Wealth Professional 2.1

EXCLUSIVE INTERVIEW

WWW.WEALTHPROFESSIONAL.CA ISSUE 2.1 | $6.95

THE

RETURN

OF MICHAEL LEE-CHIN Building wealth for retail clients the alternative way

CLIENT CONNECTION WHO’S MOST LIKELY TO LEAVE/STAY

WP2.1_Cover.indd 1

PASSING THE TORCH FINDING THE RIGHT BUYER FOR YOUR BOOK

GAME-CHANGER INSIDE SCOOP ON RICHARDSON ACQUISITION

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r r o w

V

c a p i ta l

m a n a g e m e n t

P R O U D LY P R E S E N T S

HirscH Experience.

Intelligent Investing.

HirsH perFormance Fund

e r o n i k a

15 Year : 12.0%

| 10 Year : 6.6% | 5 Year : 12.5% | 3 Year : 6.6% | 2013 : 26.2%

&

exemplar canadian Focus portFolio 5 Year : 11.6%

www.arrow-capital.com

| 3 Year : 6.9% | 2013 : 24.1%

www.exemplarfunds.com

Portfolio and Fund performance numbers for 3, 5, 10 and 15 years are as of January 31, 2014 to meet publication deadline.

Commissions, trailing commissions, management fees may all be associated with Exemplar Portfolios. Unless otherwise stipulated returns are for Series A shares in Canadian funds. Investors should read the prospectus before investing. Except as otherwise noted returns are for historical compounded total returns including changes in the share value and reinvestment of all dividends or distributions and do not take into account the sales, redemption, distributions or optional charges or income tax payable by the share holder that may effect the compound growth rate and are not intended to reflect the future value of the Exemplar Portfolio. Past performance may not be repeated. Exemplar Portfolios are not guaranteed by the Canada Deposit Insurance Corporation (CDIC) or any other insurer. Exemplar Portfolios are subject to risk of loss and values change frequently. Exemplar Portfolios involve a high degree of risk. Investors may lose some or all of their investment.

Offering of units in the Hirsh Performance Fund are made pursuant to the Confidential Offering Memorandum (offering memorandum) only to those investors who meet certain eligibility or minimum purchase requirements. Important information, including the fund’s fundamental investment objective is contained in the offering memorandum which may be obtained from Arrow Capital Management Inc. Please read the offering memorandum carefully before investing. Past returns are not necessarily indicative of future performance. Actual results will vary.

For advisor use only.

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CONTENTS

6 | News Analysis 10 | Client Departures

44

12 | Top 50: Up close with Bill McElroy

FEATURES

30 | Passing the Torch Retirement: It’s as inevitable as the setting sun for most advisors. But their departure doesn’t mean their clients depart with them 32 | When Do the Ends Justify the Means?

Those behind exempt market offerings are gaining traction with accredited investors and the advisors who guide their every move. But identifying opportunities relative to their risk remains a challenge 36 | A Different Tack?

Big players may be making a move into the exempt market space, but advisors across the country have been slower to steer their clients in the same direction. But that may be about to change 38 | Liquid Houses Advisors are increasingly coming up against a hard truth: Clients whose net worth is overwhelmingly tied to their homes. But there’s a new twist on turning bricks ‘n’ mortar into most assets

40 | Cooperative Competition Beyond the headlines, Richardson GMP and Dundee Goodman Private Wealth are offering readers a behind-the-scenes look at the deal that took the independent channel by surprise 44 | The Voice Of Reason Advisors are more comfortable reading balance sheets than writing blogs, but the latter is increasingly key to generating organic leads 58 | Bridging a Divided Industry FundSERV Inc. provides advisors with a centralized industry hub to facilitate the administration of client accounts through its fundtransaction system 60 | Ins and Outs Of The RRSP Sun Life Financial’s Shelby Kramp-Neuman shares tips and tactics to help get your clients on board and on track

24

COVER STORY Wealth Can Be Created But the question is how?

Michael Lee-Chin’s answers increasingly centre on the private capital market.

issue

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CONTENTS

BUSINESS STRATEGY 48 | Time Management: Are you a time saver or a time spender?

Do you feel like there is simply never enough time in the day to get your business firing on all cylinders? Your personal time management beliefs may well be contributing to your productivity downfall, but a change in mindset can do wonders for business as well as your stress levels

54

50 | How To Deliver Exceptional Service It’s the little things you do that create a great customer experience 54 | Build the ultimate safety net Strategic networks are built on relationships, but what type of networker are you? Julia Palmer explains how strategic networking can construct a better book 62 | A Day In The Life

64 | The Client’s Take Mark David shares one client’s take about what keeps him loyal to his advisor, and it ain’t the latest ETF

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CONTENTS

A STRONG DEFENSE ISN’T BUILT BY THOSE WHO GO HALFWAY.

RISING RATE PROTECTION With rising interest rates on the horizon, clients need a plan to protect portfolios. Renaissance has partnered with the experts at Ares Management to bring demonstrated, institutional floating rate debt investment management exclusively to individual Canadian investors.

