Securities), which he believes was one of the best choices available.

“The biggest benefit has definitely been the independence,” Luft says. “The idea that there is no proprietary product, no pressure from a firm to meet sales quotas or no specific portfolio you have to follow are all important.”

A major driver behind Luft Financial’s impressive growth has been its willingness to work with all types of clients. “Our objective is to help people at different asset levels with different solutions,” Luft says. “There are firms that dictate there is only one type of preferred client. We think otherwise and are here to provide solutions to all types of clients.”

That includes supporting future clients, something Luft accounted for when he forged the vision for his practice. “Do you really want to say to someone whose money you’ve been managing for 15 years that you can’t help their daughter with her TSFA just because she

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doesn’t have half a million bucks?” he says.

Luft Financial focuses on discretionary portfolio management, managing a variety of fee-based portfolios at different price points and with different securities based on a client’s assets. “We have the ability to manage $3 million portfolios across eight different accounts, along with managing the taxation, asset allocation as well as the sector,” Luft says.

Having multiple solutions is key for Luft, as he believes the needs of the client should drive the solution, not vice-versa. In that regard, Luft prioritizes diversity when choosing his team members, because he doesn’t want his team to all specialize in the same area.

“Finding key people and having them in the right places, along with a team mentality, is definitely the key to our success,” he says.

“It’s like a hockey team – you have the goalie, defense and forwards, and everyone knows their role. The forwards don’t tell the goalie how to stop the puck.”

To keep growing, Luft believes technology will be key. “I always look for what is bigger, better, faster and try to achieve that,” he says.

WPC: : Do you see a future for independent firms?

Robert Luft: If you aren’t offering something different, probably not.

The difficulty for independents is how to have a profitable model without proprietary products. The banks know when a client walks through the door, their advisor will use their product, and they only have to pay the advisor’s salary. For me, HollisWealth knows they get a percentage of my revenue. That can be not a profitable business because they are paying for legal compliance, custodial, etc. It will be interesting to see if firms themselves survive. If not, you’ll see more partnership organizations.

just robo-advisors and into integrated trading and financial planning software that can give clients an enhanced experience.

“We have to find a bridge between the

“We have to find a bridge between the old guard and the new generation.

Somewhere in the middle is the power point – good advice that is not cookie-cutter and can be delivered with technology platforms” Robert Luft, Luft Financial “Where’s the fun in stopping? The old adage is that fat cats don’t hunt – you have to stay lean and mean and figure out a way to make the client experience better.”

Luft believes the Canadian wealth management industry currently lags behind the US when it comes to adopting technology; he’d like to see the offerings evolve beyond

old guard and the new generation,” he says.

“Somewhere in the middle is the power point – good advice that is not cookie-cutter and can be delivered with technology platforms.”

Robert Luft is a portfolio manager with HollisWealth®, a division of Industrial Alliance Securities Inc,. which is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. The opinions expressed herein are those of Mr. Luft alone and may not be aligned with the opinions and values of Industrial Alliance Securities Inc. or any of its affiliated companies.

www.wealthprofessional.ca

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19/10/2018 10:20:59 AM

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Mandeville Private Client Inc. is a Member of the Investment Industry Regulatory Organization of Canada and a Member of the Canadian Investor Protection Fund. Mandeville Private Client Inc. is a registered trademark of Portland Holdings Inc. and used under license by Mandeville Private Client Inc. For further information please contact your Advisor. Consent is required for any reproduction, in whole or in part, of this piece and/or of its images and concepts.

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2018-10-09 12:37 PM 19/10/2018 10:21:15 AM

SPECIAL REPORT

ELITE ADVISORY TEAMS

WCBG WEALTH MANAGEMENT

Location: Regina and Moose Jaw, Saskatchewan Year established: 2006 Employees: 8 AUM: $50 million Target clients: Those with $100,000 to $2 million in assets What sometimes gets overlooked in the financial industry is that all clients need advice. No matter the asset level, everyone needs to manage their money and plan for retirement. When James Britton, senior

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“Some of the profiles we analyzed, clients weren’t aware of what they were paying in fees.

By switching to us, we reduced their fees ... and they have better diversification” James Britton, WCBG Wealth Management financial advisor at WCBG Wealth Management, recognized this, he and partner Aaron Ruston put their decades of experience in the industry to work to help address it. They noticed a real shortage in service to clients

in the $100,000 to $2 million range and decided to focus on planning for them.

“I realized there was a need about three and a half years ago, as we were focusing 70% of our time on pension clients and farmers

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with a high net worth,” Britton says. “It just seemed like that area was being ignored.

We feel we can offer tax and estate planning advice and clarity around what their financial plan is currently doing, and we have very little competition in that field.”

Britton began to analyze the investments of clients in that asset range who were still with major banks and investment firms. He

likely approaching its end. “What’s going to happen when the bear market hits?” he says. “Those smaller accounts will get ignored. In private wealth management, they don’t get ignored. Clients pay a smaller management fee for someone to pay attention to the details.”

Britton begins by asking his clients if they feel their current plan can deliver on

“What’s going to happen when the bear market hits? Those smaller accounts will get ignored [by the banks]. In private wealth management, they don’t get ignored. Clients pay a smaller management fee for someone to pay attention to the details” James Britton, WCBG Wealth Management realized that many had built wealth over 15 or 20 years but didn’t change their banker, who was recommending balanced funds for their RRSP purchases.

