Wealth Professional 3.05

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ASSANTE’S AMBITION BEATING THE BANKS AT A NEW GAME

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HOT LIST 2015

ADVISORS AND EXECUTIVES LEADING THE CHARGE


COVER STORY / TOP 50 ADVISORS

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ISSUE 3.O5

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CONTENTS

COVER STORY

THE HOT LIST

facebook.com/WealthProfessional Canada

UPFRONT

HOT LIST 2015

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plus.google.com/+WealthprofessionalCa

04 Editorial

Robo-advisors gain strength

06 Head to head

A Quebec organization speaks out against CRM2

08 Statistics

What oil price forecasts mean for the future of the Canadian economy

10 News analysis

PEOPLE

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ADVISOR PROFILE

At Mandeville Private Client, advisor Gene Kim hopes to democratize wealth by giving average Canadians access to private equity

12 Intelligence

This month’s big movers, shakers and new funds

14 Funds update

Manulife markets to the ‘mass affluent’

16 Alternative market update

Dundee Corporation sets up Canada’s first SPAC

18 Opinion

Get to know the advisors and executives who are setting the Canadian wealth management industry on fire

Why all clients should consider digital assets during estate planning

PEOPLE

PEOPLE

INDUSTRY ICON

47 Career path

John Webster leads Queensbury Securities Group with a commitment to lifelong learning

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Assante president Steven Donald explains how the advisory firm is embracing industry change

48 Other life

Advisor Richard Van Liempt keeps Vancouver’s waterways safe

FEATURES

44

AGREE TO DISAGREE

The best leaders don’t avoid disagreements – they simply know how to argue diplomatically

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Fintech is poised to be the next big thing for advisory firms looking for acquisitions

WEALTHPROFESSIONAL.CA CHECK IT OUT ONLINE


IA CLARINGTON STRATEGIC INCOME FUND

Because income isn’t the only desired outcome. With interest rates at historic lows and volatile equity markets, many are struggling to secure stable, reliable income while minimizing risk and still growing capital. As portfolio manager of the IA Clarington Strategic Income Fund, Dan Bastasic has a track record for finding income and growth with an emphasis on protecting capital. The Fund: Uses non-traditional asset classes in pursuit of income & capital gains

as flexibility in H asset allocation to find the right mix for income and growth.

Aims to provide capital protection for your clients’ investments.

Talk to your IA Clarington representative, or go to www.iaclarington.com/whynow

For advisor use 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.


UPFRONT

EDITORIAL

A new era is dawning

W

hat a year it’s been so far. Markets have held up, but interest rates are at rock-bottom levels. The regulatory change is coming at a rapid pace. Shifts in the industry seem more intense than ever. The just announced deal between major Canadian financial services player Power Financial Corp. and brand new robo-advisor Wealthsimple suggests that a new era is dawning. If there is a recent industry deal that stands out, this is it. Many WP readers have commented on the rise of robo-advisors here in Canada. The

Established advisors who adopt these technologies and let computers do the work of portfolio construction and maintenance may find they have more time to offer actual advice to clients climb up for those technology-enabled firms has been a major source of apprehension among some advisors. And now one of the biggest players in the Canadian mutual fund and wealth management industries has added to the discussion. Does this move validate advisor fears that they will someday be cut out of the equation? Perhaps not. Established advisors who adopt these technologies and let computers do the work of portfolio construction and maintenance may find they have more time to offer actual advice to clients. The advisor can spend more time prospecting for new clients as well. The entire practice becomes more manageable. That, at least, is one take on the robo-advisor trend, although questions also have been raised about what effect that phenomenon will have on young advisors looking to build their books with the same sort of clients well-suited to robo-advisors. The Wealth Professional team

wealthprofessional.ca ISSUE 3.05 EDITORIAL Editorial Director Vernon Clement Jones Senior Writer Jeff Sanford Writers Will Ashworth Jordan Maxwell Donald Horne Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Alan Wainer Alexandra Tselios Crowe Soberman

ART & PRODUCTION Design Manager Daniel Williams Designers Kat Vargas Joenel Salvador Production Manager Alicia Salvati Traffic Manager Kay Valdez

SALES & MARKETING National Accounts Manager Dane Taylor Associate Publisher Trevor Biggs General Manager, Sales John Mackenzie Marketing and Communications Claudine Ting Project Coordinator Jessica Duce

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

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IA CLARINGTON GLOBAL TACTICAL INCOME FUND

Because sometimes you need to get away. Currency volatility, interest rates, oil prices, uncertain growth. They’re all good reasons to diversify globally. The widely respected investment manager Loomis, Sayles & Company brings its distinctive style and strengths to the IA Clarington Global Tactical Income Fund: No constraints – just their best ideas.

Fixed-income used to seek stability and alpha.

Four portfolio managers with over 110 years combined experience.

Talk to your IA Clarington representative, or go to www.iaclarington.com/whynow

For advisor use 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.


UPFRONT

HEAD TO HEAD

Are advisors justified in continuing to fight CRM2? The Professional Association of Financial Services Advisors says it will fight full implementation of CRM2 – but should it?

Paul Shelestowsky

Dan Hallett

Wealth advisor Meridian Credit Union

Wealth advisor Highview Financial

The goal of CRM2 is greater transparency, for the investor to have a better understanding of the investment and fees and, if the advisor embraces CRM2 in a positive and pro-active manner, then the result can only be a better relationship between advisor and client. I would agree, however, that the regulations need to be applied to the entire investment industry, at this point, segregated funds (that insurance industry equivalent of mutual funds, but generally with higher MERs/fees than traditional mutual funds) are not subject to CRM2.

Those who want a voice at the table need simply to watch online for proposed rules and spend the time to write thoughtful submissions to regulators during the comment periods. The industry batted down Ontario initiatives to regulate financial planning in 2001 and to ban commissions in 2004, to cite just two examples. Justifiably, some regulators are under the impression that the industry responds with an automatic ‘no’ to every proposed rule. That approach worked for a while. Now the industry will be forced to show clients what they should have been showing them 15 years ago.

Ryan Colwell

Wealth advisor IPC Investment Corporation It is hard to evaluate someone’s biases when you do not fully understand their incentives. I believe CRM2 will put pressure on the advisor community as well as on the mutual fund companies to find ways to lower their fees. Transparency and lower fees are great for clients. So far, the vast majority have felt the amount is fair, and some are even surprised by how little I earn. I think those advisors who deal in the high-net-worth market will have the biggest pushback.

PAFSA’S TAKE ON CRM2 New financial regulations are rarely introduced without some customary eye-rolling by industry associations. However, the reaction of Quebec’s leading association of independent advisors might be setting a new standard for industry backlash. Recently, Professional Association of Financial Services Advisors [PAFSA] spokesman Flavio Vani made a bold statement about the organization’s attitude toward the full implementation of CRM2, saying, “I am disgusted with the new regulations; we were never consulted – the regulators crushed us like a steamroller. We are currently investigating how to stop CRM2.”

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UPFRONT

IA CLARINGTON FLOATING RATE INCOME FUND

Because income is playing hard to get. Senior loans can help you find that income. They have minimal interest-rate sensitivity and for over 20 years they’ve provided a relatively stable yield. Floating rate funds focus on senior loans, and while they’re somewhat new to Canadians, Jeff Sujitno has 15 years’ experience with this asset class. As portfolio manager of the IA Clarington Floating Rate Income Fund, he aims to provide: A stable, more predictable income stream.

Protection against interest-rate risk.

Careful evaluation of credit risk.

Talk to your IA Clarington representative, or go to www.iaclarington.com/whynow

For advisor use 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 www.wealthprofessional.ca Industrial Alliance Insurance and Financial Services Inc. and are used under license.

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UPFRONT

STATISTICS

The oil question

OIL PRICE PER BARREL

$150

What happens to the price of the world’s most important energy source in the next couple years will determine whether the economy recovers or idles AS THE price of oil declines, oil-dependent economies such as Alberta have suffered. The price of homes is no longer rising. Government officials warn an austere budget is on the way. Global demand for oil has withered. The CEO of BP has said the low prices could be with us for a couple of years. The Saudis have pledged that they won’t allow the price of oil to rise

above $100 a barrel. On the other hand, oil producers like economically starved Libya and Venezuela are hungry for a price hike. One suggestion is oil’s price recovery will be ‘V-shaped’ rather than ‘U-shaped.’ But that may be anyone’s guess – and meanwhile, the fortunes of Canadian advisors in key Western markets are hanging on the outcome.

$120 $90 $60 $30

$147

$103

Record high price for crude oil, July 11, 2008

World Bank estimate of price of crude oil in 2025

$96.57

Natural Resources Canada average of surveyed estimates, 2025

$90

$0

Long-term price per barrel, according to Royal Dutch Shell CEO Ben van Beurden

1994

THE AMAZING TURNAROUND IN AMERICAN PRODUCTION

GLOBAL PRODUCTION OUTPACING DEMAND

The amount of petroleum being produced in America has rebounded since 2005. The remarkable boom in fracked shale has seen American oil production reverse long-term declines

Millions of barrels per day

1996

1998

The high price of oil allowed a boom in production of expensive and unconventional sources of crude oil – which has caused the price of oil to crash as supply is surges ahead of demand WORLD LIQUID FUELS PRODUCTION AND CONSUMPTION BALANCE World consumption World production

100

90

5.1 million

barrels per day American production at start of 2005

9.1 million

barrels per day American production in 2015 Source: Energy Information Assocation [EIA]

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80 2010

2011

2012

2013

2014

2015

2016 Source: EIA


SHALE BUBBLE? In America, some question the sustainability of the shale boom. What happens to that sector when the hedges the shale drillers have been relying on to generate cash run out is anyone’s guess. The EIA assumes the shale boom will continue, but others suggest the boom will be short-lived and production has peaked.

2000

2002

2004

2006

2008

2010

CROSSING HUBBERT’S PEAK?

2012

2014 2015

THE WORLD’S BIGGEST PRODUCERS

In 1956, geophysicist Marion King Hubbert went public with his controversial ‘flow-based’ method for estimating future crude oil availability while predicting 150 years of increasing production. But now many think 95 million barrels a day could be the peak

Saudi Arabian officials claimed in the early 2000s that the country would be producing up to 15 million barrels a day by 2015, but this prediction has not come to pass. Russia has taken the lead globally in terms of crude production. Will Iran rapidly increase production if a nuclear deal is signed and American sanctions are dropped?

TOTAL GLOBAL PRODUCTION Millions of barrels per day 100

Russia

80

10,590,000

Saudi Arabia 9,693,200

60

US China Canada Iraq Iran

40 20 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: EIA

9,020,000 4,372,000 3,856,000 3,800,000 3,518,000 0

6,000,000

12,000,000

Source: Canadian Association of Petroleum Producers

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UPFRONT

NEWS ANALYSIS

The Fintech boom Does the just-announced deal between Power Financial Corp. and upstart Wealthsimple mark a coming wave of M&A in Canada’s burgeoning ‘Fintech’ sector? Arguably IT’S A small deal, just $10 million. But it says much about the future of the wealth management industry in this country. In April, major Canadian wealth management player Power Financial Corp. announced it is investing $10 million in small roboadvisor Wealthsimple. Power has an option to invest another $20 million over the next 12 months. But while the money and assets involved weren’t large – Wealthsimple has only signed up about 1,000 clients since its launch in September – one could almost feel the wealth management ground shift and quake. It was less than a year ago that Silicon Valley transplant Michael Katchen

Valley to build the company. The gamble is paying off: Wealthsimple is now in bed with one of the biggest players in the Canadian wealth management space. Power Financial Corp. owns Canada’s largest non-bank mutual fund/advisory network, Investors Group, as well as Mackenzie group of funds and the large advisory network Investors Planning Counsel, all of which make Power the largest non-bank player in the Canadian wealth management industry. It seems Power execs felt they needed to jump into the new financial technology (aka ‘Fintech’) boom that companies like Wealthsimple are a part of.