Exclusive Access to Institutional Floating Rate Expertise Help clients prepare for what lies ahead with Renaissance Floating Rate Income Fund.

renaissanceinvestments.ca

®Renaissance Investments is offered by and is a registered trademark of CIBC Asset Management Inc. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the 2014 | 3 prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not beMARCH repeated.

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CONTENTS

PLANNING TO LEAD? COPY & FEATURES SENIOR EDITOR Vernon Clement Jones SENIOR WRITER Sophie Nicholls STAFF WRITER Mark David CONTRIBUTORS Maggie Crowley, Shelby KrampNeuman, Liz Brown, Mark O’Farrell, John Tenpenny, Nikki Heald, Julia Palmer, Nick Bakish, Joe Bakish COPY EDITOR Tanya Enberg

ART & PRODUCTION GRAPHIC DESIGNER Marla Morelos, Joenel Salvador SENIOR DESIGNER Alicia Chin

SALES & MARKETING NATIONAL ACCOUNTS MANAGER Dane Taylor ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER SALES John MacKenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries dane.taylor@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 wealthprofessional.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or in part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss.

Ah, a man with a plan. Were there ever five words more aptly applied to Michael Lee-Chin? (That’s six if you count the interjection.) After reading our extensive sit-down interview where the billionaire shares his vision for the investment landscape and reflects on its current climate, I bet you’ll say “no.” I did.

The celebrated investment guru and head of Mandeville Inc. is persuasion personified, and he’s once again at the helm of an enterprise set to transform both advisor and client perceptions about the Canadian market and its opportunities. His seat of influence is now planted in the alternative investment space – affording him a position increasingly at the centre of a changing industry. You’re free to jump right in to that interview, starting on page 24, but remember, there’s so much more to read before you’re done.

This issue of WP also examines private capital markets from a host of differing viewpoints and asks the same questions now confronting advisors as they look to satisfy yield-hungry clients nonethelesss ambivalent about highrisk opportunities (pg. 40).

And from the personal story of one retiring advisor’s succession success (pg.

30) to the new ways CFPs are protecting clients from the spectre of scams (pg.

16) – WP, I hope you’ll agree, is making good on its own well-thought-out plan to keep advisors informed and entertained.

Cheers, Vernon Clement Jones Senior Editor

CONNECT

Contact the editorial team:

vernon.jones@kmimedia.ca

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CONTENTS

The New FUNDcom Better, Easier, and Mobile!

Powered by:

Celebrating 20 Years of Service

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Join us on LinkedIN or visit FundSERV.com to find out more.

MARCH 2014 | 5

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NEWS / ANALYSIS

IN RESPECT TO RRSPs

FEE FOLLOW-THROUGH The calculator may be mightier than the sword, at least when it comes to challenging the fee-only model – specifically, the notion it’s a one-size-fits-all panacea for all clients. Advocis President and CEO Greg Pollock picks up that tool – the calculator, and not the sword – to do the math, using a typical RRSP contribution of $2,600 as his jumping-off point.

Advisors may want to take a bow, with new evidence Canadians are finally taking their message about Registered Retirement Savings Plans to heart. According to BMO’s fourth-annual RRSP study, about 35 per cent of Canadians report contributing to an RRSP before this year’s March 3 deadline. That’s up 5 per cent from a year ago.

Still, advisors can’t take all the credit, suggests one Toronto veteran ,CFP Mark Saks. “The current low rate environment has had a lot of negatives attached to it for Canadians in terms of the temptation to over-borrow,” he tells WP. “Still, it has also allowed many of us to pay down debt faster and, in turn, better prioritize savings.

That’s captured in the data, I think.”

64%

of Canadians contributed a minimum of $2,000

40%

contributed $5,000 or more

$3,544 the average Canadian contribution for 2013;

1/3

Canadians contribute the maximum allowed

TRADITIONAL COMMISSION-BASED MODEL (1% TRAILER FEE)

( 2013 figures)

SERVICES • The development and monitoring of an investment strategy • Portfolio rebalancing • Proper account structure and appropriate placement in each account • Continued understanding of the client’s objectives and risk tolerance • Advice, reporting, meetings and ongoing

management Cost: $26

POLL: SOUPY CERTIFICATION If supporters of the Certified International Wealth Manager (CIWM) designation thought Canadian advisors would be unanimous in their acceptance, the latest poll from WealthProfessional.ca may offer an uncomfortable truth.

Our question asked readers to fill in the blank: The CIWM designation now offered through the CSI is __

FEE MODEL:

SERVICES

ut a fees

hat h ut

r

• The development and monitoring of an investment strategy • Portfolio rebalancing • Proper account structure and appropriate placement in each account • Continued understanding of the client’s objectives and risk tolerance • Advice, reporting, meetings and ongoing

management Cost: $150 to $350 an hour.

ees) fee.