“Now they realize they have accumulated $500,000 to $1 million but are still invested in 2.5%- to 3%-MER funds, balanced funds yielding 4% or 5% – the Canadian Pension Plan outperforms that,” Britton says.

It was a conundrum Britton could no longer ignore. “Some of the profiles we analyzed, the clients weren’t aware of what they were paying in fees,” he says.

“By switching to us, we reduced their fees – ours are down to 1.5% – and they have better diversification, so we can improve the growth, not just the returns, and reduce the volatility.”

This is extremely important to Britton at the moment, especially as the bull market is

their goals and dreams. Some of the answers he receives are astonishing – he says more than half of his clients had no idea how their money was being managed. Helping provide the right answer to that question has become the focus for Britton’s approach.

“We have gone to private wealth managers who have proven track records with an emphasis on downside risk and preservation of capital,” he says. “My focus is on helping manage risks from day to day and making the steps towards a client’s retirement.”

Now Britton is focused on succession planning – not only for his clients, but for his firm as well. He feels WCBG will continue to be successful because there’s a strong succession plan in place at the firm and people who want to work with its clients. He currently has four representatives who can remain independent, work

WPC: How has technology changed the way you work?

James Britton: The platforms are all good – every firm has its online service for the client so they can go on and look at their investments. Our use of technology is more on goal-setting and report documents that summarize goals and objectives on one page. We have financial planning software that we can use to determine if we are on track. We can spit out a 100-page document, but most clients just want a two-page summary, knowing that we have the 100 pages.

That’s what we do today – we do full, quality financial plans. Our goal is, when we are sitting at a meeting with a client, to have them understand if they are on track, and if not, we have to plan to put them back on track.

autonomously, not have to sell a proprietary product, achieve their goals, and know their family and clients are looked after.

While WCBG has a strong presence in southern Saskatchewan, Britton is in the process of acquiring more books of business and plans to introduce more representatives in the coming months. He’s also working on furthering his succession plan for clients.

“When we look at clients in their 70s and reps in their 60s and 70s, and can now match them with younger reps in their 50s and 40s, it gives us a continuity plan,” he says. “When you are talking about the beneficiaries of the funds of those 70- and 80-year-olds, we are in a good position with that next generation.”

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19/10/2018 10:22:16 AM

SPECIAL PROMOTIONAL FEATURE

PORTFOLIO MANAGER

Going private Ray Sawicki of Mandeville Private Client explains how the company is building a framework to increase access to private and alternative investments for its clients

IT’S NO SECRET that companies are always looking to differentiate themselves in the wealth management industry. One of the main ways they attempt to do this is by lowering costs, but Mandeville Private Client takes a different approach.

“When we characterize the Canadian wealth management landscape, it is highly fragmented, but there is a large concentration of wealth held among a very small number of firms,” says Mandeville senior vice-president and chief investment officer Ray Sawicki.

“In this context, we ask, ‘What is the highest value-add we can provide to our clients [to] make them wealthy?’”

Mandeville’s answer goes beyond traditional public securities, opening up investors to the world of private and alternative investment opportunities.

“If you look at some of the preeminent creators of wealth – like the largest and most successful family offices, such as Thompson or Rogers, or preeminent institutional investors like the Canadian Pension Plan Investment Board and the Yale Endowment Fund – they invest in a combination of public, private and alternative investments,” Sawicki explains.

“Yet the typical Canadian retail investor invests in 100% public securities. The invest-

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ment needs of these imminent wealth creators are the same as retail investors – capital preservation, growth, income and minimization of taxes. Which begs the question, if the needs of the role models of wealth creation are same as the typical retail investor, shouldn’t the portfolio profiles be similar?”

Looking at some of the portfolios of the institutional investors Sawicki references reinforces this notion. In 2017, the CPPIB reported that 42% of its investments were held in private and alternative vehicles, while the Ontario Teachers’ Pension Plan had 58% in private and alternative investments. South of the border, the Yale Endowment Fund had private and alternative exposure of 73%.

Mandeville noticed this dysfunction in the Canadian wealth management industry and set out on a mission to resolve it by providing all investors with access to quality public, private and alternative investments, just like family offices and institutional investors.

Sawicki notes that other players in the retail wealth landscape are not providing access to these types of investments.

“That’s for a variety of reasons,” he says. “It may not be the firms’ area of expertise, they may already be well entrenched in public securities and don’t want to transfer into

other areas, and a large part of it is also the regulatory landscape.”

Regulators have set rules for the distribution of non-prospectus private securities that differ from those governing traditional public securities. In addition, investors need to meet certain criteria to qualify as an accredited investor. Investors must be able to demonstrate an average annual income of at least $200,000 or a combined household income of at least $300,000 over the past two years, or have net financial assets in excess of $1 million.

“The Mandeville difference is providing clients with the same type of private and alternative securities at a high quality,” Sawicki says. “The quality is really important – we have seen smaller firms provide pseudo access to non-traditional private securities, but we don’t feel it’s at the same level of quality.”

The benefits for investors The right exposure to private and alternative investments varies from investor to investor,

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WHO IS RAY SAWICKI? Role: Senior vice-president and chief investment officer at Mandeville Private Client Industry pedigree: Prior to joining Mandeville, Sawicki held roles at MD Financial Management, Macquarie Private Wealth, CI Investments and RBC Global Asset Management Education: Sawicki has a bachelor of commerce and finance from the University of Toronto, an MBA from York University and is a CFA charterholder

but Mandeville has put together a framework to determine the proper exposure so advisors can integrate private and alternative investments into portfolios with public securities.