“This is a very, very hot topic. ... Banks, global insurance companies, payments companies … everyone is looking at this” Adam Nanjee, MaRS Fintech cluster launched this country’s first robo-advisor, Wealthsimple. Canadian-born Katchen saw a niche in the market of his home country. “I was surprised how high money management fees were in Canada,” Katchen told WP at the time. His idea: offer tech-enhanced advisor-like services at low costs similar to the robo-advisors that have popped up in the US over the last couple of years. Katchen moved his team from Silicon

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There is, according to the evangelists, a revolution occurring in Fintech. An amazing new array of small start-ups offering services like peer-to-peer payments, cryptocurrencies, fund aggregation technologies, and robo-advisors have popped up, threatening to “disintermediate” established players. Last year investment in Fintech start-ups tripled to $6.8 billion from $2.2 billion. The fourth quarter of 2014 was the

busiest time in the sector’s history, with 214 deals globally. Global investments in Fintech are set to grow to $46 billion by 2020. In Toronto, the MaRS Discovery District has welcomed, a Fintech cluster; Wealthsimple was a founding member. “Peer-to-peer payments, digital payments, crypto-currencies … There are a substantial number of companies across all the verticals in this space,” says Adam Nanjee, the head of the cluster. “This is a very, very hot topic. There is just a lot of interest in this. Banks, global insurance companies, payments companies … everyone is looking at this.” But some banking executives are looking at this boom with trepidation, and with good reason. Michael Kitces is a pubisher and partner in a US-based wealth management firm who has written on robo-advisors. He dismisses the notion, promulgated in much of the media, that this story is an “advisory versus robo-advisor” one. According to


FINTECH FORECAST

Kitces, the rise of the robo-advisor will benefit the average advisor. As Kitces explains, an existing local advisory practice could use robo-advisors to manufacture their own index funds. An advisor wouldn’t have to buy a fund through an intermediary manufacturer. Advisors will be able to buy and hold the

threaten are established industry players that offer custodial and back-office services. If a local financial advisory shop can do its own custodial work and portfolio construction, who needs the head office? No wonder bank executives are starting to sweat. Within a couple of weeks of the

“Simply put, there is a massive shift underway as robo-advisors become roboadvisor-tools-for-advisors” Michael Kitces, Pinnacle Advisory Group individual stocks that make up an index fund. This would allow advisors to do tax loss harvesting on all the stocks in an index fund, helping clients save money. “This is indexing 2.0,” Kitces says. The companies these technologies

announcement of the Wealthsimple/Power deal, new RBC CEO David McKay, speaking at the company’s annual meeting, expressed worry about the rise of the Fintech sector. He warned that the development of the Fintech sector could see Canada’s financial

Could there be more deals in the Fintech space in the months ahead? It wouldn’t be a surprise. Within about a month and half of the launch of Wealthsimple, another half-dozen roboadvisors popped up, among them WealthBar and Nest Wealth. There has been a flurry of deals in the United States around robo-advisors and companies like Vanguard and NorthWestern. The CEO of major Canadian advisor network Assante, Steven Donald, recently suggested that company will develop a robo-advisor in house. Trend watchers say others will follow: “I’ve been predicting this in the US, and it is beginning to take shape,” says Michael Kitces. “Simply put, there is a massive shift underway as roboadvisors become robo-advisor-tools-for-advisors. I wrote that this would be the hot trend for 2015 back in January before a single one of these deals had happened. But it’s certainly gaining momentum now.” In April, Canada’s Big Six banks announced the formation of a consortium to counter the upcoming launch of Apple Pay in November. Apple Pay allows consumers to use their iPhones to make transactions, effectively cutting the banks out of the payment chain. The banks seem worried. According to the Wall Street Journal, RBC CEO Dave McKay recently gave a speech in New York in which he said, “The last thing anybody wants is to have someone between you and your customer, and that’s what we now have in the payments space. We are on a collision course with the Googles and the Apples of the world.” system “disrupted” and “undermined.” He went on to suggest the new companies needed to be regulated. McKay complained that the new start-ups threaten to take over important traditional banking business lines like payments and back-office processes. He also expressed concern that, as technology firms entering the financial services space, these companies aren’t subject to the same regulation as banks. His worries seem to be shared through the industry – new TD CEO Bharat Masrani recently made similar comments around the same time.

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

FUNDS COMMENTS

CPPIB/Permira

Informatica

Pension fund in partnership with private equity firm purchases the data storage company for $5.3 billion

Desjardins Insurance

N/A

Desjardins launches its new Ajusto app for smartphones that eliminates the need to install a device in the vehicle

Hub Financial

Cortex Financial

Acquisition broadens Hub Financial’s footprint in Canada while expanding its reach with financial advisors and insurance brokers

Longview Solutions

Arcplan

Two leading providers of corporate performance management and tax provisioning software merge

Manulife Financial

DBS Bank

Entered into a 15-year regional distribution agreement that combines DBS' superior Asian banking franchise with Manulife's insurance experience.

National Bank of Canada

NSIA Participations

National Bank purchases 21% of African financial services company for $116 million

National General Holdings

Assigned Risk Solutions

New York-based insurer purchases Kingsway Financial Services subsidiary for $47 million in cash and potential future earned payouts

Tricon Capital Group

N/A

Tricon purchases 1,400 single-family rental homes in North Carolina, South Carolina and Texas for approximately $150 million

Horizons ETFs closes two funds

ETF provider Horizons ETFs has announced the termination of two exchange-traded funds from its lineup of products. The funds in question are the Horizons BetaPro S&P/TSX Global Base Metals Bull Plus ETF and Horizons BetaPro S&P/TSX Global Base Metals Bear Plus ETF. With less than $5 million in assets under management, Horizons says the funds no longer fit into the company’s long range plans. The termination was effective March 13, 2015.

Robo-advisor consolidation continues

Northwestern Mutual, the second-largest life insurance company in the US, has purchased the web-based advice platform LearnVest for an undisclosed amount (although sources put the price tag higher than the April 2014 valuation of $250 million). The acquisition provides Northwestern with a financial planning platform to roll out to its 16,000 agents and 4.2 million clients. LearnVest also brings to the table younger clients that life insurers just can’t seem to attract. With financial planning becoming vital to retirement success, this purchase is expected to set off an M&A blitz of robo-advisors.

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NEI Investments seeks a wider mandate

Environmentally conscious investment manager NEI Investments has proposed that it expand the investment objective of two of its Canadian mutual funds to allow both the NEI Select Canadian Growth Portfolio and NEI Select Canadian Balanced Portfolio the ability to invest 100% of their property in foreign securities. With assets under management of more than $6 billion, the push to invest globally has become a priority.


PEOPLE Investors Group merges two funds

Winnipeg firm Investors Group has proposed the merger of its iProfile Money Market Pool, Series I into the Investors Canadian Money Market Class (currently known as Investors Managed Yield Class), Series I (continuing Class). By merging a smaller fund into the bigger one, Investors Group expects to save on mutual fund expenses as well as provide better efficiencies in portfolio management.

Bridgehouse hedges its bets

Bridgehouse Asset Managers has introduced currency-hedged classes on the Brandes Global Equity Fund, Brandes US Equity Fund and Lazard Global Equity Income Fund. The investment solution is intended to provide Canadian investors with the global expertise of Brandes Investment Partners and Lazard Asset Management while minimizing the currency fluctuations. In addition, the Brandes Emerging Markets Equity Fund has been renamed the Brandes Emerging Markets Value Fund.

Mackenzie narrows its focus

Mackenzie Investments has proposed narrowing the investment objective for its North American Mid Cap Fund, subject to investor approval. The change would allow it to transition from a North American equity fund to a Canadian equity fund; US stocks will no longer be a large part of the fund’s investment strategy. If approved, the fund would be renamed Mid Cap Canada Fund.

NAME

COMPANY

COMMENTS

John Bartkiw

Fengate Capital Management

Fengate appointed the 25-year veteran of the real estate industry to be managing director of its real estate team

Kathryn Chisholm

Alberta Securities Commission

Senior vice-president of legal and external relations at Capital Power appointed to three-year term as a new commission member

Dr. Micheál J. Kelly

Economical Insurance

Dean of the School of Business and Economics at Wilfrid Laurier University appointed as a director of the Waterloobased property and casualty insurer

Eric Lochner

Achievers Corporation

As the company’s new CEO, Lochner will guide Achievers’ efforts to help global companies, including Bank of Montreal and Manulife, increase employee engagement

Louis Morisset

Canadian Securities Administrators

CEO of Autorité des marchés financiers appointed new chair for a two-year term

Samir Pandiri

CIBC Mellon

Appointed chair of CIBC Mellon’s board of directors; currently serves as executive vice president and CEO of Asset Servicing for BNY Mellon

Neil Petroff

Ontario Teachers’ Pension Plan

Chief investment officer of the pension fund announced retirement after 22 years with OTPP

Tim Skelly/ Jonathan Rotem

Sarbit Advisory Services

The sub-advisor to IA Clarington promoted both men to associate portfolio manager positions with the firm

McIntyre rejoins Dundee after two years

Dundee Corporation appointed Richard McIntyre as executive vice president and a key member of the executive team responsible for building Dundee’s new wealth management business. Dundee Global Investment Management will be greatly aided by McIntyre’s experience in the financial services, including his most recent position heading up Scotiabank’s Canadian wealth management solutions, as well as an earlier five-year stint with Dundee, which ended in early 2013 when McIntyre moved over to BNS. The veteran wealth manager will be based out of Dundee’s Toronto office.

Canaccord chair Kassie takes CEO role

Canaccord Genuity has appointed Chairman David Kassie as its CEO after the passing of Paul Reynolds. Kassie was CEO of Genuity Capital Markets until it was acquired by Canaccord Financial in 2010. Prior to Genuity, Kassie held senior executive roles with both CIBC and CIBC World Markets. With extensive experience in capital markets, Kassie’s appointment allows Canaccord Genuity to continue capably serving its clients around the world. Kassie will work closely with the board’s corporate governance committee in the succession planning process.

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UPFRONT

FUNDS UPDATE NEWS BRIEFS ETF market reports stellar first quarter The sales of exchange-traded funds bloomed in the first three months of 2015. As advisors continue to shift their practices toward fee-only practices, these low-priced products are selling well. Total inflows into the sector in Canada in the first quarter of 2015 were an impressive $4.6 billion, compared to $1.07 billion in the first quarter of 2014. Globally, ETFs gathered $97.2 billion over the first quarter of 2015 – triple the amount of inflows in the first quarter 2014.