89% ... more alphabet soup

11% ... a valuable accreditation

6 | MARCH 2014

an

ty” 06-09_News.indd 6

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NEWS / ANALYSIS

NEVER CRY WOLF The Wolf of Wall Street – Martin Scorsese’s award-winning look at the industry’s underbelly – hasn’t exactly given stockbrokers a PR boost. It hasn’t exactly been generous to financial advisors, either. But Jordan Belfort, the infamous brokerage head who inspired the story, may have one more zinger to offer wealth professionals, especially independents working outside the big firms. In a tip sheet for investors designed to help them steer clear of fraudulent players, he lays out sound advice that may, inadvertently, paint “legit” players with the same brush regulators rightly used to tar and feather him.

BELFORT’S TOP TIPS FOR SPOTTING FRAUDSTERS

GAMBLING ON GROWTH IF NEW CLIENTS ARE THE LIFEBLOOD OF ANY WEALTH MANAGEMENT FIRM, NEW BLOOD MAY BE IN ORDER The race is on, with U.S. wealth management firms setting their sights on the country’s 53-million-strong Hispanic community for future growth opportunity.

The financial sector, both south of the border and, indeed, here, sees new immigrants as increasingly ripe with potential, but that`s only if it can successfully connect with those potential clients. That imperative is driving diversity within the U.S. industry, as firms look to bolster their number of Hispanics advisors in an effort to better tap the Latino community and its growing wealth.

There’s plenty of room for improvement.

While in 2012, only 5.9 percent of people employed in securities, commodities, funds, trusts and other financial investment sectors were Latino, according to the U.S. Bureau of Labor Statistics, many analysts are expected representation will rise to 10 per cent by 2020.

Still some firms may be tempted to slacken their pace given the set back the recession dealt Hispanic households.

A study released by the Pew Institute in February found that the median household wealth among Latinos fell from $18,359 in 2005 to $6,325 in 2009. That translates into a 66 per cent drop, the largest among all racial and ethnic groups.

But larger retail firms still see potential as they look for new, less mature markets.

Another recent study suggests as much as 20 per cent of American Hispanics do not own any financial or insurance products, while only 62 per cent had savings accounts.

“Small-time” operators?

According to Belfort, no-name brokerage firm or financial advisors not affiliated with a major company can be a risky bet. “I’m not saying there aren’t crooks in big companies,” he says, “but to go with someone on the basis of a phone call or someone who’s operating from a business that’s very recent, you’re taking a huge risk.”

Referral runaround One or two business referrals provided by the advisor simply aren’t enough. Belfort suggests advisors should be subjected to character references as well.

Scrutinize secrets Well-defined track records aren’t a mystery, says Belfort. By contrast, “if someone’s got a scheme or an investment model that doesn’t quite make sense,” he says, it falls into the you-can’t-quite-prove-it-buteveryone’s-doing-well-with-it category, and “it’s bull.”

Ethical arm-twisting If an advisor is asking a client to fudge the truth, it’s not inconceiveable that he or she will also be doing the same, cautions Belfort, now a sought-after public speaker.

“When it comes to money, there’s no in-between,” he says. “Either you’re lily white, or you’re not. If you cross the line once, you get a taste for it.”

That observation comes attached with a cautionary note for advisors. “I didn’t start out ethically bankrupt,” says Belfort. “I sold my soul a little bit at a time. I crossed over to the dark side through a series of tiny imperceptible steps.”

The In Crowd Exclusivity sells, and investors are often swayed by the promise that they’ll be one of only a few with access to an advisor’s services.

“Bernie Madoff relied on the oldest hustle of all, which is: ‘My club is so exclusive - you want to be a member,’” says Belfort. “You wanted to be in Bernie’s club and if you weren’t in Bernie’s club, you were ‘less than.’

People clamoured to give their money to Bernie Madoff. If you asked questions, he said: ‘No.’”

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BREATHE EASY? Advisor commentary from WealthProfessional.ca on the FATCA and other headline news

RELAX! FATCA’S OFF YOUR BACK!

Worry not, Canadian advisors. FATCA, a U.S. tax law that threatened to hit your American clients domiciled north of the border, is not as bad as it seems. A number of accounts, including RRSPs and TSFAs, will now be exempt from the reporting process. As you might expect, WP readers chimed in with comments.

Although this new agreement is good for the financial institutions, it makes no difference for those individuals who are U.S. citizens living in Canada and we all need to make sure that this news does not confuse them. They will still have to report all accounts on the FBAR even if their bank doesn’t report the information to the CRA. -Bob T.

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FEE-BASED MODEL COMPLICATES BUSINESS, SAYS ADVISOR

Nathan Leibowitz, one of WP’s Top 50 Advisors, believes that only a small fraction of advisors would be willing to switch to the fee-based model, despite the controversial CRM reforms set to increase reporting disclosure requirements. Here again, WP readers had their say.

I agree with Nathan’s sentiments entirely.