“There is a premium investors are paying by limiting their investments to public secur-

that most investors do not need 100% liquidity, which is the commonplace practice in the industry. When the objective is wealth creation, wouldn’t you want to optimize your returns by taking advantage of the illiquidity discount on private securities? The industry’s

“If you look at some of the preeminent creators of wealth ... they invest in a combination of public, private and alternative investments. Yet the typical Canadian retail investor invests 100% in public securities” Ray Sawicki, Mandeville Private Client ities when the otherwise similar private security may be available at a 25% to 40% discount for no apparent additional risk,” Sawicki says. “There’s a certain degree of liquidity investors may need [from public securities], but I would challenge the fact

singular focus on public securities may lead to sub-optimal outcomes. Mandeville recognizes this dysfunctionality and empowers advisors to overcome it and create higher levels of wealth for their clients.”

Sawicki also points out the diversification

benefits of including private and alternative investments in portfolios.

“These asset classes tend to have a different correlation of returns in a portfolio context,” he says. “When you are at a certain point in an economic cycle where public asset classes are devaluating, private asset classes are going to have a different sensitivity to the economic cycle. They often will not experience the same return outcome, which creates a muted return profile to downside events. There may be more stability in the long term, and portfolio risk is therefore reduced.”

Expanding opportunities for investors is another key benefit. Sawicki notes that public securities only make up around 30% of the investable universe, so expanding into private and alternative investments opens clients up to the other 70%.

Investing in private securities also makes it easier for investors to focus on the long term. Since public securities trade on an open market, there is inherent fluctuation that investors can watch day by day or even minute by minute.

“Often this creates a focus on near-term returns,” Sawicki explains. “Individuals are emotional beings, but the best investors are

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19/10/2018 10:23:41 AM

SPECIAL PROMOTIONAL FEATURE

PORTFOLIO MANAGER

those who can detach emotion from the investment decision process. When you are watching value fluctuate up and down, there is a tendency to allow emotion to distort how you invest. Private securities act as a counter-balancing force because the value of privates is not as frequently broadcast.”

Unlocking opportunities The benefits of diversifying into private and alternative investments also extend to advisors. “It’s an opportunity to offer something unique to clients,” Sawicki says.

“It allows them to differentiate their business, enhance relationships and grow their

portfolio manager in the client/advisor relationship and suitably allocating a portfolio of private securities for clients,” Sawicki explains. “This program is the only one of its kind in Canada. Additionally, advisors who are portfolio managers are able to act as the accredited investor and offer private securities. This allows for true democratization of private investments to all investors.”

Two recent examples of the quality private and alternative investments Mandeville has made available to clients through the affiliated Portland Holdings global network are in real estate and healthcare.

“The first was a real estate develop-

“We believe in changing the paradigm and curing the dysfunctionality in the retail investment space in Canada” Ray Sawicki, Mandeville Private Client business in a landscape that can be very challenging. Above all, it is a mechanism for wealth creation.”

Bringing these opportunities to clients is how Mandeville differentiates itself from other firms. Thanks to its parent company, Portland Holdings, and its president and chairman, Michael Lee-Chin, Mandeville has gained a seat at the table with larger institutional investors.

“On the basis of Michael’s investments, we are able to see the same types of opportunities that large institutional investors see,” Sawicki says. “We believe in changing the paradigm and curing the dysfunctionality in the retail investment space in Canada.”

Mandeville also offers a unique program that facilitates access to private opportunities for non-accredited investors whose financial advisor is not a portfolio manager.

“The Mandeville Prestige Private SMA program provides access by serving as the

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ment opportunity in the upscale Toronto Yorkville district,” Sawicki says. “This was an equity investment in a condominium development in one of Canada’s most fashionable and affluent neighbourhoods. The residential condominium project hopes to command the interest of affluent individuals. It is highly customized and exclusive and will be a landmark building designed by world-renowned architectural firm Fosters and Partners. Portland Investment Counsel structured a co-investment vehicle that provided Mandeville clients with access to participate in this exclusive private real estate investment.”

The second investment opportunity was in a private German company involved in the innovative targeted radionuclide therapy [TRT] area of cancer treatment.

“This private venture-capital investment gives access for Mandeville clients to coinvest alongside the Portland Holdings group

MANDEVILLE PRIVATE CLIENT AT A GLANCE

HEADQUARTERS Burlington, Ontario

YEAR FOUNDED 2012

PARENT COMPANY Portland Holdings

LEADERSHIP Michael Lee-Chin, director, chairman and CEO

AWARDS FundServ Advisor Network/Brokerage of the Year, 2017 and 2018 companies in the exciting and innovative area of oncology diagnostics and therapy,” Sawicki says. “Opportunities such as these leverage Michael Lee-Chin’s and Portland Holdings’ global network and experience as owners, operators and investors in diverse sectors globally.”

By continuing to build its framework and enhance retail investors’ access to private and alternative investments, Mandeville hopes to resolve a prevalent dysfunction in the industry and offer better opportunities and outcomes for advisors and their clients.

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19/10/2018 10:24:10 AM

SPECIAL PROMOTIONAL FEATURE

GLOBAL EQUITY FUNDS

Dividend play Middlefield Group’s Rob Lauzon discusses how global dividend-paying funds can help investors looking to diversify their portfolios

IN 1997, when Middlefield Group first launched its Mint Income Fund (MID.UN), the firm noticed that investors tended to gravitate toward funds that focused on Canadian and North American equities. But as world economies have evolved, Middlefield has witnessed a change in investors’ interests.

