Wealth Professional 9.03

CANADA’S TOP BROKERAGES

Advisors name the firms that are providing excellent culture, technology, training and more

DIVE INTO REAL ESTATE

From private mortgages to suburban apartments, the best places to invest right now WWW.WEALTHPROFESSIONAL.CA ISSUE 9.03

THE FIXED INCOME HORIZON Low interest rates are here to stay – so what’s the smart way to approach fixed income?

ALTERNATIVE STRATEGIES Eight ways advisors are using alternative investments to enhance their clients’ portfolios

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It’s all about results.

A global investing powerhouse Alpha driven | Research intensive | High conviction Available in Canada through iA Clarington.

Visit iaclarington.com/ie to learn more.

Loomis Sayles is the trade name of Loomis, Sayles & Company, L.P. Commissions, trailing commissions, management fees, brokerage fees and expenses all may be associated with mutual fund investments, including investments in exchange-traded series of mutual funds. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Trademarks displayed herein that are not owned by Industrial Alliance Insurance and Financial Services Inc. are the property of and trademarked by the corresponding company and are used for illustrative purposes only. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo, and iA Wealth and the iA Wealth logo, are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license.

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ISSUE 9.03

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

CONTENTS

@WealthProCA facebook.com/WealthProCA

UPFRONT 02 Editorial

GameStop’s financial literacy lessons

35

Br

20 FEATURES

ALTERNATIVE STRATEGIES

As alternative investments continue to garner investor interest, WP talked to eight advisors to find out how they’re navigating the alternative space

PEOPLE

INDUSTRY ICON

For HSBC Canada EVP Larry Tomei, success is all about finding new ways for his teams to grow

16

04 Statistics o ke ra ge

Key data that should be on your radar

06 News analysis

Fixed income in a low interest rate world

SPECIAL REPORT

08 Intelligence

5-STAR BROKERAGES

10 ETF update

WP surveyed readers to find out which firms in Canada are providing the best support to advisors

This month’s big movers and shakers An ETF with an American advantage

12 Alternative investment update Why silver is more than a Reddit fad

14 Opinion

Now is the time to focus on women’s financial literacy

42 FEATURES

A WAY INTO THE HOUSING MARKET Why mortgage investment corporations make for a compelling opportunity in real estate

FEATURES 46 A proven track record

Experience counts in the liquid alt space

50 How fintech is changing portfolio management

New ways to streamline your practice

52 The coming income famine

Why fixed income needs a global view

54 Pros of private mortgage debt How to capitalize on a shift in lending

56 Apartment or condo?

Which is the winning investment?

58 Sustainable returns

Four ways to invest in sustainability

44 FEATURES

A BALANCED APPROACH TO REAL ESTATE

How one fund is taking advantage of everything the real estate sector has to offer

PEOPLE 48 The full picture

Christine LaLiberté on the advantages of running a holistic practice

64 Other life

Advisor and kickboxer Eila Akbari rolls with the punches

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

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UPFRONT

EDITORIAL wealthprofessional.ca

The case for better financial literacy

W

hile this month’s cover story focuses on alternative investment strategies, almost every advisor Wealth Professional spoke to for the piece started the conversation with something along the lines of, “Isn’t this GameStop story something?” It certainly is – but not for the reasons most media outlets focused on.

First, given the number of online trading platforms and the ease of trading, the current environment has laid an ideal foundation for something like this to happen. The GameStop story also highlights the lack of understanding from the investors who were pushing up the stock – what percentage of them stopped to wonder: “Is GameStop really worth this?”

The fact is, there’s a reason why hedge funds were shorting the stock: GameStop sells physical video games, but those same games can be purchased much more easily online, directly from the console’s store. Unless GameStop has a plan to evolve its business, the fundamentals just aren’t there.

The GameStop story highlights the lack of understanding from the investors who were pushing up the stock – what percentage of them stopped to wonder: “Is GameStop really worth this?”

So what will happen? Unfortunately, people will get hurt. Eventually, investors who bought the stock will be unable to sell and will take massive losses. However, those investors working with an advisor have likely been watching from the sidelines as everyone else gave into the hysteria. That’s why the financial advisor’s role is of the utmost importance – to protect investors from gaps in their financial education.

When the GameStop story does come to an end, people who were hurt will be asking how it happened, and that’s where the educational element comes in.

Advisors don’t need to teach people the inner working of a hedge fund, but a basic understanding of how the market works is vital. Many of the advisors WP talks to do seek to educate their clients and communities, but it needs to go much further. The new generation of investors is armed with the tools to dabble in investing themselves – and GameStop might not be the only game they try to play against the market.

The team at Wealth Professional

ISSUE 9.03 EDITORIAL

SALES & MARKETING

Editor Darren Matte

Vice President, Media and Client Strategy Dane Taylor

Writers Leo Almazora James Burton Chris Jones

National Account Managers Alan Stewart Catherine Reale

Executive Editor Ryan Smith

Vice President, Sales John Mackenzie

Copy Editor Clare Alexander

Project Coordinator Jessica Duce

CONTRIBUTORS Jessica Keus Nicola Moras Lynne Cazaly

ART & PRODUCTION Designer Marla Morelos Production Coordinators Loiza Razon Kat Guzman Ella Dayandante Client Success Coordinator Kshipra Dhindaw

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

EDITORIAL INQUIRIES

darren.matte@keymedia.com

SUBSCRIPTION INQUIRIES

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

ADVERTISING INQUIRIES dane.taylor@keymedia.com

Key Media Canada (Wealth) Ltd. tel: +1 416 644 8740 www.keymedia.com Offices in Toronto, London, Sydney, Denver, Auckland, Manila

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

INSURANCE BUSINESS CANADA john.mackenzie@keymedia.com T +1 416 644 874O

INSURANCE BUSINESS AMERICA cathy.masek@keymedia.com T +1 720 316 0154

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

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UPFRONT

STATISTICS THE CANADIAN ECONOMY IN 2021

UNEMPLOYMENT CREEPS UP AGAIN

15% 13.0%

Additional economic restrictions pushed Canada’s unemployment rate to 9.4% in January. Many experts believe unemployment is a key metric to focus on when it comes to monetary policy.

Even as the economy restarts and GDP picks up, employment will likely have a tough time reaching pre-pandemic levels, which could ultimately prompt the Bank of Canada to keep interest rates low for a longer period of time.

5.3%

GDP growth forecast by Scotiabank Economics for 2021

13.7% 12%

12.

9%

7.8% 6%

5.1%

5.6%

Increase in consumer spending forecast for 2021

3%

Feb 2020

Mar 2020

Apr 2020

May 2020

WHOLESALE SALES DECLINE LESS THAN EXPECTED

7.8%

Projected unemployment rate for 2021

Canadian wholesale sales declined by 1.3% month-over-month in December, slightly below the 1.7% decline estimated by Statistics Canada. According to Scotiabank Economics, the smaller-thanexpected decline could signal slightly better growth prospects for overall GDP.

CANADIAN WHOLESALE SALES $80bn

$70bn

$60bn

1.7%

Projected core inflation rate for 2021

$64 billion

$64.6 billion

$63.1 billion

$50bn

$49.5 billion

$40bn Source: Scotiabank Economics

$62.3 billion

Jan 2020

Feb 2020

Mar 2020

Apr 2020

$65.5 billion

$65.7 billion

$65.8 billion

Jul 2020

Aug 2020

Sep 2020

$66.9 billion

$67.2 billion

$66.9 billion

Oct 2020

Nov 2020

Dec 2020

$52.5 billion May 2020 Jun 2020

Source: Scotiabank Economics

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Jun

HOUSING SALES SET NEW RECORD IN JANUARY Canada’s frenetic housing market shows no signs of slowing down – sales continued to climb in January, hitting a new record of 736,452 units on a seasonally adjusted basis, according to the Canadian Real Estate Association. Actual (not seasonally adjusted) sales activity increased by 35.2% year-over-year in January.

.7%

ay 2020

12.3%

10.9%

10.2%

9.4%

9.0%

8.8%

CANADIAN RESIDENTIAL UNITS SOLD (SEASONALLY ADJUSTED AT ANNUALIZED RATES) 800,000 750,000

8.9%

700,000

8.5%

650,000 600,000 550,000 500,000 450,000 400,000 350,000

Jun 2020

Jul 2020

Aug 2020

Sep 2020

Oct 2020

Nov 2020

Dec 2020

Jan 2021

300,000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan

2016

2017

2018

PRICE PER SHARE OF GAMESTOP ON THE NEW YORK STOCK EXCHANGE

2021

SILVER’S VALUE RISES

GAMESTOP BRINGS THE NOISE

$350

2020

Source: Canadian Real Estate Association

Source: Trading Economics, Statistics Canada

Advisors often tell their clients to ignore the short-term noise when investing – and nothing illustrated that point better than the late January/ early February ride of GameStop’s stock, thanks to the Reddit community manipulating the price to attack hedge funds.

2019

Reddit users also brought renewed attention to silver in February, but unlike GameStop, it’s not just temporary noise: Experts say the move toward renewable energy (in the form of solar power and electric vehicles) has increased the demand for the commodity. $30

SILVER PRICE PER OUNCE

$300 $25 $250 $200

$20

$150 $100

$15

$50 $0

$10 1/18/21 1/25/21 1/26/21 1/27/21 1/28/21 1/29/21 2/1/21 2/2/21 2/3/21 2/4/21 2/9/21 Source: MarketWatch.com; all figures in US$

2/3/20 3/2/20 4/1/20 5/1/20 6/1/20 7/1/20 8/3/20 9/1/20 10/1/20 11/2/20 12/1/20 1/1/21 2/1/21 Source: Silverprice.org; all figures in US$

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UPFRONT

NEWS ANALYSIS

Figuring out fixed income With interest rates at all-time lows, how can advisors properly approach fixed income allocations for clients?

IN LATE JANUARY, both the US Federal Reserve and the Bank of Canada announced they were holding their overnight interest rates at a range of 0% to 0.25%. The announcements weren’t exactly surprising, but the trend of low rates has many in the investment industry wondering what the long-term toll on fixed income will be. As vaccine rollouts lead the US and Canadian economies to reopen, issues like growth, unemployment and inflation still linger.

“Lowering rates is the only tool central banks have to make sure the financial system has liquidity,” says Brian D’Costa, founding

D’Costa believes those bond-buying programs are likely to scale back because there’s already a drifting happening on the longer end of the yield curve. That’s a trend that Avi Hooper, a senior portfolio manager at Invesco, has also noticed.

“As much as near-term growth rebound is based on the vaccine, the truth is we don’t know what the post-pandemic economy looks like,” Hooper says. “We do see some vulnerability in government bonds in the long term – the 30-year part of the curve.”

Much of the concern revolves around inflation. The Fed recently pivoted from a

“The truth is we don’t know what the post-pandemic economy looks like. We do see some vulnerability in government bonds in the long term” Avi Hooper, Invesco partner and president at Algonquin Capital.

“Last year, the aggressive lowering of rates and commencement of large-scale asset purchases weren’t a surprise, but the magnitude was. They launched bond-buying programs that far exceeded the 2008 crisis.”

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target inflation rate to an average inflation rate, which means there could be swings in the rate as it establishes an average of 2%. While the BoC didn’t explicitly say it’s following the same path, its actions seem to suggest it will.

“Inflation is on people’s minds – in the near term, there is an element of base effects, as well as supply-side pressure,” Hooper says.

“Our view is, on the upside, it is likely to be transitory, the reason being it is structural.

We know there are disinflationary pressures – people are saving more and spending less. That means potential growth is lower.

Central banks said they won’t go to negative rates, but they can keep them at historically low levels. The motive of the central banks is to limit that savings.

“Our question is, how much will be spent versus debt being paid down? We think Canadians are likely to pay down debt. These are headwinds and why we think growth and inflation will be low – and with it, interest rates.”

Another thing both D’Costa and Hooper are keeping an eye on is the unemployment rate. Even as the economy reopens and growth picks up, both believe that the

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KEY ECONOMIC METRICS IN CANADA AND THE US

Canada

US

Target interest rate

0.25%

0.25%

Inflation rate (December 2020)

0.7%

1.4%

GDP growth rate (Q4 2020)

5.06%

4.0%

Unemployment rate (December 2020)

8.8%

6.3%

Sources: Bank of Canada, US Federal Reserve, Trading Economics, Scotiabank Economics

unemployment rate won’t quickly snap back to pre-pandemic highs, which could be another impetus for central banks to keep interest rates low.

“You will have sectors that were ravaged

things look good, but central banks will point to unemployment being higher than prepandemic and won’t raise rates.”

Those issues all present a challenge for fixed income investors. D’Costa notes that

“It’s going to be a weird market where things look good, but central banks will point to unemployment being higher than pre-pandemic and won’t raise rates” Brian D’Costa, Algonquin Capital start to recover,” D’Costa explains. “So you will have big GDP numbers initially, but at the same time, unemployment won’t be at the lows. Just because there is a vaccine doesn’t mean every business reopens – some are gone forever. It’s going to be a weird market where

for long-term investors, the problem is more dire. His solution is to break it down into three buckets that fixed income should provide for investors: preservation of capital, diversification and income.

“In the early 2000s, you could do all

that with five-year Government of Canada bonds,” he says. “Today, we think its impossible for one product to deliver all needs – you need to create a portfolio with different funds. If you understand the buckets, you can decide what you need to hold in each bucket. We think it’s the only real way to build your fixed income allocation.”

Hooper does see some opportunity in the near term in corporate bonds, but he also believes more investors will be fixated on yield, which will push them to look at other options, such as emerging markets or even private credit.

“We see a sweet spot to be overweight in corporate debt, as well as some government debt in EMs,” he says. “Fiscal policy means government-issued debt is likely to rise.”

He adds that there will be an imbalance in supply and demand – supply levels of government debt will be high, while corporate will be low – which is why he sees corporate debt as a promising area of focus.

“Everyone has different needs in portfolios,” Hooper says. “We think Canada is a great source of return with the high-quality nature. When it comes to public fixed income, we see risks in the long end of the curve, but we think the five-year part is a sweet spot, specifically corporate and in EMs.”

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Easy Legal Finance

Settlement Lenders

Canadian litigation financing firm Easy Legal Finance has acquired Settlement Lenders, one of the first firms in the country to offer pre-settlement lending

London Stock Exchange Group

Refinitiv

After some regulatory delays, the London Stock Exchange completed its $27 billion purchase of data and trading company Refinitiv in late January

TD Bank Group

Wells Fargo Canadian Direct Equipment Finance

TD hopes the purchase of Wells Fargo’s equipment financing business will allow it to scale up its own operation and expand its presence in core markets

Tier1 Financial Solutions

Alessa

CRM software provider Tier1 Financial Solutions has acquired Alessa, a compliance and financial crime prevention solution

PARTNER ONE

PARTNER TWO

COMMENTS

CPP Investments, Cyrela and Greystar

SKR

CPP Investments, along with two real estate organizations, has partnered with real estate developer SKR on a multi-family rental project in São Paulo, Brazil

Richardson Wealth

Bloom Burton & Co.

The two independent financial services firms have entered into a strategic alliance focused on the healthcare sector

Russell Investments updates fixed income offerings

Russell Investments Canada has enhanced its Russell Investments Fixed Income Plus Pool and Russell Investments Fixed Income Plus Class with three new investment strategies. The new strategies include liquid alternative funds that engage in hedging activities such as long/short credit; ‘fallen angels,’ or former investment-grade securities that were moved to the high-yield segment after the issuer was downgraded; and securitized credit, which is formed by pooling different asset-backed debt instruments such as mortgages and loans. Russell Investments’ Greg Nott said all three strategies are designed to help investors “find next-generation sources of return.”

TD expands its equipment financing business

TD Bank has forged a deal to acquire Wells Fargo’s Canadian Direct Equipment Finance business, adding scale and capabilities to TD’s existing equipment financing operation. Headquartered in Mississauga, Ontario, with regional offices across the country, Wells Fargo’s business has a 25-year operating history, which includes the acquisition of GE Capital’s Canadian equipment finance business in 2016. TD said Wells Fargo’s direct origination model will allow it to better serve a more diverse set of business customers in need of competitive equipment loans, leases and customized financing services.

“We are excited to welcome Wells Fargo’s Canadian Direct Equipment Finance team of highly skilled and experienced industry professionals to TD and leverage their deep expertise in equipment leasing and finance for the benefit of our highly valued customers nationwide,” said Darren Cooke, vicepresident of TD Equipment Finance and Canadian business banking.

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Fidelity introduces three new multi-asset funds

Fidelity Investments Canada has launched three new multi-asset funds: the Fidelity Multi-Asset Innovation Fund, Fidelity All-in-One Balanced ETF/ETF Fund and Fidelity All-in-One Growth ETF/ETF Fund.

A global balanced mandate, the Fidelity Multi-Asset Innovation Fund primarily invests in or provides mixed exposure to equities and an expansive set of fixed income securities spanning the US and other issuers from around the world. The Fidelity All-in-One ETFs, available in both a balanced and growth profile, are designed to be a cost-efficient one-ticket solution for advisors and investors looking for exposure to a globally diversified portfolio of stocks and bonds.

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PEOPLE Franklin Templeton unveils innovation-focused funds Franklin Templeton Canada has launched the Franklin Innovation Fund, which invests in companies that are leaders in innovation, take advantage of new technologies and benefit from new conditions in the changing global economy. A corresponding ETF, the Franklin Innovation Active ETF (FINO), invests substantially all of its assets in securities of the Franklin Innovation Fund. “As innovation continues to drive wealth creation in the economy, our innovation funds use active management to navigate the complexities of investing in emerging breakthroughs and technologies,” said Franklin Templeton Canada president and CEO Duane Green.

NAME

LEAVING

JOINING

NEW POSITION

Tashia Batstone

Chartered Professional Accountants of Canada

FP Canada

President and CEO

Laurent Ferreira

N/A

National Bank of Canada

Chief operating officer

Scott P. Gill

XY Planning Network

Planswell

Chief compliance officer

Janine Guenther

N/A

Dixon Mitchell Investment Counsel

President

Dean Khialani

Nextlaw Labs

Planswell

Chief technology officer

Lesley Marks

BMO Wealth Management

Mackenzie Investments

Chief investment officer, equities

Jennifer Mastrud

XY Planning Network

Planswell

Chief marketing officer

Trevor Oseen

Omikron Financial Holdings Europe

Planswell

Chief financial officer

Mackenzie Investments names new equities CIO RBC GAM enhances global fixed income shelf

RBC Global Asset Management has added two US-dollar bond pools and two global high-yield bond solutions to its fixed income offerings. To accommodate investors who prefer to invest in US dollars, RBC GAM has launched the RBC $US Core Bond Pool and RBC $US Core Plus Bond Pool, both of which actively invest in core global bonds, high-yield corporate bonds, emerging market currencies, and corporate and sovereign debt. RBC GAM also unveiled the BlueBay $US Global High Yield Bond Fund (Canada) and the BlueBay Global High Yield Bond Fund (Canada), both of which invest in high-yield debt securities globally.