For the larger producers with office support staff, the transition, if any, would not be a headache. But what about the smaller advisor, the one who only has $5 million, $10 million or $15 million AUM? How is he/she going to transition his/her business and not incur either extra costs or extra administration time? Other countries that have tried to implement no commission have seen the service to the most needy of the population diminish because it isn’t financially viable or rewarding for agents to spend any time with them.

- Brett D. Rees

12/02/14 3:00 PM

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NEWS / CLIENT RETENTION

HEAD THEM OFF

AT THE PASS

There’s no point in closing the barn door after the horse has bolted, but new PriceMetrix research could help you identify which clients are most likely to seek greener pastures tomorrow if not today Client defections – there we’ve said it.

Most advisors will only talk about their own losses in hushed tones and only when pressed.

But as painful as that discussion is, advisors can and do learn from their mistakes. Now, PriceMetrix is providing research designed to help you learn from everyone else’s blunders and improve your own retention levels by identifying which clients are most prone to fleeing. The goal is to head them off at the pass and give them the attention they need to stick around. Easier said than done? You be the judge.

25%

of their assets

The percentage of your AUM at high risk due to client flight.

ATTRITION PREDICTOR

2-4 years

22 clients

That point in the relationship when the client is most likely to leave.

The average advisor has 22 clients at ‘high risk’ of leaving

Who is most likely to stray?

• Small clients (by investible assets) • Young clients

>- 67%

Double Whammy: Not only are small clients less likely to stay with their advisors, but advisors who have books with a high proportion of small clients (>= 67%) are also more at risk for losing their larger clients

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WORD TO THE WISE:

Deepening client relationships reduces the rate of attrition. As oft stated, cross selling delivers positive collateral benefits.

30%

GROW REVENUE – KEEP CLIENTS

25% 20% Asset and Revenue growth, 15% 2010-2013

10%

5% 0% 80%

85%

90%

100%

95%

Client Retention Revenue Growth, 2010-2013

Asset Growth, 2010-2013

CLIENT RETENTION RATES SLIPPING?

100%

10%

7%

9%

8%

10%

90%

93%

91%

92%

90%

2009

2010

2011

2012

2013

80% Percentage of clients

60% 40% 20% 0%

Leave

Stay

100

30% OF CLIENTS LEAVE AFTER 5 YEARS

95

88

90 Probability of Retention (%)

80

80

74 70

70 60 0

6

12

18

24

30

36

42

48

54

60

Duration of Client Relationship (Months)

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UP CLOSE / TOP OF THE TOP 50

O I N S AL S E F O

Reader nosy question No. 1: Where are you sourcing new clients? Is it organic growth or book acquisition?

You can expect lots of attention when you come out on top of the first-ever WP Top 50 Advisors list, but Bill McElroy wasn’t expecting quite so many questions from, ahem, inquisitive advisors and on quite so many topics – from where he sources clients to why he’s the biggest fee-only supporter the industry has ever known

S I ADV

14

SINCE YOU ASKED…

has been due to my recent block acquisition but you have to remember I started with no clients back in 1990. I moved to Hamilton from Oshawa as well so I had no natural market. During my career, I have tried a lot of different methods to acquire clients.

Some worked and some were total failures. Cold calling was how I got started and I was good at it, but it doesn’t work today, primarily due to do-not-call lists and the fact that the general public is a lot less trusting than it used to be.

I did a lot of home shows in my early years as well.

I would stand for hours in a booth over a weekend and provide ballots with a few financial questions on them for a draw. Once the show was over, I would spend weeks following up on these leads. As time went on, these shows became saturated with other advisors and the leads became less receptive to calls so I stopped doing shows altogether.

Probably the most disappointing source of clients has been advertising. I think this goes back to the trust issue, I have spent thousands of dollars on advertising through various types of media – admail, direct mail, writing articles for various publications – but have had little response. I think the media has made the public leery of people in our profession and you need to be preapproved before they will talk to you and that’s where referrals come in.

Over the years, I have been fortunate to have built a great block of clients and centres of influence organically that refer clients, friends and family members to me on a regular basis. You should note that , that does not happen overnight, but takes years to build enough trust with clients to become referable.

For example, in 1990 when I first started in the business, I met a wonderful retired couple at a home show. They were farmers who had recently sold their farm. Slowly I gained their trust and over a period of several years I became very good friends with them. It took almost seven years before I was managing their entire portfolio and it was only then

20

Photo credit: Mark David

A E W LTH P R

BM: I guess as a percentage, most of my recent growth

R O

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WEALTHPROFESSIONAL.CA

that they introduced me to some of their family members. First it was their daughter who lived locally, then her husband and finally it was their granddaughters. Unfortunately, the retired couple has since passed away but even on their passing, one of their other daughters who lives out of town came to me because she was so pleased with how I managed her parents’ money and took care of her mother when her dad passed away. She moved her and her husband’s accounts to me as well. So, to give you some perspective, this all happened in about a 23-year period. Having multigenerational clients also ensures you keep the assets.