“Because we went through a period that included the Asian financial crisis, no one really wanted global equities until the late 2000s,” says Rob Lauzon, Middlefield’s managing director and deputy CIO. “In 2005, we saw the demand for more global equity income. A lot of funds were beginning to have more of a global nature – this included everything from real estate to infrastructure.”

Middlefield’s flagship global equity fund is the Global Dividend Growers Income Fund (GDG.UN). Launched five years ago, the fund’s goal is to offer Canadian clients more exposure to sectors they don’t get in Canada.

So far, the fund’s five-year annual compounded return rate is more than 13%.

“The main strategy behind our global equity funds is driven by dividends,” Lauzon says. “Income drives all our funds. We run filters to screen companies with a history of growing dividends. From there, we can filter

field Healthcare & Life Sciences Dividend Fund and Global Innovation Dividend Fund.

The last one, which launched earlier this year, is one Lauzon feels sets his firm apart.

“We look at companies that create value for customers through technology,” he says.

“This fund is not just a technology fund – we also tried to look for innovative companies that pay dividends in sectors that benefit from the technology paradigm. Yes, 50% of the fund is technology, with 20 of the most innovative tech companies, but the other half focuses on different aspects of innovation like industrial, automation, robotics, genomics, e-commerce and real estate.”

Lauzon notes that managing global equity funds presents challenges in navigating foreign exchanges, trade tensions and interest rates. But, he says, “we address them by being active managers, with decisions like being hedged in a fund. We counter by underweighting certain areas and shifting investments back into those areas when they have priced in the bad news.”

Those challenges can also help highlight areas of opportunity. Currently, that means Europe – Lauzon is the lead portfolio manager on Middlefield’s European Focused Dividend Fund (EF.UN).

“Europe has had a rough year because of

“We look for companies that have a history [of paying dividends] and that have business models that support it over the long term” Rob Lauzon, Middlefield Group it down even further. We look for companies that have that history and that have business models that support it over the long term.”

In addition to its Global Dividend Growers Income Fund and Mint Income Fund, Middlefield has also found success with the Middlefield Can-Global REIT Income Fund, Middle-

trade tensions and slowing emerging markets,” he says. “I think there is an opportunity because the euro is undervalued. This will be a transition year for Europe and should lead to a stronger euro. The negatives have been priced in, and it’s a good opportunity to invest.”

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19/10/2018 10:27:29 AM

SPECIAL PROMOTIONAL FEATURE

INDEPENDENT FIRMS

The merits of independence Wealth Professional Canada spoke to John Kelleway of iA Securities to find out how the firm is expanding its wealth footprint across Canada by supporting the growth of independent advisors

OVER THE past few years, iA Financial Group has been expanding its wealth management services through its IIROC dealer, iA Securities. A significant part of that growth occurred in 2017, when the firm acquired HollisWealth. That acquisition brought iA Securities’ AUM from $10 billion to $36 billion on its IIROC platform, with an additional $45 billion on the MFDA side. The firm has

help advisors manage and grow their own businesses. While a number of smaller firms have been absorbed by larger institutions, iA Securities is looking to expand the reach of independent advisors.

“We find that advisors who operate in the independent channel form stronger and deeper relationships with their clients,” Kelleway says. “They tend to have very long

“We find that advisors who operate in the independent channel form stronger and deeper relationships with their clients.

They tend to have very long lifespans” John Kelleway, iA Securities also witnessed organic growth among advisors in recent years.

Despite this growth, John Kelleway, iA Securities’ SVP and head of national sales, says the firm maintains its commitment to

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lifespans – it is not uncommon to see an advisor work with their client over many years and life events. That’s something that’s unique to the independent side.” iA Securities is looking to become the

leader in creating and preserving wealth for Canadians who work with independent advisors. This vision drives the firm’s goal of providing advisors with the autonomy and flexibility to find solutions that work for their clients. To continue doing this, Kelleway believes iA Securities needs to further align itself with advisors and help them foster lasting relationships with their clients.

“We respect and value advisors and see their importance within the independent channel,” he says. “Our role is to support and enable our advisors to profitably grow their businesses.”

After successfully combining platforms and processes with HollisWealth, iA Securities is evaluating how to move forward by leveraging the best features of both organizations. Kelleway believes this will happen primarily by using technology to enhance efficiency with its business, as well as its advisors’ businesses.

“We have a clean slate right now to improve both the client and advisor experience,” he says. “While the direct relationship is between the advisor and client, we also see a role on our side to help advisors meet the expectations of their clients. We believe technology will provide the greatest leverage in this area.”

One of the key tech enhancements on iA Securities’ new platform revolves around client onboarding – a significant factor in client satisfaction. The firm has invested in a company called Agreement Express to facilitate the onboarding process. iA Securities also has plans to upgrade its online presence.

“We have a number of tools that contribute to the advisor/client experience, and we are currently reviewing all programs and platforms,” Kelleway says. “We see a real opportunity in the independent space to give advisors more tools and are currently assessing what technology solutions will be the most effective.”

For Kelleway, these infrastructure

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IA FINANCIAL GROUP AT A GLANCE

HEADQUARTERS Quebec City

AUM $172 billion

CLIENTS More than 4 million

EMPLOYEES Around 6,500

enhancements are only the beginning. “We also look to assist advisors in many other aspects of the business,” he says, “for example, practice management, succession planning, growth of their team, and finally training and ongoing education.”