Invesco launches ESG- and innovation-focused funds

Invesco Canada has launched four new mutual funds that capitalize on the momentum toward ESG and disruptive innovation. The four index funds, structured as fund-of-ETFs, give Canadian investors an additional vehicle to access the strategies behind four of Invesco’s most innovative 2020 ETF launches. The new mutual funds, which will generally invest one-for-one in their corresponding ETFs, include the Invesco S&P 500 ESG Index ETF Fund, Invesco S&P/TSX Composite ESG Index ETF Class, Invesco NASDAQ 100 Index ETF Fund and Invesco NASDAQ Next Gen 100 Index ETF Fund. All four funds are available in Series A, F and PTF units.

Mackenzie Investments has appointed Lesley Marks as chief investment officer for equities. Marks has more than 25 years of experience in asset and wealth management, including 22 years at BMO Global Asset Management and BMO Wealth Management. Most recently, she was CIO and head of investment management for BMO Private Wealth (Canada), where she managed a team of more than 80 investment professionals; was responsible for BMO’s Private Wealth Investment Management platforms; and led research, product, trading and investment strategy.

“Lesley has a sterling reputation in our industry, and I know this firsthand from having worked with her in the past,” said Mackenzie Investments president and CEO Barry McInerney. “Her extensive mix of research and investment management experience is complemented by a strong commitment to collaboration and investment excellence. We’re fortunate to have her join Mackenzie.”

FP Canada gets new president and CEO

FP Canada has named Tashia Batstone as its incoming president and CEO; she will succeed longtime leader Cary List when he retires on June 30. Batstone comes to FP Canada with senior leadership experience at both the provincial and national level within the accounting profession. In her previous roles at the Chartered Professional Accountants of Canada, she led transformational change initiatives, both in Canada and internationally, and was instrumental in unifying the accounting profession and leading the development of the CPA certification program.

“I couldn’t be more pleased that Tashia will be taking over at the helm upon my retirement from FP Canada,” List said. “I know her tremendous leadership skills, her passion for professionalization of financial planning and her belief in our public interest mandate will serve FP Canada extremely well going forward.”

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UPFRONT

ETF UPDATE NEWS BRIEFS Harvest unveils ETFs focused on travel and clean energy

Harvest Portfolios has rolled out two new ETFs: the Harvest Clean Energy ETF (HCLN) and the Harvest Travel & Leisure Index ETF (TRVL). HCLN primarily invests in clean-energyrelated businesses that are listed on a regulated stock exchange in select North American, Asian or European countries.

TRVL, meanwhile, is positioned to capitalize on the rebound in international travel as the global economy recovers.

It tracks the Solactive Travel & Leisure Index, which focuses on the 30 largest travel-related companies in North America, including airlines, hotels, online booking services and cruise lines.

Evolve moves into cloud computing with new ETF

Evolve ETFs has launched Canada’s first ETF focused on cloud computing: the Evolve Cloud Computing Index Fund (DATA). The fund seeks to replicate the performance of the Solactive Global Cloud Computing Index (CAD-Hedged) by investing in both domestic and global cloud computing companies. According to Evolve president and CEO Raj Lala, the events of 2020 “rounded out what was already a vastly advancing decade for the sector. We all rely heavily on the cloud in both our personal and professional lives, and this demand is reflected in the growth we are seeing in the sector.”

Horizons launches world’s first psychedelicsfocused ETF

Horizons ETFs has unveiled the world’s first ETF focused on the emerging psychedelics industry. The Horizons Psychedelic Stock Index ETF (PSYK) contains 17 Canadian and US publicly listed life sciences companies with

10

significant business activities in or exposure to the psychedelics industry.

“We believe the opportunities with psychedelics not only provide a compelling investment case, but also the potential to provide life-changing impacts for those suffering with mental illness,” said Horizons president and CEO Steve Hawkins.

SmartBe Wealth introduces four index-tracking factor ETFs

SmartBe Wealth has launched four new concentrated factor funds on the NEO Exchange. The SmartBe US Quantitative Value Index ETF (SBQV) and SmartBe US Quantitative Momentum Index ETF (SBQM) invest in the 50 highestquality US publicly traded value and momentum stocks, respectively. Their Canadian counterparts, the SmartBe Canadian Quantitative Value Index ETF (SBCV) and the SmartBe Canadian Quantitative Momentum Index ETF (SBCM), invest in the 20 highest-quality Canadian publicly traded value and momentum stocks, respectively.

BMO Asset Management adds 11 new ETFs to product shelf

BMO Asset Management has issued 11 new ETFs, including five first-in-Canada index products that offer access to five innovation-focused MSCI indexes: the BMO MSCI Innovation Index ETF (ZINN), BMO MSCI Tech & Industrial Innovation Index ETF (ZAUT), BMO MSCI Fintech Innovation Index ETF (ZFIN), BMO MSCI Genomic Innovation Index ETF (ZGEN) and BMO MSCI Next Gen Internet Innovation Index ETF (ZINT). Those new products were joined by the BMO Covered Call Technology ETF (ZWT), BMO Clean Energy Index ETF (ZCLN), BMO MSCI USA ESG Leaders Index ETF (Hedged Units) (ESGY.F) and the BMO Short Term US TIPS Index ETFs (ZTIP/ ZTIP.F/ZTIP.U).

Capitalizing on the US market RBC’s US corporate bond ETF aims to help Canadians gain an upper hand when investing in the American market RBC is hoping to help more Canadians invest in the US market, allowing them to capitalize on opportunities not normally found in Canada. The RBC Short Term US Corporate Bond ETF (RUSB) gives investors exposure to investment-grade corporate bonds in US dollars. It will also hold some high-yield bonds, which potentially have a ratings upgrade.

The ETF’s ultimate goal is to provide regular monthly income with the potential for modest capital growth, primarily by investing in a well-diversified portfolio of American and foreign short-term fixed income securities in the US market. Generally, the fund invests in bonds that are under six years old (although it can go beyond that duration if needed); the average duration of the bonds is 2.8 years. The fund is actively managed by RBC’s team in Minneapolis, so its managers are on the ground in the US. “That team focuses on investment-rate credit, and they’ve been doing this for quite a while,” says Stephen Hoffman, vice-president of ETFs at RBC Global Asset Management.

“The team’s got 18 years, on average, of experience in corporate credit portfolio management, so they’re very experienced.”

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The team takes a fundamental, bottom-up approach to credit research, meaning the team members do their own research on the companies whose credit investors will own.

They also do their own profiling, analysis and more.

“They’re looking for market efficiencies, but they’re also building the portfolio to be well managed,” Hoffman says.

“[The fund managers are] looking for market efficiencies, but they’re also building the portfolio to be well managed” RUSB targets those who want to invest in US dollars – it’s not currency-hedged.

According to Hoffman, the ETF was created based on feedback from advisors and wholesalers, who highlighted the need for a shortterm US dollar investment vehicle.

“There are investors who hold US dollars and want to continue to hold US dollars, but they need a place to put them, at least from a fixed income side, for the short-term investment,” Hoffman says, adding that the ETF is also available in a Canadian dollar format, but 99% of investments are in the US dollar purchase option. By investing in the US, Hoffman adds, Canadian investors can get exposure to different kinds of companies and industries, and this ETF allows them to do just that.

Q&A

Emmanuel Sharef Executive vicepresident and portfolio manager PIMCO

Years in the industry 12 Fast fact Since launching in February 2020, PIMCO’s managed bond pool assets (including the ETFs PCON and PCOR) have grown to more than $600 million

Diversifying with bond pools Why are bond pools an attractive way to get exposure to fixed income right now?

With near-zero rates on cash investments and passive core bond yields at around 1%, investors are seeking ways to enhance yields and returns on their bond investments. The volatility in 2020 was a reminder that simply increasing credit allocations or duration is not enough, and a more active approach may be beneficial.

By seeking to balance the trade-offs offered by the market, bond pools can offer investors a way to build a diversified fixed income allocation that seeks to obtain the traditional benefits they have come to expect from their bond portfolio – namely, attractive returns, diversification versus equities and capital preservation.

How does PIMCO structure its bond pools, and what type of exposures do they have?

As with any strategy at PIMCO, the process is rooted in our economic forums, which set top-down views on asset classes, sectors and geographies. These views drive allocations in our pools across diversified, actively managed PIMCO mutual funds – the underlying funds – which benefit the pools in several additional ways.

First, the pools gain access to the bottom-up analysis driving security selection, as well as possibly new issues or sectors that can be difficult to obtain directly. Second, the underlying funds are regularly updating their positioning in line with changes to firm views ‘under the hood,’ making the pools more responsive to changing market conditions.

Finally, since all of the underlying funds are managed by PIMCO, we have daily look-through into all of the underlying funds’ holdings, giving us a very detailed understanding of the pools’ risk posture on a real-time basis. Overall, this seeks to provide our clients with a globally diversified fixed income allocation with the tactical flexibility to take advantage of market dislocations when they arise.

Do you think we will see this type of investment grow?

Absolutely. It is a very challenging time to be a fixed income investor.

Increasingly, we’ve seen clients become more discerning in the objective they have for their fixed income portfolio, given the tradeoffs required in today’s environment.

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. No offering is being made by this material. Interested investors should obtain a copy of the prospectus, which is available on pimco.ca or from your Financial Advisor.

The funds invest in other PIMCO funds and performance is subject to underlying investment weightings which will vary. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inflation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bonds and bond strategies with longer durations tend to be more sensitive and volatile than those with shorter durations; bond prices generally fall as interest rates rise, and low interest rate environments increase this risk. Reductions in bond counterparty capacity may contribute to decreased market liquidity and increased price volatility. Bond investments may be worth more or less than the original cost when redeemed. Management risk is the risk that the investment techniques and risk analyses applied by PIMCO will not produce the desired results, and that certain policies or developments may affect the investment techniques available to PIMCO in connection with managing the strategy. The cost of investing in the Fund will generally be higher than the cost of investing in a fund that invests directly in individual stocks and bonds. The Fund is non-diversified, which means that it may concentrate its assets in a smaller number of issuers than a diversified fund. The products and services provided by PIMCO Canada Corp. may only be available in certain provinces or territories of Canada and only through dealers authorized for that purpose.

This material contains the current opinions of the manager and such opinions are subject to change without notice. This material has been distributed for informational purposes only and should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. The Funds offer different series, which are subject to different fees and expenses (which may affect performance), having different minimum investment requirements and are entitled to different services. PIMCO Canada has retained PIMCO LLC as a subadvisor. PIMCO Canada remains responsible for any loss that arises out of the failure of its subadvisor.

www.wealthprofessional.ca

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5/03/2021 3:39:38 AM

UPFRONT

ALTERNATIVE INVESTMENT UPDATE

Investor attention turns to silver Reddit users have put the commodity in the spotlight – but experts say its fundamentals are strong

using less silver per solar panel than we used to, you can imagine we’ll have more panels deployed, particularly if the US invests in infrastructure to reduce the carbon footprint and green hydrogen takes over.”

The automotive industry is already making a similar transition, which Melek sees as another positive for silver. “The shifting over of the automotive industry to electric vehicles and hybrids will mean more circuitry in the vehicles, and that means more silver will be used,” he says.

“We should start seeing a meaningful recovery in terms of silver’s industrial demand”

Silver gained attention recently when a group of Reddit users decided to drive the price up through the purchase of silver ETFs. While that noise has seemingly passed, things still look bright for the ‘poor man’s gold,’ which the London Bullion Market Association (LBMA) recently projected to be the best-performing metal in 2021.

“Broadly speaking, the attention on silver has been there in a meaningful way long before any of the Reddit stuff,” says Bart Melek, global head of commodity strategy at TD Securities and one of the experts surveyed

NEWS BRIEFS

for the LBMA’s report. “We are talking about silver demand increasing with the global economy. The fact that Chinese economic activity, including manufacturing and industrial activities, are back to normal and in a growth trajectory signals we should start seeing a meaningful recovery in terms of silver’s industrial demand.

“As we move into 2021 and further on, we are likely to get policies to get the global economy to reduce the carbon footprint.

Silver is going to play a big role because we are using silver in solar panels. While we are

Horizons ETFs reboots leveraged oil ETFs

Nearly six months after updating the investment objectives of its BetaPro Crude Oil Leveraged Daily Bull ETF (HOU) and BetaPro Crude Oil Inverse Leveraged Daily Bear ETF (HOD), Horizons ETFs has brought the funds’ leveraged and inverse strategies back to their original exposure levels, reintroducing the use of 2x and -2x leverage to HOU and HOD, respectively. Horizons said the decision to update the ETFs was “the result of further stabilization of crude oil futures prices and negotiations with the ETFs’ counterparties.”

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Melek adds that these trends will create a tighter market for the commodity. “On the mining side, last year we had a big decline because of COVID,” he says. “Much will return in 2021 and 2022, but after that, we don’t see a lot of capital to grow supply. With the supply side not growing all that much, you will get tighter markets.”

For Melek, this combination of factors makes silver a good investment story. “We are seeing more people look at silver, which is a good thing,” he says. “I am glad the market is now looking at the fundamentals. As we go to 2021 and beyond, if the transition to a carbon net-neutral world continues, silver is one of the metals required to do it.”

Purpose unveils world’s first Bitcoin ETF

After getting the green light from Canadian securities regulators, Purpose Investments has launched the Purpose Bitcoin ETF (BTCC), the world’s first direct custody Bitcoin ETF. Designed to provide investors with exposure to the leading cryptocurrency, the ETF is the first in the world to invest directly in physically settled Bitcoin, giving investors easy and efficient access to cryptocurrency without the associated risk of self-custody within a digital wallet. It is available in both Canadian and US dollar versions.

www.wealthprofessional.ca

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Q&A

John Donahue Partner and chief investment officer

The lowdown on investing in a merchant cash advance

SUPERVEST

Years in the industry 10+ Fast fact Supervest is a funding platform that enables accredited investors to participate in merchant cash advance deals on a fractional or participatory basis

What is a merchant cash advance (MCA), and how can it be used as an investment vehicle?

An MCA is a short-term capital infusion for small businesses that are part of the underbanked or unbanked economy. An MCA is not a loan, but a purchase of a merchant’s future receivables. This product exists as an alternative to conventional bank loans and lines of credit, which can be cumbersome and involve a lengthy process to obtain.

The advantages for small businesses are quick approvals and funding within days, no collateral requirements, and financing as low as $5,000. In return for these advantages, the funding companies can command a much higher return than traditional loans or high-yielding credit.

What is the factor rate, and how does it work?

As an example, merchants are typically provided with an MCA of 1x to 1.5x of their current monthly credit card or gross sales volume. A merchant with $10,000 of monthly gross sales may be eligible to receive up to a $15,000 MCA. A ‘factor rate’ is then applied the to the MCA amount to determine the total amount to be repaid by the merchant.

The funders’ average factor rate is 1.35x to 1.45x – thus, on a $10,000 MCA, the merchant would be required to repay up to $14,500 over the MCA’s term.

The funders’ typical MCA duration is between five to

CSA widens path for distributing liquid alt funds

The Canadian Securities Administrators has issued temporary blanket relief that provides additional proficiency paths for mutual fund dealers to distribute liquid alternative funds. The changes to the CSA’s liquid alt rules – which are being implemented through local blanket orders – will make it easier for MFDA members to distribute alternative mutual funds. The CSA said the amendments should give retail investors more access to alternative investment strategies while maintaining appropriate protections.

nine months. Each aspect of the MCA is driven by the funders’ review of the merchant and the resulting risk profile.

What risks are involved with investing in an MCA? The largest risk is to any MCA is failure to pay by any individual merchant. Strength in underwriting and responsible collection practices go hand-in-hand in mitigating that risk. From an investor perspective, it is imperative to have a diversified portfolio of MCAs to mitigate the impact of any one merchant’s failure to pay. We have historically seen loss rates with our funding partners between 8% and 10%.

What kind of yield can an MCA provide?

Yields from an individual deal can be quite attractive.

After fees, commissions and assumed loss rates, individual deals can net between 15% and 25% on average over six to seven months, so on an annualized basis, it is quite attractive.

The other powerful effect with MCAs is that remittances from merchants are paid back on a daily or weekly basis. This return of cash can then be repurposed into new MCAs, creating a compounding velocity that is hard to match in any other investment strategy.

Ninepoint launches Bitcoin fund on the TSX

In late January, Ninepoint Partners successfully launched the Bitcoin Trust on the TSX. At $230 million, the fund represents Canada’s largest Bitcoin IPO to date. The Bitcoin Trust is designed to provide investors with a secure, simple investment alternative to buying and holding Bitcoin.

The fund invests directly in Bitcoin, and its assets are managed using institutionalquality service providers such as digital asset trading counterparties; trading platforms and custodians; and independent auditors, legal and valuation agents.

Dynamic Funds unveils liquid-alt income solution

Dynamic Funds has launched a new fund aimed at retirees or near-retirees in search of income and potential capital appreciation. The Dynamic Retirement Income+ Fund seeks to provide total returns with lower correlations to major stock or bond market indexes. Focused primarily on dividend- or distribution-paying securities, the new liquid alternative mutual fund can access a broader opportunity set through the use of leverage and, to a lesser extent, derivatives and short selling.

www.wealthprofessional.ca

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5/03/2021 3:40:14 AM

UPFRONT

OPINION

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

Bringing women to the table Advisors need to put a greater focus on boosting the financial literacy of their female clients, writes Jessica Keus INTERNATIONAL WOMEN’S DAY on March 8 is the perfect occasion to consider women and how they approach their investments. Women dedicate their time to their careers, to their families, to their children and to their communities – however, there are countless statistics showing that women spend a lesser amount of time talking about and understanding their own wealth. The contributions they have made to their own, or their families’, financial well-being are significant, and women should be wellversed in what they have built.

So why does this gap exist? With all the financial information available at our fingertips, why did Statistics Canada report in 2016 that only 31% of women consider themselves to be financially knowledgeable? Women negotiate, advocate and empower themselves financially, but statistics show that they often seem to forget the steps that come after a significant financial accomplishment: executing and understanding a long-term plan. Coincidentally, National Bank Investments reports that only 31% of women have a financial plan in place.

Let’s start talking more about what women need – specifically, financial literacy and to be educated rather than being told what they want. Female investors don’t want to be talked down to, sideways or on top of.

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Instead, they want a mutual relationship with communication, care and time spent.

An advisor who spends their time wisely educating their clients in the moments that matter most will become a valuable member of an investor’s long-term financial team.

all segments of our client base?