Lastly, another avenue for me has been the members of group plans we service. Once you sign up the plan members, they all know you and you have been preapproved by their employer. Instantly they are warm leads and open to a conversation.

Reader nosy question No. 2: Some of us are seeing real growth in insurance and benefits. Can you explain the re-emergence, and can a comeback for annuities be far behind?

BM: We live in different times, in the ‘50s, ‘60s and ‘70s people lived within their means and insurance was mostly for last expenses and education savings, and policies were small. Today it’s a totally different scenario. Many families have both parents working, they live beyond their means and are heavily financed.

It’s like a house of cards and without income replacement on the death or disability of a wage earner, the results can be catastrophic. The role of life insurance has changed tremendously although I think most Canadians are still underinsured, they do realize it’s importance in a financial plan and they are more receptive to it, but you still need to show them the need and sell them the solution — they aren’t lining up to buy it.

As for benefits, they are much sought after by employees as the cost of healthcare has soared.

Employers provide benefits to attract and keep quality employees. The problem is the cost of providing these benefits is getting prohibitively expensive for small

“The annuity will have its day again, if interest rates ever get back up... Many insurers have not updated the mortality tables” businesses to provide as the government continues to download these costs and drug prices continue to climb.

Currently we are seeing many employers trimming back on coverage and introducing higher co-pays for the employees or flex plans to keep costs down.

The annuity will have its day again, if interest rates ever get back up in the higher-single digits. In fact even at current rates, annuities still can work for those looking at a guaranteed income for life. Many insurers have not updated the mortality tables from which payouts are calculated. Although interest rates are still low, annuities have not been adjusted for our longer life expectancy today resulting in some pretty decent incomes being paid out as they are assuming shorter lifespans. This window is closing rapidly though as these tables are being updated. One concept I really like is the insured annuity for estate creation.

When annuities are paired with permanent life insurance policies you can potentially create larger estates for your clients.

Reader nosy question No. 3: You’ve been a fee-only advisor for 15 years now. That model is increasingly interesting to many of us commission-based advisors considering the threat of full CRM implementation. What are the biggest challenges we can expect in converting existing clients to the fee-only model?

BM: The biggest challenge would be for a new advisor (not necessarily seasoned advisors). Without an existing block to generate trailers, it’s tough to make a living just selling fee for service.

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UP CLOSE / TOP OF THE TOP 50

I sold funds on a deferred-sales-charge basis for the first 10 years of my career, and it was shortly after the dot-com bubble that I began questioning the value of selling on this basis. I found myself switching people into funds that were not my first choice, but my only choice, until the loads had expired. I always felt I was doing them a disservice by back-end loading them.

This was even more apparent when a client needed money. It was always a tough conversation which never ended well. Memories are short when it comes to money and all those DSC fees aren’t an issue until they need to redeem some of it.

Initially the transition was tough as a large part of my cash flow had ended. We explained to our clients how the fee-for-service model worked and why we were doing it and began the transitioning of matured DSC funds to front end and selling new funds zero per cent front-end load. We now have only a handful of DSC funds left and those are in non-registered accounts where there is a substantial gain. Today all my clients, depending on their portfolio size are either sold front end zero per cent or fee for service for my clients with larger accounts. Once I explain the concept, everyone is on board. It’s all about transparency.

WP nosy question No. 4: You’ve recently acquired another advisor’s book and are working through a transition. What are key factors to consider to maximize retention and minimize any misunderstandings with the selling advisor, while at the same time maintaining control of what are now essentially your clients? At what point in the process do you consider them yours entirely?

BM: It’s only been about 10 months, so we are still at the initial stages of this transition and it has been a learning experience for both of us. The hardest part I think was hammering out the deal and getting it signed. The advisor I purchased the block from is staying on as an associate advisor with us and he still works with his clients. Our whole concept is to provide for a slow, easy transition for the clients while affording my new associate the ability to continue working, but go on extended vacations knowing his clients are being cared for in his absence and we are given the opportunity to get to know everyone and

work with them. As the result of a solid, well-written contract, we have had no misunderstandings to date.

We are making an effort to meet everyone as a team, and if a client prefers to continue dealing with him or use my services, it’s totally up to them. Since we have different skill sets and product offerings, some will naturally gravitate to me more quickly, but we have had no issues with clients over this arrangement.

Actually, I think this arrangement has been a win-win -win for my new associate, me and my new clients.

WP nosy question No. 5: For advisors, retaining wealthy clients is a common goal, but can a client ever become too wealthy for an advisor? And, if so, what do you believe is the best way to handle these types of situations?

BM: Part of the reason I completed my CIM and got IIROC licensed was to feel more confident approaching larger clients and this has definitely made a difference in the size of client I am attracting today. The last thing I want to tell a large prospect is I can only look after a portion of their portfolio because I am not licensed for part of it. It’s kind of like asking someone to go out for dinner, but they have to go to one restaurant for the appetizer, one for the main course and somewhere else for dessert.