That last area is a key service iA Securities provides to advisors. “We have both national and regional conferences that help support the ongoing education and training of our advisors,” Kelleway says. “For example, we recently held our annual national conference, where more than 300 advisors attended in person and approximately 100 via streaming video.”

The firm also focuses on future planning and offers training opportunities throughout the year. “In January, we will host our 13th annual Year Ahead Conference, which helps

advisors with investment ideas for the coming year,” Kelleway says. “We also hold regulator online webinars to train advisors and their staff on different aspects of our desktop tools.”

These are just a few of the benefits iA Securities offers advisors. Kelleway believes that by aligning its vision to be the leader in the independent space with its advisors’ personal goals, iA Securities can offer opportunities that benefit everyone.

“We have tremendous respect for our advisors’ entrepreneurial spirit and mindset, which is that of a business owner,” he says.

“One of the reasons we have a high payout model is that it allows advisors to make investments into their businesses as they see fit.”

Those benefits seem to be paying off – and Kelleway believes the positive experiences iA Securities’ advisors have will help the firm

REPRESENTATIVES 25,000+ Source: iA Financial Group

expand the reach of its story.

“I think we are one of the industry’s bestkept secrets,” he says. “The truth of it is that iA Securities, and iA in general, are not yet well known in our industry. But I believe that’s about to change in the coming months.

I am very excited about the future because iA Securities has grown very quickly and today has a formidable national presence.” iA Securities is a trademark and business name under which Industrial Alliance Securities Inc. operates. Industrial Alliance Securities Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada.

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SPECIAL PROMOTIONAL FEATURE

FIXED INCOME

Ready for retirement?

Kristi Ashcroft of Mackenzie Investments tells WPC how the firm’s income-focused solutions can help those approaching retirement to create cash flow and protect against risk

INVESTORS TEND to have many questions as they approach or enter retirement.

For many, not having the stream of income provided by employment is a scary notion.

That’s why Kristi Ashcroft, VP and senior investment director for fixed income at Mackenzie Investments, feels it’s important for those investors to incorporate incomefocused investments in their portfolios.

“I think there are a couple of reasons why

to those investments for income. The second is their risk tolerance has also changed. The sequence of returns changes, so there needs to be a different approach to financial planning.”

Ashcroft believes advisors aren’t necessarily opposed to embracing these types of solutions; rather, it’s a matter of figuring out how to help investors achieve different or competing investment goals in retirement.

“Some investors are less concerned with

“The fixed-income universe is much larger than just government bonds that people buy to put away. There are some attractive investment opportunities that are hard to access on your own” Kristi Ashcroft, Mackenzie Investments income-focused solutions are important as investors approach or enter retirement,” Ashcroft says. “The major one is that they need to use their investments for living expenses to create a cash-flow stream. Their fundamental needs have changed, and they now need to turn

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running out of capital if they have put together a nice nest egg over the years, but perhaps they want their investments to fund things like education or to leave a legacy to their children and grandchildren,” she explains. “Others with more narrow constraints need that stable

income with the downside protection.

“It is these multiple goals that advisors need to help investors with,” she continues, “and help them define their new investment goals, which include cash flow, growth and redefining their risk tolerance. Advisors need to create a new plan that meets the objectives and goals of investors. I think the biggest thing is that many investors don’t realize is how much risk to dial down.”

Providing downside protection is something that’s crucial for Mackenzie Investments.

“What is really important is the sequence of returns,” Ashcroft says. “Research has been done that shows if a portfolio in retirement suffers a negative return during the withdrawal phase, it severely alters how much can be withdrawn and the overall growth. If there is a negative return suffered, you need a gain of double – or more – to make it up. So there is a risk of becoming asymmetrically exposed to returns with withdrawals exasperated.”

Mackenzie offers a variety of options for investors looking to add income solutions to their portfolios. The company’s full suite of fixed-income solutions includes everything from a core suite to high credit to products on the other end of the spectrum that are more focused on high yields.

“Several of our portfolios integrate funds across the spectrum to generate the yields specific investors want,” Ashcroft says. “There are also different risk profiles. Some of the portfolios combine fixed income and equities if the investor is looking for growth.”

Mackenzie’s funds for yield-oriented investors focus on fixed-income bonds and dividend-paying equities. This is where Mackenzie sees an advantage because it believes managers can allocate to where they see the best opportunity within those yieldoriented classes.

Mackenzie also offers multi-asset solutions, which are more diversified across asset classes and geographical areas.

“They don’t limit themselves to just income-oriented investments – they are

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diversified portfolios with a disciplined, targeted risk profile that an investor can choose with confidence to tolerate the risk and use the returns to cover their cash-flow needs,” Ashcroft says.

The strategies between Mackenzie’s solutions vary. Some are limited to incomegenerating assets while being opportunistic and tactical in terms of where the best opportunities lie. In managed assets and ETF portfolios, the strategies create diversified multi-asset portfolios with a targeted risk profile, allowing investors to use the returns to cover cash-flow needs while putting the rest towards growth.

Managing risk and downside protection are other key elements. Depending on the solutions, Mackenzie looks at different ways to do this in portfolios.

“There isn’t necessarily a downside protection mechanism,” Ashcroft says. “For the Traditional Income Balanced group, it is basically selecting the winners and avoiding downside risk through securities selection and being opportunistic. The downside protection in managed assets isn’t explicit, but is more targeted and disciplined in a risk profile that matches the investor’s tolerance. The Monthly Income Portfolios have downside protection through a call or option strategy to mitigate downside risk from the equity side that is embedded in those portfolios.”