If education isn’t a component in your service model, it might be time to reevaluate your service offering and ensure there are no gaps in educating your different client segments. Demonstrating that you’re the smartest person in the room no longer automatically qualifies you as being the best advisor – in fact, mentoring your clients during their journey to financial literacy might be the most impactful impression you make.

Creating the ‘Know Your Wealth’ platform on social media has allowed my clients, prospects and other information-hungry investors to join together over common goals in a non-judgmental community. Our female clients in particular want to work with us because we are relatable, transparent, and provide true value and financial literacy with an easy communication style that speaks to them and their entire family. We provide an experience that has a foundation of care and interest in what our clients are doing, and we strive to engage all parties in the decision-making process.

“Female investors don’t want to be talked down to, sideways or on top of. Instead, they want a mutual relationship with communication, care and time spent” As Dragons’ Den investor Arlene Dickinson has said, “I wanted an advisor who would educate me, not tell me what to do.”

The issue is bigger than many think.

A 2018 report from IPC Private Wealth revealed that 90% of women will be required to play the role of sole decision-maker at some point in their lifetime, meaning financial literacy is something that affects more than just me and you – it affects our daughters, our mothers, our aunts and sisters.

We are on the brink of the largest generational wealth transfer in history, and we as advisors must ask ourselves: How are we preparing our clients, and are we preparing

There is plenty of room at the financial literacy table for all investors, and we should strive to ensure there are always open seats available.

The information contained herein has been provided for information purposes only. The information does not provide financial, legal, tax or investment advice. WAPW is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. © 2021, Wellington-Altus Private Wealth Inc. All rights reserved. No use or reproduction without permission. www.wellington-altus.ca

Jessica Keus is an investment advisor with the award-winning, woman-led Bonten Wealth Management Group in Winnipeg. She has spent more than a decade in the industry and was named to Wealth Professional ’s Rising Stars list in 2020.

www.wealthprofessional.ca

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5/03/2021 3:40:36 AM

PEOPLE

INDUSTRY ICON

A PASSION FOR GROWTH Throughout his career, HSBC Canada’s Larry Tomei has been all about growth – and that focus has allowed him to build successful teams that excel at executing strategy

WHETHER IT’S a business, people or even the plants in his garden, Larry Tomei has always loved helping things grow. His passion has taken him to a leading role in the industry as executive vice-president and head of wealth and personal banking at HSBC Bank Canada, where he’s focused on building HSBC’s retail and wealth franchise in this country.

Tomei’s desire to get involved in companies’ growth began at York University’s Schulich School of Business, where he earned both bachelor’s and master’s degrees in business administration. “One day I went by the guidance office and saw a job posting for CIBC Securities,” he recalls. “It was a product position with mutual funds. What was intriguing was that the mutual fund business was just beginning. It felt exciting – I thought, ‘Wouldn’t it be great to get into a business at its infancy and grow it?’”

Tomei applied for the job and got it. He started as a product manager and went on to hold increasingly senior positions, working his way up to lead CIBC’s mutual fund business.

From there, he moved to the bank’s private investment counsel business, then spent a decade in various sales leadership roles before becoming SVP of national sales and service, responsible for leading the bank’s national sales strategy. He was eventually appointed head of President’s Choice Financial at CIBC

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before moving to HSBC in 2016.

“What attracted me to HSBC was its people culture, strong focus on clients and the opportunity to build on that strong foundation,” he says. “The bank’s global footprint allows us to serve clients with all of their needs in a way that other banks can’t. HSBC is also the world’s largest trade bank, so we

in banking to drive transformational growth by sharpening client focus, launching new products and services, optimizing distribution channels, and fostering relationships – all while navigating adverse macroeconomic conditions.

He has also been able to pursue his enthusiasm for diversity and inclusion at

“I think having the right strategy is incredibly important, but equally as important is making sure that you have the right people to execute it. The companies with a great strategy and great people will succeed” can connect all of our clients to a world of possibilities and help them navigate their finances both in Canada and abroad.”

Setting the standard At HSBC, Tomei strives to lead by example.

His vision for the business, coupled with his ability to inspire and transform, sparked massive growth from the get-go and made the bank’s retail franchise a destination of choice for both clients and employees.

Tomei leveraged his extensive experience

HSBC and currently serves as chair of the bank’s D&I committee.

“We operate in 64 countries and territories, so it’s important that we have that diversity of thought and people,” Tomei says. “Diversity is built into our culture.

Personally, that’s always resonated with me.

My background is Italian – my parents came to Canada over 50 years ago. I know firsthand the challenges faced by newcomers, which is why D&I has always been so important to me.”

www.wealthprofessional.ca

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5/03/2021 6:09:14 AM

PROFILE Name: Larry Tomei Title: EVP, head of wealth and personal banking Company: HSBC Bank Canada Based in: Toronto Years in the industry: 27 Career highlight: Building incredible teams and executing with excellence for the bank’s key stakeholders

www.wealthprofessional.ca

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5/03/2021 6:09:18 AM

PEOPLE

INDUSTRY ICON

Throughout his career, Tomei has notched a string of impressive accomplishments. In 2010, he was named one of Canada’s Top 40 under 40 by Caldwell Partners International.

Last year, he won Report on Business’ Best Executive Award, as well as a HERoes Women Role Model Award for his work in championing diversity and gender equality.

Yet while Tomei says he’s honoured by these individual awards, he believes they’re really a reflection of the work of his team.

“When you look at what you’ve accomplished, it’s never about one person – it’s about the team,” he says. “That’s how I have always looked at it. For instance, my Report on Business award was won for the leadership during COVID, and I am so proud of that.”

Prioritizing people When it comes to current initiatives at the bank, there are many underway that Tomei is excited about. He notes that now more than ever, clients want to bank on their terms, so HSBC is transforming its branches into advice centres while recognizing that people are doing more online. In response, the bank is scaling up its digital capabilities in Canada and transforming its contact centres to incorporate more chat and email functionality to ensure that their clients receive timely advice and service. It has also launched remote specialists to provide expert advice on mortgages and small business needs. Finally, HSBC recently announced a partnership with Dominion Lending Centres, which will offer

“We operate in 64 countries and territories, so it’s important that we have that diversity of thought and people. Diversity is built into our culture” Tomei adds that HSBC’s approach to the pandemic has been focused on stakeholders. “We made a commitment to protect our employees, to care for our clients and community, all the while keeping the bank running successfully,” he says.

And the pandemic hasn’t stopped Tomei from working on other important initiatives such as the Royal Canadian Legion’s Poppy Campaign, which saw its annual fundraising efforts impacted by COVID-19.

“We are so proud of that partnership,” Tomei says. “We were able to work with the Legion and design a contactless solution where people could tap the poppy box and make a contribution. That was really important to me. If you are Canadian, you understand the importance of the Legion and supporting those who serve today while remembering those who made the ultimate sacrifice to protect our country.”

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the bank’s mortgage products.

“At the end of the day, we are here to serve our clients however they choose to engage with us – through our advice centres and remote specialists, our contact centres and digital platforms, and other alternative channels,” Tomei says.

To best serve clients, Tomei believes that “our employees are the foundation of our bank, and we need to continue to invest in them … I think having the right strategy is incredibly important, but equally as important is making sure that you have the right people to execute it. The companies with a great strategy and great people will succeed. That means making sure people have a purpose to work and grow together. That means having a strategy as a roadmap then attracting, motivating and retaining great people. That is not an easy thing, but success always comes down to having the right team.”

FAST FACTS: HSBC CANADA

YEAR FOUNDED 1981

HEADQUARTERS Vancouver, BC

NUMBER OF EMPLOYEES 5,700

TOTAL AUM $124 billion in Canada and US$2.96 trillion globally (as of September 30, 2020)

TOP FUND BY AUM HSBC Mortgage Fund ($2.5 billion as of December 31, 2020)

www.wealthprofessional.ca

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5/03/2021 6:09:19 AM

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2021-02-186:09:22 10:21:36 5/03/2021 AM

FEATURES

ALTERNATIVE INVESTMENTS

ALTERNATIVE STRATEGIES Advisors tell WP how they’re using eight different alternative investment strategies to add diversification and reduce volatility in their portfolios ALTERNATIVE INVESTMENTS were already picking up steam before the COVID-19 pandemic hit Canada last March.

There are many factors that have pushed advisors and investors toward alternatives in recent years, from the persistent low interest rate environment to high valuations in equities and the impact of geopolitical issues on commodities. The combination of these factors led many advisors to question whether the traditional 60% equity/40% fixed income portfolio could still thrive, or if they needed a new approach to achieve targeted returns.

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While the migration to alternative strategies was already underway, the pandemic accelerated it by shining a light on how different types of alternatives would react in a volatile environment. During equity markets’ prolonged bull run, alternatives never truly got a chance to demonstrate their value. But when the pandemic hit, strategies like liquid alternatives did what they were supposed to and reduced volatility while protecting capital, and certain commodities (like gold) posted gains. Other areas, like private equity and private debt, didn’t feel the same level of

impact as the public markets, instead trading closer to pre-pandemic averages. And even alternative investment areas battered by the pandemic (like oil and real estate) have presented new opportunities in the form of attractive valuations.

On the following pages, Wealth Professional talks to eight advisors about their approach to different areas of alternatives, with the hope of providing other advisors insight on the best way to employ their own strategies with the alternative investments they’re most comfortable with.

www.wealthprofessional.ca

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Liquid alternatives When new regulations came into effect in January 2019, allowing retail investors to access alternative strategies in mutual fund form, the asset class slowly gained traction. Yet liquid alternatives hadn’t truly been tested in a market downturn until the COVID-19 pandemic took hold. In general, they passed the test, serving their purpose of bringing down volatility and protecting capital. Now, as more options come to market and more investors wake up to their benefits, advisors are increasingly starting to incorporate liquid alternatives.

“The breadth of availability in liquid alts has really expanded over the last year – you see new launches almost every day,” says Darcie Crowe, SVP and portfolio manager with Crowe Private Wealth at Canaccord Genuity Wealth Management. “In the

to provide,” she says. “The second is that interest rates play a big part. There has been a conversation over the last six months about if the 60/40 portfolio is dead and how you fill the fixed income bucket. Given most strategists predict negative real returns for the years ahead in several areas of the traditional fixed income market, people are starting to look at other asset classes to fill those gaps.”

Crowe’s approach is to use liquid alternatives to help fill different buckets and complement more traditional holdings – and right now, that largely means filling the gap left by fixed income and bringing down volatility on the equity side.

“There are some great opportunities in the liquid alt space that provide hedged credit, going long/short in the fixed income space to take out the interest rate risk and focus on absolute returns,” she says. “I use them on the equity side, as liquid alternatives

“[With liquid alternatives], clients are not experiencing the highs and lows of the market. There is a greater emphasis on protection of capital through periods of significant market volatility” Darcie Crowe, Crowe Private Wealth, Canaccord Genuity Wealth Management beginning, it was limited in terms of access.

Now there is great diversity in terms of the opportunities in the space, whether long/ short equity, arbitrage, hedged credit or even diversified alternative portfolios.”

Crowe, who has been using alternative strategies for most of her clients for the past decade, says it has always been part of her conversations, but she acknowledges that the events of the past year have heightened the focus on liquid alternatives for a couple of reasons.

“First, I think the March market drawdown was significant because it showed the protection liquid alternatives were able

have the ability to short and apply option overlays to protect capital. Lastly, I have been using them in the truly alternative space in areas such as arbitrage. There are some great liquid alts in that space that provide a diversified return stream.”

When it comes to determining what alternative funds are right for a specific investor, Crowe says the three main things to consider are how much liquidity the client needs; their risk/return objectives; and their net worth, income and cash flow. She adds that it’s important for advisors to understand a few things if they’re diving into liquid alternatives for the first time.

ENHANCING LIQUID ALT EDUCATION Over the past six months, Darcie Crowe says she’s seen a lot of material being put out by fund providers to educate advisors and investors on liquid alternatives.

She believes the next step should be industry standardization around how liquid alternative funds are classified, how much can be used and which clients they’re suitable for.

“I think over time, as liquid alternatives have longer track records, those classifications and risk levels will be better established,” she says, “and it will help in education of advisors and for firms as well.”

“The correlation of returns versus the equity market or bond market is something to keep an eye on,” she says. “If you are using liquid alternatives and equity markets run up 20%, you may not be expected to participate in a significant amount of that. Volatility metrics are another, as typically there is lower volatility within liquid alternatives.

Then there is return profile, as many are focused on more absolute returns. Correlation, returns and volatility are important in determining how you can expect them to perform in a portfolio. Also, understanding how they complement cash, equities and fixed income and how they interact with your portfolio – overall, they should bring down volatility and enhance returns.”

Lower volatility and enhanced returns are the aspects Crowe sees as the main benefits of liquid alts. “For me, it has led to an improved investor experience because clients are not experiencing the highs and lows of the market,” she says. “There is a greater emphasis on protection of capital through periods of significant market volatility.”

Darcie Crowe is a Senior Vice President, Senior Investment Advisor and Portfolio Manager at Canaccord Genuity Wealth Management. Her views, including any recommendations, expressed in this article are hers own only, and are not necessarily those of Canaccord Genuity Corp.

www.wealthprofessional.ca

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FEATURES

ALTERNATIVE INVESTMENTS

Gold Gold had an impressive run in 2020 – the price rose to a new record high of US$2,070.50 an ounce in August. While it has since dropped back under US$2,000, opening the month of February at US$1,865, the price is still up 17.9% for the year. Gold’s rise during the pandemic once again has advisors justifying its place in portfolios.

“Gold has been seen as a safe haven since the dawn of time,” says Chris Dewdney, an advisor and principal at Dewdney & Co. “It has always been seen as a currency, but it has morphed into a tangible asset that, if Armageddon comes, will still be a store of value. Last year was great for gold because of the pandemic.

With uncertainty and unprecedented times, people were unaware of the future, so the first impulse was to rush to safety.”

Dewdney says he’s always been a believer in gold as an alternative asset in portfolios and has always steered clients toward it. He emphasizes to clients that gold is a commodity and therefore can be volatile, which isn’t

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something every investor is willing to weather, and he typically holds the weighting to an average of 5%.

“Typically, people are looking at three main asset classes: cash, equities and fixed income,” Dewdney explains. “Cash is yielding

Even though gold’s value has declined from the highs reached last summer, Dewdney is still optimistic that it has room to grow. He’s seen younger investors gravitate towards other alternatives, but he doesn’t see those as a store of value like gold.

“I am still confident in gold. With the other options, I don’t see them as a store of value, and they make gold’s volatility look quite meek” Chris Dewdney, Dewdney & Co. you nothing, fixed income is yielding almost nothing, and people were scared of equities at the start of the pandemic. There are other asset classes you can look towards, but gold is interesting because it is accessible to everyone. To own gold, you don’t need to buy a gold bar and store it in your safe – you have exposure to gold through ETFs and various funds.”

“I am still confident in gold,” he says. “With the other options, I don’t see them as a store of value, and they make gold’s volatility look quite meek. I don’t know where gold’s value goes near term, but long term, I think anyone who invests in gold will definitely be in a position of profitability. With all the global uncertainty, the underlying story for gold is an attractive

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GOLD’S PERFORMANCE DURING THE PANDEMIC GOLD PRICE PER OUNCE (USD)

$2,150

$1,950

$1,750

$1,550

$1,350

Feb 2020

Mar 2020

Apr 2020

May 2020

Jun 2020

Jul 2020

Aug 2020

Sep 2020

Oct 2020

Nov 2020

Dec 2020

Jan 2021

Feb 2021

Source: Goldprice.org

one, and once the smoke clears, there will be a large reentry back into the gold market.”

There is perhaps no better counterpoint to gold than Bitcoin, which has also seen its value soar recently. Dewdney says the concurrent gains made by both gold and the cryptocurrency shows they can coexist.

“I think it is a tale of two types of investors,” he says. “There is a whole new demographic of investors, and for some, gold is not on the radar right now. It is old – what their parents did. The problem is, I don’t know how anyone can view Bitcoin as a currency. I don’t think the average person who is planning to buy something next week is going to look at the store of value in Bitcoin – something that can be up or down 50% in that period or shorter.”

When implementing a gold strategy, Dewdney says there are many ways advisors can approach it, from investing in the commodity itself to the companies involved in mining it – but he again cautions advisors to keep its volatility in mind.

“It is still a volatile asset class that may or may not be right for every client,” he says. “For the clients who can stomach that risk appetite, we don’t go more than 5% just so we can contain the volatility risk. We want exposure – if gold does what we predict it to do, it will add great alpha to the portfolio; however, if

gold goes the other way, we have limited the amount of risk we injected in the portfolio.”

That said, Dewdney is optimistic about where gold is headed. “Everyone is searching for yield and where to get it,” he says. “People who may not have been inclined to look at gold are looking today. As an industry, we are always evolving and looking for what the solution is today and tomorrow. I don’t think this low rate environment is going away anytime soon. For us, we are trying to stay true to the fundamentals, and diversification is always key. If we are not finding the yield in one place, we will keep searching to create a balanced and diversified portfolio that will give the client returns and protect from downside.”

Private equity Giving clients access to private equity investments is something Sean Moir has been doing since he joined Mandeville Private Client in 2014 – so he’s been pleased to see the concept gain momentum recently, with more information and education around the benefits private equity can bring to portfolios. That increased awareness has made more investors comfortable with the asset class.

“When I joined Mandeville, we were looking to revolutionize the industry with

our approach,” Moir explains. “We were looking to democratize the access to these investments that had traditionally only been available to ultra-high-net-worth individuals. Now we have seen big efforts from other companies to bring forward offerings that are compelling but along the same lines of democratizing the access.”

Now that more major fund companies are beginning to offer their own versions of alternative investments, including private equity, Moir says the asset class is becoming more of a household term. That’s been underscored by the COVID-19 pandemic, which demonstrated what private investments can do during periods of stress.

Because private equities have less day-to-day movement, prices don’t fluctuate as much in volatile times.

“What we saw on the public markets was one of the swiftest contractions to a full bear market,” Moir says. “There is no question that there was increased risk and uncertainty, but the pricing of a business should not materially change to the tune of 30% or 40%. The primary reason a public listing was down by 30% is because there were more interested selling parties than buying. In order for a buyer to have a price satisfied, they wanted their risk hedged, so the price was marked

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FEATURES

ALTERNATIVE INVESTMENTS

AREAS OF INTEREST IN PRIVATE EQUITY Private equity has seen a few specific themes emerge over the past couple years; two that stand out for Sean Moir are ESG and healthcare.

“The idea of doing good for society and the planet, which usually translates to renewable resources or green investing, is a theme we have seen gain momentum,” he says.

In terms of healthcare, it all relates to the aging population. “Today, baby boomers are 65+ and are thinking about their health,” he says. “They are spending money on things related to supporting or improving their health, so the industry is finding opportunities to service the boomers.”