If you want to consolidate their assets, you need to have all the tools or you will lose the business to someone who can. Wealthy clients want to be able to own various types of investments, even if it’s a small percentage of their portfolio.

Currently, I do not have any clients that I consider to be too wealthy for me to handle, but I am aware that this could happen when trying to acquire a new client with substantial wealth. Given the opportunity, I would strongly recommend to any advisor that if they feel they are out of their league with a client, seek out a private wealth management firm that works with advisors. James Capling of Connor, Clark & Lunn Private Capital Ltd. is someone I would recommend. Having built his business on advisor referrals and understanding our business, he works to positions advisors as quarterbacks of the relationship, bringing their expertise to the table but also seeing the need to bring in a specialist when needed.

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FEATURE / CAVEAT EMPTOR

CAVEAT EMPTOR...

The clients who keep secrets from their advisors are too often the clients crying on the 11 o’clock news.

Industry professionals are reiterating the need for multiple layers of accountability to keep con artists at bay and their hard work intact. Liz Brown reports

Despite the prominence of stories about scams in the media and the myriad caveats to consumers about shady con artists, there are still a number of investors who every year become the victims of financial scams.

And that creates problems for a wealth management industry increasingly protective of its reputation.

GUARDING THAT BRAND HAS HAD ITS CHALLENGES. Most recently, in January, the RCMP charged two Alberta men with bilking 1,300 investors out of $23 million in a scam where the pair promised returns of up to 500 per cent for investors as limited partners in Mexican beach property deals.

One of the accused, Dave Humeniuk of St. Albert,

Alta., was slated to appear in court Feb. 27. A Canadawide arrest warrant has been issued for the other alleged, Varun Aurora, of Calgary.

For Ken MacCoy, CHS at Ritepartner Financial Services in Chilliwack, B.C., these stories are proof of a gap in the financial education of Canadians. “This all boils down to the fact that in school they don’t teach you financial literacy,” he says.

“A lot of people do their homework before they go and buy something like a TV. You have to do the same thing with a financial advisor.”

He, along with many other advisors, believes the best way to fight these scam artists is through education. That requires reaching past the blame game some in the industry are so comfortable playing.

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“Anybody who just says ‘well it’s the client’s fault for getting duped’ is skipping right past the opportunity to ask questions. It’s more constructive to ask, what were the questions that should have been asked? What were the promises made? And were the promises reasonable?” says Gillian Stovel Rivers, CFP with Assante Wealth Management in Burlington, Ont. According to Stovel Rivers, many of these things happen because of poor financial planning habits.

“Most of the time when people are looking at an opportunity like this, it’s to make up for lost time. It’s because they need to hit a finish line that’s two kilometers away and they have 100 metres to do it in. I think that people in a state of denial will sometimes forget to ask the tough questions of things that seem too good to be true.”

When clients come to Stovel Rivers with what she calls “alternative” investment ideas, she uses it as an opportunity to help them become better independent decision makers. “Although I think advice is really important, we can’t always be with a client and we can’t always stop them from making these decisions. But we can help them get better at asking some questions about opportunities that seem too good to be true,” she says.

Stovel Rivers notes that she also always looks for multiple layers of due diligence in any investment opportunity and suggests that her clients do the same. “Multiple layers of due diligence is a great way to know that the tough questions have been asked by the people who know what the tough questions should be,” she says.

One problem for advisors, however, is that sometimes clients are not forthright with all of their investing activity. Tim Kelly, a financial advisor at Sun Life Financial in Richmond Hill, Ont., recalls one client who was taken for $20,000 by a neighbour in an “investment opportunity.”

“I only found out about it after the fact. My client never asked me for advice. I didn’t know about any of this at the time,” he says.

This is one of the reasons it’s important to express to investors that an advisor cannot help them achieve their goals unless they are given the whole financial picture, according to Stovel Rivers.

“It’s like a doctor taking on a patient who’s not

“I only found out about it after the fact. My client never asked me for advice. I didn’t know about any of this at the time.” telling them all of their symptoms. How am I going to make a proper recommendation for us to work together as a team to help that person achieve what it is they’re telling me they want to achieve if I don’t have the whole playbook sitting in front of me with all of the facts?” she says.

Beyond teaching financial decision-making skills and encouraging investor transparency, the industry should also be coming together to educate the public about what qualifications and qualities to look for in the person they trust to handle their money.

Kelly says that during the course of one of his first appointments as a financial advisor in 1991 that the person told him he was only there for himself and not to help them. “That taught me that much of the public is already on high alert when it comes to investing their money. I think there’s a stigma attached to this business and every advisor has to do their due diligence,” he says.

MacCoy argues that organizations like Advocis are working towards ensuring all planners meet certain standards, take part in continuing education and adhere to a professional code of conduct. As well, the Canadian Securities Administrators works to keep tabs on fraudulent practices in the industry.

However, MacCoy warns that any implementation of new standards or requirements has to be implemented slowly and with consideration as to how it will affect the industry as a whole.