The common thread among Mackenzie’s income solutions is active management. In that regard, Ashcroft believes investors are looking for a few things.

“Investors typically want someone making decisions to outperform the market, but retired investors are more focused on the risk management aspect,” she says. “Being able to react to market conditions or news of a company or sector and steering the portfolio in a way that’s going to protect the investor from that downside risk is what is looked for from active management. That’s what’s attractive about active management for income-oriented investors, because as much as active creates

attractive yield in the portfolio, the other critical need is downside risk management.”

So far, Mackenzie’s approach toward its income-focused solutions is working – many of the funds have performed well recently.

“Our balanced and multi-asset funds are some of Mackenzie’s best performers with many four- and five-star Morningstar ratings,” Ashcroft says. “They take advantage of many aspects of Mackenzie’s expertise, from our fixed-income team to our top equity managers in the dividend equity space and asset allocation.”

Having a multitude of income-focused strategies is something Ashcroft sees as incredibly important today, considering the many options investors have.

“There is a broad array of fixed-income assets or bond investments that aren’t necessarily available for you to buy in a one-off,” she says. “The fixed-income universe is much larger than just government bonds that people buy to put away. There are some attractive investment opportunities that are hard to access on your own – another reason to look for an active manager in this space.

“People are worried about rising rates and traditional bonds,” she adds, “but there is an opportunity to build portfolios that can weather different high-interest-rate environments and even benefit from rising rates. You can add floating-rate securities to a fixedincome portfolio and benefit from rising rates.”

Ashcroft also points out that the current bond market is not what it was in the past.

“A generation ago, people could have bought Government of Canada bonds at 8%, and that coupon itself would be their income,” she says.

“The problem is, that isn’t available anymore – it just doesn’t exist.”

That’s why Ashcroft sees a benefit for retiring investors to add income-focused portfolios like these to their strategy.

“There are lots of things the Mackenzie fixed-income team and an active manager can do to tap into huge opportunities that ultimately lead to better outcomes for retired investors,” she says. “There is a huge universe of bonds with different risk profiles. A skilled manager can build a portfolio and tap into the broad array of bonds and deliver what income-oriented investors need.”

www.wealthprofessional.ca

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19/10/2018 10:37:51 AM

WOMEN IN WEALTH MANAGEMENT AWARDS 2O18 FINALISTS

Wednesday, November 21, 2018 The Beanfield Centre Toronto Wealth Professional Canada received a remarkable number of nominations from all over the nation in our quest to find the most outstanding women in wealth management – and now it’s time to reveal the finalists for the 2018 Women in Wealth Management Awards.

Together with our publisher and event organizer, Key Media International, and event partner, Mackenzie Investments, WPC would like to thank our readers for your support in the pursuit of excellence and in making wealth management a more rewarding and empowering field for women.

Want to be there as the lucky winners receive their awards? Join more than 200 industry players at the Women in Wealth Management Awards cocktail reception on Wednesday, November 21 at The Beanfield Centre Toronto (during the evening of the Women in Wealth Management Summit).

Don’t miss out! Book your ticket today at women.wealthprofessional.ca/awards or contact us at events@keymedia.com

#WPWomeninWealth 50

www.wealthprofessional.ca

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BROUGHT TO YOU BY

THE MACKENZIE INVESTMENTS AWARD FOR

WOMAN INNOVATOR OF THE YEAR

YOUNG GUN OF THE YEAR

yy Chantal McNeily

yy Ashley Currin

Sun Life Financial

yy Donna Bristow Broadridge Financial Solutions

yy Jennifer Schell CIBC Wood Gundy

yy Julia Chung Spring Financial Planning

yy Rona Birenbaum Viviplan

yy Shannon Lee Simmons The New School of Finance

yy Tea Nicola WealthBar

Evans Wealth Management Team (Richardson GMP)

yy Dian Chaaban RBC Dominion Securities

yy Emily Ben-Haim Gluskin Sheff

yy Erika Toth BMO Global Asset Management

yy Filomena May Raymond James

yy Janea Dieno Brightrock Financial

yy Laura Money Coutts Financial Services

yy Laura Tutte

Integrated Wealth Planning (TD Wealth)

FEMALE EXECUTIVE OF THE YEAR yy Alison Fletcher Mandeville Private Client yy Catherine Dorazio Connor, Clark & Lunn Private Capital yy Catherine Milum Manulife Investments yy Cheryl Munro The Great-West Life Assurance Company yy Christine Hanlon Owens MacFadyen Group yy Lisa Catherwood BMO Global Asset Management yy Lise Dupont National Bank Financial Wealth Management yy Michelle Masson MD Financial Management yy Tammy Cash Horizons ETFs yy Tea Nicola WealthBar

