Wealth Professional 6.02

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E M A F WPC spotlights some of Canadian wealth management’s most visionary leaders THE INSTITUTIONAL PERSPECTIVE CPPIB CEO Mark Machin reveals what his pension fund looks for in a good investment

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BUYING INTO BITCOIN Should your clients consider investing in cryptocurrency in 2018?

RESPONSIBLE INVESTING GUIDE What you need to know about building client portfolios around ESG criteria

9/02/2018 4:04:34 AM

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license.

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ISSUE 6.02

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CONTENTS

@WealthProCA facebook.com/WealthProCA

UPFRONT 02 Editorial

Lessons from the financial crisis

f o L L A

H

E M A F

20

04 Statistics

Looking back at the TSX’s ups and downs in 2017

36

06 Head to head

Are mutual funds still a go-to selection for advisors?

FEATURES

RESPONSIBLE INVESTING

From negative screening to impact investing, WPC breaks down what advisors need to know about socially responsible investments

50

INDUSTRY ICON

As the manager of Canada’s largest pension fund, CPPIB head Mark Machin knows a thing or two about balancing risk and return

16

08 News analysis

Despite some high-profile naysayers, Bitcoin is gaining investment credibility This month’s big movers and shakers

12 ETF update

Can the Canadian ETF industry continue its meteoric rise?

HALL OF FAME 2018

PEOPLE

Why the industry should embrace roboadvisors, not fear them

10 Intelligence

SPECIAL REPORT

These luminaries have been in wealth management since the beginning, but they’re still as passionate as ever about the profession

07 Opinion

14 Alternative investment update

A new fund targets an untapped area for private debt

FEATURES

THE INDEPENDENT ADVANTAGE

Echelon Wealth Partners CEO David Cusson discusses the merits of advisory firms outside of the Big Six

52

FEATURES 34 Big tent asset management

BMO GAM reveals the strategies that have made it a leader in the ETF space

PEOPLE 48 Advisor profile

Advocis government relations chair Kris Birchard is advisors’ voice in Ottawa

55 Career path

Growing up in the industry proved to be a successful launching pad for Rosemary Horwood

56 Other life FEATURES

MANAGING MILLENNIALS

Developing the next generation of leaders means abandoning traditional methods

Life’s a song for advisor and choir singer Fran Kirby

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

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9/02/2018 8:25:25 AM

UPFRONT

EDITORIAL

Lessons from the past

T

he world’s power brokers congregated in the Swiss ski town of Davos last month to discuss economic policy. It won’t have escaped anyone’s attention, but 2018 marks the 10th anniversary of the financial crisis.

Given such elevated levels in global stock markets right now, is a similar collapse in the cards this year?

Speaking to Bloomberg TV in Davos, this month’s Industry Icon, CPPIB CEO Mark Machin, offered his views. “Given where asset prices have run to now, it’s unlikely we can expect very high asset-price returns over the next few years,” Machin said. “I think they are going to be quite depressed.”

Tim Adams, president of the Institute of International Finance, expressed

“Given where asset prices have run to now, it’s unlikely we can expect very high asset-price returns over the next few years. I think they are going to be quite depressed” similar sentiment, suggesting that advisors should actively be preparing their clients for a correction. “The bull market seems to be steamrolling over everyone who has a bearish view,” Adams said. “But there’s a lot of complacency. There are termites in the foundation, and a number of those are gnawing away at night.”

It’s before and during a financial downturn that advisors can really show their worth. Achieving returns during a decade-long bull market isn’t what separates the best financial planners from the rest. Rather, it is protecting a client’s interests in good times and bad, bull and bear.

The cautious tone taken by Machin and Adams isn’t being replicated everywhere, however. By the time the Davos summit had taken place, global equities had already surged more than $3 trillion in the first three weeks of 2018.

The Dow Jones Industrial Average breached 26,000 for the first time in January, and strategists from Bank of America Merrill Lynch, Deutsche Bank, RBC, Credit Suisse and UBS have all predicted a 12% rise or greater for S&P 500 this year.

In Canada, meanwhile, the S&P/TSX Composite Index has flattened out after a strong finish in 2017. As always, the fortunes of the energy sector will be crucial to the exchange’s overall performance, although sentiment there has improved now that oil prices are back above the $65 mark.

wealthprofessional.ca ISSUE 6.02 EDITORIAL

SALES & MARKETING

Editor David Keelaghan

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

9/02/2018 4:05:27 AM

LEADERSHIP DEMANDS

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Series F units are only available to investors who participate in eligible fee-based or wrap programs with their registered dealer. Commissions and trailing commissions are not payable on Series F units of the Fund but management fees and expenses may be associated with these investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. ™Trademark of its owner, used under license.

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9/02/2018 4:05:32 AM

UPFRONT

STATISTICS

Strong finish for the TSX

LAGGING BEHIND GLOBALLY

After a rough summer, Canada’s main exchange came roaring back in the fall, thanks in large part to financials and resources ON THE heels of a particularly strong 2016, last year represented a mixed bag for Canada’s main exchange. The summer months were particularly rough, but the TSX recovered in the fall, finishing the year with record-breaking valuations. As always, the main index’s fortunes were tied to its three main sectors: financials (which represent 35% of the exchange), energy (21%) and materials (11%).

This concentration is, in fact, significantly

$2.11 trillion Adjusted market cap of the S&P/TSX Composite

$8.4 billion Average market cap of TSX constituent companies

While the TSX S&P 500 Index recorded a respectable 6% gain in 2017, it pales in comparison to the Dow Jones, which was the clear leader among developed market indices in terms of growth last year. As is usually the case, volatility in the energy sector held back the Toronto index in 2017.

lower than at the beginning of the decade, when those three sectors made up more than 80% of the total exchange value. That’s certainly a step in the right direction, as an over-reliance on oil producers and miners has left the TSX susceptible to wild market swings. That was apparent during 2017, so although equities provided solid returns for Canadian investors last year, apprehension remains about what might lie in store in 2018.

9.10%

Total returns for the TSX in 2017

21.08%

Total returns for the TSX in 2016 Sources: TMX Money, S&P Dow Jones Indices; as of Jan. 31, 2018

THE HEAVY HITTERS

TRADING LEADERS

The top 10 holdings in the TSX – primarily financials and energy – account for $840 billion in market cap, or 37% of the entire exchange.

TOP 10 TSX HOLDINGS BY MARKET CAP

Of the top 10 firms trading on the TSX, measured by volume and value of securities traded, CIBC leads the way – and by quite some distance – with a value of $57.6 billion. The next highest trader, TD Securities, was more than $30 billion behind.

RBC

$153 billion

CIBC World Markets 25.3%

TD Bank

$134 billion

TD Securities 11.7%

Scotiabank

$97 billion

Enbridge

$81 billion

Suncor Energy

$77 billion

Canadian National Railway Company

$75 billion

BMO

$66 billion

CIBC

$53 billion

Scotia Capital 3.6%

BCE

$52 billion

Other 22.4%

TransCanada Corporation

$52 billion Source: TMX Money, Yahoo Finance

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RBC Capital Markets 7.6% BMO Nesbitt Burns 5.7% Instinet Canada 5.2%

% VALUE

Merrill Lynch Canada 5.1% National Bank Financial 5.0% Citadel Securities Canada 4.4% Morgan Stanley Canada 4.0%

Source: TMX Money, December 2017

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25,000

+24.4% 20,000

15,000

+6.0%

10,000

7.6%

5,000

27.2% +18.7%

0 1/1/2017

3/1/2017 FTSE 100

5/1/2017

7/1/2017

9/1/2017

Dow Jones Industrial Average

Nasdaq Composite

S&P 500

11/1/2017

1/1/2018

TSX S&P 500

Sources: Yahoo Finance, TMX Money, DQYDJ.com, The Guardian

FULL OF ENERGY

HIGH TIMES

After months in the doldrums, the TSX rallied strongly in the fall on the back of the energy sector resurgence.

Accordingly, the S&P/TSX Capped Energy Index was the best-performing index on the exchange during 2017, garnering a 10.5% increase.

In a year when resource stocks often underperformed, cannabis producers Aphria and Canopy Growth presented the best returns.

BEST-PERFORMING INDICES, 2017 10.5% S&P/TSX Capped Energy

4.2% S&P/TSX Capped Consumer Discretionary

WORST-PERFORMING INDICES, 2017

3.7% S&P/TSX Capped Financials S&P/TSX Capped Health Care -.62%

S&P/TSX Capped Utilities -3.0%

S&P/TSX Capped Consumer Staples -2.5%

Source: TMX Q3 Buy Sell Report

Stock

Total return, 2017

Aphria (APH)

271.0%

Canopy Growth (WEED)

225.4%

Kirkland Lake Gold (KL)

175.2%

Shopify (SHOP)

120.3%

Air Canada (AC)

89.3%

Martinrea International (MRE)

88.7%

Spin Master Corp. (TOY)

67.8%

Ivanhoe Mines (IVN)

66.9%

Labrador Iron Ore (LIF)

66.6%

BRP (DOO)

65.0% Source: Bloomberg

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9/02/2018 10:07:17 AM

UPFRONT

HEAD TO HEAD

How heavily do you rely on mutual funds?

Despite the growing popularity of ETFs and alternatives, mutual funds are still the backbone of many client portfolios

David Little

Chad Larson

Philip Boland

Senior investment advisor and director, private client group Little Wealth Management Group

Senior vice-president and portfolio manager MLD Wealth Management Group

Financial advisor B & A Financial Group/HollisWealth, Industrial Alliance Securities

“We use mutual funds/ETFs for our clients equally. One of the main reasons we invest in a mutual fund or an ETF is the benefit of professional management: Third-party portfolio managers invest the monies after completing thorough due diligence on businesses and securities.

The other advantages of third-party professional management are threefold: rebalancing strategies, out-of-country investment opportunities and liquidity.

We don’t have to guess which sectors, markets or trends are prevalent at any given time because these managers take care of these issues. Also, investment opportunities outside of North America are accessed by mutual funds and ETFs.”

“Mutual funds play a role – collaboratively, but not majority. Advisors lead with – and clients often fixate on – product and endless graphs and charts. We call these things the ‘how’ or the ‘so what?’ part of the business. We try to educate and work with our private families to determine the ‘why.’

It’s not about product, price and performance, but about people, process and philosophy. Mutual funds are a part of the equation, with the added benefits during stages of the economic cycle that benefit from active management. Mutual funds do play a part – for taxation, diversification and liquidity.”

“I do use mutual funds for most of our securities selection. Along with professional management, mutual funds allow us to diversify a client’s portfolio by investment style, asset type and geographic location.

A major advantage of mutual funds is the ease of acquisition, whether lumpsum or regular contributions. Richard Thaler’s Nobel Prize-winning theory has proven that this is key to building wealth.

Features such as SWPs and capitalclass funds provide our retired clients with regular income streams in open accounts with tax-efficient income. These features are not easily replicated with other securities.”

THE GREAT RELIABLE According to research from the Investment Funds Institute of Canada, mutual funds inspire greater confidence in Canadian investors than other financial products – a whopping 86% of consumers expressed faith in the investment vehicle, putting it well ahead of stocks (64%), GICs (59%) and bonds (51%). Data from IFIC shows that as of the end of 2017, Canadians had $1.48 trillion invested in mutual funds – around 31% of the population’s total financial wealth.

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9/02/2018 9:55:42 AM

UPFRONT

OPINION

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

The reality of robo-advisors Robo-advisors won’t swallow up the market, writes Jason Pereira – but they will force a complacent industry to reinvent itself DESPITE FEARS that the growing number of robo-advisors represents new competition that will take food off advisors’ plates, simple math shows that all but the largest and best funded robos face an uphill battle.

Take, for example, the country’s biggest robo: Wealthsimple. In May, Wealthsimple crossed the $1 billion AUM threshold, managing funds for approximately 30,000 clients. That works out to around $33,333 per client on average. Given that the first $5,000 of every client’s portfolio is managed free (except for the cost of the ETFs), that means the average client has approximately $28,333.

Wealthsimple charges between 0.35% and 0.5%, resulting in a fee between $99 and $142 per client, for a total top-line revenue of approximately $4.25 million. Meanwhile, around the same time, Wealthsimple’s largest investor, Power Corp., made an additional investment of $50 million.

So what does this tell us? First of all, as simple as robo-advisory looks, software development at scale isn’t cheap. And second, the cost of acquisition of each client (like the commercials during NFL games) isn’t cheap.

Ultimately, the only way the math will work is at a massive scale – that is, with a heck of a lot of investors on your platform. That spreads out the costs of the platform so the average cost falls below average per-client revenue.

Given Canada’s size, there really isn’t room for more than a handful of players in this space. So any robo-advisor hoping to act as a stand-alone business better have deep pockets – or a major shareholder with deep pockets. As

this market matures, it will most likely be the existing financial powerhouses that control the few profitable robos.

Meanwhile, most advisors are missing the two other reasons these new players exist: distribution and infrastructure.

Ask yourself: Who are the biggest roboadvisors in the US? If you guessed the two best known, Wealthfront and Betterment, you are dead wrong. It’s actually Vanguard

In fact, if embedded compensation gets banned in Canada, resulting in a world where discount brokers offer only F-class funds, you may see other big manufacturers like CI and Fidelity consider a direct model as well.

Over a year ago, I opened a robo account for myself. Using the company’s mobile app, I filled out an investor profiling questionnaire, completed and signed account opening docs, provided identity verification, and sent money to the account – all in just four minutes. I was immediately impressed.

Less than a minute later, I was enraged – not at the robo, but at the fact that for me to open an account for a client on my platform, it requires a mountain of paperwork, hours of labour and sometimes days before we can receive money. I had seen the light – I needed this tech. I immediately reached out and now have a relationship with a robo. That’s the most important reason advisors why should embrace robos: They will fix our broken world.

But their influence has the potential to go well beyond their current onboarding, rebalancing and reporting capabilities. Wealthsimple

“That’s the most important reason why advisors should embrace robos: They will fix our broken world” and Schwab by a long shot. For both of these players, a robo platform simply provides them with a new distribution channel for their core product: ETFs. Given the rapid growth of ETFs in the marketplace, these highly recognized US brands simply direct new customers to their robo channel as opposed to their DIY channel. The same can be seen in Canada with BMO’s SmartFolio and, to a lesser extent, Nicola Wealth’s Wealthbar. Taking into consideration the economics discussed above, a recognizable and trusted brand that leverages its exposure into a direct-toconsumer channel and gets paid twice (once for product fees and again for the robo fee) reinforces my theory that incumbents and incumbent-backed players are likely the only ones that will survive long-term.

owns and has automated its own custodian to offer a full-stack solution, and Nest was basically built on top of NBCN and other custodians. Both also provide platforms that allow advisors to offer robo portfolios or advisor-built portfolios to their own clients and charge their own fee on top of the robo fee.

Firms are going to have to either license technology from these or other players, or develop their own in-house – or risk losing business and advisors to firms that have it.

Robos have set the minimum bar for the future of this industry.

Jason Pereira is a senior financial consultant at Woodgate Financial/IPC Securities Corp., an instructor at the Schulich School of Business and host of the “Fintech Impact” podcast.

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9/02/2018 4:06:02 AM

UPFRONT

NEWS ANALYSIS

Can Bitcoin go mainstream?

After huge growth in 2017 and a precipitous drop to begin 2018, will cryptocurrency gain acceptance in the wider investment community?

IT WASN’T much of happy new year for cryptocurrency traders, as the market lost $370 billion in a 10-day period in January.

That slump represented 40% of the market’s total value; Bitcoin alone fell by more than 50% after peaking at just under $20,000 in late December.

Since its inception, this asset class has been characterized by spectacular growth, and that was especially the case in 2017.