“The more you educate, the more it makes sense. The only way to truly embrace a private asset is to understand it” Sean Moir, Mandeville Private Client down for those looking to find liquidity. When you buy on the public market, you don’t necessarily buy the value of the business, but rather the liquidity.”

Moir’s approach to private equity mirrors well-established institutional fund managers such as the CPP, Ontario Teachers’ Pension Fund, OMERS, and the Yale and Harvard Endowment Funds, which allocate between 40% and 60% to alternatives.

“They provide beneficiaries with positive, consistent returns and are able to satisfy withdrawals,” Moir explains. “When you talk to most Canadians about outcomes, they generally want that. They want to see capital remain positive and grow. They are looking to see an income from their capital, especially if at a retirement age, and protect their capital from taxes and inflation.”

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Moir’s team allocates capital in a similar manner, starting by discerning a client’s liquidity needs so they can take advantage of private equities’ illiquidity discount to generate outsized returns.

“Taking advantage of the illiquidity discount is a conversation we have,” Moir says.

“We ask how much of their portfolio they feel they need access to – most of the time it is minimal, and that allows us to gain exposure in the alternative realm.”

There’s no doubt that more attention is being paid to the asset class, and Moir stresses that education is a fundamental aspect of investing in private equity.

“The more we can educate our clients, the more they will understand what is in their best interest,” he says. “The more you educate, the more it makes sense. We are

aggressive in educating, and now it’s nice to see other providers are doing it as well. The only way to truly embrace a private asset is to understand it. When you purchase a private investment, you need to be dedicated for at least five years, because the nature of it requires patience to take advantage of the compounding earnings yield. You need to invest time to realize the earnings growth before injecting liquidity into it.”

Furthering their own understanding will help advisors in the long run, Moir says, adding that he’s seen this play out in his own practice. The more familiar he has become with private equity, the more in-depth his conversations have been with clients, which has made them more inclined to accept it.

“If you are a client, the biggest advantage, I believe, is the illiquidity discount, because when you compound that illiquidity discount over the long term, you create outsized wealth,” he says. “From the advisor angle, it is differentiation. This still is an emerging theme – not every dealership embraces it, so it differentiates you and gives you something to talk about with your clients and prospects.”

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Oil Commodities are traditionally volatile, sometimes even bringing the most far-fetched ideas to reality. That’s exactly what oil did during the past year, briefly dropping below $0 as the pandemic set in motion lockdowns that threw off supply and demand. Yet while the sector has been throttled by the pandemic and is still facing headwinds, it might be worth another look, as its low valuations are providing an opportunity for investors to add an asset to their portfolios that has a negative correlation to other assets.

“The idea of it going negative is almost a completely opaque concept,” says Tim Pickering, founder and CIO of Auspice Capital.

“That’s what stands out, but there are other nuances in 2020. OPEC, OPEC+ and Saudi Arabia can’t be ignored. You saw it at the beginning of 2021, when Saudi Arabia decided to cut production unilaterally. At the end of the day in the oil market, people are going to protect their position.”

Pickering believes the space will remain

volatile. He also notes that the pandemic is still reducing demand. “In 2021, my guess is it will be hard for oil to get too far to the upside because there is still a lot of supply that can meet the incremental demand that comes back,” he says.

In addition, the commodity is facing political issues both domestically and abroad.

Pickering believes the Saudi production cuts might be a preemptive move to the Biden administration offering sanction relief to Iran, which would add more supply into the global market. Then there’s Biden’s shutdown of construction on the Keystone XL pipeline.

“Keystone is setting the bar from an environ­ mental perspective, and the surrounding investment to Keystone in renewables is what is going to be missed here,” Pickering says.

“I think the decision to stick to the campaign promise was a short-sighted one by the Biden administration. The question is, does Canada do anything about it? I think it was a poor decision, given the roughly $2 billion in wind and solar projects that were going to be put in place surrounding the Keystone project.”

Oil has undoubtedly taken on a negative tone and been beat up from a fundamental and behavioural standpoint. Yet Pickering says that’s exactly why it makes sense to take another look right now.

“We have seen more investors look for these opportunities,” he says. “We have started to see US investors look at the Canadian landscape because it is so far out of whack. It may not have the overweighting that it did in the past, which is a good thing, but I think it absolutely holds a place in portfolios. We haven’t seen this opportunity in commodities since the late ’90s. They have been beat down, so far undervalued, so we see it as probably one of the biggest opportunities in our careers.”

Pickering says the demand for oil is still in question for the foreseeable future. Even as companies shift to more renewable forms of energy, oil will still be necessary. And he believes it warrants a place in portfolios because of its low correlation to equities and fixed income.

“Investors should be thinking about that not just in resource equity, but the under-

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FEATURES

ALTERNATIVE INVESTMENTS

OIL’S PERFORMANCE DURING THE PANDEMIC BRENT CRUDE PRICE PER BARREL (USD)

$60

$50 $56.35 $53.96 $51.90

$51.80

$40

$48.25 $45.58 $44.15 $43.14 $40.93 $38.97

$38.32

$30

$29.94 $26.44

$20

2/3/20

3/2/20

4/1/20

5/1/20

6/1/20

7/1/20

8/3/20

9/1/20

10/1/20

11/2/20

12/1/20

1/1/21

2/1/21 Source: Oilprice.com

“We haven’t seen this opportunity in commodities since the late ’90s. They have been beat down, so far undervalued, so we see it as probably one of the biggest opportunities in our careers” Tim Pickering, Auspice Capital lying commodity. Commodities in general are offering negative correlations. With yields so low, we are actually seeing fixed income behave like equities. Will it have a negative correlation at a time of correction?

I don’t know, and the problem is it doesn’t have yield. You have to look at other asset classes to be accretive to the portfolio, and that is critical.

“If you have your entire portfolio in trad-

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itional asset classes – equity, fixed income – and diversify with private equity, real estate, infrastructure, they all have high equity correlation. You have to look for things that are motivated by other factors – that is where commodities can perform. You are looking for your negative correlation to your portfolio. Those are the valuable things to have and what we see institutional investors adding right now.”

Private debt As many investors and advisors evaluate the fixed income portion of their portfolios, they’re noticing lower and lower returns – a symptom of the low interest rate environment that many countries have been experiencing for years.

The past year has only put a bigger spotlight on the issue and has some investors and their advisors looking for an alternative, such as private debt. Arthur Salzer, CEO and CIO at Northland Wealth Management, has been a fan of the asset class for a decade and says that while the yield is a draw, there is much more advisors need to understand before diving in.

“We have been investing in private debt since 2011, first in mortgages, primarily in Canada through private [mortgage investment corporations],” he says. “Our current portfolio is a combination of private debt through mortgages in Canada and the US and things like

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bridge loans and retail credit card financing.”

Salzer says Northland has been pleased with the performance of its private debt investments, but that’s largely because the team has done their homework to make sure they’re putting their clients in the best position possible.

“When we were doing our original underwritings for any manager, we always underwrote to the underlying investment,” he says.

“We want to know the terms to maturity of these pieces of private debt and how it is collateralized. Regardless of what the manager said the conditions were of the fund, we always underwrote to worst. That means if there is a credit contraction and credit markets freeze up, we know how long we are likely to be in one of these funds.”

When getting into private debt, advisors need to be aware of a few things, Salzer says, starting with the track record and tenure of the underlying managers. “You need to ask what experience they have, especially through credit cycles,” he says. “It’s one thing to say

“In private debt, collateral is still a big piece of the process. Having that extra security when times get tough and having a team of managers who know how to access that collateral and to get the capital back is a key point” Arthur Salzer, Northland Wealth Management you’ll raise capital, but how do they source deals and get their deal flow?”

Salzer says it’s also important to consider what type of security managers are taking – and if there are difficulties, which are normal in the private debt world, are the managers prepared to handle them?

“Do you have the ability to negotiate with borrowers? Do you have additional penalties to improve returns for the investors? And do you have the ability, legally and operationally, to seize collateral if you have to and, in some

cases, improve or sell it? It is quite an expensive business – it has gone beyond what mortgage brokers used to offer; these are sophisticated lending machines.”

Pinpointing good managers has paid off for Northland, where clients typically have about a 25% exposure to private debt. While Salzer says that the pandemic didn’t necessarily generate more interest in private debt among current or potential clients, he has witnessed more discussions about the asset class.

One thing the pandemic did underscore

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FEATURES

ALTERNATIVE INVESTMENTS

THE GROWTH OF PRIVATE CREDIT IN CANADA $4.8trn

$4.6trn

$4.4trn

$4.2trn

$4.0trn

$3.8trn

$3.6trn 2017

2018

2019

2020 Sources: Trading Economics, Statistics Canada

for him was the importance of diversifying away from Canadian managers and loans.

“Being able to diversify and get access to the US and European markets in the private debt world makes a difference, given the risks we see today,” he says. “Different economies are doing different things because they don’t have the same lockdown restrictions as here in Canada. Places like Florida and Texas, where we have a lot of capital in private debt, continue to grow, get immigration … and I think it is good to have exposure to those places and not be completely centred on the Canadian economy.”

As for the risks inherent in private debt, Salzer says it comes back to the manager’s ability, as well as truly understanding where the money you’re investing is going.

“What are the fees on the funds? Is it simply a management fee? A management fee plus performance? Are there additional ways the managers are generating returns, possibly by underwriting fees from deals? You need to read and understand those 150-page offering memorandums if you are putting capital in one of these funds.”

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But for advisors who do their homework, private debt can be rewarding. “The yield over traditional fixed income is very strong, relative to the underlying risk,” Salzer says. “In private debt, collateral is still a big piece of the process. Having that extra security when times get tough and having a team of managers who know how to access that collateral and to get the capital back is a key point. We say we want the pound of flesh because we are lending out families’ money, and to lose it by being foolish or not business-savvy isn’t a good thing.”

Commodities futures Commodity investments have enjoyed a bit of buzz recently amid forecasts that inflation is coming to the Canadian economy. Individual commodities themselves – from oil and gold to certain agricultural commodities like soybeans – have also grabbed their share of the headlines.

These are all areas that allow advisors to diversify their portfolios, says Adam Pukalo, a portfolio manager and commodity futures advisor with PI Financial, who diversifies by

trading commodity futures and options for suitable clients.

“I would say my approach to commodities is twofold,” he explains. “A lot of my clients have futures trading accounts with me for diversification purposes to hedge their stock or equity portfolios using option strategies on the S&P 500 Index. I also work with large corporations – farm operations – on protecting their commodity prices such as canola, wheat, soybeans, etc. That’s one side of what I do: hedging and helping offset their physical commodity risk to make sure their price is protected. The other side of the strategy is more on the speculative side. Someone may not have the physical commodity, but still wants to participate in the upside or downside by going long or short.”

While Pukalo specializes in various commodities, it’s the agriculture-related ones that have garnered attention amid the threat of inflation. During the pandemic, the notion of agriculture as an essential service has prompted investors to look at the various investment opportunities in the industry.

Pukalo says someone who isn’t buying into a

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FEATURES

ALTERNATIVE INVESTMENTS

COMMODITY VALUES OVER THE PAST YEAR

25% Oil (Brent crude)

18% Gold

47% Soybeans Sources: Oilprice.com, Goldprice.org, Market Insider

“The futures market isn’t like a stock, where you pay for your share and that’s all you can technically lose. You could get a margin call to lose more than the initial investment” Adam Pukalo, PI Financial physical farm or a truck full of a crop would need to participate in the futures market to get the purest exposure – but he cautions that futures markets are a very high-risk way for investors to get alternative exposure, so advisors need to be sure the strategy is suitable for the individual client. He also stresses the importance of working with someone who has expertise in the field.

Simply adding a futures strategy on commodities isn’t something that can be done overnight – Pukalo says there are a few things to consider. The first is that not many advisors are licensed to do it, and some firms might not

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allow it. “That is one of the biggest barriers to offer pure futures trading strategies for clients,” he says.

The other risks surround volatility, leverage and the chance of loss. “The futures market isn’t like a stock, where you pay for your share and that’s all you can technically lose,” Pukalo says. “With the futures market, it’s a different beast because you are using leverage and putting a certain percentage of money down.

You could get a margin call to lose more than the initial investment.”

As for the commodities themselves, Pukalo notes that they can swing quickly. A tweet or a

disaster somewhere in the world can have an unexpected impact. Something as simple as weather needs to be considered because it can have an effect on farming commodities. That makes it important for advisors to analyze all the data available on a specific commodity.

Still, for those who are experts in the commodities they chose to participate in, the futures market can add a unique element to portfolios. “The main benefit is the low correlation to the overall stock market,” Pukalo says. “That is what commodities – and their futures – can offer investors. It’s something different for their portfolio. Having too much of something is a bad thing for portfolios, and you need to add different elements – that’s what commodities can offer.”

Real estate For real estate investors, 2020 proved to be a challenging year, as the pandemic brought more volatility to the space than it had seen in decades. The iShares S&P/TSX Capped REIT ETF (XRE.TO) dropped just over 46% at its worst point in 2020, and today it’s still down 19% from its peak in February 2020.

The Canadian equity market, meanwhile, was down closer to 35% at the depths of the market crash, as measured by the iShares

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S&P/TSX 60 ETF (XIU.TO), but has since clawed its way back into positive territory and is now up almost 5%.

While real estate has had a bit of a comeback amid news about vaccines, many REITs haven’t yet returned to their prepandemic levels, which presents opportunities for advisors looking to embrace real estate within their asset allocation strategy.

But capitalizing on those opportunities means knowing where to look.

“The important thing when investing in real estate is that it needs to fit into your asset allocation process, and if you don’t have a strong real estate IQ, you need to be cautious and utilize a capable manager or diversified ETFs,” says Rory O’Connor, a senior

vice-president, portfolio manager and investment advisor with the O’Connor Engelbert Investment Group at Richardson Wealth.

“When we approach it from a high level, there are a few things we look at initially, such as sectors – multi-family, office, groceryanchored, industrial, data centres, storage, cell towers, etc. – and geographic exposure.

We also consider where in the capital stack we want to invest: debt or equity. And from there, we can also consider publicly traded companies or private real estate.

“There are essentially four areas available to us: public and private, within debt or equity.

Not every investor will have access to private real estate opportunities, and it does get quite complex. However, for most investors, there

are still plenty of opportunities in the public markets to fulfill your real estate needs.”

When evaluating the vast real estate universe, O’Connor says his team often delves into specific sectors to find the ones that make the most sense for their portfolios.

“We have tended to be on the conservative side, so we have not had any exposure to the more cyclical side of the real estate market such as hotels,” he explains. “We tend to stick to things where we know the revenue and tenants are more resilient. We have always had a healthy position in multi-family residential, predominantly in growing US markets like Seattle and the Sun Belt states. We are also invested in things like grocery-anchored centres that are more geared towards essential

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FEATURES

ALTERNATIVE INVESTMENTS

REAL ESTATE’S LONG-TERM PERFORMANCE VERSUS OTHER INVESTMENTS ANNUALIZED 20-YEAR RETURNS (2001 TO 2020) Canadian REITs (S&P/TSX Capped REIT Index) 10.2% Global real estate (FTSE EPRA/NAREIT Developed Index) 8.1% Small-cap equities (MSCI Canada Small Cap Index) 8.6% US equities (S&P 500 Index) 7.5% Corporate bonds (Canadian 5- to 10-year corporate bonds) 6.7% Canadian equities (S&P/TSX Composite Index) 6.2% Government bonds (Government of Canada 10-year bonds) 5.2% Commodities (Canada Energy & Materials Index) 4.9% Source: Scotiabank Global Banking & Markets

“Real estate has historically been a great place to collect a robust distribution, but not all distributions are created equal” Rory O’Connor, O’Connor Engelbert Investment Group, Richardson Wealth services, mostly in the US and in Germany.”

O’Connor says his team’s process didn’t change throughout the pandemic and has held up well. Still, the volatility surrounding COVID-19 has presented the opportunity to make minor adjustments.

“We had an allocation in self-storage that held up quite well,” he says. “We were able to sell our self-storage near full value and reallocate into multi-family that was down considerably. We also exited a small amount of office in favour of industrial. Having said that, I don’t

32

think you write off office completely because there are areas that show promise. There are opportunities, but you need to be careful.”

One area O’Connor has been watching closely is the public markets. He says that 2020 was a perfect illustration of why advisors should look at different areas of real estate – public and private – at different times.

Right now, private real estate is trading a lot closer to pre-pandemic levels, especially when compared to publicly traded REITs. This price dispersion won’t last forever and represents a

compelling opportunity.

“We have even seen publicly traded REITs taken over and brought private,” O’Connor says. “That typically happens when you have a valuation disconnect.”

While certain subsectors will still need time to establish a new normal, O’Connor believes that once the economy starts to reopen, a lot of real estate will rebound.

“The one thing we stress with investors is to understand what you own,” he says. “We see a lot of investors and advisors invest in real estate solely based on what the yield looks like. Real estate has historically been a great place to collect a robust distribution, but not all distributions are created equal.

We remind investors that the distribution on a REIT stock is not what you should look at first; it is the last thing to consider. You need to look at all the other factors that make for a great real estate business. If you are not a sophisticated real estate investor, we highly recommend sticking to a broadly diversified ETF or a reputable manager who can screen out the bad apples.”

Given real estate’s tremendous longterm track record, O’Connor believes every investor should have exposure to it in one form or another.

“In a normal market environment, real estate tends to offer an added element of diversification and a return profile that is less correlated to equities,” he says. “However, investors should be aware that during large market sell-offs, the REIT sector does not provide a lot of diversification benefits. The main reason we are enthusiastic about allocating to the real estate sector is because it has been the best-performing asset class over the past 20 years. Canadian real estate has produced a 10.2% annualized return from 2001 to 2020 – an incredible result.

Over the long term, the real estate market will provide you with a great return, but you need to be patient, collect the yield and capture appreciation in the share prices over time. There’s a reason real estate represents a little over 12% of the Canada Pension Plan – it’s because it works.”

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BITCOIN’S RISE IN 2020 PRICE PER TOKEN (USD)

$30,000 $25,000 $20,000 $15,000 $10,000 $5,000

1/1/20

2/3/20

3/2/20

4/1/20

5/1/20

6/1/20

7/1/20

8/3/20

9/1/20

10/1/20

11/2/20

12/1/20

1/1/21

Source: Refinitiv

Cryptocurrency Cryptocurrency investing has gained a lot of attention recently, thanks largely to Bitcoin’s substantial rise at the end of 2020, which spilled over into the early part of January. Advisors need to be prepared for more questions from investors and develop an approach for clients who want exposure to cryptocurrency – if they don’t, they risk losing clients to other advisors who are more open to crypto, says Rob Tétrault, SVP and portfolio manager with Tétrault Wealth Advisory Group at Canaccord Genuity Wealth Management.