Government doubles down on tax-free savings The federal government delivered a welcome gift to the wealth management industry in the April federal budget when it doubled the amount Canadians can contribute to a tax-free savings account. Contribution limits will increase to $1,100, up from $550. Critics have complained that this move will starve the government of needed tax revenue in the years to come, but for the wealth management industry this is manna from heaven. It is expected the vast majority of the funds going into TFSAs will flow in through advisor-managed accounts.

IFIC releases model reports to help with CRM2 implementation

The Investment Funds Institute of Canada (IFIC) to the rescue! Advisors worried about getting compliant on CRM2 can dial down the anxiety a bit. The Investment Funds Institute of Canada [IFIC] has just released two model reports – one for investment performance, the other on charges and other compensation paid to

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dealers/advisors – to help the advisors meet the requirements of Phase 3 of CRM2. “For most investors, these two reports will mark a sea change in the way information about their investments is presented, said IFIC president and CEO Joanne De Laurentiis. “IFIC’s model reports are designed to meet both the letter and the spirit of the rules.”

Two new private client businesses launched A Canadian credit union has become the first in the country to integrate a private wealth service into its offering. Vancouver Island’s largest financial services organization, Coastal Community Credit Union, announced the launch of an advisory firm for the high-net-worth market. Torontobased High Rock Capital Management also announced the launch of a new private client division for individuals, households and small institutions. High Rock already manages $200 million through four closed-end funds on behalf of Scotia Managed Companies Administration.

Sun Life and Power Shares launch new products

Sun Life Global Investments has launched three new corporate-class mutual funds for retail investors, which will be delivered by Franklin Templeton, Invesco Canada and Bridgehouse. PowerShares Canada also has announced it is listing three new ‘smart beta’ ETFs. Smart beta funds go beyond simple cap-weighted index measures to assess the true economic size of each company. These ETFs will use four fundamental measures – five-year average sales, cash flow, dividends, current book value – to ‘reweight’ the indexes.

Defining the mass affluent Manulife’s pooled funds are designed to serve those slightly wealthier than the average investor The pursuit of the high-net-wealth client is the obsession of many advisors. But there is another group of clients that Manulife targets with so-called pooled funds. Rather than buying single units of a mutual fund, investors in pooled funds see their money aggregated with other investors into one large amount. The money is invested as a group, and the savings are passed back to investors. These products are perfect for targeting those with slightly more assets to invest than the typical client, according to Manulife executives. Manulife segments its client base into four categories. Those with assets under $100k are directed by advisors into standard mutual funds. Mid-market clients are those with $100k-$500k and are directed toward the Elite Series of Manulife Mutual Funds. Clients with assets over $1 million are directed to the Manulife Private Wealth division. But it is the mass affluent – those with $500,000 to $1 million in assets – who invest through Manulife Private Investment Pools, or MPIPs. The benefits of these funds are varied. Fees are lower than typical mutual funds, so they address client concerns about high cost. The products also offer a higher level of client reporting. There is more in-depth commentary from portfolio managers. The funds are tax-efficient, as money from one family can be invested across different pools. Investors get a dedicated call center line as well as access to institutional-style mandates. According Griffin Gettas, product manager for MPIPs and alternatives at Manulife, the


mass affluent is the second fastest-growing market segment, at a rate of 6%. To service this sector, Manulife has added a new US-invested fund. The latest pool is ‘inspired’ by the Manulife US Monthly High Income Fund. It will offer investments in US equity and fixed income. The Monthly High Income Fund returned almost 11% in its first year (2014). If the US

“The US stock market has been strong, generating substantial cumulative returns since the lows of the financial crisis” economy continues to recover, the pooled fund clone should offer similar returns. “The U.S. stock market has been strong, generating substantial cumulative returns since the lows of the financial crisis,” says Justin Heldsinger, product manager of retail markets at Manulife. “Today, the US remains poised for growth – strong company fundamentals, positive economic trends and favorable monetary policy make investing in US equities a compelling opportunity.” Heldsinger also notes that the US bond market offers diversification in terms of credit type and sector. “Many investors tend to be overexposed to the Canadian bond market through Canadian mutual funds. Adding a US component would provide significant diversification.”

Q&A

Hilliard Macbeth Advisor Richardson GMP

Age 65 Years in the industry 36 Career highlight Helping clients get through the dot-com bubble in 1999 unscathed Other achievements Also a speaker and author (his most recent book is When the Bubble Bursts: Surviving the Canadian Real Estate Crash)

Portfolio manager takes on debt levels You suggest that housing prices could fall by half. Why? All bubbles correct all the way back to the trend line. If home prices went up at the rate inflation, as has been the case for decades, house prices would be on the trend line. But that hasn’t happened. Home prices have been increasing faster than the rate of inflation for a long time. How did I determine a 40% or 50% drop? That’s what it would take to get us back the trend line. Canada is now double the trend line. Other countries like Germany, Japan and the US have already reverted back to the rate of inflation. Canada has yet to do so.

The US has already de-leveraged? Yes. In the US, the de-leveraging has already happened. Prior to 1993 or 1996, the ratio of debt to income never went above 100. But after the mid-1990s, that ratio started to inflate. In the United States, the ratio of debt to income went all the way up to 130 at the top of the housing bubble. The ratio has since gone back to 110 in a very short period. That’s still high by historical standards. But the problem is that we’re at 163 in Canada. And we have to go back to 110, at least. There is no way people can pay back that much money by increasing their monthly payments. In the United States, there were a significant number of defaults and foreclosures. That’s the only reason prices came back to trend.

Are we facing a debt-based recession? The elephant in the room is the debt. In the last 10 years, household debt has doubled. Consumer debt outstanding has gone from $1 trillion in Canada to $1.8 trillion. That’s an 80% increase in 10 years. There is a required de-leveraging coming. And unfortunately for the economy, this could be quite serious. We’ve been experiencing 10% annual increases in outstanding debt for years. The latest numbers show that slowing to 5%. So the rate is dropping. I could see that going to zero. The problem with zero debt growth is that, for an economy based on consumer spending, this will mean a slowdown. I’m amazed when people use the term ‘prudent’ when talking about Canadian banking regulations … because someone allowed, or encouraged, the banks to go from $1 trillion to $1.8 trillion in just a couple years. I personally don’t believe the word ‘prudent’ should be attached to that. Whenever debt goes up that rapidly, a financial crisis follows. We in Canada are probably facing a severe recession.

The reaction to your book has been … interesting. I probably shouldn’t read the comments online … the vitriol is quite amazing.

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UPFRONT

ALTERNATIVE MARKET UPDATE

Dundee pioneers new alt investment Hometown hero floats first of a new entity in Canada

take part get their money back with interest. Target companies are mid-market ones between $200-800 million in enterprise value. Companies with owners looking to execute a succession plan will be welcomed – for example, where the owner is not an operator but wants to transfer to people running the company. “There is large inter-generational

“For a company that wants to move from private to public so they have the currency of a public listing, this is the way to do it

Independent wealth management player Dundee Corporation has just launched a new investment product – one the company hopes will make it a leader in the burgeoning alternative market. “It’s like a small private equity fund,” says Dundee chair David Goodman about the new Special Purpose Acquisition Company, or SPAC. “But you don’t have to keep your money in the fund for five years. There is no two and 20 fee structure … no management fee. And you can vote on the deals.”

NEWS BRIEFS

Many investors have balked at the rigorous terms and big fees attached to more traditional alternative investments. Some private equity offerings have been opaque. Not so with the SPAC. The new vehicle, offered through new subsidiary Dundee Acquisition Ltd., will see Goodman put in $4 million of his own cash to run the company. The cash from unitholders will be placed in escrow and invested in T-bills. Dundee then has two years to find a deal – a so-called qualifying transaction. Once a deal is found, a vote is held. Those who don’t want to

Toronto’s Arrow Capital launches new fund

Well-known hedge fund manager Arrow Capital Management has announced a new balanced fund. The Exemplar Growth and Income Fund will offer investors strategic asset allocation through investments in equity and fixed income. As a hedge fund the managers will deploy various hedging techniques to provide capital protection. The fund is designed to address the key challenges investors face in this era of radically low interest rates: income, growth and safety of capital.

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transfer of wealth taking place,” Goodman says. “For a company that wants to move from private to public so they have the currency of public listing, this is the way to do it.” Rules on listing SPACs have been in place for more than six years on the TSX, and the companies have been popular in the US. Still, there hadn’t been one floated in Canada until Dundee. The deal is also a bit of a coming out for Goodman, who took the chairmanship of the company from his father this past summer. “it is a bit of a return to asset management. We’re a money manager. Our goal is to enter the alternative asset management sector with this. And this is an elegant structure for doing that. We are proud to have launched the first SPAC in Canada.”

Regs loosened around exempt market

The CSA has announced a new round of changes for Canada’s exempt marketplace, set to take effect May 5, 2015. The amendments to National Instrument 45-106 include an overhaul of prospectus exemptions – most significantly, a version of the friends, family and business associates exemption in Ontario. There is also a new exemption aimed at assetbacked commercial paper. Still to come: new rules around crowdfunding proposals and revamped reporting requirements for exempt distributions.


Q&A

Senia Rapisarda Principal HarbourVest

Years in the industry 20 Career highlight Investing in a tiny Israeli company sold later to eBay at spectacular valuation and opening Harbour Vest​‘s Toronto office Community highlight Founding the London Business School Private Equity Institute and supporting some of the top accelerators in Canada, such as Founder Fuel and Growlab & Extreme Startups (now HighLine)

Global private equity firm lands in Toronto HarbourVest is set to open up a new Toronto office. Principal Senia Rapisarda provides insight on the venture Why open a new office in Toronto now? Canada has always been on our radar. Today, we see a lot of activity in Canada both on private equity and in the venture space. Quite a few US venture firms are coming north. We made this decision two years ago. But the price of oil is low. The Canadian dollar is low. That helps.

What sectors are you looking at? Technology is a bit more the flavor of the day today. And there are some very quality tech companies in Canada. The tech cluster in the Kitchener-Waterloo area is particularly hot. That’s creating quite a stir. We noticed this over the last four years. The problem at Blackberry was in the management. It wasn’t the engineers. There has also been a change of attitude in the country. There is a more entrepreneurial attitude. There has been a mental shift … it’s a bit of that Vancouver Olympic attitude of ‘owning the podium.’ Entrepreneurship is a career of choice, and that’s fantastic. The talent is also loyal in Canada. The amount of churn in terms of employee turnover is a disaster in the United States. We’ve now seen that there was basically a cartel between the large groups in Palo Alto. Canada can also attract excellent talent

TMX Group launches TSX Private Markets

TMX Group has launched TSX Private Markets, a new business focused on supporting capital raising and secondary trading in Canada’s exempt market. Companies and investors will have access to exempt market capital raising for public and private companies (both domestic and international), secondary trading of exempt market securities (including debt and equity), facilitation of public company private placements, and secondary trading of public company ‘hold period’ securities issued pursuant to a private placement.

through immigration … there are fewer barriers on that here than in the US.

What other opportunities do you see? Mobility, security. We see some opportunities in infrastructure, energy and agriculture. That has not been touched by venture groups. There are some interesting agriculture plays in Alberta and Saskatchewan, as well as in Guelph. There are some fabulous technologies around water- and drought-resistant crops. These are technologies that deal with the up-and-coming pain points in human society. Making crops more resistant, water filtration – these are going to be important in the years ahead. And Canada is at the forefront of that. This is a very up-and-coming industry sector.