The price of Bitcoin increased by 1,900% during the year, and it wasn’t even the best performer in the space. That goes a long way toward explaining how cryptocurrency has moved from strange curiosity to legitimate investment option for many people.

That’s not to say this market doesn’t have its naysayers – quite the opposite, in fact. Some of the biggest names in finan-

(Allianz Global Investors global strategist Neil Dwane). The world’s most venerated investor, Warren Buffett, has been more tempered with his remarks, simply stating that because it is not a value-producing asset, cyptocurrency would ultimately “come to a bad ending.”

But there are plenty who disagree with this viewpoint. David Mondrus is the CEO of Trive, a tech startup that uses blockchain technology to verify facts in the media.

The firm also has its own cryptocurrency, Trackcoin, which it uses to pay its employees, and Mondrus is a long-standing advocate of this asset class.

“There is no question that the growth is sustainable; it’s just a question of which cryptocurrency will do it – Bitcoin, Etherum, Litecoin, Dash,” he says. “The parabolic

“There is no question that the growth is sustainable; it’s just a question of which cryptocurrency will do it” David Mondrus, Trive cial services have blasted cryptocurrency as a “fraud” (JPMorgan Chase CEO Jamie Dimon), a “bubble” (Peter Schiff, president and CEO of Euro Pacific Capital) and “a scam for criminals around the world”

8

charts I have seen, which have been correct for the last eight years, predict that Bitcoin will hit $100,000 by the end of 2019.”

While the rise of Bitcoin was undoubtedly the investment story of 2017, cryptocur-

rency remains a largely untapped market for retail investors. That means there’s plenty of room for further expansion, especially if the banking industry finally warms to the idea.

“Right now we are at US$800 billion worth of market cap,” Mondrus says.

“Compare that to any large-size market in the United States – it’s miniscule in comparison.

We still haven’t onboarded any of the big boys yet – Fidelity doesn’t allow you to buy crypto; Schwab doesn’t.”

Another hurdle cyptocurrency will have to manage is government interference.

Reports of a crackdown in South Korea, one of the global leaders in virtual-trade volume, precipitated Bitcoin’s plunge in January.

China and Russia have also promised tighter

www.wealthprofessional.ca

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9/02/2018 4:06:43 AM

FAST FACTS: BITCOIN

As of January 31, 2018, the Bitcoin market cap is US$169 billion Bitcoin has a ceiling of 21 million, and there are 16.7 million coins currently in circulation The limit of 21 million is expected to be reached in 2140 Around 1,000 people own 40% of total Bitcoin assets Some Fortune 500 firms, including Expedia, Dell and Microsoft, have begun accepting Bitcoin payments Source: Coinmarketcap.com

regulation, and it’s only a matter of time before other countries move to introduce taxes on crypto trading.

But despite the headwinds, it’s unlikely

concluded that despite their extreme volatility, digital currencies would indeed make up part of a diversified portfolio in the future.

“As is so often the case, there are extremes

“The more it becomes not just for speculation, but for actual use, then the price will stabilize” Randy Cohen, Alignvest Asset Management these disruptors will disappear anytime soon.

Randy Cohen of Alignvest Asset Management recently co-authored a study entitled “Illuminating the Path Forward: Digital Assets in Institutional Portfolios,” which

on both sides, so I try to find the truth somewhere in the middle,” Cohen says. “There have been a lot of different things that have been used as money throughout history, and all have their pros and cons. That includes gold

and silver, paper currency, bank accounts and now digital assets. Once you give up on the search for perfect money that solves all problems at all times, we will have a much clearer idea of digital assets and see that maybe it is good for global commerce.”

A professor of finance and investment at Harvard Business School and MIT, Cohen takes issue with the view that Bitcoin and its ilk have no intrinsic value. Already these products are being used as a more efficient means to transfer money, leaving existing wire transfer systems in the shade. It’s an ongoing process, but in Cohen’s view, cryptocurrency is here to stay.

“I think we will see the volatility drop over time,” he says. “The Chicago Mercantile Exchange initiated futures recently, and that will moderate volatility because it opens the possibility of investing to more institutional players, long as well as short. The more it becomes not just for speculation, but for actual use, then the price will stabilize.”

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9/02/2018 4:06:49 AM

UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

Aon

Townsend Group

Aon's purchase of the alternative investment manager will increase its global AUM to US$130 billion

CIBC

Wellington Financial

The acquisition will allow CIBC to launch its new Innovative Banking business line

Sun Life Global Investments

Excel Funds

Sun Life finalized its acquisition of the emerging-market-focused investment manager in early January

TD Bank

Layer 6

The purchase of the AI company is part of the bank’s customer-service innovation strategy

PARTNER ONE

PARTNER TWO

COMMENTS

BMO

Industrial and Commercial Bank of China

The two banks have entered into a deal to bolster their respective product lineups and expand distribution

Bridging Finance

MJardin Group

The partnership will establish a private debt fund focused on infrastructure and consolidation within the cannabis sector

3iQ gains approval to launch cryptoasset fund

Investment manager 3iQ has been approved by the OSC and CSA as the first Canadian portfolio manager and investment fund manager allowed to invest in multiple cryptoassets. Units of 3iQ’s Global Cryptoasset Fund will be open to accredited investors, advisors and dealers via the Fundserv platform. Pension funds, institutions and family offices will also be able to access the fund through private placement. The fund, structured as a trust, will invest directly in Bitcoin, Ethereum and Litecoin.

Sun Life completes Excel Funds acquisition

Sun Life Global Investments [SLGI] has completed its purchase of Excel Funds, bolstering both its ETF lineup and its expertise in emerging markets, and growing its AUM by approximately $700 million. “By expanding our lineup of emerging market funds and adding Excel’s exchange-traded funds, clients will have more choices through which to achieve their financial goals,” said SLGI president Rick Headrick.

The company welcomed Excel Funds founder, president and CEO Bhim Asdhir into the Sun Life fold as SLGI’s first head of emerging markets and business development. “I look forward to working with advisors and clients who see opportunities within emerging markets as we continue to build on the great achievements we’ve seen with Excel Funds, but now under the Sun Life Global Investments banner,” Asdhir said.

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Middlefield Group plans global innovation fund

Middlefield Group has taken the first steps toward creating a new Global Innovation Dividend Fund. The fund will invest primarily in dividend-paying securities of global issuers that are involved in or derive a significant portion of their revenue from cutting-edge technological innovations such as blockchain. In its preliminary prospectus, Middlefield set an initial target distribution yield of 4% a year based on the original subscription price of $10 per unit. Prospective purchasers can pay for units in cash or by exchanging securities of issuers listed in the prospectus by February 22.

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9/02/2018 4:07:17 AM

PEOPLE BMO makes changes to online platform

BMO Wealth Management has slashed the minimum account requirement for its BMO SmartFolio online platform from $5,000 to $1,000. It has also waived the minimum account fee of $60 per year, and existing clients can receive $50 for referring friends and family members to start a BMO SmartFolio account. “This is an area of focus for us, and we will continue to evolve our digital investing experience to inspire even more Canadians to invest smarter,” said Silvio Stroescu, head of digital investing at BMO Wealth Management.

Invesco updates monthly income fund strategy

Invesco Canada has updated the investment strategy for its PowerShares Monthly Income Fund to give the fund’s management team greater flexibility in the selection of underlying strategies and the ability to invest in ETFs. The changes aim to create a more diversified portfolio with the potential for lower volatility and higher riskadjusted returns that are focused on monthly income generation. To reflect its new investment strategy, the fund has been renamed the Invesco Monthly Income ETF Portfolio.

Redwood rolls out behaviour-based fund

Redwood Asset Management has launched the Redwood Behavioural Opportunities Fund, which seeks to identify and profit from irrational, emotionally motivated investor decisions. Primarily investing in equities from North American issuers, the fund uses a bundle of strategies designed to exploit investors’ behavioural weaknesses or structural inefficiencies in the market. “While the study of behavioural finance is not new, Canadians have until this point not had a widely accessible vehicle to capitalize on the collective effects of investors’ emotional mistakes,” said Redwood president and CEO Peter Shippen.

NAME

LEAVING

JOINING

NEW POSITION

Andrew Auerbach

BMO

BMO Nesbitt Burns

Head

James Boyle

Zillion Group

Foresters Financial

President and CEO

Jaime Carrasco

ScotiaMcLeod

Canaccord Genuity Wealth Management

Portfolio manager

Andrew Clee

Raymond James

Fidelity Investments

Vice-president of ETFs

Don Coulter

Coast Capital Savings

Concentra Bank

President and CEO

Albert Ngo

N/A

Empire Life Investments

Portfolio manager, fixed income

Camilla Sutton

Scotiabank

Women in Capital Markets

President and CEO

Foresters Financial appoints new CEO

Foresters Financial has named James Boyle as its new president and CEO. Boyle has more than 30 years of financial services experience, almost 20 of which were spent with Manulife Financial and John Hancock, where he became president and CEO in 2008. Boyle retired from John Hancock in 2012 and became involved in private and venture capital investing, most recently serving as CEO of healthcare technology startup Zillion Group.

“Jim has proven himself to be an exemplary leader, clear communicator and a very successful developer of talent,” said Robert Lamoureux, chair of Foresters Financial’s board of directors. “[The] Foresters board of directors is confident that he is well suited for this important role.”

Women in Capital Markets names new head

Women in Capital Markets [WCM] has appointed industry veteran Camilla Sutton as its new president and CEO. Most recently, Sutton was Scotiabank’s global head of foreign exchange; her 25 years of capital markets experience also includes senior roles at OMERS and BMO Capital Markets. She also serves as a board member at large for the CFA Society Toronto and has been part of several committees at the CFA Society and WCM. “Camilla is a respected, talented and motivated leader with a strong business acumen, and a capital markets veteran,” said Mari Jensen, chair of the WCM board of directors. “Camilla is the right leader for WCM during this important stage of growth, and I am confident she will continue to drive change in Canada’s boardrooms, executive offices and workplaces.”

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UPFRONT

ETF UPDATE NEWS BRIEFS Interest in fixed-income ETFs could rise in 2018 According to research firm ETFGI, equity funds accounted for 77.6% of the global ETF industry’s year-end asset total of US$4.8 trillion in 2017. But bond ETFs reeled in US$138 billion in new assets globally – US$26 billion more than in 2016. Stephen Cohen, head of BlackRock’s iShares ETF business in Europe, the Middle East and Africa, told the Financial Times that fixed-income ETFs should see increased assets and market share as investors become comfortable with them and fund managers use the products to quickly calibrate their bond portfolios.

Purpose Investments launches enhanced dividend ETF Purpose Investments has rolled out the Purpose Enhanced Dividend Fund, which combines the firm’s high-quality North American dividend strategy with a tactical covered-call option strategy to optimize the trade-off between premium generation and limiting upside appreciation. ETF shares of the fund are trading on the TSX under the ticker symbol PDIV. “In a world of lofty valuations and flat to rising interest rates, strategies that seek to enhance income and lower volatility can be a meaningful way to help manage risk,” said Purpose Investments president and CEO Som Seif.

Value-driven smart beta ETFs underperform benchmark In a study of 560 smart beta funds, UBS Group ETF strategist David Perlman found that only about 32% to 39% outperformed their closest cap-weighted

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index over a 10-year period. After factoring in risks taken by ETFs that followed benchmarks other than broad indexes, Perlman discovered that only 25% to 32% of funds outperformed. “The biggest headwind has been that value has lagged, and a lot of smart beta has a value tilt,” Perlman said, suggesting that smart beta funds work best when they rely on combinations of factors.

Canadian ETF inflows record a surge in 2017 According to data from research firm ETFGI, inflows into Canada-listed ETFs reached US$18.9 billion during 2017, handily beating the US$13.1 billion and US$12.7 billion inflows observed in 2015 and 2016, respectively. Inflows were strongest for Canadian equity ETFs, amounting to US$10.1 billion over the year. Actively managed ETFs gathered US$4.8 billion, while fixed-income ETFs collected US$3.6 billion. BMO Asset Management led the pack for net ETF inflows with US$6.9 billion, followed

by Vanguard with US$2.4 billion and BlackRock with US$2.3 billion.

Brompton seeks to convert healthcare and tech funds to ETFs

Brompton Funds, which manages the Global Healthcare Income & Growth Fund (HIG) and Tech Leaders Income Fund (TLF), has announced plans to convert the closed-end funds into ETFs. On February 28, the firm will hold special meetings to seek unitholder approval for the proposed conversion. According to Brompton, the change will give unit­ holders increased trading liquidity, reduced bid-ask spreads, reduced MERs and potentially lower expenses per unit due to growth. The funds’ strategies are not expected to change.

What’s next in the ETF space?

Even after several years of unprecedented growth, one firm predicts ETFs will continue to increase in popularity Though they’re still dwarfed by mutual funds, ETFs are rapidly becoming Canadians’ favourite way to access fixed income and equities. And according to one major ETF provider, numerous trends and developments on the horizon are poised to make the space even bigger – and more complicated.

In its 2018 ETF Industry and Market Outlook, WisdomTree Canada predicted that overall ETF adoption rates, which still lag behind those in the US, may accelerate over the next few years as the industry reaches a critical mass. “If, hypothetically, the industry experiences 20% annual rises in AUM in the coming years, and underlying assets appreciate 4% per year, the Canadian ETF industry would be about one-third the total size of the mutual fund industry by 2024 (assuming mutual funds do not experience net outflows),” the report said.

Forecasting a critical role for core fixedincome ETFs in Canadian portfolios, WisdomTree also predicted interest rates will become a more critical factor. “Market expectations for additional rate increases are placed at over 60% for the BoC meeting in March 2018 and better than 70% for April,” the report said.

“In the US, [the outlook for the Fed in 2018] has been placed at three rate hikes.”

Given those probabilities, WisdomTree predicted a likely shift toward shorterduration instruments, as well as fixed-income ETFs that are weighted more toward credit and less concentrated in interest-rate-sensitive

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sectors like government bonds. The firm also anticipated that ‘smart’ ETFs, which provide income while mitigating interest-rate risk, will become more preferable, which could lead to a shift from market-cap-weighted ETFs toward more optimal strategies such as fundamentally weighted ETFs. Globally, WisdomTree expects more ETF innovation as providers grab more market share from mutual funds due to fee disparities. The trend will include more thematic ETFs, which, in Canada, will likely focus on

“The Canadian ETF industry will be about one-third the total size of the mutual fund industry by 2024” millennial demand, artificial intelligence, robotics, and political and social trends.

Finally, with the possibility of heightened discussions around CRM3 and full disclosure of management expense ratios, WisdomTree believes advisors will increasingly rely on ETFs in client portfolios because of their lower fees relative to mutual funds. Citing a Morningstar survey, WisdomTree highlighted the fact that Canada has some of the highest mutual fund expense ratios globally.

“For example, in fixed income, the median Canadian fund still charges an MER of 1.15%, whereas the ETF median is 0.29%,” the firm said. “With 10-year Canadian Treasuries yielding only 1.87%, this kind of yawning gap in fees presents a prohibitive obstacle for traditional active managers, who are caught between the desire to maintain profit margins and market share. A deterioration in both is expected in 2018.”

Q&A

Pat Dunwoody

ETF growth and challenges

Executive director CANADIAN ETF ASSOCIATION

Years in the industry 18 Fast fact Canada’s ETF industry swelled to more than $145 billion by the end of 2017, representing 30% year-over-year asset growth

The Canadian ETF industry displayed impressive growth last year. What do you think were the most striking numbers?

Two jump out at me. The overall asset growth of 30% year-over-year is just astronomical. We’ve had similar growth in past years, but now that the industry’s at a decent size, it’s striking that we’re still hitting those kinds of numbers.