“My view from a macro level has changed a lot on cryptocurrencies,” Tétrault says. “In 2016, I didn’t think the value made sense – I thought it was a bubble. Now my opinion has changed and shifted to more acceptance. I understand the argument for it but also against it. If you don’t understand or want it, don’t use it, but I will accommodate clients who want the exposure, in proper proportions for that specific client.”

Tétrault tends to advise a minimal level of cryptocurrency exposure only for clients who are sophisticated, looking for maximum growth, have an appetite for risk and want the exposure. “Only then will we make our recommendation,” he says. “With the volatility the space sees, we will try to buy it on a dip and will go to a max of 2% in a portfolio.”

When looking for exposure, Tétrault notes

“[Investors] can’t just want [cryptocurrency] because they’ve seen it in the media. If they don’t have the right appetite for risk, we won’t recommend it” Rob Tétrault, Tétrault Wealth Advisory Group, Canaccord Genuity Wealth Management that there are a few ways to access the asset.

“You do need to make sure you are dealing with a premium cryptocurrency or fund,” he says. “Our approach was to get in on an IPO so that our clients were able to get the appreciation of the fund and the currency.”

Tétrault re-emphasizes the importance of determining whether the exposure truly makes sense for the investor, or if they’re merely trying to chase the latest fad.

“It can’t just be the six o’clock factor – they can’t just want it because they’ve seen it in the media,” he says. “If they don’t have the right appetite for risk, we won’t recommend it.”

That’s largely because of the volatility in the space, which can be seen in the major fluctuations some cryptocurrencies have had.

“Volatility is the big risk,” Tétrault says, “but there may also be some counterparty risk, which is why it is important to deal with the best and largest funds and cryptocurrencies for your exposure.”

Tétrault notes that more clients have been asking questions about cryptocurrency, which

is why he wants to be prepared with answers.

“I think clients are more involved and interested in what is happening with their portfolio,” he says. “They want new-aged stuff like the crypto, fintech, junior miners, etc. When you have high- and ultra-highnet-worth clients, your approach can’t be cookie-cutter. They want more and won’t be happy unless you can provide it, even at a small portion.”

Tétrault does see cryptocurrency as an uncorrelated investment to traditional equities and believes it could be a hedge against inflation. He believes advisors have a key role to play in providing education and access.

“We are still in the early stages of people getting on the train,” he says. “There is still a large portion of the population that can’t or doesn’t know how to trade it. I think the most feasible ways will be through ETFs and funds on an exchange. I think we could see an uptick in demand, and that’s where advisors come in. If they can’t trade it, they will call their advisor.”

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International

CLean Dividend Power Fund TSX Symbol (Reserved): CLP.UN

MIDDLEFIELD EXCHANGE OFFER AND CASH OPTION IF YOU OWN SECURITIES OF ANY OF THE FOLLOWING ISSUERS, YOU ARE INVITED TO EXCHANGE THOSE SECURITIES FOR UNITS OF INTERNATIONAL CLEAN POWER DIVIDEND FUND - DEADLINE: PRIOR TO 5:00 P.M. (TORONTO TIME) ON FEBRUARY 25, 2021 International Clean Power Dividend Fund (the “Fund”), is offering units of the Fund to investors at a price of $10.00 per unit in exchange for the securities of any of the issuers listed here or for cash subscriptions.

Prospective purchasers under the exchange option are required to deposit their exchange eligible securities prior to 5:00 p.m. (Toronto time) on February 25, 2021, in the manner described in the preliminary prospectus.

The Fund’s investment objectives are to provide holders of units with: (i) stable monthly cash distributions; and (ii) enhanced long-term total return through capital appreciation of the Fund’s investment portfolio, through a diversified, actively managed portfolio comprised primarily of dividend paying securities of international issuers focused on, involved in, or that derive a significant portion of their revenue from renewable power and related sectors (collectively, “Clean Power Issuers”). The Advisor (as defined below) believes that Clean Power Issuers will generate attractive risk-adjusted returns for the Fund due to the increasing demand for renewable power stemming from the ongoing reduction in cost associated with renewable power as well as the growing political, corporate and societal support for renewable power.

The initial target distribution yield for the Fund is 5% per annum based on the original subscription price (or $0.04167 per unit per month or $0.50 per unit per annum).

Middlefield Capital Corporation (the “Advisor”) will provide investment management advice to the Fund.

WIND & SOLAR ISSUERS Array Technologies Inc Atlantica Sustainable Infrastruc PLC Boralex Inc Brookfield Renewable Corp Brookfield Renewable Partners LP Canadian Solar Inc Clearway Energy Inc Enphase Energy Inc Enviva Partners LP First Solar Inc Hannon Armstrong Sust Infra Cap Inc

ARRY AY BLX BEPC BEP.UN CSIQ CWEN ENPH EVA FSLR HASI

Innergex Renewable Energy Inc JinkoSolar Holding Co Ltd Northland Power Inc Ormat Technologies Inc Pinnacle Renewable Energy Inc Renewable Energy Group Inc SolarEdge Technologies Inc Sunnova Energy International Inc SunPower Corp Sunrun Inc TPI Composites Inc TransAlta Renewables Inc

INE JKS NPI ORA PL REGI SEDG NOVA SPWR RUN TPIC RNW

Brookfield Infrastructure Partners LP Canadian Utilities Ltd Capital Power Corp CMS Energy Corp Duke Energy Corp Emera Inc Fortis Inc/Canada Hydro One Ltd NextEra Energy Inc Power Integrations Inc TransAlta Corp

BIP-U CU CPX CMS DUK EMA FTS H NEE POWI TA

GRID INFRASTRUCTURE ISSUERS Advanced Energy Industries Inc AES Corp/The Algonquin Power & Utilities Corp AltaGas Ltd Ameresco Inc American Electric Power Co Inc Atco Ltd/Canada Avangrid Inc Bloom Energy Corp Brookfield Infrastructure Corp

AEIS AES AQN ALA AMRC AEP ACO/X AGR BE BIPC

ELECTRIC VEHICLES & BATTERIES ISSUERS Albemarle Corp Alphabet Inc Amazon.com Inc Apple Inc Aptiv PLC ATS Automation Tooling Systems Inc BlackBerry Ltd Ford Motor Co Generac Holdings Inc

ALB GOOGL AMZN AAPL APTV ATA BB F GNRC

General Motors Co Lithium Americas Corp Livent Corp Magna International Inc Micron Technology Inc NIO Inc NVIDIA Corp Tesla Inc Uber Technologies Inc

GM LAC LTHM MG MU NIO NVDA TSLA UBER

HYDROGEN ISSUERS Air Products and Chemicals Inc Ballard Power Systems Inc Cummins Inc

APD FuelCell Energy Inc BLDP Linde PLC CMI Plug Power Inc Xebec Adsorption Inc

FCEL LIN PLUG XBC

NON-RENEWABLE ENERGY EXCHANGE ISSUERS

(L to R) ROB MOFFAT, Investment Analyst, NANCY THAM, Managing Director, Sales and Marketing, JEREMY BRASSEUR, Managing Director, DEAN ORRICO, President and Chief Investment Officer, ROB LAUZON, Managing Director and Deputy Chief Investment Officer, POLLY TSE, Chief Financial Officer and SHANE OBATA, Executive Director, Investments and Portfolio Manager

ARC Resources Ltd Bank of Montreal Bank of Nova Scotia/The BCE Inc Brookfield Asset Management Inc Canadian Imperial Bank of Commerce Canadian Natural Resources Ltd Cenovus Energy Inc Crescent Point Energy Corp Enbridge Inc Freehold Royalties Ltd Gibson Energy Inc Granite Real Estate Investment Trust Imperial Oil Ltd Inter Pipeline Ltd

ARX BMO BNS BCE BAM/A CM CNQ CVE CPG ENB FRU GEI GRT-U IMO IPL

Keyera Corp MEG Energy Corp National Bank of Canada Parex Resources Inc Parkland Corp/Canada Pembina Pipeline Corp PrairieSky Royalty Ltd Royal Bank of Canada Seven Generations Energy Ltd Suncor Energy Inc TC Energy Corp Toronto-Dominion Bank/The Tourmaline Oil Corp Vermilion Energy Inc Whitecap Resources Inc

KEY MEG NA PXT PKI PPL PSK RY VII SU TRP TD TOU VET WCP

To learn more about International Clean Power Dividend Fund, speak with your financial advisor or contact us at: 1-888-890-1868 invest@middlefield.com www.middlefield.com

Middlefield Limited 812 Memorial Drive NW Calgary, Alberta T2N 3C8

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

This offering is only made by prospectus. The prospectus contains important detailed information about the securities being offered.

Copies of the prospectus may be obtained from your IIROC registered financial advisor using the contact information for such advisor.

Investors should read the prospectus before making an investment decision.

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SPECIAL REPORT

5-STAR BROKERAGES

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5-STAR

BROKERAGES Wealth Professional surveyed hundreds of advisors to find out which brokerages are the best of the best

www.wealthprofessional.ca

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SPECIAL REPORT

5-STAR BROKERAGES

5-STAR BROKERAGES:

THE WINNING FORMULA FOR ADVISORS THERE IS MUCH that brokerages need to focus on today to support advisors to deliver the best possible service to their clients, from corporate culture and diversity and inclusion to training, technology and compliance. To find out which brokerages have achieved the ideal combination of all of these aspects, Wealth Professional turned to its network of individuals and organizations within the Canadian wealth management landscape, surveying more than 1,700 financial advisors and wealth management professionals to find out their opinions of the brokerages they work with.

Ultimately, 15 firms earned the title of 5-Star Brokerage in the first in a series of 5-Star Award special reports WP will be publishing this

“Diversity and inclusion is definitely a focus for our firm. The whole industry, for a number of years, lacked that, but I think the industry is doing a better job today” Stuart Raftus, Canaccord Genuity Group

year to recognize great individuals and organizations in Canadian wealth management. Advisors also weighed in on the areas where their firms are excelling and where they still need to improve.

Corporate culture and ethics Overall, brokerages’ top-scoring category was corporate culture and ethics; advisors gave their firms an overall score of 96% in this area. In addition, 89% of the advisors surveyed said they thought their firm was doing an excellent job of building culture.

Those trends were also affirmed by the qualitative research WP conducted – among the positive comments advisors made were that their firm puts clients’ needs first, that they felt their opinions were valued by leaders and that their organization has solid leadership.

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One firm that received consistently positive feedback from advisors on its culture was Wellington-Altus Private Wealth.

“Culture is a bit of a buzzword, but at Wellington, culture is what we are all about,” says Charlie Spiring, founder, senior investment advisor and chairman of Wellington-Altus Holdings. “We focus every day on how to improve our culture. We do it through connection – there are multiple ways, but we do a monthly connect call where we speak to our world, talking about what’s going on with all aspects of the business. Our management is so connected with our advisors, the gap is near zero. Management has ingrained a listening attitude to our advisors. Management listens well – we insist on listening even when we are wrong. We’ll tell [advisors] when we are wrong, when they are right and adapt. That adaptation is a massive skill we have overlaid on our model.”

Technology Another area where brokerages scored highly overall (94.3%) was technology. It’s another hot-button topic for advisors, especially those

HOW WE CHOOSE THE BEST Wealth Professional’s inaugural 5-Star Brokerages awards celebrate the firms that are excelling in key areas like culture, compliance, training and technology. The awards give advisors who might be contemplating moving their practice insight into the industry’s highest-rated brokerages.

During a 15-week process, WP’s research team conducted one-on-one interviews with advisors from top brokerages across Canada and surveyed thousands more within WP’s national audience to gain a keen understanding of what advisors care most about in their relationships with their firms.

Advisors were first quizzed on what features of a brokerage matter most to them and then asked how their brokerage ranked on each of those attributes.

From those results, WP’s research team created a shortlist of finalists. To be eligible, each firm had to be a full-service brokerage with a minimum of three locations. From there, the research team conducted further in-depth telephone interviews with advisors to capture qualitative data to validate the results. Based on the importance of each criteria, WP applied an algorithm to determine the star rating of each firm in each category. The firms that received the highest ratings across all criteria were selected for the final list of 5-Star Brokerages.

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at larger firms, where use of the firm’s tech tools is usually mandated.

That makes it even more important for firms to listen to the needs of their advisors so they can supply the best possible tools. Many of the advisors WP surveyed said they’re happy with the tools they have access to; however, there were some who wanted to see improvements.

Jim Durnin, a senior financial planner at 5-Star Brokerage Assante Financial Management, says incorporating technology can help advisors establish both discipline and consistency.

“Where I see technology helping us is to become more disciplined, more consistent and to provide longevity in something you are creating,” Durnin says. “On the discipline side, when we have significant geopolitical events or a recession, emotions play a large role in the investment process. Having some kind of baseline you can reference when making decisions is important. [Technology] can help us during periods of high stress.

“For consistency, in the 1990s, I used to find I would structure a portfolio differently depending on the day or week I was having. What I wanted to do was make the experience of our clients very consistent, and so a computerized investment process helps accomplish that.”

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“Where I see technology helping us is to become more disciplined, more consistent and to provide longevity in something you are creating” Jim Durnin, Assante Financial Management

Diversity and inclusion There’s no doubt that one of the most important things brokerages need to focus on right now is diversity and inclusion. Overall, brokerages earned an impressive score in this area (93.7%); however, only 78% of firms received an ‘excellent’ rating from advisors for their efforts toward making wealth management a more diverse and welcoming industry.

WHERE BROKERAGES ARE EXCELLING Culture and compliance stood out as the areas where advisors believe their brokerages are doing especially well. At the other end of the spectrum, advisors said their firms need to do a better job providing training and helping them build their business.

Excellent

Very good

Good

OK

Poor

Corporate culture and ethics

Compliance and regulation

Compensation

Advisor support (technology and back office)

Diversity and inclusion

Training

Helping build your business

0%

20%

40%

60%

80%

100%

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SPECIAL REPORT

5-STAR BROKERAGES

It’s an issue that many firms are aware of and are starting to take action on. Canaccord Genuity Group, for example, has been making sure its hiring, training and succession planning processes all provide equal opportunities.

“Diversity and inclusion is definitely a focus for our firm,” says Stuart Raftus, vice-president and chief administrative officer at Canaccord Genuity Group. “The whole industry, for a number of years, lacked that, but I think the industry is doing a better job today. It has been an industry dominated by white males, frankly, for a number of years, so you have to be cognizant of what your communications in the marketplace are and what mediums you are using so you reach a broader group.”

Compliance Brokerages’ compliance efforts received the second highest overall score from advisors (95.9%), and 87% of advisors rated their firms ‘excellent’ in compliance – suggesting that advisors understand the importance of the compliance measures their firms put in place.

Some firms have found that compliance success lies in creating a partnership between advisors and the compliance department.

“We take a common-sense approach,” says Shaun Hauser, founder

OVERALL SCORES BY CATEGORY More than 1,700 advisors and industry professionals rated their firms on seven key metrics. The scores below represent the combined score of all the brokerages rated by advisors.

Corporate culture and ethics

96.0%

Compliance and regulation

95.9%

Helping build your business

94.3%

Advisor support (technology and back office)

94.3%

Compensation

93.8%

Diversity

93.7%

Training

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90.2%

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and president of Wellington-Altus Private Wealth. “We try to always do what is best for the client, company and advisors, in that order, and make sure the client is being taken care of. If there are mistakes that need to be corrected, we correct them. It is very important our advisors view our compliance department as partners, not as adversaries. The term ‘dictatorial’ does not come into our lexicon on how compliance manages and helps us understand our risks. I believe our advisors really appreciate that and would tell you our compliance department is an asset, not a detriment.”

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5-STAR BROKERAGES 2021 Edward Jones

Training

Phone: 800-441-2222

According to the advisors WP surveyed, the area brokerages need to pay the most attention to is training. The category had the lowest overall score (90.2%), and only 69% of advisors rated their firms ‘excellent’ in this area – and nearly 5% rated their firm’s training as ‘poor.’

Email: katrine_clark@edwardjones.com

“It is very important our advisors view our compliance department as partners, not as adversaries.

The term ‘dictatorial’ does not come into our lexicon on how compliance manages and helps us understand our risks”

Assante Wealth Management

Website: edwardjones.ca/knowmore

BMO Nesbitt Burns Canaccord Genuity Group Harbourfront Wealth Management IA Private Wealth Mandeville Private Client Manulife Securities

Shaun Hauser, Wellington-Altus Private Wealth Nicola Wealth At Edward Jones, the key to training is providing opportunities at all stages of an advisor’s career, says Katrine Clark, the firm’s principal of branch team talent acquisition.

“Training is not just something one needs to close the immediate gap and complete a specific job requirement; we take a career-long view in developing talent,” Clark says. “We continue to develop programs for branch teams to prepare them for the next step in their progress.

We also provide tailored onboarding support for financial advisors transitioning to Edward Jones and leadership training and coaching for those showing a passion for developing talent.”

Even with the areas that need improvement, the findings of the inaugural 5-Star Brokerages awards indicate that advisors are generally pleased with how their firms are handling key areas of support. That’s a positive for the wealth management industry as a whole – and for the millions of Canadians relying on advisors for financial guidance.

Peak Financial Group Scotia Wealth Management Raymond James RBC Dominion Securities Richardson Wealth Wellington-Altus Private Wealth

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SPECIAL REPORT

5-STAR BROKERAGES

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EDWARD JONES CANADA Headquarters: Mississauga, Ontario Year founded: 1922 Number of employees: 49,000 associates across the US and Canada Number of offices: Home offices in the US and Canada, with more than 15,000 branch locations Leadership: David Gunn, President, Edward Jones Canada EDWARD JONES CANADA has a long history of being

recognized for service by clients – the firm has ranked highest in investor satisfaction by J.D. Power for the past eight years.

Edward Jones’ latest recognition as a 5-Star Brokerage is yet another confirmation that the firm’s approach is working, this time with advisors.

“We are really honoured to be recognized this way, especially by our advisors,” says Katrine Clark, Principal of Branch Team Talent Acquisition. “If our advisors feel confident that their firm’s practices are of such high standard, it reinforces the quality of service and the trust that our clients want and need.”

Clark believes the keys to success for Edward Jones revolve around putting the client at the centre of everything the firm does.

“I am sure a lot of people would say that, but we use the client lens in all decisions we make and regularly include our branch teams because they are the ones closest to the client,” she says. “Edward Jones is a partnership, and this furthers our mindset of putting the client first because we do not have to answer to shareholders. We are encouraged to think like owners in our business decisions as well.”

In addition, Edward Jones’ leadership team is made up of many former advisors, which has allowed them to develop strong relationships with advisors across the country and understand what they need to best serve clients. That includes areas like technology and training, where Clark says the firm takes a best-in-class approach, as demonstrated by its recent My Priorities and Starting Point initiatives, which help advisors engage with clients in an interactive way.