www.wealthprofessional.ca

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19/10/2018 10:42:44 AM

WOMEN IN WEALTH MANAGEMENT AWARDS 2O18 FINALISTS

WOMEN-LED ADVISORY TEAM OF THE YEAR

EXCELLENCE IN PHILANTHROPY & CSR

ETF CHAMPION OF THE YEAR

yy Alexandra Horwood & Partners

yy Bonnie Lyn de Bartok

yy Pat Dunwoody

Richardson GMP

yy Castlemark Wealth Management yy DFS Private Wealth Mandeville Private Client

yy Giesbrecht Snyder Team Harbourfront Wealth Management

yy Kingsford & Associates BMO Nesbitt Burns

yy Marbach Wealth Management

MacCormick

yy Michelle HastickCowell Mandeville Private Client

yy Pat Weir Lawton Partners

yy Sandra Macenko Merkley ScotiaMcLeod

Canadian ETF Association

yy Duran Guest Horizons ETFs

yy Mary Hagerman Desjardins Securities

yy Atsuko (Annie) Hiraoka Cougar Global Investments

yy Erika Toth BMO ETFs

yy Susan O’Brien BMO Nesbitt Burns

yy Tracey McGrath Richardson GMP

National Bank Financial Wealth Management

yy Remy Brown Investment Group CIBC Wood Gundy

yy The Susan O’Brien Group BMO Nesbitt Burns

yy The Susan Stobart Team Lawton Partners

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www.wealthprofessional.ca

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BROUGHT TO YOU BY

MARKETING & COMMUNICATIONS TEAM OF YEAR

The winners of the 2018 Women in Wealth Management Awards will be selected by our esteemed panel of judges:

yy GLC Asset Management Group yy Horizons ETFs yy Mandeville Private Client yy Spring Financial Planning yy WealthBar

Julie Martini

Katie Walmsley

VP, public affairs and marketing Advocis

President Portfolio Management Association of Canada

Paulette Filion

Judy Paradi

Partner, StrategyMarketing.ca Financial services industry expert and speaker

Partner, StrategyMarketing.ca Lecturer on entrepreneurship, University of Toronto

Don’t miss out! Book your ticket today at women.wealthprofessional.ca/awards or contact us at events@keymedia.com

www.wealthprofessional.ca

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19/10/2018 10:43:00 AM

PEOPLE

CAREER PATH

THE HARD WAY

Elie Nour always chooses the more difficult of two paths – but doing so has brought him great success The eldest son of a small businessman, Nour came to Montreal from Lebanon to study economics at McGill University, enticed by the school’s campus and its international profile “Everyone had high expectations of me; I had to be a good role model. I applied to four schools and got into all four – but I was drawn to McGill’s reputation”

2000

COMES TO CANADA

2005

SETS HIS SIGHTS ON BERKSHIRE

2006

BEATS HIS BENCHMARKS

After a year as an associate, Nour got his licence and immediately began crushing his targets “All I could control was the amount of effort I put in. I set targets and blew them out of the water. I outperformed all the associates hired in 2006, and then I outperformed the advisors from 2007. By 2008, I had passed all advisors in the office. Then I reached the top 100 list for the company nationwide”

2013

RELOCATES TO ONTARIO Joined by 16 of his fellow Montreal-based advisors and associates, Nour relocated to Oakville, Ontario, and launched Nour Private Wealth, converting to a fee-based platform the same year “I recognized the opportunity in Ontario – it was a risk, but risk is the price you pay for opportunity.

Once we moved, it stopped being about me and became about the team”

Post-university, Nour fielded several job offers but remained laser-focused on Berkshire, due to the impression it made on him at a campus job fair. A chance meeting with a friend on the street provided Nour with an ‘in’ that led to his first professional position “He had disappeared for about 10 months, and he told me it was because he had joined Berkshire – and was now getting a Porsche!

He got me an interview”

2009

SHINES IN A CRISIS The global financial crisis served Nour well, as his cautious approach shielded his clients – and then led to referrals for more clients “When things went bad on the market, my clients were protected. During our meetings, they would ask me how much their portfolio had dropped and would be pleasantly surprised at how defensive it was. Shortly after that, my assets under management and my revenue exploded”

2015

STARTS STRONG

2017

PREPARES TO LAUNCH

In typical style, Nour decided to take the tougher road, making plans to relaunch Nour Private Wealth as an independent firm “I wanted to create a company that is truly independent, a company that gives clients and advisors a completely new experience from what is out there. In an industry where everyone is either competing on reducing fees or chasing clients of high net worth, we focused on creating added value” 54

Nour’s first few years at the helm of Nour Private Wealth were wildly successful: The firm was named New Practice of the Year at the Wealth Professional Awards; the following year, AUM passed $575 million

“Nothing good comes easily; success is not a straight line – it is the result of hard work, persistence, discipline, rejections, sacrifices, criticism, doubts, failures, and many early mornings and late nights”

www.wealthprofessional.ca

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19/10/2018 10:38:59 AM

AN

NIVERSARY

E T SX

TH

21

st ON

CELEBRATING 21 YEARS ON THE TSX • MINT is an actively managed fund (TSX symbol: MID.UN) •

Diversified portfolio of publicly-listed income-producing securities: Equities, Fixed Income and REITs

•

Provides a high level of monthly distributions representing $0.48 per annum and the opportunity for capital appreciation

•

Since inception in 1997 through to June 30, 2018; total distributions of $18.05 have been paid to unitholders

(L to R) JEREMY BRASSEUR, Managing Director, Corporate Finance, NANCY THAM, Managing Director, Sales and Marketing, DEAN ORRICO, President and Chief Investment Officer, ROB LAUZON, Managing Director and Deputy Chief Investment Officer, VINCE GRECO, Managing Director, Trading and Portfolio Manager, DENNIS da SILVA, Managing Director and Senior Portfolio Manger, Resource Group and MICHAEL BURY, Managing Director, Sales and Marketing and Portiolio Manager

CALGARY

812 Memorial Drive NW Calgary, Alberta T2N 3C8

TORONTO

First Canadian Place 58th Floor, P.O. Box 192 Toronto, Ontario M5X 1A6

LONDON

288 Bishopsgate London, England EC2M 4QP

SAN FRANCISCO

One Embarcadero Center Suite 500 San Francisco, California, USA 94111

For more information, call toll-free 1.888.890.1868 www.middlefield.com You will usually pay brokerage fees to your dealer if you purchase or sell units/shares of investment funds on the Toronto Stock Exchange or other alternative Canadian trading system (an “Exchange”). If the units/shares are purchased or sold on an Exchange, investors may pay more than the current net asset value when buying and may receive less than the current net asset value when selling them. There are ongoing fees and expenses associated with owning units or shares of an investment fund. An investment fund must prepare disclosure documents that contain key information about the fund.