There’s also the number of ETF providers that have come to market. There were 18 at the beginning of 2017, and by the end of the year, there were 27. A lot of them are Canadian firms, which are either existing businesses that are rolling their assets from closed-end funds into ETFs, or individuals and entities that are venturing into the space on their own. There are some big US-based firms that have yet to come in, but I expect they’ll be entering within the next six to 12 months.

What are some of the factors behind that growth?

I think ETFs are now being seen as worthy of investigation by a lot more people. The investing public is asking about them a lot more and reading up on them. At the same time, a lot more advisors are starting to look at fee-based accounts, and once they have that, ETFs become a more viable consideration.

Related to that is the sense of fear around regulators looking at eliminating or substantially changing guidelines governing embedded-commission fund products. If you’re a commissionbased advisor who’s sold a lot of mutual funds, you’ve got to start thinking about going fee-based, which opens up a whole new range of products. We’re not expecting all advisors to flip their accounts over to fee-based, but a significant percentage should.

What challenges can advisors expect moving forward in terms of using ETFs? I think a lot of it is going to come down to what we are working on, which is education. Historically, ETFs were passive, index-tracking products that were easy to understand and explain. But now you have beta products, fully active products and other products that have been developed with real innovation in mind. Due diligence is not going to be as simple as comparing ETFs with similar mutual funds.

Advisors will really have to understand what index they’re based on, how they trade and essentially just get into the meat and bones, which they haven’t necessarily had to do for passive products.

That ties into how regulators continue to take a closer look at this growing industry. We have to make sure we’re offering appropriate products, make sure they’re being sold appropriately, and ensure they’re provided to advisors and their clients at the appropriate times. Especially as we get into the MFDA channel, advisors who might have little or no experience selling ETF products must truly understand the differences between them. It’s a positive challenge – Canada’s ETF space has been a success story so far, and we want to keep it that way.

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UPFRONT

ALTERNATIVE INVESTMENT UPDATE

Finding attractive returns in private debt A new fund targets a potentially overlooked corner of the private debt market in North America

teams. Through these relationships, it aims to facilitate enterprise growth, acquisitions, succession planning, special dividends and other transactions that can create attractive returns for investors. SCP’s first investment last summer provided Calgary-based Founder’s Advantage Capital Corporation with a US$75 million senior secured credit facility.

Vigna said the fund will be sectoragnostic, focusing on lending to family- and

“The private debt space is underserved, particularly the North American, non-sponsored midmarket space”

Canadian investors now have a new option for investing in private debt. Sagard Holdings, a subsidiary of Power Corporation of Canada, recently announced the first closing of Sagard Credit Partners LP (SCP), which targets public and private middle-market companies in Canada and the US. “We truly believe the private debt space is underserved, particularly the North American, non-sponsored mid-market space,” said Adam Vigna, managing partner and chief investment officer of Sagard Holdings. “We’ve looked at more than 225 deals since January 2017. From what we’ve seen, the private debt space over the

NEWS BRIEFS

last several years has really been focused on the sponsor-backed market.”

At approximately $325 million, the fund is already sizeable, and has external commitments from the Healthcare of Ontario Pension Plan, BRK Capital, Walter Financial and one other major Canadian corporate pension plan. But it’s aiming for total commitments of around $625 million from leading institutional investors and family offices by the end of 2018.

The fund invests across North America with the goal of developing long-term business relationships with founders and management

Pension plans get green light for alternatives

Canadian pension plan executives expect to increase allocations toward alternative assets, particularly infrastructure and real estate, in 2018.

A new law in Ontario, similar to recent legislation in Quebec, allows defined benefit pension plans that are 85% funded to calculate their annual funding on a goingconcern basis, disregarding solvency considerations. The change, which is expected to take effect later this year, will allow pension plans to take on more risk in pursuit of higher yields.

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founder-owned companies and smaller public companies with strong fundamentals and targeting net annualized returns of 10% to 12%. “If you look at the deals we’ve examined since January, the average EBITDA of those companies is about $23 million,” he said. “Aside from having strong fundamentals and cash flows, a lot of the companies we’re looking to partner with are market leaders in their niche.

“The final thing we look at in considering a loan is the quality of the management team,” he added. “Reputation is extremely important to us. Not only do we want to build relationships with respectable management teams, but we also want to choose partners that are aligned with the business.”

Canadian venture capital ends 2017 with decline

Both the amount and the number of venture capital deals in Canada declined in the fourth quarter of 2017, according to a new report from KPMG. Nonetheless, Canada accounted for the biggest venture capital deals outside the US in Q4, raising more than US$435 million.

Average deal size did exhibit an increase, driven largely by foreign investment in Canadian firms. Canada also saw a rise in early-stage investment, which accounted for the highest share of venture capital deals in this country since 2009.

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Q&A

Corrado Russo Senior managing director, investments, and global head of securities TIMBERCREEK ASSET MANAGEMENT

Years in the industry 20+ Fast fact In 2017, global REITs gained 11.4%, exceeding Timbercreek’s projection of 8.5% to 10.5%

Global REITs to grow despite rising rates Despite the fact that real estate got its own GICS category in 2016, it seems REITs have remained overlooked. Why? I believe equity managers have hesitated to give them an equal weight or overweight in their portfolios due to the noise around probable interest rate hikes and their potential impact on REITs. But from our perspective, that will change as rates start to rise and we get beyond the pressure applied to REITs at the beginning of a rising-rate cycle, and more of them start to deliver the sustainability in the long-term contracts and cash-flow growth embedded in their lease structures.

Another supporting trend is the valuations that continue to get rich across multiple equity sectors. At some point, I think equity managers will go back to their desks and look for value and income streams that can grow, and that’s when REITs will start to look good on a relative basis.

What are your return expectations for REITs this year?

Our expectations are somewhere between 8% and 10%. First off, the current cash-flow yield we’re seeing today is, on average, 4.6% globally. And if you look at the underlying lease contracts – what contracts are rolling over, where the rents are versus where they’re going, and step up in rates that exist in underlying leases we have today – and then add just the projects that these companies have underway, you’ve got a 4% to 4.5% built-in expectation of growth in earnings or cash flow.

New equity fund will accept digital currencies

Vancouver-based investment firm InvestX has launched a growth equity fund that will accept traditional as well as digital currency. The fund allows accredited US and international investors to invest in pre-IPO global companies with at least $1 billion in valuation, a minimum growth rate of 40% and evidence of a potential liquidity event in 12 to 36 months. To safeguard digital currency, InvestX has a secure online fund-transfer platform, and it encrypts and stores all digital wallet information in a secure offline database.

But that 8% to 10% doesn’t factor in an increase in capital flooding into the REIT sector. I think if that were to occur, the industry could deliver low- to mid-doubledigit returns. Based on our expectations that equity managers will put more funds into the sector and a possible re-rating of the overall REIT sector, we could see that happening.

Timbercreek’s 2018 REIT outlook recommends REITs with global real estate exposure. What opportunities do you see in markets abroad?

I think, even though the bricks-and-mortar retail sector has fallen out of favour globally, there will be winners and losers. The US is the most highly retailed market per capita in the world, which presents an opportunity to sift and uncover hidden gems. And despite stronger fundamentals in places like Europe, which has just one-fifth of the retail per capita of the US and also puts much greater value in the shopping experience, they’re being painted with the same brush.

Another theme we see across many markets, which has also picked up in Canada, is densification. Globally, trends in urbanization and lifestyle preferences are leading to a rise in land values, as well as opportunities for REITs to enhance their existing portfolios. Taller buildings, structural additions and other changes will let REITs extract more value and income from their properties. In our view, none of that is priced in today.

Canadian interest in reverse mortgages rises

HomEquity Bank, the national provider of the CHIP reverse mortgage, reported reverse mortgage originations of $608 million in 2017, driving record growth of 32.5% for the year. The bank’s referrals from mortgage brokers increased by 55%, and the number of consumer product inquiries doubled. “The sustained strength of Canada’s real estate market has increased the confidence of Canadian homeowners in reverse mortgages,” said HomEquity Bank president and CEO Steven Ranson.

Sprott introduces gold and silver trust

Following Sprott Asset Management’s acquisition of the common shares of Central Fund of Canada Limited [CFCL], the company has launched a new gold and silver trust, which will absorb CFCL Class A shareholders. “The new Sprott Physical Gold and Silver Trust … will offer investors the same benefits as our other bullion trusts, including our industryleading physical redemption feature,” said Sprott CEO John Ciampaglia. The new trust began trading on the TSX in January under the ticker symbol CEF.U.

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PEOPLE

INDUSTRY ICON

PUTTING A PLAN INTO ACTION Mark Machin, CEO of the Canada Pension Plan Investment Board, reveals how Canada’s largest pension fund limits risk and enhances returns

AS THE HEAD of the investment arm of the Canadian Pension Plan, Mark Machin bears the responsibility for ensuring the long-term sustainability of Canada’s largest pension fund. The Office of the Chief Actuary has predicted that the CPP will be viable for the next 75 years, assuming a 3.9% real rate of return. Currently, the CPPIB’s 10-year annualized real rate of return is 5.3%, which suggests Machin and his colleagues are succeeding in their remit.

Addressing advisors at the recent Advocis symposium in Toronto, Machin discussed the “confidence deficit” affecting this country – specifically, the fact that, according to a recent CPPIB study, 64% of Canadians believe the Canada Pension Plan will not be there for them when they reach retirement.

Such a high number is concerning, especially considering that the same research revealed that 42% of working-age Canadians expect to rely heavily on the CPP when they retire. That figure is inextricably linked to people’s attitudes about money – and in particular, how much they’re saving for retirement.

A world of debt That Canada has an issue with personal debt is no secret, and it’s something Machin and the CPPIB keep a close eye on.

“Housing debt and personal debt in this

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country are very high – a record high, in fact,” Machin says. “Canadians have $1.69 of debt for every dollar in disposable income.

It’s something we need to be aware of when making investments in Canada. We have to make sure we don’t have all our eggs in one basket, so we diversify around the world – not just across asset classes, but across strategies, too.”

Machin assumed his current role after

global in its outlook.

When it comes to attitudes about money, Machin does see differences between Canadians and other nationalities.

“In Asia, there is a very high savings rate,” he says. “People have been through tough times and think about their retirement from a very young age. That means not taking on too much debt and saving your income. When you have generations

“Housing debt and personal debt in this country are very high ... It’s something we need to be aware of when making investments in Canada. We have to make sure we don’t have all our eggs in one basket, so we diversify around the world – not just across asset classes, but across strategies, too” serving as senior managing director and president of CPPIB in Asia. He already had a high level of expertise in that market, having overseen Goldman Sachs’ capital markets, financing and investment banking divisions on the continent. Machin’s time in Beijing and Hong Kong made him a good fit for the top job at the CPPIB, which is truly

that have only seen good times, they tend to save less. Racial or national stereotypes are less relevant than the experiences people have been through.”

Responsible investing In terms of investment strategy, diversification is paramount for the CPPIB.

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PROFILE Name: Mark Machin Title: President and CEO Company: Canada Pension Plan Investment Board Based in: Toronto Years in the industry: 27 Fast fact: Having studied medicine at both Oxford and Cambridge, Machin qualified as a doctor in 1990, but only practiced medicine for one year before joining Goldman Sachs

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PEOPLE

INDUSTRY ICON

Currently, the fund’s highest concentration is in foreign developed market public equities (27%), while Canadian equities account for only 3%. Although Canada’s economy is currently performing well, there are headwinds that can’t be ignored, particularly when you’re investing $382 billion on behalf of 20 million people.

Another important asset class for the fund is infrastructure, which accounts for 7.7% of total investments and acts as an important counterpoint to its equity exposure.

“We want long-term, stable cash flow that protects us from inflation and that we

Peru is very sensibly managed as a country.”

Aside from diversification, environmental, social and governance [ESG] factors are a crucial part of the CPPIB’s investment ethos. The organization publishes a sustainable investment report annually, focusing on the four areas of water, executive compensation, labour rights and climate. And, as Machin explains, whenever the board makes an investment in a company, it is far from a silent partner.

“We take our responsibility seriously, and when we are an owner, we exercise all our proxy rights,” he says. “We voted on almost 52,000 items in 50 different countries last

“We engage with a company and tell them where they need to improve. That’s one of the responsibilities we have as an owner. The world has gone too far into index funds, with people not necessarily exercising those responsibilities” can rely on,” Machin says. “We generally don’t invest in projects that are higher-risk – we have very little greenfield, for example, where there is construction, regulatory and permitting risk. We generally invest in brownfield projects, where we have a fairly wide range – power investments in the US; toll roads in Canada, Mexico, Chile and Australia; water utilities in the UK.” Most recently, the CPPIB and Goldman Sachs banded together for a $950 million investment in Peruvian private equity firm Enfoca. The CPPIB commitment amounted to $380 million, reflecting its confidence in the progress of the Andean nation.

“Looking at South America, we have substantial real estate investments in Brazil that have done quite well,” Machin says. “In Peru, we have investment in private equity, and we also own half of the major gas pipeline that brings all the industrial gas into Lima.

That has been a terrific investment for us.

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year. Every investment we make, we look at through an ESG lens.”

Governed by the Canada Pension Plan Investment Board Act, the CPPIB’s primary function is to maximize returns without undue risk of loss. This isn’t mutually exclusive to high ESG ratings; in fact, the two complement each other quite well.

“If you invest in things that are sustainable, then generally the returns will be there in the long term,” Machin says. “It is making sure the companies you are investing in are continuing to improve their environmental, social and governance capabilities.

We engage with a company and tell them where they need to improve. That’s one of the responsibilities we have as an owner.

The world has gone too far into index funds, with people not necessarily exercising those responsibilities. We think we have a pretty important role to play to make sure that companies hear our views.”

CPPIB BY THE NUMBERS

20 million Number of Canadians who either contribute to or receive benefits from the Canada Pension Plan

$382 billion Assets of the CPPIB, making it one of the 10 largest retirement funds in the world

$931 billion Assets the CPPIB is projected to have by 2040

$33.5 billion The CPPIB’s net income in 2017

38% Proportion of CPPIB assets invested in the US

16.5% Proportion of CPPIB assets invested in Canada

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9/02/2018 4:08:20 AM

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FEATURES

SPECIAL REPORT

f o L L A H

E M A F Wealth Professional Canada’s first Hall of Fame brings together some of the most recognizable and accomplished advisors in wealth management THE ABILITY to provide sound financial advice is a skill that takes years to master, which is why those at the top of the profession tend to have a few grey hairs. Managing a person’s finances means protecting their future, and it’s a responsibility not to be taken lightly.

Wealth Professional Canada’s inaugural Hall of Fame showcases 11 veterans who have enhanced the status of financial advisors in Canada. All have more than 30 years in the business, which has allowed them to experience how the job of the financial advisor has shifted from simply selling life insurance or mutual funds to holistic financial planning. The advisors featured

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here have thrived by adapting to the industry’s evolution.

That’s not to say everything in the wealth management garden is entirely rosy, and many of this year’s Hall of Fame members cite increased regulation as more of a hindrance than a benefit for consumers. By and large, though, these veterans are positive about the advisory business and where it’s headed. As Canada’s wealth transfers from one generation to the next, a demographic shift is occurring in wealth management, too. It’s the responsibility of seasoned advisors to ensure this transition goes smoothly – a role this year’s Hall of Fame members are keen to embrace.