Any word on products? It is too early to talk about a specific fund. But as investors of choice, HarbourVest can raise the bar in this sector in Canada. One message we would like to get out is that we need to re-engage investors in the venture sector. In the past, the performance wasn’t there. And there will only be interest if there is performance. This is our mission.

Brookfield to split stock threefor-two

Canada’s largest and oldest alternative asset manager, Brookfield Asset Management, has announced a threefor-two stock split. The split will happen by way of a stock dividend that will give shareholders half of a Brookfield Class A Share for each Class A and Class B Share held. Brookfield is undertaking the split to ensure its shares remain accessible to individual shareholders; it will not dilute shareholders’ equity. Since the company is ascribing no monetary value to the dividend, it will not be taxable in Canada or the US.

Survey finds alternative market growing

The market for alternative investments is growing, according to a new survey by eVestment. Alternative assets under administration in 2014 came in at $6.9 trillion, up 16.8% from the same period a year ago. Hedge funds still hold the bulk of these assets, almost three times more than any other sector, but private equity and real estate funds are growing fastest. The funds flowing into those sectors rose 23.7%, hitting $1.58 trillion. Assets in hedge funds advanced 15.5% to $4.22 trillion. Hedge funds-of-funds assets grew 11.9% to $902 billion.

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UPFRONT

OPINION

A will for your Facebook page? Estate planning for your digital assets – it’s a thing, writes audit and advisory specialist Alan Wainer

*Performance for the three year period ending March 31, 2015. The inception date of the fund was November 13, 2007. †Morningstar Canadian Fixed Income Balanced Category. The indicated rates of return are the historical annual compounded total returns for the Class A units 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 a security holder that would have reduced returns. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The information presented is accurate at the time of first printing, and is subject to change without notice. Management fees for Class A and Class F units are outlined in the Fund Facts and the Simplified Prospectus. Please read the Fund Facts or the Renaissance Investments Simplified Prospectus before investing. Mutual funds are not guaranteed, their values may change frequently and past performance may not be repeated. ®Renaissance Investments is offered by, and is a registered 18 www.wealthprofessional.ca trademark of CIBC Asset Management Inc.

AS MORE and more of our lives are conducted online, a discussion on estate planning for digital assets has become a subject of debate. The topic of digital assets and digital estate planning is an important one, and yet it’s one that is rarely addressed. At a recent client and spouse meeting, we were discussing wills and estate planning. Due to the loss of a family member years before, the couple was well-versed on the importance of proper estate planning. Our discussions led us to planning not only for their tangible assets, but for digital ones as well. Like many others, this couple had the majority of their financial and personal information online. Here in 2015, digital assets are not just something kids worry about anymore. Research shows that even the older generations, particularly Baby Boomers, are spending more time online than ever before. Banking, video streaming, sharing photos online and posting to social media sites have become immensely popular pastimes. Much of the record of a life now is online. It is no wonder some clients want to preserve this history.

Knowing my clients, I knew that covering the topic of digital estate planning was important. I was able to leave them with a comprehensive document that outlined the meaning of digital assets and determined what was to be done with the online assets at death. This is important: You may have more digital assets than you know. Typical digital assets include social

“As it stands right now, your digital legacy is at risk of extinction. Our society is creating and storing digital content without much thought to its longevity”


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networking accounts (such as Facebook, LinkedIn, Twitter, etc.), websites, online account information from other websites and programs, videos (e.g. YouTube), photos, email and webmail, financial documents (such as banking, investment and utilities statements), online businesses (such as eBay, Etsy, Amazon etc.), and personal documents. Turns out, the average person has a lot of this stuff today. A 2013 Digital Assets survey released by McAfee found that globally, the average person is storing over $35,000 worth of assets on their digital device. What is to be done with this stuff when you pass? We’re entering a time when it’s essential to consider the digital assets of the deceased. As it stands right now, your digital legacy is at risk of extinction. Our society is creating and storing digital content without much thought to its longevity. Your estate executor should take into account some key considerations when dealing with your digital assets. In order to safeguard your digital assets, a plan to handle these assets should be mandatory. Clients should appoint a digital executor to manage their online presence after death. For example, do you want your Facebook or LinkedIn account closed or left open as a lasting memorial of your life? Consider the following four steps when making a plan for digital assets: 1. List all of your digital assets, including user names, account numbers and passwords. Store your list of passwords separately from the account names to ensure that no link can be made in the event that the lists are stolen. Ask yourself what would be of value if your computer were lost or stolen? 2. Outline comprehensive directions on how you would like your digital assets to be managed post-mortem. Draft a specific clause in your will to give your

executor the power to access, handle, distribute and dispose of your assets. Provide information on how to access and control your online accounts to facilitate the administration of this aspect of your estate. 3. Choose a digital executor. Where applicable, you could have a number of executors for your will. You may choose to have one person for your financial assets, one for your business assets and one for your intangible or digital assets. 4.Safeguard your information. Programs such as PasswordBox and My Vault act as a digital safety deposit box and allow you to safeguard your private data as well as manage your digital assets. You also can use these to store copies of important documents such as your will, power of attorney and birth certificate. As more people spend more time online, the need for such clauses in a will are going to increase. To this point, the law hasn’t yet caught up to the advances in technology, especially in this area. But we live in a digital age, and our online presence continues to grow. It is imperative to consider digital assets. Think about what you might want preserved after you are gone. If you took all that time to preserve those family photos online, shouldn’t you take the time to make sure they last into the future and that the generations to follow can access those photos?

Toronto-based Alan Wainer has more than 30 years’ experience servicing a wide range of clients and industries: manufacturers and distributors, real estate development, property management, health care, investment companies, lawyers, architects and engineers.

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PEOPLE

INDUSTRY ICON

ASSANTE’S CORE AMBITION Assante president Steven Donald runs one of Canada’s premier advisor networks. As CRM2 comes into force, can the country’s high-flying independent out maneuver the big banks? Not a problem, he says

ON A MID-WEEK work day, construction cranes swing back and forth over a brand new thicket of towers in downtown Toronto. An area once home to parking lots has been turned into the new South Core financial district. Blue-chip brands such as Telus, Sun Life Financial, Royal Bank of Canada, and Maple Leaf Sports and Entertainment are moving in and relocating thousands of employees here. One of the earliest tenants was CI Financial and its affiliated advisor network, Assante. The firm has moved its administration offices, advisor support teams, a private wealth office and a whole bunch of fancy IT here. Welcoming a visitor to the new offices, Assante’s president Steven Donald explains that this is where you have to be today if you want to attract the talent of today’s generation – the dismal, grey box out in the suburbs doesn’t cut it if you want to attract that young talent. “You have to be here now,” Donald says. “You have to be downtown. “We’re at the centre of the transportation networks, the GO network and the TTC. We’re a hundred metres from Union Station. It’s been fantastic for us.” Walking into the company’s offices at 15 York Street, the appeal is obvious. It’s like walking into a design magazine. The walls are art-gallery white, hung with chic modern art. It’s cool, but it’s also practical.

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Embracing change

Company beginnings

Today, tech is becoming the way in which companies differentiate themselves from the competition. “Having leading edge technology is becoming the minimum standard,” Donald says. To avoid a data disaster, CI has built both protection and resilience into its digital systems. There are back-up generators on the roof. Another data facility

It was way back in 1965 that the Universal Savings Canadian Equity Fund was launched. That company, which became CI, pioneered early product innovations. As Canadians moved their savings from GICS and into equity-based mutual funds over the last several decades, CI and the other Canadian independents had the market to themselves.

“You have to be downtown. We’re at the centre of transportation networks, the GO network and the TTC. We’re a hundred metres from Union Station. It’s been fantastic for us” is located three kilometres away on a different grid. There is also a new system of secure communication portals. The days of email are, apparently, over. “It’s not secure. It’s like a postcard in the mail. Anyone can flip it over and read it,” Donald says. These are the types of investments that firms have to make to stay on the cutting edge of an industry as hyper-competitive as the modern mutual fund industry has become.

But eventually, big banks realized they were missing out. They developed fund management firms and advisor networks, and gained a majority market share. But CI managed to hang on and evolve into one of the industry’s independent premium brands. While mutual fund managers at the big banks learn to be safe and steady and turn in non-volatile, consistent results, CI competed on performance, going aggressively after high-net-worth types.


PROFILE Name: Steven Donald Company: Assante Wealth Management Title: President Age: 50 Years in the industry: 20 Career focus: Leading a team to help Assante advisors and the firm achieve unprecedented growth. Charity: Some 20 years of service to the Canadian Cancer Society: “Cancer touches everyone and it has been great to see the incredible progress we are making toward beating it.

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PEOPLE

INDUSTRY ICON STEVEN DONALD’S CAREER TIMELINE

Born and raised in Vancouver

The result is in the numbers: the company cconsistently came out on top in WP’s recent ‘Advisors on Fund Providers’ survey. “There’s always room for an independent,” Donald says with commendable restraint. What has helped the combined CI/ Assante organization stand out among the independents is the company’s decision to

up as CRM2 approaches. Some question whether the traditional mutual fund model will be as successful after that dawning. “Our industry has always been changing,” Donald says, pointing to the company’s forward thinking on the new transparency regulations. “We said to ourselves, this is going to come.”

“We think there is increasing demand for advisors as a result of demographics. I’m biased, [but] I think we have the most professional group of employees and advisors” develop an advisor network through which to distribute the firm’s mutual funds. “That was hugely successful. I’ve always been a supporter of the integrated model,” Donald says. “Bill Holland and McPhail are visionary. They saw the shifts in the tides. They recognized early on that the game was changing. They saw distribution was going to be critical. And they went out and formed Assante.” As a result, the company has prospered amongst the competition. Today, CI is the country’s second-largest publicly traded mutual fund company. Thirteen hundred employees generate a market cap of $9.99 billion. Total assets are a record $140.6 billion. AUM grew another $13.9 billion or 14.6% over the last year.

CRM2 preparation But another era in the industry is opening

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Recognizing that allowed Assante to formulate an approach, Donald says. The company is encouraging advisors to upgrade their skills. “Those who are doubly licensed as advisors and insurance consultants deliver value,” he says. Assante also has developed and promoted strategies advisors can use to help clients, such as promoting savings discipline and tax efficiency. The company is also considering launching a so-called ‘robo-advisor’ as a way of helping advisors. But there is also opportunity in this new world dawning. “We think there is increasing demand for advisors as a result of demographics,” Donald says. “There is also a lower supply of good advisors as a result of attrition. I’m biased, [but] I think we have the most professional group of employees and advisors. We’re ahead of this. We’re ready.”

Attends UBC before moving to Toronto

Serves as VP of finance for SHL Systemhouse Co.