“In principle it’s a good idea. But in the U.K. they put in more regulations and pushed it so far that a substantial number of advisors quit. The problem is if they implement really strict requirements, a lot of people will leave the business.

And if we go from a commission base to a fee base, the average Canadian won’t be able to afford advisors,” he says.

ADVISORS BEHIND BARS: Be advised, these one-time fat cats are now on bread and water.

Jennifer Killins,

a.k.a. the G-Spot Advisor - $1.5 million fraud, convicted in 2013

Earl Jones

- $50.3 million fraud, convicted in 2010

Bernie Madoff

- $17 billion fraud, convicted in 2008

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UP CLOSE / TOP OF THE TOP 50

THE

ONE PERSON ADVISORS CAN’T AFFORD TO IGNORE

Advisors quite understandably focus on maximizing the client’s quality of life. But make no mistake, writes Mark O’Farrell, president of the Canadian Institute of Certified Executor Advisors, part of the job is guiding what happens next Regardless of what you call them – gatekeeper, decision-maker, person of influence or whatever – we all know there are key people in our business we can’t afford to ignore. They can make or break the deal, depending on whether we engage early and build relationships or make the crucial mistake of ignoring them at our peril. We know all this, but an astounding number of us continue to totally miss the one key person we can’t afford to ignore: the executor.

Advisors know who their future testators will be, but how many can name their future executors?

Executors (executrixes) are the most-trusted family members and the one person who can influence both your testator clients as well as the heirs of their estate.

Alternatively, if your client will one day be an executor, they may be the conduit to new, future testator clients. Executors are important to our business and failure to engage early and build relationships will be costly. In fact, Investor Economics reports that 98 per cent of heirs do not intend to leave assets with their parent’s advisors.

We ignore executors at our peril.

The good news is it’s not too late and there’s plenty that can be done. Not only will future testator clients need help with executor issues, their executor children will need all kinds of help. According to a BMO Leger poll, 26 per cent of executors report having legal issues, 31 per cent have emotional issues and almost half, 47 per cent, are having administrative complications. Advisors who broaden their

knowledge and offer credible value will have tremendous prospects over the next 20 years, the period in which Step Canada has estimated 1.5 trillion dollars will transfer to the next generation.

Advisors wanting to increase their involvement working with executors should look at opportunities from three vantage points: 1. The testator is your client 2. The executor is your client 3. Neither is a client … yet First of all, in any of these situations, advisors should update their skills and knowledge base regarding executor’s roles, risks and responsibilities, in order to be credible and add tangible value. For example, consider acquiring a designation specifically focused on building the requisite skill set.

If the testator is your client, start by asking about their will and when it was last updated. Leave-A-Legacy estimates up to 70 per cent of Canadians don’t have a valid and upto-date will, and many people don’t understand the events that can outdate or even invalidate an existing will, such as re-marriage. If there’s no will, there won’t be an executor. The relevant provincial court will appoint someone to manage the estate.

Next, asking about their executors is like asking about their family. In fact, polls by BMO and RBC tell us 98 per cent of Canadians aged 45 and up will name a family member as their executor. Some

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questions to consider: »» Do they understand the executor’s role and responsibilities? »» Is the person they named still living in the region? »» What does that person know about investments, property and legal process? »» What is the potential for disharmony among siblings and other heirs? »» Have they considered executor insurance (now available in Canada)? »» Have they named successor executors, in case the first is unable to act?

This is not to say advisors should act as the executor themselves, but rather to open the dialogue about the importance of choosing this person wisely and to uncover potential pitfalls in advance. The logical next step is to meet them, together with the testator, to bring them into the conversation about steps that can be taken to mitigate problems before they arise. You can also discuss how you and your colleagues in related professions can help the executor when the time comes. Adding value today will strengthen relationships for the future.

If the executor is your client, start by asking what they know about the estate they will be called on to settle. In some cases they won’t want to discuss it, but advisors talk about disability insurance because 34 per cent of Canadians will suffer a disability before aged 65 and likewise, with 40 per cent of Canadians anticipating an inheritance (BMO Financial Group), we should be talking about this as well. Here are some questions to consider for them: »» Is there a valid and up-to-date will? See above, as this can be a garage-sized door opener to further discussions with both the executor and testator. »» Have you discussed executor insurance? This leads to a discussion about the risks they are accepting and what can be done to protect themselves. »» Has there been an estimate prepared for estate fees and taxes? Few people fully appreciate the challenges of trying to settle an illiquid estate. »» Will you know where to find all accounts, online accounts, login and passwords? The Bank of Canada currently has about 1.4 million

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Mark O’Farrell BA | CFP | CLU | CHFC | TEP | CEA, is president of the Canadian Institute of Certified Executor Advisors

unclaimed accounts, which demonstrates why executors should talk with testators while they can.

All of the above really leads to the ultimate question of, Do you want to accept the role? Many may not even be aware they have the right to recuse themselves. If they are going to accept, they should know what they’re getting themselves into, and again, the best way to determine that is with a meeting.