2018 HALL OF FAME INDEX NAME

COMPANY

Bonten, Laurie

Wellington-Altus Private Wealth

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Horwood, John

The Horwood Team

30

Kalyn, Brian

World Financial Group

24

Little, David

Little Wealth Management Group

27

Loney, Dan

Loney Financial

21

Macdonald, Doug Macdonald Shymko & Company

31

Moore, G. Bradley SAGE Connected Investing

23

Nicola, John

Nicola Wealth Management

29

Rae, Ken

The Rae Lipskie Partnership

26

Schnurr, Ed

Unity Group Financial

24

Spiring, Charlie

Wellington-Altus Private Wealth

28

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DAN LONEY Owner and president Loney Financial Years as an advisor: 30

It was a family tragedy that first inspired Dan Loney to become a financial advisor three decades ago. “I naturally had an interest in investments and working to help people improve the quality of their lives,” he says. “My father was a successful businessman and was killed in an airplane crash. When his corporate assets were frozen in lawsuits, I saw what insurance can do to protect a family and maintain a good standard of living.”

Today, Loney provides that same service to clients through Loney Financial, the company he founded in 1995. His career arc hasn’t been a straight upward trajectory, but after some lean early years, Loney was able to establish himself and

eventually open his own practice. Now a veteran of the business, he is worried about the lack of young advisors making the same journey he did.

“Thirty years ago, there were many great companies that would train a new advisor and help them get started in the industry,” he says. “Today the list is limited, and we have an average age around 60, whereas when I started, there were lots of advisors in their 30s.”

Another obstacle new entrants must overcome is the often negative public opinion of the industry – which isn’t entirely unwarranted, Loney admits.

“Research has shown that the public is not really keen on the advisory industry, but are very positive about their personal advisor,” he says. “In recent times the industry’s reputation has suffered through dishonest advisors like Bernie Madoff and the negative coverage of the Canadian banks pressuring advisors to sell products

that clients don’t need.”

Such behaviour didn’t go unnoticed by the regulators, but in Loney’s opinion, the response has been disproportionate.

“Regulators seldom stop the crooked advisors from their activities, but their compliance regulations have become burdensome for the industry,” he says.

“Regulation is not bad, but it must represent both the client and the industry to move forward. England is an example of regulation gone bad, where it hurt clients and many advisors left the business.”

Such an outcome could materialize in Canada, too, and with a lack of new advisors coming in, could prove devastating for the industry. But Loney believes there’s an obvious way to avoid this. “I would like to see a compensation package that makes it easier for young advisors to get started in the industry,” he says. “Compensation has been declining, and it hurts the young advisors more than anyone.”

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FEATURES

SPECIAL REPORT

LAURIE BONTEN Founder and senior vice-president Wellington-Altus Private Wealth Years as an advisor: 31

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In more than three decades in the investment industry, Laurie Bonten has risen from the position of office clerk to co-founding her own firm, Wellington-Altus Private Wealth. “I started at Midland Doherty

in November 1982 as an office clerk who basically did everything from being a wire operator to answering phones, cheques and deposits, deliveries – back in that time we delivered actual certificates to institutions – and helping the brokers with various duties,” Bonten recalls.

It proved to be a valuable learning experience; in 1986, Bonten became a broker at Merrill Lynch Canada. She then spent more than a decade with BMO Nesbitt Burns as an advisor before arriving at asset manager Wellington West in 2003 under the guidance of her investment mentor, Charlie Spiring. Wellington was subsequently acquired by National Bank Financial, where Bonten spent five years before returning to her roots, co-founding Wellington-Altus Private Wealth with Spiring last year.

Today, Bonten is the one doing the mentoring, in what is an increasingly challenging environment for young advisors.

“When I started, it was a simple process to set someone up to start investing,” she says. “We basically bought stocks and bonds and didn’t do much else. I think all the change has been for the better, and most of the paperwork is due to heavier compliance, which I think has been the best thing for both the advisors and the clients.

I have seen a few bad seeds, and it breaks my heart when clients have been taken advantage of.”

Increased regulatory pressure isn’t welcomed by most in the industry, but Bonten sees it as a necessary evil. The advisor-client relationship is built on trust, so efforts to stamp out unethical behaviour should be paramount, she says.

Another development that gives her cause for concern is the influence of the Big Six banks. “I think the biggest challenge is that the banks don’t want independent advisors and would rather manage all their clients’ money,” she says. “At a branch level, the expertise is fairly low – clients deserve more advice than they are getting.

It is a complex investment world, so I know that clients need actual advisors versus robo-advisors or bank employees.”

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G. BRADLEY MOORE Portfolio manager SAGE Connected Investing Raymond James Years as an advisor: 34

As a portfolio manager with SAGE Connected Investing, Bradley Moore’s main goal is to grow his clients’ assets.

Before starting his career in wealth management, however, he had different growth in mind. “I started in 1983 as a stockbroker for Moss Lawson & Company in Toronto,” he says. “I got the job because I was a good tree planter.

Their sales manager thought anyone who planted 5,000 trees per day could accomplish anything.”

Going from planting trees to trading stocks isn’t exactly a natural switch, but Moore’s work ethic allowed him to succeed in both realms. He also isn’t

afraid to try new things, which has served him well. “I did leave the investment management profession in 1987, just before Black Monday, to work in the real estate side of the investment world,” he says. “The move gave me a much better understanding of investing and wealth creation ... after two years, I came back.”

Moore has remained in wealth management ever since, putting in time at Merrill Lynch and McLean & Partners before arriving at SAGE in 2010. He still retains the same passion for the job as when he started in the business some 34 years ago.

“I have always been intrigued by business and entrepreneurs,” Moore says. “So being a financial advisor, where I’m paid to study businesses and serve entrepreneurs, seemed like a dream job – it scarcely feels like work at all. After 34 years, I am enjoying this profession more than ever.”

As far as changes in the industry, the

emergence of the internet has clearly had a huge effect on an advisor’s day-to-day job. “In the ’80s, I monitored and ranked around 60 Canadian stocks,” Moore says.

“Back then, much of my intel came from waiting by my mailbox for the next quarterly report to arrive. Today, with the help of a Bloomberg terminal and a CPMS stock screening system, my team monitors and ranks over 22,000 companies from around the world with real-time updates.”

Although knowledge is power, Moore believes the market’s evolution hasn’t been entirely positive. “The banks need to be forced to release their oligarchic stranglehold on the investment industry,” he says. “They are making too much money recommending passive investments at the investor’s expense. The pendulum needs to swing more in favour of the retail investor, where they have more competitive investment advisory alternatives available to them.”

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FEATURES

SPECIAL REPORT

BRIAN KALYN Executive marketing director World Financial Group Years as an advisor: 32

ED SCHNURR President Unity Group Financial Years as an advisor: 31

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With 32 years as a financial advisor under his belt, Brian Kalyn speaks from experience when he discusses how the business has changed over the years – and not always for the better.

“Compliance is necessary; however, it’s getting to a point where too much time is required to maintain all the continually changing rules,” he says.

“Unless there is some deregulation, many advisors are going to leave the industry at a time when too many people are not getting the help and advice they so badly need. The regulators need to focus on stopping the bad guys without crippling the efforts of all the other advisors who are doing great things for families.”

Kalyn believes this exodus will accelerate if any ban on commissions comes to pass. “The potential banning of commissions or trail commissions and forcing a fee-based option is going to cause many advisors to leave the industry,” he says. “Why can’t there be

both systems and allow the client and the free market system to determine what’s best?”

Rather than increased regulation, Kalyn believes it’s in advisors’ own interests to lift standards through dedication to self-improvement. He holds CFP, CLU and ChFC designations, and encourages his peers to follow in the same vein.

“Continuing education has increased the knowledge of advisors, and therefore the reputation has definitely improved,” he says.

In his role with World Financial Group, Kalyn dedicates much of his time to recruiting and training new entrants to the industry with a view to enabling them to one day open their own agency – something he believes is sorely needed in today’s wealth management landscape.

“There needs to be more incentive to attract new advisors to offset the average age of current advisors, which is around 59 years old,” he says. “Otherwise, there will be even more families left behind.”

Ed Schnurr’s route to becoming a financial advisor was a bit unorthodox. “I worked as a meat manager with A&P 30-plus years ago,” he says. “I enjoyed working with the people but couldn’t stand the unionization of the industry. I had a brother in financial services and thought it might be a good idea.”

Schnurr made his start as an advisor with London Life Insurance in 1987.

Honing his craft over the next 25 years, he eventually opened his own practice, Schnurr Insurance Consulting. The business subsequently became Unity Group Financial, offering a wider range of financial services to reflect the industry’s shift toward more holistic financial planning.

Looking back over the past 30 years, Schnurr says that “the major change I’ve felt is technology. Obviously, this is huge.

The ability to get access to information right away is extremely helpful.”

Not so helpful is the increased regulation that goes along with an advisor’s job in

2018. “The regulation in recent years has become almost insurmountable,” Schnurr says. “I understand the need for security and confidentiality, but it has become ridiculous in some cases. The need for three to four signatures from a client on the same page is redundant.”

That doesn’t mean he believes compliance is a bad thing, per se. “I believe that the move to transparency is absolutely the right one,” Schnurr says. “Anything that can be done for the betterment of the client is typically the right direction. But I’ve found my client appointments are longer than they have ever been, filling out excessive compliance documents.”

Time spent on compliance is time taken away from the actual nuts and bolts of financial planning, but Schnurr has some ideas about how things should change. “The redundancy of paperwork with most major institutions is astounding,” he says. “Let’s use technology to make everyone’s lives better.”

www.wealthprofessional.ca

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9/02/2018 8:12:18 AM

Go beyond ordinary income.

16 fixed-income asset classes.

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An unconstrained, global approach can help investors who aren’t getting the income they need from traditional sources.

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Speak with your iA Clarington representative or visit iaclarington.com/gobeyond The information provided herein does not constitute financial advice. Always consult with a qualified advisor prior to making any investment decision. The opinions expressed herein are those of iA Clarington. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing.

Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license.

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9/02/2018 8:12:42 AM

FEATURES

SPECIAL REPORT

KEN RAE Chairman and CEO The Rae Lipskie Partnership Years as an advisor: 54

Among this collection of industry veterans, there are a lot of years of experience. None have had quite the career of Ken Rae, however. The Waterloo-based advisor, now chairman and CEO of the Rae Lipskie Partnership, made his start in the business in 1963 as an investment assistant at Canada Permanent Trust Company in Toronto.

From there, he joined the Mutual Life Insurance Company as an investment analyst, relocating to Kitchener-Waterloo.

After serving as investment director with Dominion Life Insurance Company,

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Rae decided to branch out on his own and set up Advantage Investment Counsel in 1985. That enterprise proved to be a success and was acquired by Michael Lee-Chin in 1987.

Rae’s entrepreneurial vigour remained, and in 1988 he founded Kenneth Rae Investment Counsel, which ultimately became Rae and Lipskie Investment Counsel after he forged a partnership with Brian Lipskie. The two men remain at the forefront of the company today, managing approximately $650 million in assets and specializing in investment management for individuals, trusts, estates, foundations and corporations, with offices in both Waterloo and Burlington, Ontario.

A former president of the Portfolio Management Association of Canada

[PMAC], Rae is a strong advocate for more regulation of titles in order to ensure greater transparency in the industry. “I think the reputation of financial advisors has been watered down by the admission of a lot of salespeople being allowed to use the titles that are more specific, such as ‘investment counsellor’ and ‘portfolio manager,’” he says.

In Rae’s opinion, professional titles should be specific and founded on high educational standards. “The industry could improve its relevance by requiring more education for people who want to be in the investment business,” he says. “These titles should reflect their specialty. These would replace the broad titles of ‘financial advisor’ or ‘investment advisor.’ These titles are too general, and to me should not be used.”

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9/02/2018 8:13:04 AM

DAVID LITTLE Senior advisor Little Wealth Management Group HollisWealth, Industrial Alliance Securities Years as an advisor: 33

The recipient of the Lifetime Achievement Award at the 2017 Wealth Professional Awards, David Little came into the business when his dream of an NHL career went unfulfilled. He instead channelled his energy into education, obtaining an economics degree at Queen’s University before making his start in the advisory business in 1984.

There have been some bumps in the road since then, but his dedication to the job has never wavered.

“Failure or quitting was never in

the cards, despite many challenging situations,” he says. “The embezzlement of commissions – scoundrels who forged my signature and cashed my cheques – left my wife and I in a very challenging financial situation. I persevered and never gave up.”

While Little holds the profession of wealth management in high regard and believes the vast majority of his peers have impeccable personal ethics and dedication to their clients, he acknowledges this isn’t a narrative one might glean from reading a major newspaper.

“I know some media outlets and government agencies have a dim view of financial advisors,” he says. “My understanding of their position is that advisors make far too much money for what they do. Unfortunately, I am not sure either

one of these groups has a clue about the day-to-day functioning inside a financial advisory firm and what advisors do for their clients. I know in my own practice, we survey our clients regularly, and our findings confirm that our clients have confidence in our services.”

While there aren’t many advisors who speak about regulation in glowing terms, Little is willing to admit that the increased compliance headaches have had a positive impact. “Let’s face it – we’re all much better at our jobs, given the regulators’ scrutiny to be better,” he says. “Compliance has never been more complex, and that makes us better at our jobs, along with the simple fact that we’re mostly seasoned veterans who truly have a passion for doing what is best for our clients.”

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FEATURES

SPECIAL REPORT

CHARLIE SPIRING Chairman Wellington-Altus Private Wealth Years as an advisor: 37

Aside from his standing as a veteran financial advisor, Charlie Spiring’s entrepreneurial spirit is what really sets him apart. Last year he launched

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Wellington-Altus Private Wealth, a name that will likely ring a bell with those familiar with Spiring’s career. He is perhaps best known as the founder of advisory firm Wellington West, which he eventually sold to National Bank Financial in 2011 for $333 million.

“I became fascinated with preserving capital and creating solid compound returns,” Spiring says, reflecting on the

firm’s early days. “We also saw a big void in capital formation in Manitoba; therefore, at Wellington West, we created a connection between entrepreneurs and capital markets. It allowed a series of companies to grow into multi-billion-dollar corporations, which ultimately attracted the attention of National Bank.”

After the acquisition, Spiring joined the institution as a senior advisor, but the lure of running his own shop eventually proved too much, and he launched Wellington-Altus Private Wealth last summer. Now in the process of growing that company, Spiring believes today’s advisors are much more comprehensive in their approach than when he started in the business.

“The IIROC firms are substantially more professional, and continuing education is constantly improving investment advisors,” he says. “As much as we do not like the pendulum going too far, it has forced us to continually improve. The delegated models allow advisors more time to service families versus picking stocks.”

Another plus, in Spiring’s view, is the shift toward advisory teams, which allows for a greater level of specialization and enhanced service for clients. “Wealth management firms have raised the bar considerably through the use of the team concept,” he says, “incorporating services such as financial planning, estate planning, insurance planning, trust services, taxation advice and portfolio construction, to name just a few.”

Now in his 37th year in wealth management, Spiring has no intention of slowing down anytime soon, as the launch of his new firm attests. However, he does hope to see some changes made with a view to increasing efficiency across the industry.

“I would like to see advisor incorporation, common-sense compliance and the continual increase in technology usage as our friend,” he says. “If the industry has strong independent voices providing competition to the big banks, we will undoubtedly make it a better place for all consumers.”

www.wealthprofessional.ca

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9/02/2018 8:13:38 AM

JOHN NICOLA Chairman and CEO Nicola Wealth Management Years as an advisor: 44

Aside from being a highly accomplished financial advisor with more than four decades of experience, John Nicola has developed quite the reputation as a businessman. Named Business in Vancouver’s BC CEO of the Year in 2015 in the small to medium private company category, he was also honoured as Ernst & Young Entrepreneur of the Year in financial and professional services in the Pacific region in 2011. Those accolades recognize his stewardship of Nicola Wealth Management into one of Canada’s top advisory firms, with $5 billion in assets under management. Nicola has

come a long way from his early days selling insurance for Metropolitan Life – as has the business itself.

“The changes have been legion,” he says. “Changes in technology, products, distribution, compensation and the business model are all huge developments.