Becomes TITLE at Ernst & Young

Moves to Synergy Asset Management, where he serves as CFO

Synergy is acquired by CI Financial; Donald becomes senior VP and CFO at Assante

Becomes president of Assante

Moves the company’s offices to 15 York Street, part of the South Core Financial District


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FEATURES

COVER STORY: HOT LIST

HOT LIST 2015

Meet the advisors and executives taking the Canadian wealth management industry into the future NEW TRANSPARENCY regulations, shifting compensation models, mergers and acquisitions – the volatility and change in the industry are unrelenting and greater than ever before. As the next phase of CRM2 comes into play, the Canadian wealth management industry will work through even more of that kind of upheaval. In anticipation, we’re seeing companies jostle for position this year. Who’s going to come out on top? You’ll find a couple clues on this year’s Hot List, a look at just some of the industry stars shaping its agenda. Each has won a place on Wealth Professional’s second-annual list by capturing headlines in 2014/15 and leading their organizations to greater heights. As a group, they embody the excellence that characterizes Canadian wealth management.

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At IA Clarington, we believe that investing has changed. Shifting investor demand and unprecedented access to information and products have created new challenges and new opportunities. We believe that the best results for investors will be achieved by being invested – not just in the markets, but in distinctive and outcomebased product solutions, and in active, trusting relationships with advisors. We market a wide range of investments to individual investors through their advisors, including actively managed mutual funds, portfolio solutions, socially responsible investments and target date funds. IA Clarington manages more than $15 billion in assets (as at March 31, 2015) and is a wholly owned subsidiary of Industrial Alliance Insurance and Financial Services, Canada’s fourth largest life and health insurance company.


Randy Ambrosie 3Macs The board of Canada’s oldest wealth management firm brought former AGF head and CFL star Randy Ambrosie onboard to develop and update the firm for the latest century. This past year, 3Macs signed a key deal with Fidelity to handle back-end services. The company also bought up a select few advisor teams, including socially responsible investment firm Castellum Wealth Management. More than 160 years after 3Macs got its start in Montreal, Ambrosie’s next big move could be heading west toward his home turf, Winnipeg, as well as Alberta and BC.

Steve Meehan Evolution Advisors

Victor Dodig CIBC It seemed every global bank talked up their wealth management division this year. With traditional banking lines like consumer lending and capital markets operations sputtering, global banking execs seemed to hit on wealth management as the new bright spot. But CIBC seemed to embrace the trend like no other. When former CEO Gerry McCaughey announced he was stepping down, Bay Street was shocked when Victor Dodig was named the new CEO. There had been rumours the bank would be the first of the Big Five in more than 100 years to go outside for a new leader, but if the bank did recruit internally, it was assumed David Williamson, the head of the bank’s core retail banking unit (responsible for 70% of earnings), would be crowned. So when CIBC tapped Dodig, it signalled a coming of age for the Canadian wealth management sector.

In his last go-around in the wealth management industry, Meehan co-founded the massive advisor network, Investment Planning Counsel [IPC]. As CEO of that firm, Meehan grew the organization from two small offices with approximately 30 advisors to a fully integrated wealth management organization with $18 billion in assets under administration. Meehan sold IPC to Power Financial through an acquisition by Investors Group. He stayed on until 2010, but eventually left the industry. On the sidelines for a couple years because of a non-compete, he spent his time racing NASCAR. But now, Meehan is back and raring to go. He’s heading up Evolution, a firm financing the acquisition of the books of business of retiring advisors as a way of passing them to younger hands. Given that the average age of the advisor is well into middle age, it seems Meehan is set to take another victory lap.

David Goodman Dundee Corp. Back in 2011, Dundee Corp. sold its advisor network, DundeeWealth, to Scotiabank for a hefty $2.3 billion. Since then, a non-compete clause has kept Dundee out of the wealth management industry. Over the past year, the firm’s patriarch, Ned Goodman, moved out of the way to let his eldest son, David, take the top spot at Dundee. DundeeWealth has been rebranded HollisWealth, and the non-compete clauses have run out. Rumour on the street is that David is getting ready to take the family firm back into wealth management with a new private group focused on alternative products, land and agriculture investments. Would the return of this historic name to the sector be the biggest story in Canadian wealth management in the year to come? Absolutely.

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FEATURES

COVER STORY: HOT LIST Bhim Asdhir Excel Funds Management Excel specializes in emerging markets – the company has a fund specifically devoted to investing in India that blew the lights out last year (up more than 60%). Better yet, as one of the sponsors of superstar Indian Prime Minister Narenda Modi’s April visit to Canada, Asdhir was there for his rapturous appearance at the Ricoh Coliseum in Toronto. He wasn’t alone – thousands of an increasingly influential and affluent branch of the Indian diaspora were also in attendance.

Pierre Lapointe Jarislowsky Fraser Is there a brand name more respected in the modern Canadian wealth management industry than Jarislowsky Fraser? Arguably, no. The 90-something Stephen Jarislowsky is this country’s most heralded wealth manager. He got his start in post-war Montreal after fleeing the Nazis, and he’s been managing the money of many of the city’s most well-heeled patrons since. Now the firm is evolving into a new era, giving average Canadians access to a series of mutual funds that represent the firm’s first foray into the broad retail market. A thirty-year veteran of the firm, Lapointe has immersed himself in the culture that’s made Jarislowsky Fraser so successful. In 2012, he was named chairman of the executive committee, a role that will make him key to the firm’s coming growth strategy.

David McKay Royal Bank of Canada Not many saw it coming. The new CEO of the country’s largest bank had only been in the job since August. But in January, David McKay made his first big deal. Reflecting new emphasis on wealth management, RBC announced it was buying City National, a Los Angeles-based ‘celebrity’ wealth management firm for about US$5.4 billion. It is the biggest US acquisition ever by a Canadian bank. The head of City National will become head of RBC’s US wealth management division, and one of this country’s most conservative banks will take over a wealth management firm favoured by Hollywood royalty. It doesn’t get any more exciting than this in the Canadian wealth management space.

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Joe Canavan Entrepreneur Name any innovation in the Canadian wealth management industry, and it seems Canavan has been involved. He started (then sold) both Synergy Asset Management and Assante Wealth Management to CI Financial for amazing bundles. The serial entrepreneur then had a hand in Wealthsimple, which just struck a deal with Power Financial. His latest project? Fintech start-up Borrowell, which sees institutional investors offering small retail loans through a high-tech platform.


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FEATURES

COVER STORY: HOT LIST Atul Tiwari Vanguard Investments Canada The battle among ETF providers in Canada is the most contested industry sector today. As advisors continue to shift to a fee-based platform (one estimate suggests 35% of advisors are using, at least in part, the fee-based model), sales of ETFs are skyrocketing. Actually, sales are up over 400% year-overyear, according to March figures. In this hot new sector, the stakes are huge, and the competition fierce. Vanguard is killing it – and managing director Tiwari is one the reason. The former BMO banker seems to have attracted many from his team at the bank.

Jean-Guy Desjardins Fiera Capital Fast-growing Montreal-based asset management firm Fiera Capital continues to expand. In fact, it is very much on a tear. This year, the company announced dividend increase of 8% to $0.13 per share. This follows a dividend jump of 9% announced in August 2014. For the end of 2014, net income was $23.6 million, $0.40 a share, up sharply from $14.6 million, or $0.26 a share, a year ago. Assets under management rose to $86.6 billion, an increase of 12% from 2013. The firm also won $4.2 billion of new mandates both in the institutional and private wealth segments. Most recently, Desjardins was honored with the Award for Professional Excellence from the CFA Institute, the most prestigious distinction bestowed by the organization. Past winners include Warren Buffett, John Bogle, Sir John Marks Templeton and Peter Bernstein.

Thomas Caldwell Caldwell Securities One of Bay Street’s classic personalities, Caldwell has a pedigree that goes back to its bond trading roots of. Caldwell was heard a couple times this year chatting up the still-unknown consequences of the mass move by investors into index products. “I don’t know how, I don’t know when, but I wouldn’t be surprised if that’s where the next market blow-up is,” Caldwell told WP earlier this year. Interestingly, a recent article in the Journal of Finance suggests the mass move to indexing is increasing market vulnerability. There is a reason Caldwell was voted into the IIAC Hall of Fame in 2014.

Brian Peters MD Financial Management Ever wonder how the RRSP came to be? Way back in the late 1950s, the Canadian Medical Association lobbied the federal government to make private pension plan contributions tax-deductible. The argument was that it was only fair that self-employed people had the same opportunity for stable retirement as those in corporate pension plans. Thus, the RRSP was created. Today, Brian Peters leads MD Financial, the discretionary investment management company owned by the Canadian Medical Association. Tasked with providing investment advice to Canadian doctors, the CFP-holder has guided the company to a very healthy position in the industry. According to the summer 2014 edition of the Investor Economics Fee-based Report, MD Financial remains the largest non-bank-owned private investment counsel firm in Canada. Under Peters, it also is also the only non-bank among the top five firms. MD Private Trust was named the fastest-growing firm for estate assets, and it had the largest relative growth of assets under management, seeing an increase of 29.3% for the 12 months that ended June 2014.

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COVER STORY: HOT LIST George Aguiar GP Wealth Industry veteran and GP Wealth CEO George Aguiar had a busy year. The company celebrated the opening of a new headquarters in Mississauga. The 96-year-old former Mayor of Mississauga, Hazel McCallion, showed up at the opening celebration, so you know it was a party. But the company has been expanding, undertaking an aggressive business development and recruitment campaign. GP Wealth has an exclusive arrangement with Evolution Wealth Advisors that is seeing them develop succession plans for advisors hoping to exit the business at retirement. GP is looking for advisors with $40 million to $50 million under management. “We’ve had a lot interest,” Aguiar says. “There are three or four dozen advisors we’re speaking to at this point. We’ll add another 12 advisors. That’s what we’re planning. The average age of an MFDA-licensed advisor is 58. We’re reaching that point. There’s a real opportunity there.”

Kostas Andrikopoulos Nicola Wealth Management

Michael Katchen Wealthsimple After a stint in Silicon Valley, Michael Katchen sold out of a tech start-up, moved his team to Canada and made a big splash by launching robo-advisor Wealthsimple. Some of the big names involved included Rotman bigwig Roger Martin; Eric Kirzner, godfather of indexing theory in Canada; and respected wealth management entrepreneur Joe Canavan. Less than a year after its launch, the company has already announced an investment from Canadian wealth management behemoth Power Financial Corp. It seems the hyper-speed deal-making velocity of Silicon Valley has arrived in the Canadian wealth management industry.

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West Coast-based firm Nicola Wealth Management announced a new campaign to expand eastward this year. The independent financial planning firm has long been a familiar part of the West Coast wealth management scene, having established offices in Vancouver, Kelowna and Richmond, BC. As the firm’s managing director for Eastern Canada, Kostas Andrikopoulos is the general of the invasion of Ontario. The new office at 2 Bloor Street West puts the firm right between the two Ontario money neighborhoods of the Mink Mile and Yorkville. No wonder Nicola Wealth garnered a nomination as a finalist for the Private Business Growth award presented by Grant Thornton and the Canadian Chamber of Commerce.

Chris and Tea Nicola WealthBar Financial Services This year will be remembered for the attack of the roboadvisors. At least a half-dozen such firms popped up within the space of a month last fall. The Canadian hometown player, WealthBar, piloted by son of the founder of wellknown West Coast wealth management firm Nicola Wealth Management, was early out of the gate. Co-founders Chris and Tea Nicola have made it clear that WealthBar is developing an advisor-centric business model. Paper-based advisors who are meeting clients face-to-face for hour-long conferences in suburban offices, be aware – there is a new player in town.