“We use tools to enable the conversation around clients’ real needs, fears and dreams, however unique they are,” she says. “We want the tools to be user-friendly so our branches can easily learn and use them.”

When it comes to training, Edward Jones takes a long-term view to help advisors beyond when they first join the company.

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Katrine Clark, CFP Principal, Branch Team Talent Acquisition

“At Edward Jones, we take all associates’ development very seriously,” Clark says. “Training is not just something one needs to close the immediate gap and complete a specific job requirement; we take a career-long view in developing talent.

We continue to develop programs for branch teams to prepare them for the next step in their progress. We also provide tailored onboarding support for financial advisors transitioning to Edward Jones and leadership training and coaching for those showing a passion for developing talent.”

Relentless focus on clients’ needs and deep care for its associates has allowed Edward Jones to create a strong corporate culture, something Clark believes has been highly attractive for financial advisors.

“We really foster an inclusive culture while embracing diversity of thought,” she says. “I am proud to say that 42% of our Canadian leadership team is comprised of women. We strongly believe inclusive leadership leads to better decisionmaking. Our executive team leads by example. Our president hosts a town hall every month to update and stay connected with all of the head office and branch teams. We foster a culture of support and collaboration and want all our associates to feel there is opportunity to succeed. This means creating equal opportunity for employees to develop their strengths and develop a growth mindset because a growth mindset has no limits.”

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SPECIAL PROMOTIONAL FEATURE

REAL ESTATE

A way into the housing market Real estate offers an attractive investment opportunity, but not all investors can gain access.

CMI’s Warren Aarons explains how mortgage investment corporations can give investors the real estate exposure they’re looking for THE PAST year has been one like no other for investors. A health crisis ripped across the globe, causing death, illness, and lockdowns and instilling a deep sense of uncertainty about what the future holds. The market crash in March hit portfolios, and

of existing properties that changed hands in December 2020 was 47% higher than in December 2019, while the benchmark price of a home was 13% higher.

In the face of equity market volatility and an unattractive bond market (both Canada’s

“With interest rates in Canada remaining at historical lows, the targeted yields offered by MICs to investors can be attractive” Warren Aarons, CMI while the vaccine rollout is now underway, the economic recovery remains at an early stage, and many people have seen their income reduced.

One sector that appears immune to the drama is the Canadian housing market, which ended 2020 with a bang. The number

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five- and 10-year benchmark bond yields remain below 1%), real estate represents a defensive strategic opportunity. However, not every investor has the desire or ability to buy a house or willing to saddle themselves with a full mortgage.

Enter CMI Mortgage Investments, a

leading private mortgage lending firm that offers individuals the chance, either independently or through their advisor, to profit from the red-hot housing market without being a property owner. This is achieved via a uniquely Canadian investment vehicle: the mortgage investment corporation (MIC). CMI offers three unique MIC funds, which allow investors to earn yield from the lending side of the industry while their investment is backed by mortgages secured against residential property.

With a MIC, investors pool their money to lend out to borrowers in the form of private mortgages. MICs operate much like mutual funds, but instead of stocks and bonds, they are made up of carefully selected mortgages.

Rather than owning a single mortgage, investors purchase shares of a MIC, so their investment is spread across a broad range of private mortgages. This provides diversification, mitigates risk and means that if one mortgage doesn’t perform, others can make up for it. Income is generated by collecting interest and fees from mortgage borrowers, which is paid out to investors as a regular monthly dividend or can be reinvested through a dividend reinvestment plan (DRIP).

Warren Aarons, vice-president of investor relations at CMI, explains that most MICs aren’t priced daily and therefore don’t exhibit the market price fluctuations typical of stocks and mutual funds.

“MICs have provided yield through times of economic uncertainty, as we have experienced in 2020,” he says. “With interest rates in Canada remaining at historical lows, the targeted yields offered by MICs to investors can be attractive when considered as an investment in a portfolio. MICs have demonstrated a low correlation to the broad equity market, and because the MIC is composed of a pool of mortgages with fixed rates and set times to maturity, the valuation of a MIC is calculated at various times throughout the year and should show little price fluctuation

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CMI MICS AT A GLANCE CMI Balanced Mortgage Fund

This more balanced fund targets higher annual returns of 8% to 9% by investing in both first and second mortgages and by increasing the maximum loan-tovalue ratio to 75%.

CMI High Yield Opportunity Fund

This more aggressive fund aims to deliver targeted annual returns of 10% to 11% by investing primarily in second mortgages with a maximum loan-to-value ratio of 85%.

CMI Prime Mortgage Fund

This more conservative fund minimizes volatility by investing primarily in first mortgages and by capping its loan-to-value ratio at 65%. The fund aims to deliver targeted annual returns of 6% to 6.5%. between time periods. A small MIC exposure can enhance the yield of a portfolio while reducing the risk to traditional asset classes like stocks and bonds.”

The yield is attractive in the current environment: CMI’s trio of MIC funds have targeted annual yields of between 6% and 11% at a time when retirement income is top of mind. Investors can participate with a starting investment as low as $5,000, which are RRSP, TFSA, RRIF, RESP, RDSP, DPSP and LIRA eligible, making them a versatile investment alternative.

CMI’s flagship MIC is the CMI Balanced Mortgage Fund, which consists primarily of mortgages in first and second positions and targets an approximate annual yield of 8.5%.

The CMI Prime Mortgage Fund consists of mortgages in first position and targets an annual yield of around 6%, while the CMI High Yield Opportunity Fund includes mort-

gages in first, second and third positions and targets an annual yield of 10.5%.

For those who prefer to invest directly in specific mortgages, CMI also offers a mortgage investment service, where portfolios can be individually tailored and built to the needs and requirements of the investor, with expert guidance and complete administrative support.

For investors who want to participate in the housing market boom without actually buying a property, CMI believes its MICs stand out as an increasingly compelling investment opportunity. Given current market volatility and economic uncertainty, debt investing is a good defensive strategy to add ballast to a portfolio, and Aarons believes there is potential to reallocate some assets from volatile stocks or underperforming bonds.

“If you’re an investor at CMI in any of the

Shares in all CMI MIC Funds are RRSP, TFSA, RRIF, RESP, RDSP, DPSP and LIRA eligible.

Source: CMImic.ca

three MICs or the direct mortgage lending service, you’re basically giving your investable amount to somebody who actually is buying a house,” he says. “You’re earning a return from your capital being used as a mortgage because they have come to us for that funding need rather than another institution. CMI offers a way for investors to be exposed to the housing market across Canada in the form of short-term obligations. On the borrowing side of homeownership, most of our mortgages are one year or less in term, so it allows the investor to take advantage of real-time opportunities to earn a return from the housing market.”

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SPECIAL PROMOTIONAL FEATURE

REAL ESTATE

A balanced approach to real estate Hazelview Investments’ Four Quadrant Global Real Estate Partners Fund gives investors access and exposure to various real estate strategies as an efficient way to build their portfolio ACCESS TO strong and reliable income, diversification, and capital preservation are all achievable through Hazelview Investments’ Four Quadrant Global Real Estate Partners Fund. This value proposition is accomplished by combining the inflation-hedged benefits of real estate equity with the stable and consistent yield of real estate debt. Investments are also made both privately and publicly to optimize liquidity while maintaining stability. This unique, multi-strategy approach to real estate investing relies on Hazelview’s 20 years of real estate investment experience and the firm’s fully integrated global platform.

“There are a variety of ways to access real estate today, and each have their own set of advantages,” says Corrado Russo, head of public real estate investments and lead portfolio manager of the Four Quadrant Fund at Hazelview. “We believe the best approach is to combine strategies to offset the limitations of one with the benefits of another. That is how we came to launch the Four Quadrant Fund over 10 years ago.”

Over time, the strategy has resonated well with wealth managers who are looking for an all-in-one real estate solution for their portfolios. Now, with more than $1 billion

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in assets, the Four Quadrant Fund is further diversified by property type and geography, enhancing its capital preservation characteristics. The Four Quadrant fund has also delivered a return of more than 9% for investors since its inception in 2011.

“It took some time for investors to understand the thesis initially, but once they were able to see how this integrated approach performs through different market cycles, it

real estate, on the other hand, does generate income, and that income can grow over time, typically at the pace of inflation or better. That is an important differentiator.”

The Four Quadrant Fund, however, isn’t just focused on buying commercial real estate and collecting income – it’s focused on investing in assets where value can be enhanced through active management. Hazelview employs

“This product allows more investors access to the strong benefits of commercial real estate through a well-diversified, balanced portfolio” Ugo Bizzarri, Hazelview Investments became quite popular,” Russo says.

Hazelview CEO Ugo Bizzarri notes that commercial real estate should be part of every investor’s portfolio. “I know that most individuals have exposure to real estate through their homes or cottages, but those assets are not producing income,” he explains. “Commercial

several different strategies to achieve this – including leveraging the expertise of different teams and units across the business, managing the renovation and leasing up of vacant space, improving zoning/density on a property, and developing new assets – all of which are focused on improving the properties’ ability to

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ALLOCATION OF THE FOUR QUADRANT GLOBAL REAL ESTATE PARTNERS FUND

Multi-family 21.9% Diversified 16.1% generate income.

Hazelview also looks for opportunities on the debt side. By providing loans to other real estate investors, the company is able to generate income that is secured by real estate without taking on equity risk.

“Private real estate gives you the low volatility – it gives you the great total returns over the long term,” Russo says, although he warns that it’s less liquid than other investments.

Hazelview addresses that by combining private investments with public equity, which also gives investors more global diversification, as well as exposure to niche sectors such as data centre or cell towers REITs. With the public portion of the fund, which makes up roughly 30% of the portfolio, Hazelview seeks to enhance value by making investments at prices it believes are below the longer-term intrinsic value of the properties.

Russo notes that current market conditions, driven by COVID-19, have presented excellent opportunities to gain access to high-quality real estate at significant discounts to the intrinsic value of the underlying real estate.

“We expect a strong recovery in the next year, which will compress that discount and

lead to outsized returns,” he says.

Russo adds that real estate investments tend to provide more income right now than fixed income, while the volatility of investing in real estate is relatively similar. When combined with a broader portfolio, he says, it makes the overall portfolio more efficient from a risk-adjusted perspective.

Hazelview’s depth and breath of experience is critical to the Four Quadrant Fund’s success. Real estate investing has become increasingly more complicated in recent years. Optimizing long-term, risk-adjusted returns requires in-depth knowledge of an asset to appropriately ‘future-proof ’ and meet the evolving needs of tenants in a sustainable and socially responsible manner. Hazelview currently has more than $9 billion in assets under management, primarily institutional capital, with more than 20 years of real estate investment experience and a team composed of over 80 professionals located in Canada, the United States, Europe and Asia.

As CEO of Hazelview, Bizzarri says watching the Four Quadrant Fund grow has been exciting. “I’m thrilled that this product allows more investors access to the strong

High-rise office 11.6% Low-rise office 8.1% Residential 7.8% Life sciences and R&D 7.7% Industrial 7.5% Cash and cash equivalents 7.2% Mortgage REITs 5.3% Open-air grocery-anchored centres 4.2% Technology REITs 2.8% Hotels 2.2% Self-storage 1.6% Specialty/triple net lease 1.3% Healthcare 0.9% Single-family rental/MHC 0.9% Regional malls 0.2% Source: Hazelview Investments, as of Dec. 31, 2020

benefits of commercial real estate through a well-diversified, balanced portfolio,” he says.

“Through the Four Quadrant Fund, we can bring our diverse experience of real estate investing – private, public, debt and equity – into one accessible solution.”

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SPECIAL PROMOTIONAL FEATURE

ALTERNATIVES

A proven track record By partnering with established managers in alternative investments, CI Global Asset Management brings a unique perspective to the liquid alternatives space CI GLOBAL Asset Management has been in the liquid alternatives space since the CSA adopted new rules granting access to retail investors in January 2019, but the experience of the portfolio management teams overseeing CI’s funds far exceeds the two-plus years the products have been offered in Canada. Now CI is using that experience to bring a robust offering to the table and to help educate investors and advisors on the benefits of using liquid alternatives in portfolios.

“We were one of the early issuers of liquid alternatives in Canada because we understood the client need and benefits of alternative strategies,” says Randall Alberts, senior vicepresident and head of distribution for Eastern Canada at CI Global Asset Management.

Liquid alternatives offer investors the best of two worlds: the flexibility and diversity of hedge-fund-type solutions and the liquidity and accessibility of mutual funds and ETFs. The enhanced investment flexibility of liquid alternatives offers the potential for superior portfolio outcomes, such as strong riskadjusted returns and low to negative correlation to equity and fixed income markets.

“The introduction of liquid alternatives marked a historic change for the Canadian investment industry, putting it on a more level footing with other global jurisdictions and giving Canadians greater choice and an improved tool set with which to build more robust portfolios,” Alberts says.

He isn’t wrong. In just over two years, the asset class has accumulated approximately

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$13 billion in assets1. Yet when launching its initial offering, CI put an emphasis on establishing partnerships with portfolio managers experienced in strategies with the flexibility to move beyond the constraints of a traditional mutual fund portfolio.

“We felt, when looking at liquid alternatives, that there’s an advantage to working with managers who have an extensive track record and experience in using the different tools available in liquid alternatives strategy,” Alberts says.

immediate access to managers with a proven track record,” Alberts says.

While alternative strategies can and often do hold both conventional and alternative assets, the portfolios themselves are managed using unconventional methodologies that often rely on the ability to utilize both shortselling and leverage. CI’s liquid alternative lineup includes long/short equity, where funds look to benefit from a manager profiting from both rising and falling stock prices. CI also offers strategies based on global macro and long/short fixed income, where funds are focused on implementing opportunistic strategies around macroeconomic trends. In these funds, the manager buys and sells bonds on different credit ratings and duration, as well as uses derivatives on a long/short fixed income portfolio. Finally, CI offers a long/short global investment-grade credit, which focuses on investment-grade credit spreads and producing consistent returns with lower volatility than the broader fixed income markets.

CI has seen its liquid alternative assets grow substantially and was the first firm in Canada to cross $3 billion in liquid alternative AUM2.

A big contributing factor to the growth was the 2020 market environment, which showcased the benefits of including alternative strategies

“We are innovative in terms of our approach, and we’ll continue to look for areas in the market that could potentially benefit investors” Randall Alberts, CI Global Asset Management CI offers liquid alternative strategies overseen by Lawrence Park Asset Management, Marret Asset Management and Munro Partners. In November 2018, the firm launched the CI Lawrence Park Alternative Investment Grade Credit Fund, the CI Marret Alternate Absolute Return Bond Fund and the CI Munro Alternative Global Growth Fund. In May 2020, the CI Marret Alternate Enhanced Yield Fund was added to CI’s liquid alternative lineup alongside the three existing funds.

“That gave us a footprint, along with an

in a portfolio. For example, in a year when equity markets experienced extreme volatility, the CI Munro Alternative Global Growth Fund (Series F) returned 42.03% versus the benchmark (MSCI ACWI GR CAD), which returned 14.77%. The fund strongly outperformed during the COVID-19 drawdowns, largely due to risk management tools such as shorts and option protection, demonstrating both the value of the liquid alternative structure and Munro’s proven experience in using them.

“It would be fair to say that we didn’t

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foresee a global pandemic that would have impacts across the world,” says Nick Griffin, founding partner and CIO of Munro Partners. “Thankfully, our flexible mandate and ability to use a range of capital preservation tools helped us through the initial market plunge and then reinvest once it became more attractive, leading to a strong year.”

Similarly, given the current interest rate environment, where traditional fixed income is paying negligible interest rates, liquid alternative fixed income strategies can provide better returns using more sophisticated credit and fixed income tools. The CI Marret Alternative Absolute Return Bond Fund was designed to be as flexible as possible to add value through asset allocation and active duration management, and throughout 2020, this unique strategy demonstrated its value in being nimble. During the equity drawdown from February 20 to March 23, when traditional fixed income strategies and benchmarks produced negative returns, CI Marret Alternative Absolute Return Bond Fund (Series F) returned 1.13%.

“Credit and duration management with the tools offered by liquid alternative strategies will be of paramount importance going forward if investors expect to get the same benefits from fixed income that they did in the past,” says Paul Sandhu, president, CEO and CIO of Marret Asset Management.

The tools and flexibility offered by liquid alternatives, as well as performance fees, are what set them apart from traditional mutual funds and ETFs, but liquid alternatives do have some similarities as well.

“Liquid alternatives can be bought and sold like mutual funds and have similar disclosure requirements,” Alberts says. “In ETF wrappers, they offer the same intraday liquidity as traditional vehicles. A key difference would be the performance fees, which are based on perpetual high-water mark and hurdle rates that are set at levels that make it challenging for manager to earn the performance fee.

The second key difference is the considerable investment flexibility offered in liquid alternative strategies.”

According to Alberts, education is crucial.

While alternatives are widely regarded as a great way to diversify and enhance portfolios,

CI FUNDS VERSUS THE BENCHMARK FTSE Canada Universe Bond Index

CI Marret Alternative Absolute Return Bond Fund (Series F)

8%

7.53%

6%

6.46% 6.31%

6.31%

6.34%

4% 4.44%

2% 0% -2%

1.34%

-0.26%

0.27%

1.14%

-1.11%

1 month

-1.30%

3 months

6 months

1 year

2 years

Since inception*

*Inception date: November 7, 2018

CI Munro Alternative Global Growth Fund (Series F)

MSCI All Country World Index GR CAD

40% 38.3%

30%

20%

25.1% 21.2%

10%

12.1% 8.4%

1.5%

0%

13.8%

13.6%

12.0%

15.5% 13.2%

-0.2%

1 month

3 months

6 months

1 year

2 years

Since inception*

*Inception date: November 7, 2018

Sources: Morningstar Research and CI Global Asset Management, as of January 31, 2021

they are still a relatively new phenomenon for many advisors and investors. From an accreditation point of view, the CSI and IFSE are now offering courses for advisor accreditation. CI also offers an introductory course for general education or as a ‘Liquid Alt 101,’ either for those looking to step up their knowledge or as a primer prior to accreditation.

“We have developed this online program as a great way for advisors to get their feet into the liquid alternative space,” Alberts says.

“We’re investing in supporting independent financial advisors and are happy to report that the course has been popular with both IIROC and MFDA advisors looking to increase their knowledge.”

In addition to continuing to educate advisors and investors, CI is also surveying the landscape to determine what holes need to be filled as the liquid alternative market continues to grow and mature.

“We are innovative in terms of our

approach, and we’ll continue to look for areas in the market that could potentially benefit investors,” Alberts says. “All of our liquid alternatives are available in both Canadian and US dollar denominations, as well as mutual fund and ETF wrappers, which we consider a potential differentiator and an important element to enhance accessibility.”