It is a completely different industry today.”

In addition to building Nicola Wealth into an advisory powerhouse, Nicola is a founding member of the Conference for Advanced Life Underwriting [CALU], where he is also a past chair. He holds CLU, ChFC and CLP designations, believing education is hugely important for advisors. “It helps when many more advisors have CFP, CIM or CFA designations,” he says. “I also find that, based on my own experience, younger advisors are more knowledgeable than my peer group was when we were the same age.”

While younger advisors might have more training, Nicola is concerned that there simply aren’t enough of them, which he says will have dire consequences in the long run.

“Overall, I think the industry has done a poor job in showing younger people what a great career being an advisor can be,” he says.

“The average age of advisors is far too old, and we need to get serious about recruiting and training up-and-comers.”

In that regard, Nicola Wealth Management is leading by example, focusing on a longer development cycle for young advisors and reducing the pressure for them to find new clients. “We want advisors to develop a great combination of technical competency and high EQ,” Nicola says. “If we are successful in that, then our advisors will not only perform well, but will be referable and won’t need to prospect in a traditional way.”

www.wealthprofessional.ca

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FEATURES

SPECIAL REPORT

JOHN HORWOOD Director, wealth management The Horwood Team Richardson GMP Years as an advisor: 30

The Horwood name is synonymous with financial advice in Canada. Both John Horwood and his wife, Rebecca, are advisors, as are their daughters, Alexandra and Rosemary. All ply their trade at Richardson GMP, an institution where the family patriarch has a long history. Having previously worked as a chartered accountant in Australia and later in Canada’s mining industry, Horwood made his start as an advisor at Richardson Greenshields in 1987. The firm has switched hands several times in the interim, but the Horwood Team has

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remained a constant.

“It is a case of whether you build versus buy,” Horwood says. “My feeling was that we had a stable platform and a strong relationship. You can take the easy money and sell up and go somewhere else, but your clients won’t appreciate it, and in the long run, your business won’t appreciate it either.

So I was much happier to stay.”

Today his team is regarded as one of Canada’s premier wealth management firms, with a commitment to creating detailed financial plans for its clients. This is standard in the industry today, but that wasn’t the case when Horwood made his first steps as a financial advisor.

“When I started in 1987, we were the first firm, and I was the first advisor, to offer financial planning to retail clients,” he says. “Before that there was no planning

whatsoever, and a typical RSP probably had about five junior gold stocks in it.”

Today, Horwood has shifted his focus to reflect the expectations of his clients.

Increasingly, that means legacy-building.

“Pretty much all of my clients have devolved down to the next generations,” he says.

“So now I spend my time on philanthropy and on starting new companies and investing in places where we can really change the world.”

There’s no shortage of opportunities out there, Horwood explains, as today’s disruptors can prove quite lucrative.

“We have been investing in biotech and healthcare,” he says. “There are big opportunities in Canada because there is so little capital and so few entrepreneurs.

Canada does great research but doesn’t know how to commercialize it.”

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9/02/2018 8:14:09 AM

DOUG MACDONALD Founder Macdonald Shymko & Company Years as an advisor: 45

Another Wealth Professional Awards Lifetime Achievement Award winner, Doug Macdonald was recognized in 2016 for a career spanning more than four decades.

One of the founders of Macdonald Shymko & Company, he explains how the firm came into being.

“In 1972, having identified the need for independent, objective, comprehensive advice, I, along with two other individuals, created a firm to provide professional advice on a fee-for-service basis,” he says.

“This was motivation enough, particularly as most people we sought advice from claimed it would not work.”

The naysayers clearly were mistaken – this year, Macdonald Shymko & Company marks its 36th year in business. The industry has changed massively during that period, but Macdonald and his team have been able

to move with the times in every respect – particularly in regard to technology.

“The computer, and its evolution as a significant analytical and planning tool, has been a major change,” he says. “It provides improved access to information to efficiently work with clients to make more informed decisions.”

While technology has changed the game, Macdonald is frustrated by other parts of the business that have proven resistant to progress. “I would advocate for the regulators to establish the legal framework that mandates that all individuals using the term advisor to be legally held to broadreaching fiduciary standards,” he says.

“A clear understanding of these fiduciary obligations would allow all advisors to do their job more effectively, garnering greater client trust.”

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9/02/2018 8:14:15 AM

BROUGHT TO YOU BY

CANADA’S PREMIER WEALTH MANAGEMENT INDUSTRY AWARDS IS BACK Since its conception in 2015, the Wealth Professional Awards brought to you by Invesco Canada has celebrated excellence across the entire spectrum of wealth management and financial advisory in Canada.

“We are committed to working with advisors in delivering superior financial outcomes for Canadians. The WP Awards serve as a showcase for the country’s leading professionals.”

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SPECIAL THANKS TO OUR AWARD SPONSORS BROUGHT TO YOU BY

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32-33_KMI - WPA.indd 32 DPS.indd All Pages WPA 18 Nomintions Close

9/02/2018 8:09:57 AM

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9/02/2018 8:10:13 AM 9/02/2018 6:50:14 AM

SPECIAL PROMOTIONAL FEATURE

ASSET MANAGEMENT

Big tent asset management Alain Desbiens of BMO Global Asset Management details the importance of synergy across product lines SUCCESS IS one thing, but sustained success over several years is quite another. In 2017, BMO Global Asset Management [GAM] marked seven years in a row leading the ETF space in Canada for new assets. BMO GAM saw $10.32 billion in net creations throughout the year, increasing its total AUM to $46.5 billion in 2017. The BMO S&P/TSX Capped Composite Index ETF (ZCN), meanwhile, was the standout product in terms of net creations, adding $1.287 billion in 2017*. With 95 ETFs in its current suite, BMO GAM has 32% of Canadian market share* and every intention of taking the top spot from BlackRock Canada in the years ahead.

It was a banner year for the Canadian ETF industry in general, which notched $26 billion in inflows, representing a 56% increase over the previous record set in 2016. Total ETF assets in Canada now amount to $145 billion, with 28 providers and 648 products.

As a result, the space has never been more competitive, but BMO continues to set the standard for the industry. This was clear at the Thomson Reuters Lipper Fund Awards this past November, which honours risk-adjusted performance in Canadian asset management.

BMO GAM took home seven awards, in the Canadian Equity, US Equity, Financial Services Equity, European Equity, Canadian Fixed Income, Global Fixed Income and Canadian Long-Term Fixed Income categories.

Complementary products For those more comfortable using mutual funds than ETFs, synergy is an important part of BMO GAM’s investment strategy. Currently,

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more than 45% of BMO mutual funds contain ETFs. Segregated funds provide yet another option, offering the choice investors have come to expect. Alain Desbiens, vice-president of BMO ETFs, explains the firm’s ambitions for further growth.

“We have taken the ETF market by storm these past seven years, but we have also seen our shop of mutual funds grow significantly,” Desbiens says. “They complement each other.

We believe in active, index, smart beta, and

“We had more than 10 ETFs that produced more than 20% overall return in 2017,” Desbiens says. “You have a mix of core indices, with a couple of factor-based ETFs in there.

With mutual funds, we had 12 mutual funds with a better performance than 20% last year – the top one was China Active.” * The three leading BMO ETFs in 2017 in terms of returns saw emerging markets feature heavily, with BMO China Equity Index ETF (ZCH) at 37.3%, BMO Equal

“We have taken the ETF market by storm these past seven years, but we have also seen our shop of mutual funds grow significantly. They complement each other” Alain Desbiens, BMO Global Asset Management we believe in ETFs, mutual funds and segregated funds.”

While the growth of the ETF space in recent years has been spectacular, mutual funds remain the backbone of asset management and a vital part of BMO GAM’s overall business. Diversification is the guiding principle of any portfolio, so it is Desbiens’ role to ensure the product lineup meets the complex needs of Canadian investors.

Providing a wide range of investment products is certainly a plus, but those products need to show the required performance, too.

This isn’t an area where BMO GAM was found lacking in 2017.

Weight Global Base Metals Hedged Index ETF (ZMT) at 37.2%, and BMO India Equity Index ETF (ZID) at 34.4%. The leaders in mutual funds told a similar story: BMO Greater China Class – Series F at 40.3%, BMO Emerging Markets Fund – Advisor Series US$ at 33.9%, and BMO European Fund – Advisor Series US$ at 27.8%*.

Fixed-income expansion Fixed income is another important product line for the firm – the BMO Aggregate Bond Index ETF (ZAG) is the largest fixed-income ETF in Canada* – and shifting interest rate policy is likely to provide greater opportuni-

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9/02/2018 5:34:51 AM

TOP 10 ETF PERFORMERS

TOP 10 MUTUAL FUND PERFORMERS

BMO China Equity Index ETF (ZCH)

BMO Greater China Class – Series F 14.69%

37.33% 17.63%

8.28% BMO Equal Weight Global Base Metals Hedged to CAD Index ETF (ZMT)

37.34%

5.17% -0.43% -1.36% BMO India Equity Index ETF (ZID)

33.97%

6.55% 2.92% 4.29% BMO European Fund – Advisor Series US$

13.38% 6.91%

34.30% 16.36%

15.10% 16.92% BMO MSCI Emerging Markets Index ETF (ZEM)

31.61% 19.99%

6.01% BMO Dow Jones Industrial Average Hedged Index ETF (ZDJ)

8.49%

BMO US Equity – Series F US$

26.50%

24.10% 26.34% BMO US Equity Class – Advisor Series US$ 21.98% 8.61% 13.34% 11.38%

25.29%

19.56% 17.50% BMO Covered Call Dow Jones Industrial Average Hedged ETF (ZWA) 22.02% 10.74% 12.84% 12.81% BMO S&P 500 Index ETF US$ (ZSP-U) 21.30% 10.94% 15.27% 16.09% BMO S&P 500 Hedged to CAD Index ETF (ZUE) 20.66% 10.39% 15.11% 14.36%

BMO European Fund – Series F 11.90% 11.84% 11.69%

21.51%

BMO US Dollar Dividend – Series F One-year return Three-year return Five-year return Return since inception

9.88% 11.47%

20.87% One-year return

BMO Asian Growth and Income – Series F US$ 20.79% 4.75% 3.30% 7.59%

Source: BMO Asset Management Inc., as of Dec 31, 2017. All returns are net of fees

ties in the asset class in 2018.

“We will be launching new fixed-income ETFs in 2018, and that will round out our lineup, making it one of the most comprehensive in the country,” Desbiens says.

The enhanced lineup can be broken down into three parts: broad market (tracking big bond indices), segmented (tracking certain areas like long provincial bonds) and precise (tracking specific areas such as emerging markets or corporate bonds). For those who prefer, these ETFs are also available

27.27%

10.95% 9.31% 10.82%

BMO Global Equity Class – Advisor Series US$ 24.64% 7.91% 10.16% 11.27%

28.88%

11.36%

12.95% 15.40% 15.00% BMO EW US Health Care Hedged Index ETF (ZUH)

27.83%

7.54% 5.35% 7.51% BMO Emerging Markets – Series F

BMO NASDAQ 100 Equity Hedged Index ETF (ZQQ)

8.48%

40.42%

16.69% 18.97% BMO Emerging Markets Fund – Advisor Series US$

through the firm’s mutual fund platform as BMO ETF Portfolios.

“They’re mutual funds that invest primarily in BMO ETFs, so they’re easy to use while still offering efficient, low-cost access to markets and asset classes,” Desbiens says. “They’re great for anyone who wants convenient access to ETFs in a diversified portfolio matched to their level of comfort and risk.” *Source: BMO Asset Management Inc., as of December 31, 2017. All returns are net of fees.

Three-year return Five-year return Return since inception Source: BMO Asset Management Inc., as of Dec 31, 2017. All returns are net of fees

BMO Global Asset Management is a brand name that comprises of BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp. and BMO’s specialized investment management firms. BMO Mutual Funds refers to certain mutual funds and/or series of mutual funds offered by BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal. BMO ETFs are managed and administered by BMO Asset Management Inc., an investment fund manager and portfolio manager and separate legal entity from Bank of Montreal. Commissions, management fees and expenses may be associated with investments in mutual funds and exchange traded funds (ETFs). Trailing commissions may be associated with investments in mutual funds. Please read the fund facts or prospectus before investing. The indicated rates of return includes changes in unit value and assumes reinvestment of all distributions, and does not take into account for account sales, redemptions, optional charges, or income taxes payable by any security holders, which would reduce returns. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated. ®”BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under licence.

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FEATURES

RESPONSIBLE INVESTING

RESPONSIBLE INVESTING GUIDE No longer a niche interest in the wealth management space, selecting investments according to environmental, social and governance criteria has gone mainstream, both in Canada and worldwide IN THE words of Remy Briand, managing director of ESG Research at MSCI, “ESG investing is the consideration of environmental, social and governance factors alongside financial factors in the investment decision-making process.”

It’s a strategy finding its way into more and more portfolios in 2018, but it has taken some time for the wealth management industry to fully get on board. There’s a simple reason for that – asset managers create the funds people want. Now that the want is there for ethically minded products, the supply is too.

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This wasn’t always the case, and until fairly recently, SRI funds were not known for generating good returns. The concept of responsible investing can trace its roots back to the 1960s, when it gained prominence during the anti-apartheid movement against the South African government. In those days, ethical investing centred on the exclusion of certain companies or industries deemed harmful to society, such as tobacco, gambling or weapons. Today, responsible investing has evolved to incorporate ESG strategy into more traditional methods of portfolio construction.

The United Nations Principles for Responsible Investing, founded in 2006, has more than 1,800 signatories, accounting for more than US$68 trillion in assets under management. Those signatories comprise asset managers, advisory firms and service providers, but ESG is starting to gain traction among everyday investors. As is usually the case, retail follows the institutional money, so it’s positive to see industry leviathans like BlackRock and Vanguard putting ESG investing front and centre of their investment strategy.

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DIVEST OR ENGAGE? The global divestment movement in fossil fuels really started to gather momentum in 2017. This was most apparent in October, when the Catholic Church made the largest faith-based divestment in history in a commitment to the fight against climate change. There are approximately 1.2 billion Roman Catholics worldwide, so the Vatican wields significant influence, and the investment community certainly took note of this development. So did Mike Thiessen, manager of sustainable research at BC-based asset manager Genus Capital.

“Coming from the Catholic Church, it was quite impactful,” he says. “From an investment perspective, every time we are taking money away from companies involved in fossil fuels, we are making it harder for oil & gas companies to raise capital. With the impact the Catholic Church has, it continues the cultural shift toward fossil fuels becoming more stigmatized and more and more like tobacco in the investment world.”

While responsible investing is now commonplace in asset management, Genus Capital considers itself somewhat of a pioneer in the space. Its Fossil Free portfolios have been a central part of its business since 2013, allowing investors the chance to generate returns without exposure to any company involved in the extraction, transportation, processing or storage of fossil fuels. The firm also avoids industries like gambling, tobacco, adult entertainment and firearms,

an approach that is proving more and more attractive to clients.

“There are a lot of different styles of ethical and sustainable investing,” Thiessen says.

“Some people say you can invest in a fossil fuel company and then really focus on shareholder engagement to get them to switch to green energy. But to me, that’s like investing in a tobacco company and trying to get them to not invest in tobacco anymore.”

That’s not to say the oil & gas industry is simply ignoring the changing attitudes on climate change. In the past – especially in Canada – any moves to curtail carbon emissions that could potentially slow down the economy were furiously opposed by vested interests. In today’s post-Paris Agreement world, things have changed, and the most powerful forces in global commerce are largely on board when it comes to sustainable investing. Oil & gas producers are therefore adapting to this new reality, but the transition won’t happen overnight.