Paul Desmarais, III Power Financial and Power Corporation

Hilliard Macbeth Richardson GMP The experienced and highly regarded advisor created waves in the mortgage industry this year when he published a book predicting a coming crash in the Canadian housing market. According to Macbeth, advisors will be handling a decade-long challenge: Baby Boomer clients who helped their kids buy a house will have to be convinced to resist cashing out stock portfolios to help fund children struggling with stagnant and falling home prices. It’s a provocative but perfectly rational conclusion based on his assessment of consumer debt levels and home price trends – the controversial book is a must-read for advisors.

Prior to his current position as VP at Power, Desmarais was assistant vice president in the risk management group at Great-West Lifeco; he previously worked in project management and corporate strategy at Imerys in France. He began his career in 2004 with Goldman Sachs in the US, in the investment banking and investment strategy groups. In May 2014, Desmarais was named a director of Power Financial holdings, including Great-West Life, Investors Group, Mackenzie, Pargesa, Groupe Bruxelles Lambert and Imerys. As the progeny of the Power founder Paul Desmarais Sr., the younger Desmarais now has the chance to take Canada’s largest non-bank financial company into the future. And it seems Power is getting its mojo back. The company recently announced it is raising its dividend by 6.4% for the first time since 2008. Power also just made an interesting deal with the small start-up Wealthsimple, proving the massive company can still move nimbly. If it’s a fresh, young perspective that Power needs, Desmarais III can provide it. He is also the founder and honourary chairman of Young Canadians in Finance and sits on the board of directors of The Next 36, an organization dedicated to fasttracking the development of Canada’s most talented young innovators.

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COVER STORY: HOT LIST Flavio Vani Professional Association of Financial Services Advisors [PAFSA] New financial regulations always spark some reaction in the industry, and so it is the case with CRM2. Quebec’s leading association of independent advisors, the PAFSA, recently railed against the powers that be when it released a press release stating that it is “… disappointed with the new regulations. We were never consulted, and the regulators crushed us like a steamroller … We want politicians and regulators to join us at a round table to discuss the impact on advisors and on customers.” Anyone who has ever felt the pressure of the big banks owes a tip of the hat to PAFSA head Flavio Vani.

Som Seif Purpose Investments One of this country’s newest fund management companies, Purpose Investments recently announced it has already accumulated $1 billion in assets in just two years. It’s impressive, but perhaps no surprise. Seif was an RBC investment banker in the late 1990s; there, he played a key role in developing the structured products group. Always with his eye on the larger trends, Seif moved on to start the early ETF fund manager Claymore Investment Management. He grew that company to $8 billion in assets before selling it in 2012 to the world’s largest fund manager, BlackRock. Sensing the next big trend, Seif moved on to start Purpose, a company set on democratizing the alternative investment space by offering so-called liquid alt mutual funds. With interest rates at rockbottom levels, many are turning to alternative investments to generate yield – and it seems Seif has put himself at the right place at the right time again.

Tom McCullough Northwood Family Office The family office sector in Canada is expanding smartly. Tom McCullough has helped engineer that evolution, a testament not only to his skill, but also to the profound generational wealth growing in this country. That phenomenon isn’t about to peter out. “The family office often becomes a key trusted advisor in the family network,” McCullough says. When a family joins a multi-family office, they also become part of a ‘buying group’ that gives them access to better (institutionallevel) services.

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Harley Lockhart Quail Ridge Financial A tireless champion of embedded compbased advisors, the former head of Advocis has actually grown his influence as the industry moves toward full CRM2 implementation. In an era when it’s become trendy to attack those who charge through fund fees, Lockhart has been the one out there fighting the battle on chat boards and in the press. He has been diligent in making the very rational argument that, with transparency, it doesn’t matter how fees are charged – if the client can see it, they can make the decision. More so, any ban on embedded comp would cut the vast middle-class from access to an advisor. Preserving choice … what a concept. Let’s hope Lockhart never stops speaking out.

Jeffrey Tory Pembroke Private Wealth Management Pembroke has roots going back to 1929; Tory joined in 1987 after a stint at Burns Fry as a research analyst. Today he is a portfolio manager and manages special situations for the company while acting as chairman. The company runs the GBC, no-load, $100,000 investment minimum family of mutual funds. Privately held, the firm manages investment portfolios and separately managed accounts for Canadian pension funds, foundations, endowments, wealthy families and individuals. This is an exclusive company with impeccable connections. And did we mention Tory is the brother of new Toronto mayor John Tory?


John DeGoey BBSL

Wayne Wachell Genus Capital Management

A well-known, outspoken proponent of fee-based compensation in Canada, DeGoey continued to raise controversy in the industry (and drive embedded compensation-based advisors mad) with his bold pronouncements and predictions. But love him or hate him, DeGoey takes a position and defends it vigorously. He’s also two-time member of WP’s Top 50 Advisors list.

The left coast is the heart and home of this country’s environmental investment community, and Genus, led by Wayne Wachell, is part of that eco-system. The company offers high-net-worth individuals environmentally conscious investments. The firm also has a practice helping aboriginal communities manage their investments. This is enlightened capitalism.

Joanne De Laurentiis Investment Funds Institute of Canada [IFIC] No doubt about it: The big task in the industry this year was the continuing scramble to get ready for CRM2. The time and IT investments to get compliant have been significant. As the head of the IFIC, De Laurentiis was at the center of the storm. To her immense credit, she ably steered the organization through this challenging period. That the implementation of CRM2 continues to unfold smoothly is due largely to the behind-the-scenes work of De Laurentiis and everyone else at IFIC.

Arthur Salzer Northland Wealth Management

Christine Laliberte Insightful Wealth Group HollisWealth Laliberte’s elite team works with affluent individuals and business owners. Her practice has invested heavily in a “fresh, digital brand and video production centered on storytelling.” She is also building community through social media and events. The attempt is to focus on narrative rather than product. Establishing a close relationship is key: “This approach is particularly attractive to our female clients,” says Laliberte, who also identifies consolidation as a big industry trend. To survive, “Advisors need to be open to changing how they run their practice, or they will become irrelevant,” she says.

John Cook Greenchip Financial In the 1990s, John Cook was instrumental in growing BPI Financial from a near start-up to a $6.5 billion asset manager. He was the president of Invesco Canada when AIM/Invesco acquired Trimark Financial. He was also founding president of the MaRS project in Toronto. Now he’s president and CEO of Greenchip Financial, a private equity firm managing a fund increasingly feted for efficient, sustainable, green-based investments.

The idea of an office dedicated solely to managing ‘family money’ is an established industry segment in the US, but not so much here in Canada. But things are changing. Anecdotal evidence out of Calgary suggests the recent decade-long bull market in oil created a whole new pool of ultra-high-net worth individuals. Having a dedicated, standalone address for your family’s wealth management is the new private jet. Northland CEO Arthur Salzer is part of the trend. Last year, the company was crowned Best Canadian Wealth Manager/Wealth Management Offering at the Family Wealth Report’s second annual awards gala at the Mandarin Oriental in New York City.

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COVER STORY: HOT LIST Shafik Hirani Blue Energy Capital Hirani manages a bustling practice in the Alberta oil patch. So when he began prodding clients to cash out their energy holdings, he must have seemed a heretic. Post-oil price crash, Hirani is looking like a genius. “I was laughed at as an Alberta advisor, saying energy will go down when everyone said it’s going to infinity,” he says. “Even my own compliance departments were giving me a hard time.” With Investors Group, he says he feels somewhat vindicated by the crude crash. His outlook is similarly contrarian: “I don’t believe it will be the ‘V’-shaped recovery everyone is suggesting.”

Matthew Robinson W.A. Robinson

Paul Tepsich, Scott Tomenson High Rock Capital Management There are some new kids on the private wealth block. Paul Tepish served as head of Canadian credit trading at Merrill Lynch Canada until his departure in 2008. A portfolio manager at Hesperian Capital Management, he was the lead manager for their two newly formed high-yield funds. The firm’s flagship high-yield fund, The Norrep Yield Fund, was a top performer on a quarterly basis while Tepsich was lead manager. He left Hesperian to form High Rock Capital was formed in 2010. Since then he has teamed up with Scott Tomenson, a 30-year veteran of investment management who began as an institutional fixed-income trader/risk manager. Now co-owners, the pair have been managing about $200 million in institutional money for Scotiabank – ut friends and family kept asking when they were going to manage money for them. Thus, High Rock Private Wealth management was born this April.

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As a young kid, Robinson grew up around the family business, W.A. Robinson Asset Management. His father, Wayne, incorporated the Robinson Group in 1980 on the shores of Sharbot Lake, Ont., and started offering managed mortgage-based investments in 1986. The firm has grown to 30 employees from three. Now, with Boomers headed to retirement, cottages are increasingly becoming first residences, and the pools of rural mortgages the company offers through its subsidiary are set to do well, even in a low-rate environment. After a years-long, successful succession plan, Matthew Robinson took the reins from his father last July.

Nick Fournier Raintree Financial Solutions A recent report from the University of Calgary suggests the burgeoning exempt market could be much larger than thought. Raintree Financial Solutions, led by Nick Fournier, has been working to unlock the potential in the $100 billion market by offering investments in hot market sectors like farmland, retirement communities and REITs. With interest rates where they are, business is likely to continue to boom.

David Christianson Christianson Wealth Advisors National Bank Financial Christianson is a veritable poster boy for this year’s Hot List – he grew his book by 70% this year, and profit was up 100%. He also added a CIM designation and PM license to his resume. Impressive stuff – but then, he’s the kind of advisor who has been CRM2 compliant since 1993.


Carl Mustos IA Clarington Investments Carl Mustos has been with IA Clarington for almost eight years as senior vice president and national sales manager. When the reigning IA Clarington head decamped for CIBC, Mustos moved into the top spot. He has more than 20 years of industry experience, including a wealth of expertise in mutual funds. He also brings a sales-based perspective to the firm, having worked in senior sales positions at Mackenzie Financial and Global Strategy Financial.

Paul Allison Raymond James Allison’s time at the helm of Raymond James’ Canadian operation increasingly speaks for the group’s future. The independent dual US-Canadian firm just acquired ETF provider Cougar Asset Management. The deal will help Raymond James advisors manage the new CRM2 era. Not that the network needs help – in the latest quarter, net revenue grew 6% to hit $1.25 billion on income of $126.3 million. Pre-tax income of $202.9 million also increased 13% over the prior year’s fiscal first quarter, resulting in a pre-tax margin on net revenues of 16.2% for the quarter.

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FEATURES

COVER STORY: HOT LIST Nader Hamid Total Wealth Management Group HollisWealth In this weird world of near-zero interest rates, generating return is tougher than ever. Cutting-edge advisors like Nader Hamid are going beyond the old prescriptions to deliver on the client promise. According to Hamid, the old standby principle that markets are efficient is flawed. Buy and hold is not a strategy, neither is the idea that an investment portfolio should be based in only the three asset classes of cash, fixed income and equity. Total Wealth Management manages funds on a discretionary basis. There are three scenarios for the firm’s holdings: all in during a bullish streak, all out when markets are sliding, and average back in when things look flat. The firm also introduces asset classes outside of the standard three as a way to create a low level of correlation between portfolios and the market.