You can find more detailed information about the fund in these documents. Investment funds are not guaranteed, their values change frequently and past performance may not be repeated.

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19/10/2018 10:39:07 AM

PEOPLE

OTHER LIFE

TELL US ABOUT YOUR OTHER LIFE Email wealthprofessional@kmimedia.ca

Richards trains every single day of the year, except for Christmas Day

21:04 Richards’ best time on the 15km course

100

Length (in miles) of Richards’ longest race

1st

Richards’ overall place in the local Interclub series in 2016

ALONG FOR THE RIDE Advisor Keith Richards has found his perfect competitive outlet in cycling time trials, which he calls “the race of truth” KEITH RICHARDS has been riding bikes competitively for decades – the Barriebased founder of ValueTrends was an early adopter of mountain bike racing – but it took him a while to discover time trials. “I got tired of hurting myself on a mountain bike and switched to road racing,” Richards says, “and found I was good at time trials.”

56

Naturally competitive, Richards was drawn by the challenge and the fact that the sport plays to his independent spirit.

Plus, he says, the absence of tactics in time trials has the advantage of turning the focus very clearly on becoming faster. “You can win a road race by sucking wheel, if that’s your strategy,” he says. “That can’t

happen in time trialling.”

While cycling provides Richards with an outlet for the stresses of work, the nature of time trials also ties in with the exactitude he brings to his professional life.

“I can obsess over the parameters I need to meet to reach a goal – which now is to do the 15km in less than 21 minutes.”

www.wealthprofessional.ca

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19/10/2018 10:39:34 AM

S&P DJI can weigh all the factors Factors add new variables into the investing mix and require focused insight, robust data, and transparent methodologies. Investors count on S&P Dow Jones Indices as a market leader for all things factors, and to express their views with straightforward single-factor indices as well as the most complex multi-factor strategies.

indexology®rethink factors spdji.com/indexology Copyright © 2018 S&P Dow Jones Indices LLC. All rights reserved. S&P ® and Indexology ® are registered trademarks of Standard & Poor’s Financial Services LLC. Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. It is not possible to invest directly in an index. S&P Dow Jones Indices receives compensation for licensing its indices to third parties. S&P Dow Jones Indices LLC does not make investment recommendations and does not endorse, sponsor, promote or sell any investment product or fund based on its indices.

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19/10/2018 10:39:49 AM

STEADY AS SHE GROWS. M O R N I N G S TA R C A N A D A

Mackenzie Strategic Income Fund Mackenzie Monthly Income Conservative Portfolio

M O R N I N G S TA R C A N A D A

Mackenzie Income Fund Each fund is designed around fixed income investments that aim for consistent, reliable returns, and high quality equities that target capital growth.

That’s diversification for better outcomes.

For a better outcome, talk to your Mackenzie Sales Representative today.

ETFs

|

MUTUAL FUNDS

|

PRIVATE WEALTH POOLS

|

MANAGED ASSETS

Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing.

The indicated rates of return are the historical annual compounded total returns as of September 30, 2018 including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution, or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Morningstar Star Ratings reflect performance of Series F as of September 30, 2018 and are subject to change monthly. The ratings are an objective, quantitative measure of a fund’s historical risk-adjusted performance relative to other funds in its category.

Only funds with at least a three-year track record are considered. The overall star rating for a fund is a weighted combination calculated from a fund’s 3, 5, and 10-year returns, as available, measured against the 91-day treasury bill and peer group returns. A fund can only be rated if there are a sufficient number of funds in its peer group to allow comparison for at least three years. If a fund scores in the top 10% of its fund category, it gets 5 stars; if it falls in the next 22.5%, it receives 4 stars; a place in the middle 35% earns a fund 3 stars; those in the next 22.5% receive 2 stars; and the lowest 10% receive 1 star. For more details on the calculation of Morningstar Star Ratings, see www.morningstar.ca. Quartile rankings and peers beaten are calculated by Mackenzie Investments based on the fund series-level data Morningstar provides. The CIFSC categories, Star Ratings, number of funds in each category, and annual compounded performance for the standard periods are: Mackenzie Strategic Income Fund Series F, Canadian Neutral Balanced category: 1 year - n/a stars 5.4%, 3 years - 5 stars (538 funds) 8.0%, 5 years - 4 stars (436 funds) 7.0%, 10 years - 5 stars (155 funds) 8.0%. Mackenzie Monthly Income Conservative Portfolio Series F, Global Fixed Income Balanced category: 1 year - n/a stars 4.4%, 3 years - 5 stars (332 funds) 5.8%. Mackenzie Income Fund Series F, Canadian Fixed Income Balanced category: 1 year - n/a stars 3.8%, 3 years - 4 stars (434 funds) 4.9%, 5 years - 5 stars (345 funds) 5.7%, 10 years - 4 stars (136 funds) 5.6%.

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