“A lot of these companies are moving in the right direction – Shell is a great example with its renewable energy efforts,” Thiessen says. “A lot of companies have moved from the oil sands and are focusing on natural gas now, which is a lot cleaner. The movement away from coal and the oil sands is great for our climate, but it is in the oil companies’ best interests to continue to sell fossil fuels.

I would rather invest in an industry that is really propelling this low-carbon transition.”

In the past, options were limited in this respect, but that isn’t the case today. New companies and industries are emerging all the time to disrupt the status quo, particularly in the energy sector. Of course, some of these

“Some people say you can invest in a fossil fuel company and then really focus on shareholder engagement to get them to switch to green energy. But to me, that’s like investing in a tobacco company and trying to get them to not invest in tobacco anymore” Mike Thiessen, Genus Capital

ABOUT THE SPONSOR One of Canada’s leading investment management companies, iA Clarington brings clarity, integrity and commitment to a complicated global investment landscape. A wholly owned subsidiary of Industrial Alliance Financial Group, we offer a wide range of investment products, including actively managed mutual funds, managed portfolio solutions and socially responsible investments.

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firms make better investments than others, which is where the portfolio managers at firms like Genus come in.

“We are quantitative investors, so everything we do is based on our models and how different companies and sectors rank,” Thiessen says. “When we look at the overall transition to a low-carbon economy, I think one area that will be in high demand is basic materials. If you look at what goes into creating a massive capacity battery or solar panels, wind farms or electric cars – there are a lot of materials needed, especially rare metals. Supply there is quite thin, and demand will only increase.”

While climate change is almost universally accepted by the scientific community and the vast majority of international governments, there is one powerful exception. Donald Trump has made no secret of his opposition to the Paris Agreement, making the US the only country to officially reject the accord. With the

world’s largest economy sitting this one out, does it mean the deal will ultimately fail in its objectives like Kyoto before it? Not necessarily, Thiessen believes.

“I think this will be much different,” he says. “With the Paris accord we have all the countries in the world, except one, agreeing on the overall framework. You have big players like China that are all for it; European countries are all for it, and even within America, a lot of representatives of states and cities went to the 2017 United Nations Climate Change Conference. So there is a strong world commitment, which you didn’t have with Kyoto.”

Another difference is the strict requirements and standards that have been laid out.

There is no grey area on what is expected regarding carbon emissions, which makes compliance much easier to track and enforce.

“With the Paris accord, we are moving past what we want to accomplish and what the objectives are,” Thiessen says. “With [the

GROWTH OF SRI ASSETS

BY REGION

PROPORTION OF SRI TO TOTAL MANAGED ASSETS

Europe

Europe

$10.78 trillion

58.8%

$12.04 trillion United States

52.6%

United States $6.57 trillion $8.7 trillion

17.9% 21.6% Canada

Canada $729 billion

31.3% 37.8%

$1.08 trillion Australia/New Zealand 16.6%

Australia/New Zealand $148 billion

50.6%

$516 billion Asia ex Japan $45 billion

Asia 0.8%

$52 billion

0.8%

Japan

Japan 2014 included in Asia figure above 3.4%

2014 2016

$7 billion $474 billion Total

Total $18.28 trillion $22.89 trillion Source: The Global Sustainable Investment Alliance (GSIA)

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2014 2016

30.2% 26.3% Source: The Global Sustainable Investment Alliance (GSIA)

United Nations Climate Change Conference], we are looking at the overall framework for the rules for individual countries, and in turn what corporations have to do. It is almost more powerful that the US federal government isn’t involved, because people realize they need to do twice the work to fight climate change than before.”

This, in turn, increases the responsible investment options for investors. Thiessen is an advocate for green bonds and what that vehicle will mean for both financial services and society in general.

“They can be issued by governments or the World Bank, or by different corporations,” he says. “The money from the issuance has to go toward projects that are going to make an environmental impact. There are a lot of green bonds around the world, but the ones we really focus on are those that have been reviewed by third parties that make sure the capital is going to green projects.”

ADVISING RESPONSIBLY While responsible investment might be something of a new frontier for many advisors in Canada, it has been a key focus for Ryan Colwell since he began his career more than 20 years ago. A two-time winner of the SRI Impact Investing Award at the Wealth Professional Awards, he prioritized environmental, social and governance metrics before ESG was even a term.

Part of the Investment Planning Counsel, Colwell identifies how responsible investing has evolved since he entered the business in 1997. “The main change has been with product,” he says. “Specializing in responsible investing was more an interest than an action. At that time, you really only had three companies that offered socially responsible mutual funds.”

Ethical Funds, now NEI Investments,

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was one such provider, but it was direct to consumer and not open to the advisor channel.

Clean Environment (later acquired by AGF) and Investors Group were the other firms in the space, so choice was limited for those seeking to invest in progressive companies.

“It wasn’t until about the year 2000 that Meritas launched an ethical-fund-like lineup,” Colwell says. “It was standard, with core holdings, paid commission trailers and DSCs, and it wasn’t until then that I could really bring responsible investment to my clients.”

Now sustainable investing is Colwell’s calling card, but the central tenets of financial advice remain. “The portfolios we put together are soundly based on financials,” he says, “with a socially responsible value-add.”

Just as people’s ethics can differ, so too does the concept of ethical investing. Being a socially responsible investor doesn’t have a stringent set of rules, Colwell explains. “We do talk to our clients about what their values are,” he says. “Some are very passionate about certain issues, so we do our best to try to accommodate that. Most are not as passionate about any particular issue; they like the idea of helping the world but are not gung-ho about excluding anything, except for tobacco and weapons.”

Unlike at the beginning of Colwell’s career, there are plenty of options for ESG products in 2018. As responsible investing becomes more accepted as an investment philosophy, asset managers that don’t offer some form of RI fund are few and far between. Despite this, Colwell believes the firms with the most tenure still stand out from the pack.

“We do a lot of business with NEI, Ocean Rock and iA Clarington – we like their approach to RI funds,” he says. “They will not invest in certain companies no matter what – tobacco and weapons manufacturers are obvious examples. After those, every other industry is generally represented, with investment in the better companies and avoiding the worst.”

While excluding certain companies and industries sends a powerful message, an

“Institutional investors have started to invest this way, but so far retail investors have not. That’s not due to a lack of interest, because studies show they do have that interest. The disconnect is at the advisor level, where there are a huge amount who are absolutely not interested in SRI” Ryan Colwell, Investment Planning Counsel investor’s main goal is to protect their assets and generate returns. In a country like Canada, where the main exchange is dominated by energy companies, an exclusionary policy might not seem that attractive to many investors. Therefore, Colwell believes in effecting positive change from the inside.

“We do have oil and mining companies in most of the portfolios that I put together,” he says. “The most important reason why I like NEI, Ocean Rock and iA Clarington is the active engagement. They will try to make the companies they are invested in better and more progressive in terms of their environmental footprint, their social action, their corporate and share structure. It is more powerful as an owner to make changes than as a protestor.”

In the past, there was a belief that investing ethically meant compromising the ability to generate returns. That’s no longer the case; many studies argue that a strong ESG presence in a portfolio will in fact provide better returns. In Colwell’s opinion, the difference is negligible, but it is still better to increase your assets with ethically minded companies than those that damage the planet or society.

“I think it’s about equal, and you certainly don’t have to give up returns if you are going to invest this way,” he says. “If you look at it like buying coffee, if Nabob and organic fair trade were the same price, then you would always go with the fair trade.”

Unless, of course, you received professional advice not to. In Colwell’s opinion, the growth of responsible investing is being hindered by many of his peers. “Institutional investors have started to invest this way, but so far retail investors have not,” he says. “That’s not due to a lack of interest, because studies show they do have that interest. The disconnect is at the advisor level, where there are a huge amount who are absolutely not interested in SRI.” Opinions can and do change, however, and advisors may start to come around to the idea once there are more clearly defined

INSTITUTIONAL VERSUS RETAIL SRI ASSETS 100% 90%

13.1%

25.7%

80% 70%

86.9% 74.3%

60% 50% 40% 30% 20% 10% 0%

2014 Retail

2016 Institutional

Source: The Global Sustainable Investment Alliance (GSIA)

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products on the market. BMO recently launched Canada’s first thematic fund – Women in Leadership – which is made up of North American companies with a female CEO or board of directors with at least 25% female representation.

Gender diversity in the C-suite has many advantages, particularly on the balance sheet: Research by MSCI shows that firms with better representation of women in the boardroom have a 36% higher return on equity. While ESG criteria might not be a priority for some, numbers like that simply can’t be ignored by any rational investor.

INSTITUTIONAL INFLUENCE In its recent study, “Responsible Investing: The Evolution of Ownership,” RBC Global Asset Management looked at ESG factors to identify potential sources of alpha or risk reduction. In doing so, it broke socially responsible investing into four parts:

• Negative screening: Using ESG measurements to exclude companies or sectors • Sustainability-themed: Building portfolios that only include investments that meet specific ESG criteria The study surveyed institutional asset owners and investment consultants in Canada, the US and Europe to gauge different attitudes toward ESG investing. In its analysis, RBC GAM found that investors’ main query was whether divestment or engagement was best when attempting to influence corporate behaviour. The study also found that the US has been slower than other regions to integrate ESG factors into investment strategy.

Overall, 67% of respondents said they use

ESG principles as part of their investment approach and decision-making, while 25% said they planned to increase their allocation to managers that incorporate ESG into their investment management process over the next year.

The findings were of little surprise to Jeremy Richardson, senior portfolio manager with RBC GAM’s global equities team in London. He believes the conversation regarding ESG has changed, and responsible investing is no longer just a curiosity for most investors.

“More and more asset owners are telling us they want their assets run in a way that is consistent with their personal values,” he says. “The idea of responsible investing is gaining credence with investors broadly, and as an industry, we are trying to catch up. There has been a lot of thought and innovation in this particular area over the past few years, and now it’s snowballing, I’m delighted to say.”

In Richardson’s opinion, RBC GAM, like asset management in general, has come a long way on this issue. When the firm launched its first SRI funds, the products had a basic set of exclusions for industries such as alcohol, tobacco, gambling, pornography and armaments. These days, investors’ expectations are higher, so asset managers have had to respond in kind.

“We needed a more sophisticated

DO YOU EXPECT TO INCREASE YOUR ALLOCATION TO MANGERS WITH ESG STRATEGIES OVER THE NEXT YEAR? Total

US

Canada

Europe

60% 50% 40%

• Impact investing: Allocating funds to earn a financial return alongside measurable social and environmental impact

30%

• Positive screening: Using ESG measurements to select companies or sectors

0%

20% 10% Yes

No

Not sure Source: “Responsible Investing: The Evolution of Ownership,” RBC Global Asset Management

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approach to get away from loaded ethical labels, which aren’t always helpful because ethics varies from individual to individual,” Richardson says. “ESG was borne out of that line of thinking. We still have those original funds, so if you have a low tolerance for those kinds of industries, then it’s a great place to invest.”

Rather than negative screening, RBC GAM now places more emphasis on impact investing. This approach is more suitable for most investors, Richardson believes, and is a major part of the firm’s Vision fund lineup.

“Across the bulk of our business, we have moved to integrated ESG, which is much more contextual and recognizes that often there is no such thing as ESG fact, just ESG opinion,” he says. “We think that’s a smarter way to invest because you are not only trying to avoid some of these negative externalities, but you can use it to drive outperformance.”

In RBC GAM’s responsible investing study, data revealed varying attitudes globally when it comes to ESG investing. The space is much more developed in Europe than the US, for instance, which Richardson attributes in part to Americans’ unwavering belief in free-market capitalism.

“In the early to mid-’90s, legislation passed that made it a legal requirement for custodians and plan sponsors to demonstrate to their savers they are maximizing returns,” he says. “The idea for this went back to a famous article by Milton Freidman in the New York Times in the early ’70s where he explained that it was the social responsibility of companies to maximize profit.”

This line of thinking was derived from the teachings of Adam Smith, who believed profit maximization entails capital being allocated most efficiently, which ultimately benefits society. It’s a philosophy espoused in the US more so than any other nation, Richardson explains.

“Because of US tort law and a litigious environment, plan sponsors could be sued if they don’t show they are trying to maximize profit and investment return,” he says. “It led

“It’s an approach many investors are taking, de-emphasizing high-carbon sources of energy and moving capital toward lower carbon and renewables like battery technology, wind farms and solar power” Jeremy Richardson, RBC GAM DO YOU THINK OF ESG AS AN ALPHA SOURCE? Total

US

Canada

Europe

60% 50% 40% 30% 20% 10% 0%

Yes

No

Not sure Source: Responsible Investing: The Evolution of Ownership, RBC Global Asset Management

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to a very short-term approach. I don’t think Europe went quite so much down that path, and Canada is in between the two with influences from both sides.”

Richardson believes the Freidmaninspired approach to investing is on borrowed time in the US, as well as everywhere else. Concentrating solely on shortterm returns neglects the kind of planning required to protect a business over the long run. And when analyzing the long-term prospects of an investment, ESG criteria are increasingly being used to gauge the fundamentals. If that asset happens to be an oil company, then Richardson and his team use

the stranded assets argument.

“It basically recognizes that man’s ingenuity has found more than enough carbon from fossil fuels in the earth’s crust, which, if released into the atmosphere, could cook us all several times over,” he says. “That’s an unconscionable prospect, so policymakers and society won’t allow that to happen. We will see carbon taxes and other legislation before those reserves can ever be released.”

However, that doesn’t mean investors need to stay clear of the Shells or BPs of this world. Instead, Richardson advocates putting money into the companies effecting positive change on carbon emissions.

WHEN THINKING ABOUT ESG INVESTING, DO YOU CONSIDER DIVESTMENT TO BE MORE EFFECTIVE THAN ENGAGEMENT?

6.3% 23.2%

43.3%

10.9% 16.2% Divestment is more effective

Neither approach is effective

Engagement is more effective

Not sure

They are equally effective Source: “Responsible Investing: The Evolution of Ownership,” RBC Global Asset Management

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“If we do assume a carbon tax and legislation, then it will only be fossil fuel reserves that are cheap, easy to get to and with a low-carbon content that society will tolerate,” he says. “So there is a pecking order. Coal is very dirty, so we will avoid that first; heavy oil has more carbon than light, and gas least of all, so we should be favouring natural gas for future projects.

“It’s an approach many investors are taking,” he adds, “de-emphasizing highcarbon sources of energy and moving capital toward lower carbon and renewables like battery technology, wind farms and solar power. It’s not about saying no energy – it’s unlikely fossil fuels will not be in the energy mix, but hopefully it’s a lot less, and hopefully we will avoid the sources that are most damaging.”

As far as the ‘S’ and ‘G’ of ESG are concerned, a company’s social and governance fundamentals are also vitally important.

While he is reluctant to link a good ESG score to stock performance, Richardson believes there is a high correlation.

“There is academic evidence to say that companies that do well in terms of sustainability – particularly environmental and social – go on to have superior investment performance,” he says. “That assumes a certain degree of market efficiency in linking ESG to stocks.

Actually, we think there is an important middle step, which is the company’s own fundamental performance.”

This means having an efficient and forward-thinking management team that does business the right way. If that is achieved, then superior performance – usually in the form of return on assets and return on invested capital – is often the result.

“You are also able to deliver those returns with lower risk, so you see less volatility and much more consistency,” Richardson says.

“That’s important because we know in the long run, company fundamental returns are the main thing that drive stock price, but there is the tricky issue of market efficiency and its ability to catch up with reality.”

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ACADEMIA AND ESG As a professor of sustainable finance and banking at the University of Waterloo, Olaf Weber is one of Canada’s foremost authorities on ESG in the financial services sector. In a recent paper he co-authored with Vasundhara Saravade, masters candidate in environmental finance and sustainability management at the University of Waterloo, Weber discussed how the financial sector could best combat climate change. Referencing the “tragedy of the horizons,’’ a term coined by Mark Carney, governor of the Bank of England, Weber argued that the problem with trying to address a long-term issue like climate change is that most investors are concerned with short-term returns. Therefore, he says, a shift in investment behaviour is required.