Elie Nour Manulife Securities Top 50 advisor Elie Nour is an elite performer at Manulife, this offering the quintessential blueprint for moving your practice from one city to the next. From Montreal to Toronto, he brought much of his team with him. He has been splitting his time between the two cities as he makes the move. But he felt he could not pass up the opportunity to tap into the old and deep wealth along the shores of Lake Ontario in that bastion of Ontario wealth, Oakville.

Rob Jones Horizon Partners HollisWealth Jones is one of the HollisWealth’s top investment professionals. A consultant with HollisWealth Insurance Agency, he is also a financial advisor. He has been in the financial services industry for 12 years, focusing on generating stable returns. “My investment focus is on absolute returns rather than trying to outperform the markets,” he says. “I look for stable rates of return year over year, and maintain a plan that clearly identifies my clients’ goals and organizes their estates. The biggest trend is creating value for your clients above and beyond just investing their money. On the investment side alone, I am seeing more and more companies offering products that focus on risk reduction through the use of options, as Baby Boomers today are much less inclined to be fully exposed to the stock markets as they were before the recession.”

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Michael Holden HPC Wealth Management HollisWealth Holden’s journey as a financial advisor began when he joined Great Pacific Management in 1991. He’s now with HollisWealth. Based in Vancouver, and he’s developed a sophisticated discretionary practice that’s on the vanguard of that model’s move upward. “Less than 3% of our industry has achieved this,” Holden says. “We do not believe that a buy-and-hold strategy works for most people, and we feel that a discretionary approach is the only way we can proactively manage client portfolios in a timely manner. The practice also employs a team-based approach, which is another evolved strategy. “Most of us know that two heads are better than one when it comes to planning,” Holden says. “We do not use the typical hierarchical structure for our team. We have a team of eight people. Each person in our team has responsibility for a few specific aspects of our overall business. Our industry is becoming increasingly complex, and one person cannot do it all. We believe that a team of specialists that are all working together to find the best solutions for each client is the best way to achieve this.” That team is just as bullish on social giving, having started its own charitable foundation, providing capital for micro financing through Kiva and, for Christmas last year, helping build a school in Cambodia.


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FEATURES

COVER STORY: HOT LIST Stewart Gavin Gavin Asset Management This burgeoning, sophisticated practice in downtown Toronto has found its niche – multiplying and managing the money of pro athletes. With offices in Tampa, Florida (home base of spring training) and Toronto, Gavin is making all the right hits.

Deb Abbey Responsible Investing Association In the early ’90s, Abbey was the first project director of The David Suzuki Foundation. Since then, she has been a pioneer in the responsible investing industry in Canada, where she created the first investment management firm to focus exclusively on responsible investing. Her company, Real Assets, was eventually acquired by IA Clarington and lives on under the Inhance name. Abbey also co-authored The 50 Best Ethical Stocks for Canadians – 2001 Edition and is the author of Global Profit and Global Justice: Using Your Money to Change the World. In 2014, she led the launch of a certification program for responsible investment advisors and professionals. It offers two designations, which earn advisors CE credits and allow them to demonstrate expertise to increasingly conscientious clients.

Connie Craddock Ontario Securities Commission Investory Advisory Panel Craddock is well-known in the industry for the time she spent at the Investment Industry Regulatory Organization of Canada [IIROC]. But after leaving IIROC, Craddock become chair of eight-member Investor Advisory Panel, working to advise the Ontario Securities Commission on investor protection issues. She hasn’t been shy about speaking out. According to her, the regulator has failed to address “inadequate and outdated regulatory standards” on investing advice. She urges quick action on “fair, independent complaint handling” and binding compensation.

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Greg Pollock Advocis The issue of legitimate use of the term ‘financial advisor’ was continually debated this year when the term was loosely and incorrectly attached to some notorious unlicensed players who showed up in the news. As chairman of the trade group Advocis, Pollock continued to lobby hard this year for the government to make the CFP a recognized legal term. Signs point to some success on this front – when the new Wynne government released its budget, there was some language in that document suggesting the Ontario government is listening to the arguments.

Paul Tyers Wealth Stewards Last June, the OSC issued an order against Wealth Stewards Portfolio Management. The company’s principal, Sushila Lucas, was suspended, along with the registration of the company. This is a relief for the similarly named, Torontobased Wealth Stewards. In a conversation earlier this year, Tyers suggested that “most of the business activity that’s gone on with that company’s been in Alberta.” His company has been aware of Wealth Stewards Portfolio Management since 2008. Back then, it decided not to pursue legal actions because it felt the costs would outweigh the benefits.


WE FOSTER GROWTH. PORTFOLIOS AND OTHERWISE. When people are given the freedom to act, they grow. When people are trusted and supported, they flourish. When people feel deeply responsible and charged with doing the right thing – you got it – they’re happy. And when they’re happy, their clients tend to be too. If a place that embraces the possible and encourages portfolios to grow by encouraging people to grow first sounds interesting, call John Cucchiella in strictest confidence at 647 428 8225. Dundee Goodman Private Wealth is a division of Dundee Securities Ltd. Member CIPF. Dundee Goodman Private Wealth is a trademark of Dundee Corporation, used under license.

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ADVISOR PROFILE

Finding the Canadian Berkshire Gene Kim recently jumped ship from Manulife to Mandeville, effectively enlisting on a crusade led by his mentor that’s focused on democratizing the pursuit of wealth IF YOU think Berkshire Hathaway hasn’t hit Canada yet, think again. Gene Kim has hitched his star to what he thinks will one day be the Canadian equivalent in terms of strength, track record and influence. “Mandeville Private Client is the new Berkshire,” says Kim, president and financial security advisor at Summit Private Wealth. “In terms of differentiation, I think Mandeville is offering a very compelling argument to democratize wealth for Canadians.” In March, Kim left Manulife Securities after more than a decade with the institution to partner with Mandeville as a branch owner. In doing so, a reunion of sorts was effected. “There is a certain sense of nostalgia but also history,” Kim says. “I’ve known [Mandeville head] Michael Lee-Chin for the last 12 years. My first mentor really was Mr. Lee-Chin. I was at Berkshire prior to Manulife’s acquisition, so we have a long history together. We made the pilgrimage down to Omaha in 2005. We were introduced to Warren Buffet and his philosophies – good role models to have.”

But the move to partner with Mandeville isn’t just a sentimental play for the Montreal-based advisor. “We chose Mandeville for a number of reasons,” Kim says. “We find that from a technology perspective, they really have a lot to offer. Whatever makes our lives easier in terms of operational efficiency leaves us more time to take care of our clients.” Mandeville also offered many clientfacing improvements, as well as the infrastructure and platform to support portfolio managers. “It’s a way to reduce costs for clients and ... to add operational efficiencies for advisors,” Kim says. Thanks to the new relationship with Mandeville, Kim is able to offer alternative investment options for clients. “It’s nice to have that as a tool,” he says. “It’s not a tool that existed for us before. None of the other firms are really offering this product line. I think for certain individuals who have an understanding of this type of product, I think it will be very compelling. Some of the biggest deals out there are private equity deals. So it’s just another tool that we have in terms of product line offering.” In trying to democratize wealth for all Canadians, Mandeville and Summit are directing investors down the

“Mandeville is creating a unique solution ... because private equity does have a tendency to be less volatile than public equity ...”

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path blazed by the likes of Warren Buffet and Bill Gates but also the Weston family, as well as pension and endowment funds. “The one thing they have in common is when they invest their money – the so-called institutional or smart money – they invest in a mix of public and private equity, whereas the average retail client, they only have access to public equity,” Kim says. This is where Mandeville hopes to come in and help level the playing field for Canadians. “Mandeville is creating a unique solution for democratizing wealth for people because private equity does have a tendency to be less volatile than public equity – it’s not priced clearly,” Kim says. “Bond markets are going through a difficult time, and when rates go up, they will have a more difficult time. It helps to diversify your portfolio and add more stability.” While many of Kim’s clients are high-net-worth individuals and small to medium-sized enterprises, the process of democratizing wealth allows him to help average Canadians as well. “That rings well in my ear,” he says. “Just like the mutual fund was innovated a couple of decades ago and was new to everybody, but now it’s a household name. I think for private equity and private investing, it’s sort of the same thing. I think it’s at the seedling stage right now, but ultimately 10 years down the road, I’m sure a lot of consumers and retail clients will have it.” While liberalizing access to wealth-generating tools is a national issue, as a branch owner with Mandeville, Kim is focused on La Belle Province. “We’re extremely excited about the opportunity in Quebec,” he says. “Quebec is a market that has a lot of potential to grow. It’s a very different market from Toronto and other metropolitan areas in Canada. It sort of has a unique culture, a unique society.” Given he’s spent his career in Montreal, Kim thinks he is uniquely positioned to understand the subtleties of Quebec and its largest market. “The key thing about Montreal is, economically, it’s not as central a financial market like Toronto,” he said. “But there’s such a large population that’s underserved. People are looking for advice, and sometimes they just don’t know where to find good advice.”

Preparing for change Of course, good advice and how it’s delivered for consumers is top of mind for all advisors now, given the continuing CRM2 rollout. Kim has been already been preparing Summit Wealth for the upcoming changes, locating the company in a

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“When you look at CRM2, the industry is really trying to see what’s right for the Canadian market and what differences they should make, but ultimately we support it because I think it’s the right direction”

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sophisticated building with cutting-edge systems, allowing more to be done electronically. “We’re rolling with the punches really,” he says. “When you look at CRM2, the industry is really trying to see what’s right for the Canadian market and what differences they should make, but ultimately we support it because I think it’s the right direction.” As an embedded compensation advisor, he’s well aware of the importance clients place on an advisor’s honesty, integrity and ethics. “The advisor transitioning from an embedded model to a fee-based model has to take it seriously,” he says. “Whether the client pays an embedded fee, [using] a fee-based portfolio or a managed portfolio [fee], in the end, the client pays fees anyway. As long as the transparency is there for any fee structure, I think it’s fine.” But considering Canada is following the lead of other countries, Kim is hoping the country’s regulators and advisors are paying attention to the history books. “I think the Canadian market has the advantage of looking back and seeing what happened in Australia and in England, what was good about it, what mistakes were made, and maybe learn from those mistakes,” he says. “If you’re a student of that, I think you’ll be fine.” Kim thinks the move toward complete transparency and disclosure will raise the bar in terms of the competencies and core skills required for advisors to succeed. “Whereas before, maybe salesmanship would have been a great asset, I think these core skill sets are very, very important,” he says. “Gone will be the days when anybody really can become an advisor. For advisors who are looking to penetrate this business, they’ll need good mentors who can really provide the guidance and tutelage to show them the ropes. I think that will be more important than ever.” Despite the undisputed changes that CRM2 will bring, the basic tenets of financial advice still stand. “We have a process, and the process starts with listening to what clients’ needs are and really tuning into their language – what are their ambitions and what do they want to accomplish,” he says. “I think by listening, you pull a lot of information; you also get a lot of information from a personal perspective, a more emotional perspective, to make a better assessment of their needs.”