As the liquid alternative space in Canada grows, CI is committed to being at the forefront of education and solution offerings.

1

Canadian Association of Alternative Strategies and Assets (CAASA) as of Jan 31, 2021

2 CI Global Asset Management and CAASA, November 2020 Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns net of fees and expenses payable by the fund (except for figures of one year or less, which are simple total returns) including changes in security value and reinvestment of all dividends/distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any securityholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.

Marret Asset Management Inc. is a majority owned subsidiary of CI Financial Corp. and an affiliate of CI Global Asset Management. Lawrence Park Asset Management Ltd and Munro Partners are portfolio sub-advisors to certain funds offered and managed by CI Global Asset Management. CI Global Asset Management is a registered business name of CI Investments Inc. ©CI Investments Inc. 2021. All rights reserved.

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5/03/2021 3:42:21 AM

PEOPLE

ADVISOR PROFILE

The full picture Advisor Christine LaLiberté found that her career took off when she revamped her practice to be high-touch, proactive and embrace all aspects of wealth management

CHRISTINE LALIBERTÉ is one of the most successful advisors in Canada today – but her current career is a far cry from what she once envisioned for herself.

“I wanted to be a broadcast journalist, but my parents had just split up and couldn’t afford to help me pay for school,” recalls LaLiberté, who is currently a senior investment advisor with Insightful Wealth Management at Manulife Securities. “I ended up getting a job with a bank. Then a mutual fund dealer who I dealt with at the bank asked me to come work for him. That’s how I ended up in the business.”

Her sudden shift into investments prompted LaLiberté to begin learning about the industry, starting in administration. Over time, she earned her mutual fund licence, completed the Canadian Securities Course and eventually got a CIM designation. After moving to Midland Walwyn, LaLiberté shifted to the mutual fund side, thinking she wanted to be a wholesaler. Yet all her experiences ultimately led her to the realization that she could make a difference as an advisor.

“In August 1999, I started my practice from scratch,” she says. “Over the first three years, I built a $40 million book and was doing OK. Then it got up to $55 million, but I realized if I was going to have a productive business, I needed to streamline it and create a process to work more on wealth management.”

That’s exactly what she did, creating a more valuable client experience by focusing

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on needs and goals rather than simply investment returns.

“I revamped my business in 2006,” she says. “I created a process where every client got a financial plan through NaviPlan, an investment policy statement and a personal financial action plan.”

The financial crisis of 2008 was looming just after the refresh, but LaLiberté says it didn’t slow her business. Because of her process and the confidence she had instilled in her clients, she managed to grow through referrals during the crisis.

“Conversations are personal – not always talking dollars and cents,” she says. “We create the plan and don’t talk about investments until the end. This approach created a whole lot of advocacy because our clients knew what to expect and encouraged others, especially during that time, to come see us.

Our process became our marketing.”

The time and attention LaLiberté pays to relationships has set her apart, leading to

a 99% client retention rate and another 15% increase in business in 2020.

“Here I am in my 21st year, at $244 million in AUM from 280 households,” she says.

“What made me my best was realizing that you can’t focus just on investments – it has to be a full wealth management approach, and you need to be there for the client.”

Looking at how far she’s come is a source of pride for LaLiberté – and while she says she sees herself staying in the industry for another eight to 10 years, she realizes she’ll have to think about retirement herself at some point.

“The difficult thing is I need to start thinking about what my plan is,” she says.

“Finding someone with the same compassion, drive, feelings, high-touch approach and who wants to run the business the same way is one of my biggest concerns.”

That’s where LaLiberté’s focus is now. She says that with her current team members either playing a supporting role or in the same age demographic as her, she’s still

LALIBERTÉ’S BIGGEST CHALLENGES Christine LaLiberté says she’s had a few significant challenges over the course of her career, the first of which has been running a business while being a mother. “The biggest struggle has been managing a business, the clients, the team, a relationship and children,” she says.

Her other main obstacle was being a woman in a traditionally male-dominated industry. “My first few years, being 29 and female, it was hard to gain the trust of people,” LaLiberté says.

“But once I established the reputation, there hasn’t really been anything too difficult.”

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FAST FACTS: CHRISTINE LALIBERTÉ

PRACTICE Insightful Wealth Group

FIRM Manulife Securities

LOCATION Surrey, BC

YEARS IN THE INDUSTRY 21

“What made me my best was realizing that you can’t focus just on investments – it has to be a full wealth management approach, and you need to be there for the client” looking for someone to succeed her – but it has to be someone who’s willing to learn and continue the process she’s established.

That goal falls in line with advice she offers young advisors entering the industry: Try to work with an established advisor rather than starting on your own.

“I started from scratch – it was tough, but things were different and you could do things differently,” LaLiberté says. “I wouldn’t want to start from scratch today, but rather learn from someone who has a client-centric practice. This can be a very rewarding career if you are focused on the whole process.”

CERTIFICATIONS FCSI, CIM

SPECIALIZATIONS Retirees, high-net-worth individuals, single women

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5/03/2021 3:42:50 AM

SPECIAL PROMOTIONAL FEATURE

TECHNOLOGY

How fintech is changing portfolio management David Mastroberardino tells WP how Croesus is using technology to help advisors improve client relationships and make managing portfolios more straightforward FINTECH IS the way of the future, making finance more convenient for clients and advisors alike – and Croesus is working to make sure it’s at the forefront of this new wave. A portfolio management application used by advisors, portfolio managers and family offices across Canada, Croesus operates out of Quebec and works with advisors across Canada.

“Obviously the first thing we think of [when it comes to finance] is numbers and dollar signs … but in my opinion, there’s also the aspect of ‘How do I manage my clients?’” says David Mastroberardino, product director at Croesus. “If I’m an advisor, for example, how do I use technology to manage my clients? It could be a CRM that I’m using in a financial context. That’s not necessarily traditional fintech in that space, but I’m still using fintech to manage my clients to help them reach their financial goals.”

Mastroberardino references Gartner Research, which showed that fintech can help advisors be more efficient in several different

50

ways: scanning data, mitigating risk, eliminating bias, and rebalancing and optimizing accounts. This can be something as simple as generating alerts around a certain event, such as a stock price that’s rising, or it can be used to solve more complex problems.

“Those are a couple of ways that an advisor

folios, but behind every portfolio, there’s an individual and vice versa,” he says. “So, if I’m thinking about it from a traditional CRM [perspective] … we then bring all the aspects of the portfolio so the advisor has access to a

“We’re helping advisors manage portfolios, but behind every portfolio, there’s an individual and vice versa” David Mastroberardino, Croesus can be more efficient, because obviously at that point, the advisor’s not having to manually sift through data for the information they’re looking for,” he says.

As a provider of portfolio management software, Croesus has always focused on what’s behind the portfolio, Mastroberardino says.

“We’re helping advisors manage port-

complete picture that includes financial and non-financial data.”

This includes everything needed to meet regulatory requirements, he adds, such as calculations on gains and losses, reporting, and any notes taken.

“Taking a note isn’t necessarily financerelated, but in the context of serving clients

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FAST FACTS: CROESUS

YEAR FOUNDED 1987

HEADQUARTERS Montreal

EMPLOYEES 180+

SOLUTIONS Portfolio management, data analytics, models and rebalancing, APIs and widgets and their portfolios, it’s a regulatory requirement, so just having that integrated saves a lot of time,” he explains. “If an advisor at our firm is audited, it saves a lot of time because everything is in the same place.”

He notes that Croesus has invested heavily in rebalancing features and model management over the last few years, as the company has noticed more and more advisors outsourcing their portfolios to a centrally managed team – or sometimes even externally managed teams – so they can focus on their clients. It comes back to the idea that some advisors just want to work with their clients rather than taking on portfolio management, so they’ll use Croesus to take care of that part of the process.

Adopting technology can bring changes to a workplace, but Mastroberardino stresses that fintech is only meant to get advisors to where they want to be faster and more cost-effectively. “In other words, it should

accelerate the firm’s differentiators,” he says, adding that if a practice’s culture is based on customer service, then it should select technology that will optimize this.

“Obviously the advisor and the portfolio manager need to understand their client base,” he says. “So, at a certain point, you can only force the technology so much.”

While Mastroberardino acknowledges that not all retirees are tech-averse, he uses them as an example of clients who might prefer a more traditional way of doing business.

“You can put a bunch of methods in place, but maybe it’s not going to work for some people who want to have the paper reports in front of them,” he says.

However, he notes that the COVID-19 pandemic has changed the landscape in that regard. “We’re living now in this era of video calls, social distancing, etc.,” he says. “What we’ve found is a lot of firms were banking on that physical proximity with their clients, and

that’s been shifted on its head.”

For example, he’s seen some advisors recording meetings now and just attaching them into Croesus – with the client’s approval, of course. “Maybe the timing of those meetings will be a lot easier for clients so they don’t have to travel an hour into town – they can just log on and have their chats,” he says.

Mastroberardino believes this shift toward a more tech-forward experience will only intensify, as younger generations are more likely to want to use technology.

“With video calls maybe being the standard, is anybody going to be rushing back to meet their advisor at a restaurant or at a conference room and travel into town?” he says. “Maybe there’s those people who absolutely want to go back there … but maybe some people are going to be like, ‘You know what? This is not the best thing. I can do things online.’”

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5/03/2021 3:43:16 AM

SPECIAL PROMOTIONAL FEATURE

GLOBAL INVESTMENTS

The coming income famine Forstrong Global Asset Management’s Tyler Mordy tells WP how a global outlook can help investors find the income they can no longer get domestically

THE COVID-19 pandemic has created many changes in the world – and it’s also accelerated trends that were already occurring, such as historically low interest rates. With many central banks’ rates at such low levels, it’s tougher than ever for investors to rely on traditional fixed income. As a result, those in or nearing retirement are being pushed to take on more risk when they should be reducing it.

“It is a massive problem – investors are now entering a multi-year income famine,” says Tyler Mordy, CEO and CIO of Forstrong Global Asset Management. “The problem is that the famine has arrived at an inopportune time. Clients are older, and the income they need is not there domestically. Then there are reflationary efforts of policymakers arising out of the pandemic, which will lead

52

to higher inflation. We don’t think that will happen imminently, but we are heading into a period where inflation will be higher than the last decade.

“It is a very unfortunate situation, and many in the financial community have said, ‘Let’s replace domestic bonds with dividendpaying stocks.’ The issue with that strategy is that you are dramatically changing the risk profile of the portfolio. You are moving from bonds to something that will get hit in a downturn, and you are compromising the overall diversification of a balanced portfolio construct.”

One solution to this problem might be simply expanding one’s worldview. Many Canadian investors suffer from home bias, but Mordy believes looking at global markets

for different exposures is the solution to this income famine.

The demographic most affected are the baby boomers, whose focus is now on capital preservation – but in the current environment, that’s more challenging than ever.

Conventional approaches to income are no longer getting the job done. Forstrong has noticed things like GICs being incorporated by more financial professionals, but Mordy stresses that they are a savings product, not an investment tool. In this low-rate environment, they simply can’t be counted on to meet retiring boomers’ income needs.

The problem also exists with Government of Canada bonds and US Treasuries.

In Canada, short-term bonds (out to the 10-year) are offering yields of less than 1%, and the situation isn’t much different in the US. In addition, there is more risk at the long end of the curve, especially if higher inflation comes to pass.

One area that’s been gaining attention is investment-grade and high-yield corporate debt. While these asset classes do tend to be less sensitive to interest rate risk, they come with default risk. Instead, Mordy and Forstrong see a diversified approach that embraces global opportunities as the antidote to the income famine.

“Our approach is different in that we are solving an income problem for retirees or near-retirees and doing it without structurally changing the nature of risk in the underlying portfolio,” Mordy says. “For income generation, the solution is looking further afield for yield sources from all around the world – investment classes like EM bonds, global real estate, currencies, and yes, even some dividend-paying stocks, which are far more attractive outside of North America.”

Mordy acknowledges that this strategy does venture out a little farther on the risk curve, but not to the extent that replacing bonds with equities would.

Forstrong’s investment team has operated this global income strategy for more than a decade, but the recent effects of the

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OPPORTUNITIES IN EMERGING MARKET CURRENCIES DEVIATION FROM FAIR VALUE* 15% 5% -5% -15% -25% -35%

a ric Af

s ne pi ilip Ph nd la ai Th a re Ko

h ut So

h ut So

a in Ch

a di In sia ay al M sia ne do In

ile Ch

ru Pe

ce ee ic bl Gr pu Re

h ec Cz

o ic ex M

nd la Po a bi m lo Co ry ga un H

il az Br

ia ss Ru

ey rk Tu

*Forstrong proprietary calculation as of December 31, 2020

Sources: Macrobond, BIS, Forstrong Global Asset Management

“The antidote to income famine is to open up the world and seek opportunities from all around the world” Tyler Mordy, Forstrong Global Asset Management pandemic have highlighted its advantages.

Because of the way emerging markets, specifically Asia, handled both the health and financial aspects of the crisis, investments such as EM Asia debt are offering attractive yields with greater comfort for investors.

“This was the first financial crisis in history where Asia outperformed developed markets in terms of currency, bond and stock markets,” Mordy says. “Part of the benefit of having a deeper global reach is the ability to look across into these different areas and see correlations that are starting to move differently and see how those types of income impact portfolios.”

Mordy notes that Asian economies didn’t blow out their national balance sheets with stimulus like the US and Europe, which has impacted these regions’ perception as a safer place for investment.

“More capital is finding its way to Asia, and investors are becoming more comfortable with the credit quality, safety and volatility of those regions,” he says. “Improving macro fundamentals lead intrepid investors to Asia because they came through the crisis in good economic health.”

Forstrong’s strategy isn’t limited solely to credit in EMs; Mordy also points to currency as a way to add return in an income approach.

“Many take a passive approach to currency exposures, but if you are a global investor, you have to take a view on currency,” he says.

“Our philosophy is that currencies are just like stocks and bonds – they can become overloved and over-owned and vice versa. Looking at the Asian region, countries there generally have undervalued currencies, higher real interest rates, and credit quality is increasing.

If you think about bonds, you get return from

three areas: coupon, capital gains and return from currency appreciation. The currency view should not be ignored.”

Then there’s real estate, which Mordy feels is undervalued in other parts of the world – especially compared to the Canadian landscape, which he sees as overvalued.

“There are other real estate markets in the world that remain undervalued, with undervalued currencies, and offer a decent yield,” he says. “What you are trying to do as a macro investor is to look for macro misinformation and a related mispricing.”

Combining that global view with some exposure to dividend-paying stocks (rather than simply using them as a replacement for fixed income), along with active management, can help produce the income many are searching for, Mordy believes.

“We have been running this strategy since 2008, but it is even more relevant now,” he says. “The antidote to income famine at home is to seek yield opportunities from all around the world.”

For more on Forstrong’s view on the future of income, visit forstrong.com.

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5/03/2021 3:43:42 AM

SPECIAL PROMOTIONAL FEATURE

PRIVATE MORTGAGE DEBT

The pros of private mortgage debt Sterling Global Financial offers investors a way into a space that’s poised to grow as the traditional lending landscape changes

PRIVATE DEBT is a strong alternative to traditional lending methods, and Sterling Global Financial is at the forefront. While the past year has highlighted the benefits of private lending, for Sterling, those benefits exist in all environments.

Even with the many stressors of 2020, Sterling CEO Stephen Tiller says his firm had one of its best years ever when it comes to private debt. He believes one reason for this is private debt’s advantage of being offered to borrowers at a more accelerated pace, something that was valuable during a volatile year.

“One loan we did, from the time of seeing the property to actually funding the borrower was five days,” he says. “While we wouldn’t do that every day, contrast that with a traditional bank, where it might take three, four, five months – and even then, in this environment, you’re not quite sure if funding will complete.”

This ability to respond quickly is something that makes private lending desirable in all market conditions. For Sterling, the ability to do this effectively is also driven by the fact that the company operates in many different countries and has strong teams on the ground in all of its core markets.

Another advantage of Sterling is the pride the company takes in being reliable – an important aspect, as advisors are constantly seeking companies with the best track records

54

to partner with when entering the space.

“Almost half of our lending portfolio is repeat business,” Tiller says, “which shows you that we’ve done business with customers, and it really speaks to the bench strength we have. We have 50 years of experience operating in Florida alone, our chairman has been in the business for over 50 years, and

developing their properties.

“We’re also able to work within different interest rate levels that might facilitate their product, and [clients] look to us, quite honestly, because we have developed with a real estate background,” he says.

For investors, Sterling’s flagship mortgage investment fund, the Sterling Mort-

“The benefit of investing in a private mortgage fund is the ability of the fund to preserve capital while providing for a very consistent and attractive yield that is not correlated to capital markets” Stephen Tiller, Sterling Global Financial our senior executive team has an average of 35 years in the real estate finance industry.”

When it comes to private debt itself, Tiller adds that “the other benefit of private debt is that there are different ways of getting transactions done and being flexible to our borrowers’ concerns.” He gives the example of being able to extend an interest-only mortgage, which allows borrowers to have lower payments and flexibility while renovating or

gage Income Fund (SMIF), is an open-ended fund that aims to deliver a consistent yield and capital protection via a diversified mix of high-quality mortgages, with a targeted overall net return of more than 10%.

“The benefit of investing in a private mortgage fund is the ability of the fund to preserve capital while providing for a very consistent and attractive yield that is not correlated to capital markets,” Tiller says. “We’re under-

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written and approved by many of the large Canadian investment dealers, we’re a regulated entity, and SMIF is on Fundserv, so investors can subscribe with confidence.”

While the COVID-19 pandemic highlighted some issues with traditional lenders, Tiller feels it has showcased why partnering with Sterling can be beneficial in both the current and a non-pandemic environment.

“You’re seeing major US banks, which took huge write-offs in the second quarter of last year … getting ready to write down questionable loans,” Tiller says, adding this isn’t an approach Sterling would ever take.

One interesting observation Tiller has made during the pandemic is that lenders haven’t seen their streams cut off completely, even for companies that can’t meet their obligations. He notes that in industries most affected by the pandemic, such as hospitality and shopping malls, even some large public companies have walked away from assets due to money lost during the pandemic, giving it back to the lenders to cover their debts.

“What has happened, and it’s a bit of a paradox, is that while there’s this huge

stimulus and quantitative easing at the federal level … it’s not filtering through to the individual and corporate borrowers, especially in the smaller asset groups below $100 million,” he explains.

That’s opened up an opportunity in the private debt space, he adds. “It’s a very substantial market in terms of aggregate size – hundreds of billions of dollars of lending capacity on a global basis – and it’s large firms like ourselves who can cover the gambit on the lending side, and that’s an area where we’ve been growing substantially.”