“For a long time, the financial sector focused on internal issues because they didn’t want to be held responsible for the companies they finance,” Weber says. “Since then, they realized there is a connection between the environmental performance of borrowers and their financial performance. They started to do that mainly for risk management, but now they have figured out it is good to communicate it and create a good reputation.”

Climate change denial, by and large, is not a good look for corporate entities today. That’s especially the case for the large financial institutions that dominate the sector. At a much lower level, environmental, social and governance factors are becoming an important part of investors’ portfolio construction. Aside from the ethical considerations at play, this often means better performance, and without the volatility the oil & gas sector entails.

“If you have been highly invested in the fossil fuel sector over the past three to four years, you probably lost a lot of money,” Weber says. “After the Paris Agreement, everybody knew they couldn’t burn all these fossil fuels anymore. There are more international and

national regulations like cap and trade for high emitters. All of this influences the financial performance and risk of companies.”

Simply deciding to forgo oil & gas producers isn’t as easy as it sounds, though, especially in a country like Canada, where energy makes up a huge part of the economy. As Weber explains, the Great White North lags behind other nations when it comes to green alternatives.

“We did a study looking at the TSX 260 to see what happens if you divest, and of course, if you invested less money in fossil fuels over the past five years, you had higher returns,” he says. “The question is where to invest. You can redistribute to other industries, but it’s harder in countries like Canada, where the green industry is a recent phenomenon. There are better opportunities internationally.”

While Canada builds its renewable energy sector, another option for responsible investing is to adopt a best-in-class approach.

This means that rather than excluding a certain sector, you find the companies making an effort to make positive changes in the way they do business.

“If you look at Suncor, they are investing in wind and other renewables,” Weber says. “It’s not a massive shift, but it is moving in that direction. It’s my hypothesis that the oil price will never get back to when it was over $100.

Anything below that is not good business for the oil sands, so they have to figure out how to shift away from that.”

Outside of equities, green bonds are becoming a real driver of change across the financial services sector. In his paper, Weber identified green bonds as a useful tool in lowering carbon emissions and combating climate change. Estimates put green bonds’ total value at $221 billion – a tiny fraction of the overall bond market, but a sector that’s growing fast, with $155 billion in issuance last year. However, there is still some grey area on what actually constitutes a green bond.

“What is and isn’t a green bond isn’t well defined,” Weber says. “The understanding I have is that a green bond is made up of

“After the Paris Agreement, everybody knew they couldn’t burn all these fossil fuels anymore.

There are more international and national regulations like cap and trade for high emitters. All of this influences the financial performance and risk of companies” Olaf Weber, University of Waterloo

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renewables and mainly green transport and infrastructure. If you look to China, a green bond would mean increasing the efficiency of industrial production and decreasing the emissions of coal-powered plants.”

The world’s second largest economy, China has long been considered one of the globe’s worst offenders when it comes to carbon emissions. That reputation is shifting, however, especially in light of the United States’ refusal to sign the Paris Agreement. In a recent study for the University of Waterloo, Weber and his team analyzed the Chinese Green Credit Guideline Policy. In doing so, they found the policy had compelled banks to become more financially and environmentally conscious of climate change risks, leading to positive results nationwide.

The fact that a country as large as China has committed to defined sustainability goals is a clear sign of progress. Outside of governments, Weber believes institutional money will also play a crucial role in effecting change.

“They invest more long-term, so they want to know what the effects of climate change may be in 30 years,” he says. “They have to figure out the environmental and social factors that could influence the return on their investment, and they manage most of the investment in the world.”

PROPORTION OF GLOBAL SRI ASSETS BY REGION

A company is more than just the numbers, and ESG information helps paint a fuller, clearer picture of a company’s quality of management.

THE INDUSTRY VOICE The Responsible Investment Association [RIA] is the industry voice for all things ESG. Its membership comprises some of Canada’s largest asset managers and advisory firms, including RBC GAM, iA Clarington, CIBC Wood Gundy and Jarislowsky Fraser.

Dustyn Lanz is CEO of the organization and a long-standing advocate of responsible investing – so much so that he received the Clean50 Emerging Leader Award in 2016 for his commitment to the promotion of environmental, social and governance criteria in asset management.

WPC: What methods do investors use to gauge ESG performance?

Dustyn Lanz: Investment professionals typically buy research from ESG data providers such as Sustainalytics, MSCI, ISS, VigeoEiris and other firms that specialize in ESG data collection and analysis. Responsible investors use this research as a supplement to traditional financial analysis to make more informed investment decisions.

WPC: How has responsible investing evolved over the past decade?

DL: Responsible investing has evolved quite significantly over the past few decades. In the 1980s and 1990s, it was all about screening out so-called ‘sin stocks’ that may not align with an investor’s personal values.

That approach still persists today for some investors, but responsible investing has grown to encompass much more than just exclusionary screening. It’s about going beyond traditional financial metrics to protect and enhance shareholder value.

We’re also seeing more of a focus on impactful outcomes. For instance, a growing number of investors are seeking to align their investments with the UN Sustainable Development Goals, which is a more proactive and forward-looking approach than the traditional exclusionary approach.

WPC: Can someone have exposure to energy and mining companies and still consider themselves an ethical investor?

SRI ASSETS BY STRATEGY AND REGION Impact/community investing

Europe United States

Sustainability-themed investing

US$29.9 trillion

Canada

Positive/best-in-class screening

Australia/New Zealand

Europe 52.6% United States 38.1% Canada 4.7% Australia/NZ 2.3% Asia ex Japan 0.2% Japan 2.1%

Corporate engagement

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Japan

Norms-based screening ESG integration Negative screening 0

Source: The Global Sustainable Investment Alliance (GSIA)

Asia ex Japan

$2 trillion

$4 trillion

$6 trillion

$8 trillion

$10 trillion

$12 trillion

$14 trillion

$16 trillion

Source: The Global Sustainable Investment Alliance (GSIA); figures in US$

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DL: Absolutely. Positive screening refers to a best-in-class approach whereby a company is selected for a portfolio based on positive performance relative to industry peers. This is one way to identify sustainability leaders across sectors.

Investors can also invest in funds that practice shareholder engagement, which refers to the use of shareholder power to influence a company’s ESG performance.

Investment firms such as iA Clarington, NEI, RBC GAM and Addenda Capital are among Canada’s leaders in this area.

These firms and others are engaging with corporate issuers across all sectors to improve their sustainability performance – including mining and energy.

WPC: What options do investors have in Canada for products tailored specifically toward responsible investing?

DL: There is a wide range of responsible

GROWTH OF ESG STRATEGIES Negative screening $12.05 trillion $15.02 trillion

investment products available to Canadian investors – far too many to list. There are responsible investment products available to investors of all sizes, across all asset classes.

You can find a complete list of RI funds on the RIA website.

Also, I’m pleased to report that the RIA will be launching a user-friendly platform for advisors and investors to search for responsible investment products in Canada. This will be launched in late spring 2018.

ESG integration $7.53 trillion $10.37 trillion Corporate engagement $5.92 trillion $8.37 trillion Norms-based screening $4.39 trillion $6.21 trillion

WPC: What changes would you like to see in wealth management to make responsible investing more attractive?

DL: I would like to see more advisors talking to their clients about responsible investing during discovery meetings and KYC interviews. Survey data shows that the vast majority of clients are interested in responsible investing, but they don’t know much about it. Advisors who educate themselves and their clients about responsible investing will add value to client relationships, and they’ll be positioned to reap the rewards as responsible investing becomes the norm.

Positive/best-in-class screening $890 billion $1.03 trillion Sustainability-themed investing $138 billion

2014 2016

$331 billion Impact/community investing $101 billion $248 billion 0

$2 trillion

$4 trillion

$6 trillion

$8 trillion

$10 trillion

$12 trillion

$14 trillion

$16 trillion

Source: The Global Sustainable Investment Alliance (GSIA); figures in US$

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SPECIAL PROMOTIONAL FEATURE

RESPONSIBLE INVESTING

Five ways to spot a true SRI fund iA Clarington outlines why not all funds billed as socially responsible are created equal MORE AND more investors are recognizing the personal and financial benefits of socially responsible investing. According to the Global Sustainable Investment Alliance, at the beginning of 2016, the global market for SRI securities reached US$22.89 trillion – a 25% increase from 2014. With steadily growing demand for socially responsible investments, the mutual fund industry has responded with a wide array of options.

But not all funds that are classified as socially responsible meet the same standards.

We believe the highest standard of socially responsible investing is achieved when a fund has the following five characteristics.

1

Integrated team of ESG experts and security selection specialists

The fund management team should have dedicated environmental, social and governance (ESG) experts working seamlessly with financial analysts in a fully integrated investment selection process. In our view, ESG experts should ensure that only companies that meet socially responsible criteria are considered. These criteria generally fall under seven key categories:

Corporate governance • Is there a majority of independent directors?

• Are the CEO and chair roles separate?

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• Does the company have a code of conduct and business ethics?

Sustainable products • Do the company’s main products or services contribute to or detract from quality of life?

• Is the company developing products that advance or detract from sustainability?

Employee relations • Does the company have a history of good or poor employee relations?

• Does the company contribute to employee health and retirement plans?

Employee diversity • Does the company have a commitment to increasing gender and ethnic diversity?

• How diverse is the board?

• How diverse is senior management?

Community relations • Are employees encouraged to volunteer? Are they compensated, or are hours volunteered matched with corporate donations?

• Has the company been involved in disputes with the community?

• Does the company engage in regular consultation with local communities?

Human rights practices • Has the board approved a human rights policy?

• Do the company’s operations affect indigenous people or their livelihood?

How does the company mitigate the impact? Are consultation processes meaningful?

• Does the company have a system in place to monitor working conditions at supplier facilities? Is the system audited?

• Has the company been party to human rights abuses?

Environmental performance • Does the company have environmental goals and policies?

• How does the company’s environmental performance compare to industry counterparts?

• Does the company provide regular information on environmental performance, such as emissions data?

• Is the company contributing to the degradation of the environment?

The portfolio management team’s financial analysts should use fundamental financial metrics to assess companies’ prospects for targeted returns, including free cash flow, price-to-earnings ratio, earnings growth and return on equity. Financial analysts will also assess companies’ business models, competitive advantages and quality of management.

Only securities that satisfy the combined requirements of the financial analysts and ESG experts should qualify for inclusion in the fund.

2

Negative and positive ESG screens

We believe a comprehensive approach to SRI should include both negative and positive ESG screening. A negative screen eliminates companies that fail to meet the ESG criteria outlined above. A positive screen takes the investment selection process one step further by seeking out companies that actively pursue a progressive ESG agenda. These types of businesses can include companies devoted to developing clean, sustainable technologies.

They may also be businesses that go above and beyond in areas such as employee diversity,

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SHAREHOLDER ENGAGEMENT:

CASE IN POINT

Two types of risk have recently generated significant concern among investors, communities and environmental regulators: Environmental risks associated with financing oil pipelines and other infrastructure that may contribute to long-term climate change Social risks resulting from the impact of these projects on the rights of indigenous peoples

community engagement and sustainability.

Importantly, ESG factors should be a core element of the investment selection process, and not a mere add-on that may come into play after the portfolio is built with purely financial analytics.

3

Banning big offenders

A fund that’s truly committed to SRI should rule out investments in companies whose primary line of business includes tobacco, nuclear power, military weapons, adult entertainment and gambling.

4

Shareholder engagement

The portfolio manager should continuously monitor the fund’s holdings to ensure companies remain true to the ESG standards that qualified them for inclusion in the fund.

When a company appears to deviate from these high standards, the portfolio manager should leverage the fund’s status as a shareholder to call company boards and management to account.

A fund manager committed to SRI should also use its shareholder rights to ensure companies in the portfolio are dealing with new and emerging environmental, social and governance risks.

5

Willing to put it in writing

If you’re concerned that some funds may only be paying lip service to SRI, there is a simple way to root out the pretenders: Check the prospectus for an unambiguous statement that identifies socially responsible investing as the fund’s core investment objective. If no such statement is present, the portfolio manager may have only a lukewarm commitment to SRI. iA Clarington Inhance SRI Funds, managed by subadvisor Vancity Investment Management, deliver a high standard of socially responsible investing through a unique, integrated approach that incorporates each of these five criteria.

The information provided herein does not constitute financial, tax or legal advice. Always consult with a qualified advisor prior to making any investment decision. Statements by Vancity Investment Management Ltd. represent their professional opinion, do not necessarily reflect the views of iA Clarington, and should not be relied upon for any other purpose. Information presented should not be considered a recommendation to buy or sell a particular security. Unless otherwise stated, the source for information provided is the portfolio manager. Statements that pertain to the future represent the portfolio manager’s current view regarding future

Banks, insurance companies and other financiers provide or facilitate debt and equity capital to allow resource and infrastructure companies to construct new or expanded fossil fuel projects, which are expected to operate for decades. Current inter­ national research on climate change suggests long-term operation of these projects may not be consistent with the need to curtail greenhouse gas emissions.

Social risks arise from a reluctance to require free and informed consent by indigenous peoples prior to financing the project. This can compromise sustainable development opportunities and curtail historic rights.

We believe that SRI portfolio managers who own shares in banks or other financial institutions should use their shareholder rights to encourage thorough ESG risk evaluations prior to financing projects with potential adverse environmental or social impacts.

events. Actual future events may differ. iA Clarington does not undertake any obligation to update the information provided herein. The information presented herein may not encompass all risks associated with mutual funds. Please read the prospectus for a more detailed discussion on specific risks of investing in mutual funds. 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. 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 are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license. www.wealthprofessional.ca

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9/02/2018 8:17:45 AM

PEOPLE

ADVISOR PROFILE

Advocating for advisors Advocis government relations chair Kris Birchard outlines how professionalism can be enhanced across the industry THE ABILITY to build strong relationships is essential to being a successful financial advisor. Kris Birchard, proprietor of Eagle Insurance Agency and a 45-year veteran of the industry, knows that better than most.

It’s a skill that’s easily transferable to other areas, too, as Birchard has learned in his position as chair of Advocis’ government relations committee.

“It is the same thing as dealing with a client – we build relationships,” Birchard says. “If you want a favour, you should ask a friend, not a stranger.”

Thus, Birchard and his colleagues at Advocis will soon travel to Ottawa for the House of Commons’ Question Period.

It’s an annual occurrence for him and a valuable chance for Canada’s largest advisory association to assess what regulatory upheaval might be in store.

“One of the issues we have been talking about is the Bank Act review,” Birchard says.

“We are not anticipating radical changes in the areas where we have concern. Through dialogue with the government, there doesn’t seem to be anything of particular significance to us that will change.”

Another recent interaction involved a meeting with one of Finance Minister Bill Morneau’s advisors on the topic of roboadvice. Opinion is divided on whether digital platforms will ultimately be a friend or foe to advisors in the long run, but Birchard can see both sides.

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“It’s good technology, and to say you aren’t in favour of advancements in technology is to put your head in the sand,” he says. “We think Wealthsimple as a platform can do a lot for an advisor to be better prepared for their clients. Will it eventually replace an advisor? Maybe, but I think a lot of us might be replaced by artificial intelligence.”

A long-standing member of Advocis, Birchard recently moderated a panel at the association’s symposium in Toronto on the topic of “Profession versus Professionalism.”

Karl Baldauf of the Ontario Chamber of Commerce, Curtis Findlay of the Advocis investment subcommittee, FSCO’s Anatol Monid and CARP’s Wanda Morris joined Birchard in debating how the job of financial advisor can be regarded as a true profession.