GENE KIM: THE ADVISOR How is your practice set up? It’s an independent and holistic wealth management practice. What kind of clients do you have? We cater to the mass affluent/high net worth, small and medium-sized enterprises, executives, professionals, estates and the like. What do you like about the job? I enjoy the fiduciary responsibility and the ability to provide guidance to clients. They have an enormous amount of trust and confidence in our competencies, and I truly love the personal connections we make by helping them. The idea of building solidity for clients’ plans and executing them with exactitude, using solutions centered on a sound risk management model, brings pleasure. How is your practice managed? With great vigilance, diligence and care. Primordial to us is respecting our clients’ goals and ambitions. What do you think are the industry’s biggest challenges? Embracing change that is good. Humans are creatures of habit, but you have to step outside your box to experience growth. What are your plans for your career? To continue to build a premier independent practice that helps to democratize wealth for as many Canadians as possible. For this to happen, we need to continue working hard, develop great partnerships and have the ability to continually innovate. What are your hopes for the future? I’m very excited about the future of our business. We believe CRM will eventually bring more professionalism to our business. Many complaints are voiced in the industry about how many compliance [requirements] there are and how that affects time and resources, but change is good when financial advice can be a true profession. But it’s his relationship with Lee-Chin and Mandeville that have him the most excited. “We’re creating a premier practice in Montreal, the likes of which aren’t very common,” Kim says. “To have a fully integrated financial services form is a sight that’s rare to see outside of the banks, and we’re not a bank-owned firm. That’s something we’re very, very proud of. I hope more people get to meet with dedicated, seasoned advisors who can bring value to people.”


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FEATURES

LEADERSHIP

How to agree to disagree There’s a myth that disagreements are negative and should be avoided at all costs. However, as business consultant Alexandra Tselios explains, if you avoid them entirely, you may never achieve truly effective business outcomes ONE OF the biggest misconceptions that is detrimental to our society, in my opinion, is that a disagreement has a negative connotation. Too often, I hear people describing a discussion they had at work that was regarded as a disagreement, and they are upset and disillusioned by the event. Quite simply, a healthy team in a company moving forward is going to face disagreements. It is the only way conversations will be effective, outcomes can be achieved, and targets can be met. Beware a leader who avoids conflict, or any sort of disagreement, because the most effective leaders are the ones who are able to agree to disagree diplomatically. Basic leadership communication skills suggest that a productive conversation has the ability to compare perspectives and make a decision. But what happens if a conversation becomes emotional, or worse, an all-out argument? The key is to have the ability to separate yourself and look at the situation from a holistic point of view. How has this conversation derailed? What are all participants trying to achieve? Part of leading effectively is to have the ability to identify strengths in others that you lack, and navigate social nuances. One particular type of person that senior managers often surround themselves with is

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the ‘Yes Man.’ This person consistently pats their manager on the back, never questions any decisions and generally flees when their CEO faces a huge legal dispute or failure. While these Yes Men can be fantastic motivators when the chips are down, their inability to provide an alternate opinion is ultimately their downfall. It’s crucial to feel a sense of team unity and have a defined goal, but it’s equally important for a manager to encourage diplomatic disagreements with effective outcomes, something that’s not possible with a Yes Man. A business is built on its employees, and every staff member is selected for their specialist skill set and experience. A diplomatic leader is one who considers a variety of different perspectives and analyzes this information when making their final decision. Understanding how the delivery of information can impact those around you is crucial to ensuring that a disagreement doesn’t result in a negative blow to productivity. Who wants to deal with a situation where the guy from accounts refuses to speak to the guy from sales, over a conflict that wasn’t even personal? Sometimes you can’t influence office politics, and people won’t always get along, but how that affects a discussion is up to the diplomatic

leader. The crux of disagreeing effectively is ensuring that all participants in a discussion feel as though they have been understood and validated, even if their suggestions aren’t adopted in the resolution.

The art of disagreeing There is a fine art to disagreeing with employees without seeming combative or stubborn, and all too often managers get caught up in the fact that “they know the business better” or “they’ve been in the business longer.” With differing opinions there must come detachment. Don’t make it about being right or wrong, but have the overall goal of finding the best outcome for the business. Managers should make quality decisions based on data and facts, and this can only be done if they are able to disagree diplomatically when required. Because every staff member comes with their own filter for how they view and behave in a conflict, a


manager needs to have a tight rein on his or her own personal reaction to disagreements. Before engaging in any disagreement, whether it’s between colleagues, companies or competition, it’s essential to leave ego at the door and identify why a disagreement is occurring. Sometimes it’s simply a clash of personalities, but more often than not, it’s because someone can see something you can’t. Consider the fact that this colleague or client may be providing you with the opportunity to gain a fresh perspective that you didn’t have the latitude to scope. This is why a toptier manager should be able to value the differences of those around them, rather than employ a strict autocratic leadership model.

Negotiate and compromise Negotiation skills and a willingness to compromise are key characteristics of a diplomatic leader, and the best managers are able

to negotiate in such a way that they receive the outcome they desire without the other parties realizing that they’ve compromised on their original position. Leadership is about surrounding yourself with a group of advisors, and if you build a reputation of being unmovable, you can quickly find yourself alone. Ultimately, by creating a company culture conducive to discussion and feedback, you are facilitating a change around the myth that disagreements are a negative thing. The right way to disagree with others is only possible after you have listened to all perspectives while considering the impact on whatever decision is finally made. Whether you agree or not isn’t the point; the point is what resolution is best for the company, the team and the clients. Until you respect the opinions of others, they are unlikely to respect yours, but once a culture of discussion and appreciation is fostered, it will be far easier

to make a decision that will be adhered to by even your strongest opponents. This is why it’s important to have a healthy balance of personality types on your team who are capable of both encouraging and challenging. I have often heard the meekest of voices challenge me in a meeting, but once they realize it is absolutely welcomed, they gain confidence, and a discussion can truly start to form. This is not the time to assert your leadership position or flaunt your dominance; this is the time to show your employees that you value their strengths and want them to contribute fully. One of the strongest qualities of a good leader is their ability to say no to something without this causing tension or a loss of employee morale. Use each disagreement as an opportunity for greater understanding. If a staff member offers a suggestion that isn’t in line with company procedure or standards, take the time and brainstorm together the reasons it won’t work, and what an alternative could be, instead of belittling or disregarding the individual. The core of a diplomatic leader comes down to respecting and valuing the strengths in those around them. This has nothing to do with personality differences or clashes, and everything to do with the ability to listen, respond and validate. If it is second nature to avoid conflict, you simply need to get over it because, quite frankly, conflict can be a productive and important part of analyzing data and reaching decisions. Diplomatic leaders have to be comfortable that they are responsible for decisions that drive the company to success, as well as for the decisions that don’t work as well as planned; they need to be at ease with their own leadership abilities, and clear on the gaps that require personal investment. Alexandra Tselios is a business consultant and publisher of The Big Smoke. She has a diverse background in corporate, public and creative fields and is an expert business consultant. To learn more, visit www.thebigsmoke.com.au.

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PEOPLE

CAREER PATH

LIFETIME LEARNER

As president of Queensbury Securities Group, John Webster is committed to constantly broadening his industry knowledge 2014

GOES BACK TO SCHOOL

2015

EXPERIENCES BEST YEAR AT QUEENSBURY

After a few years at the helm of Queensbury, Webster decided to enroll in the Osgoode School of Law “I wanted to keep learning. I think that’s the most important thing – to keep learning. It’s an LLM securities law course, and it’s important for any advisors to understand issues from a regulatory standpoint. It’s important to grasp changes that are being proposed to best communicate it to clients, while at the same time getting involved on the ground floor of organizing new rules”

1992

“We’ve attracted top advisors, and we’re focused on the retail advisor as well, less on equity capital markets, given the state of the economy. We’re probably in the middle of our best year ever” 1995

BECOMES VICE PRESIDENT OF QUEENSBURY Webster quickly worked his way through the ranks to executive positions within the company “I knew when I started that I had a chance to move up if I worked hard. We started Queensbury Strategies in ’93, which was another source for us to recruit top advisors so we could grow. By 1997, I’d become the executive VP and later became the president in 2001. We grew from just six advisors and other staff to more than 100 today“

STARTS WITH QUEENSBURY SECURITIES GROUP

When choosing between starting his career at Queensbury or another company, Webster felt the decision was clear “Either I started out as doing some filing, a little telemarketing and a whole other slew of activities, or go to work with a company that now belongs to RBC. I chose Queensbury because it was a smaller practice and I’d have more opportunity to advance and get to know the industry“

1989 GOES BACK TO HIS ROOTS

Webster got his degree at Queen’s with an eye toward following in his family’s entreprenurial footsteps “Our family had a business growing up, so I was always involved in business in one way, shape or form, so I knew it’d be the path for me. The program at Queen’s gave me the tools to enter the business world and pursue my goals”

1984

BEGINS STUDIES AT QUEEN’S UNIVERSITY

After university, Webster went back to work with his family’s party rental business, but eventually was drawn to a new path “After a while, I was looking to do something else. I thought to myself, ‘There must be an easier way’ to make a living.’ So I decided to pursue a career in investments. I saw an ad in the Toronto Star – that was back in the day when you had to actually read the newspaper to find jobs”

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PEOPLE

OTHER LIFE

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

COAST TO COAST This Vancouver-based advisor regularly trades his suit for a life jacket BY DAY, Richard Van Liempt deals with risk, handling pressure and communicating constantly with his clients to ensure they’re prepared for the financial realities of Canada’s now-stagnant economy. But night by, the wealth advisor from Vancouver takes off his jacket and trades it in for boat gear, volunteering with the Coast Guard search and rescue team. Van Liempt took a search and rescue course and first aid training last fall, and since then, he’s been aiding his community in rescue missions. Just recently, while off duty, Van Liempt was the first responder in a rollover around 3 a.m. that involved three intoxicated teens. His role in the rescue effort was credited with saving their lives, which one of the crash victims acknowledged, Van Liempt recalls. “She just needed to know that everything was going to be OK,” he says. “As a financial advisor and a volunteer member of the Coast Guard, the skills go hand-in-hand: to be calm, find the best course of action and react.”

7

Years spent as a financial advisor

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2

Years as coast guard volunteer

5

Years as a contractor and real estate investor


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FEBRUARY 2015 Assets growing nicely since I moved. Firm values more than my book. I’m respected.

OCTOBER 2014 Started advisor group to support our corporate goals to recruit more female advisors. Like that.

JULY 2014 Helped client through job loss. Put her in touch with a career coach I know. My value is more than just the money part. Feels good.

MAY 2014 Connect often with advisors in my office. We supported each other when we got licensed as Portfolio Managers. Nice.

SEPTEMBER 2013 Made the move to Dundee Goodman. Good people in my life.

FEBRUARY 2013 When I started, no one believed I could do this job. Now Dundee Goodman wants to hire me. Gratifying.

WE FOSTER GROWTH. PORTFOLIOS AND OTHERWISE. When people are given the freedom to act, they grow. When people are trusted and supported, they flourish. When people feel deeply responsible and charged with doing the right thing – you got it – they’re happy. And when they’re happy, their clients tend to be too. If a place that embraces the possible and encourages portfolios to grow by encouraging people to grow first sounds interesting, call John Cucchiella in strictest confidence at 647 428 8225. Dundee Goodman Private Wealth is a division of Dundee Securities Ltd. Member CIPF. Dundee Goodman Private Wealth is a trademark of Dundee Corporation, used under license.