While Sterling has carved out a specialty in private lending, it also offers other specialties in the alternative investment landscape, including equity opportunity funds that allow investors to participate directly in the equity of some of the projects the company is acquiring and developing.

“We’ve been very focused on the marina and infrastructure space,” Tiller says when asked about other areas where Sterling is seeing opportunity now. “We have interests in half a dozen marinas, and there’s a huge demand for the marina space – we kind of

call them the toll booths of the water. We like the regular income – people are very excited about that.”

For larger investors, Sterling also offers co-investment opportunities directly at the property level, allowing people to own part of, say, a marina or a resort. In addition, Sterling owns a bank, which clients can use for deposits or fixed income, and one of the oldest trust companies.

With any type of alternative investment, Tiller invites advisors to do their due diligence to understand not only the investment, but the manager, their process and their track record when looking to add exposure in any space.

“I think if people look at our track record, we have a very long history of delivering solid returns – we’re very proud of the fact that we’ve never lost any capital,” he says. “I think the due diligence should focus on the product, the underpinning management team experience and alignment with investors, and the risk management principles. Having a fully integrated operating real estate organization is a huge benefit to investors.”

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5/03/2021 5:22:53 AM

SPECIAL PROMOTIONAL FEATURE

REAL ESTATE

Apartment or condo?

Centurion Asset Management president and CEO Greg Romundt breaks down the investment differences between apartments and condos – and explains why the apartment space offers more benefits to investors ONE OF THE most popular areas in real estate investing is multi-family residential.

Yet even in this category, there are subsectors – primarily apartments and condominiums.

While both can provide income as an investment, there are some notable differences investors need to be aware of.

“Normally, apartments are professionally run,” explains Greg Romundt, president and CEO of Centurion Asset Management Inc. “You have a management company leasing and managing the entire asset. In a condo, you own the unit and are responsible, so you do not have any of the economies of

56

scale that you would have in place for a fully managed building.”

That professional management is a key advantage, Romundt says. He notes that apartment building managers work quickly to fill vacancies by posting ads, taking phone calls and arranging showings. In a condo, the owner either needs to handle that themselves or hire a management company, which would add another expense.

Then there’s the personal liability an owner assumes with a condo. “You are usually taking on personal debt,” Romundt says. “When you compare that to investing

in, say, a REIT, you don’t have personal liability. An apartment building in a REIT would be hands-free – you really don’t need to do anything but collect cheques.”

Another area where Romundt sees a huge difference between apartment buildings and condos is in the ability to enhance the asset’s value. Condo owners are typically limited to the suite they own, unless they can purchase the entire building and rent out each individual unit. Romundt says he’s seen this done for the benefit of being able to sell off units down the road, but he cautions that the entire process is difficult.

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business at scale.”

The one small area where Romundt sees an advantage in the condo space is if there are government changes to the rules around rent control, which would essentially trap apartment building owners. Condo unit owners, however, could always sell their unit to someone who wanted to live in it, although he believes the seller would probably take a hit.

While the landscape for apartments has been improving in recent years, Romundt says COVID-19 has accelerated it. On the other end of the spectrum, the pandemic has had a negative effect on condos.

“The trends are moving towards the suburbs,” he says. “That was happening years before the pandemic started – the pandemic only exacerbated it and will make the trend last longer. It resulted in condo units in the downtown core being vacant. Now the owners understand that if they were barely covering

With apartment buildings, however, much of the stock in Canada was built in the 1960s and ’70s, presenting owners with the opportunity to complete significant renovations.

“If you want to redo hallways, the lobby, facilities, amenities, windows, etc. – everything that affects the resident experience – you can drive all of that and create value,” Romundt says. “I would argue you have more opportunities to create value. If you buy a condo unit, you can improve your interior unit. There is nothing you can do about hallways, grounds or services provided, so you have limited control.”

In addition to the consistent rent, ability for improvements and control of the asset, Romundt says apartments also offer one more overarching theme that’s harder to find in condos: diversification.

“If you own an apartment building or are in a REIT, it is diversified across cities, areas of town, provinces and even countries,” he says. “If you have 10,000 units and one is not rented, you don’t really notice it in the financial statements. It is a more resilient

into real estate – you can’t eat capital gains unless you realize them, but you can eat the cash flow.”

Romundt believes apartments in the suburbs and exurbs are where the biggest opportunities can be found right now.

“We have been focused on it for a while,” he says. “We still very much like the suburbs and exurbs because there is a wave out occurring. For someone who lived in the downtown core, but it became too expensive, they moved to the suburbs. That made the suburbs more expensive, so the person living there moved out to the exurbs – it is just creating the wave of purchasing power.”

However, this trend is no longer being driven solely by price. Romundt notes that the suburbs are becoming more attractive from a lifestyle perspective, thanks in no small part to the pandemic.

“You can walk outside; you may have

“People who can’t afford the rent in condos are choosing the cheaper, older apartment. Inside the rental sector, you are getting movement from the condos to apartments” Greg Romundt, Centurion Asset Management the cost before, they will be underwater even if they have a renter.”

The affordability of older apartment buildings versus brand new condo towers is also becoming more evident. “People who can’t afford the rent in condos are choosing the cheaper, older apartment,” Romundt says.

“Inside the rental sector, you are getting movement from the condos to apartments. That will support the apartment space even more.

“I never saw condos as an investmentgrade asset,” he adds. “When you think about what you pay for a condo downtown, after maintenance fees and any modest leverage, you can’t break even. There is no cash flow, and cash flow is the main reason you get

parks, trails and bike paths – all things you can’t do in the city,” he says. “The things that kept you interested in a big city, you haven’t been able to do because of the pandemic, which shined a light on the suburbs. We still think the suburbs will be an attractive area moving forward.”

Given continued population growth, especially after the pandemic (the Government of Canada has said the country plans to welcome 400,000 immigrants annually), along with the ongoing rise in housing costs, Romundt believes the signs point to continued momentum for the apartment sector, particularly in suburban areas – cementing its status as the more attractive investment option.

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SPECIAL PROMOTIONAL FEATURE

ENERGY

Sustainable returns In a world hungry for renewable energy sources, Middlefield Group’s sustainable funds give investors exposure to the trend

MIDDLEFIELD GROUP’S SUSTAINABLE FUNDS Middlefield Sustainable Innovation & Health Dividend Fund (SIH.UN) Middlefield Sustainable Infrastructure Dividend Fund (INF.UN) Middlefield International Clean Power Dividend Fund (CLP.UN) Prospectus closing March 18

Middlefield Global Sustainable Energy Class Source: Middlefield.com

AS THE WORLD transitions from fossil fuels to renewable energy, Middlefield Group is working to keep up with the changes.

According to Rob Lauzon, a portfolio manager with Middlefield, this paradigm shift will see the world’s energy use transition from two-thirds fossil fuels to two-thirds renewable energy over the next three decades.

“I think the same is occurring in the fund

According to Lauzon, Europe is at the forefront of this change, but the adoption of net-zero emissions policies is beginning to grow around the world, notably under the new administration in the US. “We’ve seen some tangible climate policies and legislation and budgets all start to come to fruition over the last 12 months,” he says, adding that during COVID-19, investments

“We’ve seen some tangible climate policies and legislation and budgets all start to come to fruition over the last 12 months” Rob Lauzon, Middlefield Group flows in the asset management industry – particularly legacy energy funds that have invested in fossil fuels primarily,” Lauzon says, adding that there’s been a big push from investors, providers and corporations to move toward renewable energy. “We’ve had another little boost of flows into sustainable and [ESG] type of funds because of this Democratic sweep in the US,” he says.

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have shifted not only toward fighting the pandemic, but also to the transition to renewable energy.

He points to companies such as Apple and Microsoft, which have made commitments to becoming 100% carbon-neutral over the next decade. Corporations and governments are creating goals and are working together to reach these ambitious targets, Lauzon says.

Middlefield itself has made strides towards renewable energy programs, starting with an initiative in the UK. “We started being asked questions about ESG and our views about five or six years ago, and ESG wasn’t really an acronym used in Canada around that time,” Lauzon says.

“Our institutional clients in the UK wanted to better understand how we looked at the environmental, social and governance issues of companies, and we began to formalize our process of reviewing these important metrics across all our investments. Now we’ve seen these same concepts start to resonate with our investors in North America.”

Over the last few years, Middlefield has created a series of sustainable funds for Canadian clients – a Sustainable Infrastructure Fund, a Sustainable Innovation & Health Fund and, most recently, an International Clean Power Fund – allowing investors to capitalize on these powerful investment themes.

Middlefield’s investment strategies typically focus on producing stable income for investors. The renewable energy investments in its newest offering are typically developed within large-scale utility companies, which already pay dividends, and a lot of these projects are contracted and have regulated cash flow streams.

“Renewable utilities work well with our investment mandate,” Lauzon says, “and we’ll continue to think of how to evolve our funds to continue to broaden our buckets that we launch mandates in, but all through this sustainable lens.”

www.wealthprofessional.ca

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JUNE 2-3, 2021 • ONLINE

THANK YOU FOR YOUR NOMINATIONS WP would like to thank the industry for the incredible response to the nationwide call for nominations for the 7th annual Wealth Professional Awards. It is great to see so many outstanding wealth professionals, teams and organizations who have excelled over an extraordinary year.

Finalists will be announced in WP magazine and on online channels before the winners are revealed at the highly anticipated virtual awards show happening June 2-3.

To learn more, visit

www.wpawards.ca For sponsorship opportunities, contact dane.taylor@keymedia.com

#WPAwardsCA

SPECIAL THANKS TO OUR SPONSORS

SOCIAL MEDIA PARTNER

OFFICIAL BALLOT ACCOUNTANTS

PRESENTED BY

CANADA

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5/03/202110:48:30 9:51:33 5/03/2021 PMPM

FEATURES

MARKETING

The fight for visibility It’s becoming more important for businesses to not only have an online presence but also be seen above the rest. Nicola Moras explains how to win at being visible

THE FIGHT to be seen online, to be visible, has never been more fierce than it is now.

Business owners especially have been somewhat forced to embrace the online world in their marketing and delivery of services. This has meant new learning for those owners who have relied on local area marketing in the past.

ensure that you have an audience to market to. It will mean you are able to have a consistent conversation with that audience, and they’ll be more likely to buy from you.

What you need to determine is how to establish yourself as being different, as a business that can be trusted. There are far too many charlatans who have come out

When you assume the position of an industry leader before you even begin to dial up your visibility efforts, you’ll have more confidence to show up and do what needs to be done Shockingly for some, your potential customers and clients are spending more and more time online. In fact, recent data indicates that most of us will probably spend more than 100 days online this year. That’s almost a third of the year online.

For businesses, this presents a great opportunity to carve out your patch of dirt on the internet and really own it. This will

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of the shadows and taken people for a ride.

As a result, every customer’s BS detector is on heightened alert these days, and they’re a lot slower to trust.

This begs the question: How do you create more visibility when everyone is wrestling for the click, the comment, the like and the share? Follow these four steps so you can win the visibility fight and soar.

1

Assume the position of industry leader

Confidence breeds confidence, and you know it. You’ve seen people online, and you’ve felt drawn to them. This is usually because someone who is confident in what they’re saying and sharing is magnetic.

When you assume the position of an industry leader before you even begin to dial up your visibility efforts, everything else becomes easier to implement. You’ll have more confidence to show up and do what needs to be done.

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everyone. You don’t need to appeal equally to the teens and the silver foxes, or to the coffee moms and corporate career chasers.

The more specific you can be about who you want to be visible to, the easier it is to get on their radar.

When you know exactly who your niche is, you can start to create content specifically for them. For instance, if you know your niche is a 35-year-old woman with two children who hates her body, your business might provide a total workout and meal plan solution that has her falling in love with her body postchildren, without feeling stressed and overwhelmed. Or if your niche is a 43-year-old man who now has time and wants to start a hobby making wooden rocking horses, but he’s having trouble knowing how to set up his workspace and equipment, you can create content for him specifically.

When you know who your audience is, you’ll get results faster. They are likely to joke that you have cameras in their house. (Yes, this is a good thing. Just don’t go installing any cameras!) You’ll be inside their heads, and they’ll love this.

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2

Show what makes you different

This is not about your unique selling proposition. This is where you need to determine what makes you different as people. If you’re a solo entrepreneur, this is going to be pretty easy, because you are what makes you different than everyone else.

For those of you with larger-than-you businesses, you and your team are what make you different.

Take stock of your history, why you exist and the stories you interlace through all that

you do. It’s ever so important to share these online on your pages and websites.

People are slow to trust these days, given the sheer volume of fraudsters, but when you start sharing your stories and what makes you different, it helps your audience see you as a company they can trust. This is because they start to see the human beings behind the logo.

3

Own your niche When it comes to visibility online, you don’t need to be visible to

Be consistent and persistent

Visibility takes time, but when you are consistent with your efforts, it will pay off. Be aware that you have to play the long game, as well as the short game, for visibility growth. This is not dissimilar to joining a gym. You have to keep going to achieve results. Haphazard attendance will reap haphazard results.

Create different types of content and share it multiple times daily. You’ll be visible in no time.

Nicola Moras is an online visibility expert and the author of Into the Spotlight, a guide to help you step up your online visibility, become a rock star in your industry and make your business thrive.

www.wealthprofessional.ca

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FEATURES

LEADERSHIP

When to go for good enough In a culture focused on achievement, success and making things perfect, how can leaders know when striving for something better is a waste of time?

Lynne Cazaly explains how to let go of perfection and embrace ‘good enough’

HOW OFTEN while working on a task or project have you thought, “It’s not done yet,” “It’s not good enough” or “I couldn’t share that … it has to be better”? We can feel it’s not good enough yet and believe there’s still work to be done to make it better, to make it perfect. Shouldn’t you try to do things perfectly? It turns out, no, not at all.

Research by Argyro Avgoustaki and Hans Frankort, gathered from more than 50,000 people across 36 countries over a five-year period, showed that extra work effort was “associated with reduced wellbeing and inferior career-related outcomes.”

Avgoustaki and Frankort’s research showed that the harder people worked, the more likely they were to report stress, lower satisfaction and inferior outcomes.

Working too hard burns us out and doesn’t result in the success – career or otherwise – that we might expect. It sounds crazy, but their research found that doing less at work can actually help us achieve more.

We can afford to spend less time on things thanks to two theories of activity. The law of

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diminishing returns (that our return on effort reduces over time) and the 80/20 rule or the Pareto principle (that just 20% of our efforts yield 80% of the results) are two approaches that validate the practice of going for good enough rather than the waste of perfection.

Next time you’re working on a proposal or report or developing a new system or process, stay alert to your desire to pursue perfection.

Good leadership starts with us modeling behaviours for others; here, it’s about knowing when good enough is good enough.

The rise of perfectionism The problem is perfectionism is on the increase. Research by psychologists Thomas Curran and Andrew Hill revealed three types of perfectionism:

Self-oriented (“I expect high standards of myself ”)

Societal (“I believe society expects high standards of me”)

Other-oriented (“I expect high standards of you”)

All three are on the rise, but societal perfectionism has increased the most, by 33% over the past couple of decades. Future projections don’t look good, either. The hitch with perfection is that it simply doesn’t exist, and pursuing it is a foolish and wasteful activity. If we find ourselves – or a team – staying back, taking work home or working on weekends in a devoted effort to make something better, it’s likely there’s a wasteful pursuit of perfection underway.

The more contemporary preference is to go for ‘good enough’ or ‘ish’, which means near enough. The practice is to work on a

smaller piece or packet of work – an increment – and work until it’s good enough to get feedback, good enough to test it out with customers or clients, or good enough to try again and improve via a new iteration.

It’s a process used successfully by lean startups, technology teams and software developers. Increments and iterations are the new perfect. They’re more effective in helping us make progress over perfection.

How to go for good enough There are four things you can do to set a course for good enough rather than the pointless pursuit of perfection.

than expecting perfection.

4

Assess whether ‘near enough’ is good enough

Check whether ‘ish’ might be feasible, doable or acceptable to the business more often. It’s a major productivity gain, and it’s more motivating for teams when they complete work.

If you spot perfectionism behaviours or hear people being highly critical of themselves or others, know that a standard isn’t clear enough and perfectionism could be at play. Step in, coach, guide or suggest that a specific standard might help everyone get on

Increments and iterations are the new perfect.

They’re more effective in helping us make progress over perfection

1

Stop expecting or requiring perfection

2

Make the standard clearer

Accept first drafts, rough cuts and mock-ups. The design industry thrives on them to gain early feedback and ensure the efficiency of work going forward.

Great leaders clarify the end goal or outcome beyond a generic call for ‘high quality’ or ‘really good.’ Explain the standard in a measurable way; it will help people enormously.

3

Improve over time

Allow learning, iterations and insights to build on first attempts.

The best and brightest organizations know the power of improving over time rather

the same page, gain alignment and work to achieve the goal. There will be less stress and greater success.

Don’t let perfectionism get in the way of doing good work – for yourself, your team, and those you advocate for, partner with or support within the organization. Getting work done using increments and iterations beats the stress, burnout and mental health effects of perfection-chasing every time.

Lynne Cazaly is a keynote speaker and advisor who helps businesses think and work in ways that are more productive, collaborative, creative and effective. She is the author of ish: The Problem with our Pursuit for Perfection and the Life-Changing Practice of Good Enough. Find out more at lynnecazaly.com.

www.wealthprofessional.ca

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PEOPLE

OTHER LIFE

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

Akbari splits his training between time in the ring and strength and agility work

2008

Year Akbari first got involved in Muay Thai kickboxing

9–11

Hours Akbari trains per week for a fight

5

Years since he last competed in a tournament

FIGHTING SPIRIT Combat sports have helped advisor Eila Akbari develop the discipline needed to thrive in the wealth management industry EILA AKBARI has always had a fascination with boxing and mixed martial arts. “I was impressed with the athleticism, drive and discipline of these individuals,” he says – yet he had always been too intimidated to try it himself.

That all changed in 2008, when Akbari, an advisor with CorePlan Financial at Assante Wealth Management, convinced a friend to try Muay Thai kickboxing with him. He’s been involved in combat sports

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ever since and has competed in several tournaments. He’s even had a chance to give back to the sport as a coach.

Akbari says what he enjoys most is the opportunity to meet and work with other like-minded individuals and be part of a community. “Kickboxing is so much more than meets the eye,” he says. “Sure, you build confidence and you have skills for life, but it teaches you to persevere through adversity, continue to push through the

barriers and get back on your feet, regardless of how many times you fall.”

Those lessons have been key to his success in wealth management, he adds. “I truly do believe if it wasn’t for my involvement in sports such as kickboxing, I would have not lasted in the financial services industry,” he says. “Discipline, persistence, drive and ambition are lessons I learned from kickboxing, which I believe one needs to survive and succeed in our industry.”

www.wealthprofessional.ca

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