It’s a source of great frustration for many in the industry, and Birchard believes improving wealth management’s fragmented regulatory regime will be key to finding solutions.

“Anyone can call themselves a financial advisor,” he says. “Whether I’m working from my home, or from a large office downtown inside a bank or trust company, or as a wholesaler. There are no standards I have to keep or criteria to call myself that.

There is nothing in regulation today to deal with that.”

The same is true, he adds, for standards of practice or a guide for consumers to gauge what they can expect when using the services of a financial advisor.

Investment products and how they are sold, on the other hand, are heavily regulated, which is a considerable change from Birchard’s early days as an advisor.

“A lot of the regulation we see today didn’t exist in the ’80s and ’90s – product suitability, for example,” he says. “We have to be responsible to tell the client why we are choosing this investment fund as opposed to another. The suitability has to be there

POLITICAL PLAY As chair of Advocis’ government relations committee, Birchard regularly meets with elected officials to state his case for the industry. At a provincial level, this comes through a series of advocacy committees. Things are more complicated at the federal level, where the Conference for Advanced Life Underwriting [CALU] deals with advanced issues like tax.

On more general items, the government relations committee performs the same function. “We deal with things that are more general like bank retailing, anti-money laundering, do-not-call legislation – and we have a day on the hill every year in Ottawa,” Birchard says.

www.wealthprofessional.ca

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FAST FACTS: ADVOCIS

Claims more than 13,000 members, making it the largest voluntary professional membership association of financial advisors and planners in Canada

There are 40 Advocis chapters across Canada

Its lineage dates back to 1906 and the formation of the Life Underwriters Association of Canada [LUAC]

“With continued education, you have to keep yourself up to date, which is what any professional should do” on how we come to the conclusion to buy a product. That’s where standards have definitely come up.”

As such, Birchard sees a clear disparity between the rules governing products and those concerning the rest of the job. Advocis has taken the lead in attempting to improve standards across the industry, identifying education as the best way to make financial

advice a true profession.

“In the mid-’90s, this organization – through the Institute of Advanced Financial Education – brought in mandatory continued education on a licensing basis before the government did,” he says. “With continued education, you have to keep yourself up to date, which is what any professional should do.”

Members agree to uphold a professional code of conduct with standards of best practice and a commitment to putting their clients’ interests first

The Institute for Advanced Financial Education, the designation-granting and standards-setting body of Advocis, awards the CLU and CHS designations

www.wealthprofessional.ca

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9/02/2018 8:05:37 AM

SPECIAL PROMOTIONAL FEATURE

RECRUITMENT

The independent advantage Echelon Wealth Partners CEO David Cusson reveals how the firm competes with the industry’s giants in attracting Canada’s best advisors

CANADA’S FINANCIAL services sector is dominated by the Big Six banks. That extends to wealth management, too, where the majority of advisors are employed by one of those institutions. Years of consolidation have considerably reduced the ranks of independent firms, but that’s not to say smaller operators can’t succeed in the current climate.

Echelon Wealth Partners is one such example. According to CEO David Cusson, part of the firm’s strength is the very fact that it isn’t a bank, which is proving attractive to some of Canada’s top advisory talent.

“It definitely is an interesting marketplace right now,” he says. “In many respects, we have tailwinds in terms of potential recruiting opportunities. Almost all of the banks have agendas of reducing payouts, constraining business styles, and requiring minimum book sizes and production.”

The fact that the banks are largely moving in concert on such policies opens a window of opportunity for the independents. While

50

firms like Echelon can’t compete with the resources of an RBC or a TD, it can make its working environment more inclusive.

“We are creating a partnership culture here and making equity available to all of our staff, specifically the advisors coming in,” Cusson says. “We had a new office open recently, and that advisor chose to take some of their incentive in equity rather than cash.

I think that’s validation of what we are building here.”

In contrast to other advisory firms – banks and independents alike – Echelon has been consistently adding to its roster since its acquisition of Dundee Goodman Private Wealth and Pope & Co. in 2016. Today it has about 70 advisors operating under its banner, managing approximately $4 billion in assets for retail, corporate and institutional clients.

With offices in Toronto, Ottawa, Montreal, Calgary, Vancouver, Victoria, Saskatoon, London, Edmonton and Tokyo, Echelon isn’t exactly David to the banks’ Goliath. Among independent advisory firms in Canada, it

certainly classifies as a heavyweight, but with plenty of room to grow in the coming years.

“The challenge historically was why a bank advisor would consider an indepen­ dent,” Cusson says. “Now it’s a question of which independent has the right platform and right scale. To find a national-scale independent that can provide all the plat­ form tools of a bank – there’s probably no more than a few firms that fit that profile, and Echelon is one.”

While the company’s transformation from Euro Pacific Canada to Echelon Wealth Part­ ners has been a success so far, Echelon’s leader­ ship exercises due caution when it comes to expansion plans. Cusson and his team are still in the market for new advisors, but only those who fit within the Echelon structure.

“We think there is real opportunity to grow in a responsible way,” he says. “One of the

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“To find a national-scale independent that can provide all the platform tools of a bank – there’s probably no more than a few firms that fit that profile, and Echelon is one” David Cusson, Echelon Wealth Partners challenges for all independents is the incentive packages being offered to advisors that are completely non-commercial. We run very detailed financial models on any advisor we look to bring in. If you are in marketplace where people are prepared to write checks for non-commercial deals, then that will have an impact, and we have walked away from a number of processes with really good people.

Some of the deals being offered we could

never in good conscience sign.”

For advisors who do come on board, Echelon offers a degree of collaboration they likely won’t find elsewhere, which led in part to the firm’s certification by the Great Place to Work Institute in 2017. In Cusson’s view, the recognition was a sign of the successful culture being cultivated at Echelon.

“Transparency, honesty, financial stability, accessibility – those are things we work really

hard on,” he says. “This week I will be holding another town hall. I will be releasing our financials for 2017; we go through our strategic planning process every year, with clearly articulated objectives. So I’ll be updating everyone on our wins, and where we fell down and what lessons were learned.”

In Cusson’s opinion, this transparency and trust between Echelon and its employees is its strength, and will remain the bedrock of the company heading forward.

“There’s an insatiable desire to know what is happening at your organization, and we work hard on that,” he says. “I can only imagine how adrift someone at a much larger financial organization might feel. I think most organizations typically do a bad job telling people what success looks like. In our case, we take a firm set of objectives and cascade that on down.”

www.wealthprofessional.ca

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9/02/2018 4:09:44 AM

FEATURES

MILLENNIALS

A generation set up for failure?

Much like millennials have changed the way we work, soon they will change the way we lead. Hiam Sakakini suggests the old leadership development models will not work for this generation

WE’VE NOW moved firmly into an era in which millennials are taking on the responsibility of managing people. The problem is, their predecessors haven’t given serious consideration to the unique ways millennials learn, adapt and grow as professionals, and consequently are not arming them with the critical leadership capabilities that ensure future sustainability of an organization.

I see it everywhere: Senior leaders are taking a page from the old textbook on how to manage and grow a workforce. But this advice simply doesn’t work for the 6.1 million millennials in the workforce today. How scary to think we are potentially missing easy opportunities to engage this segment of future leaders.

Having spent a significant portion of my career both managing a team of millennials and learning about their needs, it has become apparent to me that this old way of developing our future leaders doesn’t develop leaders anymore.

To get some perspective, let’s look at the trends Gen Y bring with them: • Millennials typically have itchy feet and tend not to stay in a position longer than two to three years.

• They like to work in sprints – short projects with rotating teams increase their productivity and engagement. You’ll notice that emergent leaders will feel compelled to solve a problem presented through a project and then retreat to

52

being part of the team once the problem they noticed is solved.

• They prefer a leader who is involved and inclusive – a mentor and a coach as well as a friend, and someone who is accessible, not hierarchical. They want a leader who genuinely cares about them as a whole person, not just during their

working hours.

• They need immediate feedback on their performance – they want it straight after a milestone is achieved. They are natives of the digital world, which has propelled the art of instant feedback.

• They are driven by their core values, which anchor their every decision.

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This seems to be instilled by a great relationship with their parents, who tend to be the key influencers in their decision-making.

• They enjoy a challenge, they like to be constantly stimulated, and they aren’t afraid to stretch themselves out of their comfort zone – especially when the project has impact.

With these trends in mind, the challenge now is how do you grow leaders who typically don’t spend very long in a single role or with one employer? What strategies do you need to implement to fulfil their need to feel challenged and learn best on the job?

And how do you factor in their care about impact, not status and titles?

How you incorporate all of this into a journey that develops leaders for the future will determine the long-term success and stability of your organization.

It starts with managers of managers Typically, promotion – and therefore, by default, succession planning – rewards bottom-line results. Type A personalities who are driven, fearless, competitive and focused do exceptionally well as individual contributors, rising through the ranks because they are as goal-driven with their careers as they are with their KPIs. They get noticed, they openly ask for promotions, and they are seen as natural leaders over those who seem ‘too emotional.’

I will admit that, as a young saleswoman at Google who loved to smash through every target handed to me, I was that person.

Before I knew it, I had a team and was expected to teach them the tips and tricks that I knew instinctively. The problem was, I was never equipped to coach, and as a result, I faltered – badly.

How can managers of managers play a crucial role?

1 Pay attention to how your superstars are achieving their KPIs. Are they collaborative?

Are they inclusive? Do they ask for feedback from their teammates as well as from you? Are they helping their team toward achieving their collective goals?

Rewarding the how as much as, if

CHANGING STYLES OF MANAGEMENT Old-school

New-school

Hire for a specific team

Hire for personal values and cultural fit

Hire for skills and experience

Hire for motivation, growth mindset and aptitude for change

Promote based on bottom-line results and short-term achievements

Promote based on results combined with behaviours and long-term impact

Develop leaders through high-potential fast-track plans and programs

Develop leaders through experiential on-the-job projects that bake in coaching, reflection, tools and guides

Give feedback at performance review time

Give feedback in real time

Rewarding the how as much as, if not more than, the what will, by default, get the right future leaders into the next leadership layer not more than, the what through your competency and behaviour frameworks will, by default, get the right future leaders into the next leadership layer.

2 Support your new managers in learning the art of coaching. This is a new skill that typically only gets taught after an individual contributor becomes a manager, and it is crucial to their success and the success of their team. Be the meta-coach.

Deconstructing leadership learning This is a challenge, and it will require an investment of time and the support of a good internal or external learning & development business partner, but the investment will pay off.

Within everyday workplace teams, projects and initiatives, there exist golden opportunities to learn valuable leadership lessons. This all starts with a) identifying the learning opportunity, b) keeping the right tools, principles and techniques at your fingertips to match the scenario at hand, and c) having the guidance of an experienced facilitator who allows the team time to stop, reflect, give feedback and experiment.

I don’t think leadership programs will entirely be replaced by this approach; however, the tools and principles that lie within them can be deconstructed into bite-sized, easy-to-use downloadables, facilitator guides and how-to videos that can be used within the life cycle of any project or initiative.

Capitalizing on the learning opportunities within everyday business projects will mean a richer experience for all involved and potentially less time and money spent on formal leadership learning courses.

Ultimately, the ramp-up time to upskill future leaders will be significantly shorter, coinciding with the trends of millennials and their itchy feet.

Hiam Sakakini is the co-founder of Think Change Grow. During 14-plus years of working for Fortune 500 companies in a range of roles, Sakakini has developed a passion for pinpointing the simplest strategies to help individuals and teams build the skills, confidence and competence needed to become genuinely customerfocused and deliver outstanding bottom-line business results.

Visit thinkchangegrow.com.

www.wealthprofessional.ca

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9/02/2018 4:29:05 AM

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33 AM

PEOPLE

CAREER PATH

DRIVEN TO SUCCEED There’s nothing Rosemary Horwood loves more than a challenge The daughter of two investment advisors, Horwood grew up in a house steeped in finance “Not a day went by when there wasn’t a conversation about private equity or capital markets at the dinner table. It gave me an enormous head start. I didn’t plan to go into investment advice, but all the incidental family chatter since I was a kid familiarized me with the industry and helped make that world second nature”

1990s GETS A HEAD START

2012

TAKES SOME TIME AWAY After five years of study without a vacation, Horwood stepped away from her slew of options post-graduation to intern at a Florentine restaurant kitchen. It was then that she got an offer she couldn’t refuse “Most of my classmates couldn’t find a job – I had too many offers; I needed to stop and think. My parents twisted my arm. They said, ‘We can pay you half as much [as these other offers], but you’ll have the opportunity to run your own business’”

2014 ACQUIRES BOARD EXPERIENCE A year after joining high-IQ society Mensa, Horwood was asked to be part of the organization’s board; she went on to serve three years as a director and Ontario representative on Mensa’s national board. In search of more experience, Horwood also joined her condo’s board

“Gaining board experience gave me a good idea of how organizations make decisions at the highest level. I wouldn’t trade it for the world” 2018 WINS A TRIFECTA OF AWARDS Horwood followed the Young Gun of the Year honour with the award for Advisor Rising Star of the Year at the 2017 Wealth Professional Awards, then capped it off with a spot on WPC’s 2018 Top 50 Advisors list “I never expected to be recognized in this way; I didn’t show up to any of those awards shows thinking that I would win.

I have been blown away by the support people have shown. It’s fantastic; I’m really happy with the way things have gone”

2007

FINDS HER PLACE Drawn to the University of Waterloo by its co-op program, Horwood spent her summers in the corporate world, ultimately working across six placements in a variety of firms, sectors and positions – but the two in asset management proved to be particularly influential “I had outstanding co-op performance reviews as a student. I learned so much that I then didn’t need to relearn once I was working in the field”

2013

GETS HER LICENCE Horwood’s first year in the advisory business was characterized by a thirst for knowledge – both on and off the clock “I worked on a team managing events while I was learning about the business and how to manage money.

Studying for my licence was my number-one priority – I wanted to get through those courses quickly and did a lot of off-hours work to reach that goal. I like a challenge”

2016

STEPS OUT ON HER OWN Within the space of a week, Horwood created her own team, Rosemary Horwood Wealth, moved into new office space, and won the Young Gun of the Year Award at the Wealth Professional Awards “It was like my launch. I was taking my independence, and I garnered third-party recognition. There’s a lot of responsibility and a lot of pressure in this career, but I love what I do”

www.wealthprofessional.ca

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9/02/2018 5:16:28 AM

PEOPLE

OTHER LIFE

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

Fran Kirby

The Encore Women’s Choir performs at various festivals on Vancouver Island and stages an annual Christmas concert

16

Notes in Kirby’s range as a high alto

20

Approximate number of choirs Kirby has sung with

22–25

Typical number of members of the Encore Women’s Choir

SINGING OUT When Fran Kirby isn’t working with clients, she can likely be found raising her voice in song FRAN KIRBY likes to tell people that she never sang in public until she was 40 years old – but in the almost 20 years since, she’s more than made up for lost time. During that period, Kirby, a financial planner with Assante Capital Management, has taken lessons, studied at the Canadian Music Conservatory and performed with a variety of choirs.

It was a move to the small community

56

of Duncan, BC, that provided the catalyst when Kirby realized the town was a hotbed of activity for choral singing. These days, she sings in the Encore Women’s Choir, which she helped found a decade ago; the group boasts a repertoire that ranges from medieval to modern.

But the high point of Kirby’s singing career might be the trip to Europe that she has now made two summers in a row with

a choral summer school. Touring in such locations as Salzburg and Assisi, Kirby and her choirmates had the chance to sing in a room where Mozart once performed.

The communal nature of the singing also resonates with Kirby. “Singing together with other people is one of the most fantastic experiences a human can have,” she says. “It’s exhilarating; the feeling cannot be replicated.”

www.wealthprofessional.ca

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