If neither the testator nor the executor are clients yet, consider how much of this important information is being provided by their current advisors. After all, if 98 per cent of assets are likely to move from advisors who aren’t taking steps to stem the tide, and planning opportunities abound, it’s worth offering your services to fill their needs. According to a Manulife Financial survey, 43 per cent of Canadians “haven’t given any thought” to their estate plan. The timing couldn’t be better.

There are several ways to accomplish this. One is to provide seminars in your community geared to executors along with other executor-focused speakers. For example, one seminar included a funeral director, lawyer, financial advisor and a real estate auctioneer/ broker. Of the 600 attendees, half were executors wondering what their job would entail, and the other half were testators, wondering what they have involved their kids in. It was a lively Q&A. If you have any trouble finding interested speakers, check the Find-A-CEA Directory at cicea.ca.

Another option is to simply meet with other executor-focused professions in roundtable sessions.

There are 17 professions an executor might turn to in the course of their duties, so meetings like this are great for getting a better understanding of what each one provides in estate situations. In all likelihood, you’ll be able to help some of the clients of the other 16 professions at the table.

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Regardless of an advisor’s approach, interest in asset retention or growth, or desire to expand their client base or engage in estate planning, what should be abundantly clear to all advisors is that executors are the one person they can’t afford to ignore.

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INDUSTRY ANALYSIS / THE ROLE OF THE DESIGNATION

Debate over?

THE DESIGNATION IS...

Investors are confused by what even advisors call an ‘alphabet soup’ of industry designations. But it’s very clear, argue Montreal advisors Nick and Joe Bakish, one certification is increasingly essential to the recipe ALPHABET SOUP Many people choose to obtain designations after receiving the certified financial planner (CFP) certification, wishing to acquire specialized knowledge in a particular area, just as some doctors specialize in various practices. We view the CFP – or Pl. Fin in Quebec – to be the starting point for a professional practice, much like an MD is for a career in medicine.

For example, both Nick and I have the CLU and CFA designations. The former allows better discussion and understanding with lawyers and notaries concerning wealth transfer, while the latter allows better discussion with clients and portfolio managers.

In the current environment, trust is at an all-time low for the financial industry, therefore requiring clear standards for clients.

PUSHING FOR THE CFP Today in Canada – outside of Quebec – anyone can call themselves a financial planner. There is no regulation that restricts the use of this title. Clients need to know that the person they have engaged to be their planner has the appropriate knowledge, skills and abilities to earn their trust.

Not only does a CFP professional meet internationally recognized standards of knowledge, skills and abilities, they are also obligated to follow a code of ethics that prescribes their professional duty to put their clients’ interest first.

Since 2008, I, Joe, have volunteered with the

Financial Planning Standards Council (FPSC) to help craft exam questions and mark completed exams. This process has shown me the importance of having a baseline or standard in this field.

CLIENT PROTECTION – NEXT STEPS It is our view that to appropriately protect clients there must be: • A single, unified set of standards for financial planners, so that clients are protected knowing their financial planner has the necessary professional competencies and will act ethically with due prudence and professionalism. The CFP certification is considered the gold standard in financial planning by our industry in Canada and

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so is a natural choice to be the single designation.

• The government should create title and holdingout restrictions by establishing a professional Financial Planners Act. Only those individuals who have demonstrated their competence by meeting a single, unified qualification standard, consistent, ongoing professional ethics and continuous professional development requirements – as CFP professionals are doing today – will be permitted to call themselves financial planners. As a result, clients will no longer be at risk of poor or inappropriate planning by those who have not met minimum competency standards.

• Financial planner accountability should be monitored by one professional body, responsible for enforcing standards and representing public interests – as the FPSC is doing today. Canadians need to know that they can rely on financial planners, who meet universal standards of competence, practice and ethics determined and assessed by a panel of industry experts. Clients cannot, and should not, be expected to differentiate between financial planners working in one regulatory sector versus another.

CERTIFICATION AND TRAINING To become a CFP professional, candidates must complete a rigorous education program, pass two national exams and have three years of qualifying work experience. To remain certified they have to complete professional education courses every year and agree to adhere to the Standards of Professional Responsibility for CFP professionals.

CFP certification is recognized worldwide, with 17,500 CFP professionals in Canada, who belong to a global network of more than 150,000 CFP professionals across the planet. In Canada, CFP professionals are the largest identifiable body of financial planners in the country – the gold standard for the industry. Clients should not settle for less and advisors should strive to reach a standard level of proficiency.

STATISTICALLY SPEAKING Of course, this needs to be backed up with data proving that education matters.

The FPSC and the Financial Planning Foundation

conducted a three-year longitudinal study to measure the impact of financial planning on Canadians’ emotional and financial well-being, as well as the impact of financial planning services offered by CFP professionals compared to noncertified advisors. More than 15,000 Canadians, from all net-worth categories, were surveyed.

The study revealed: • 78 per cent of Canadians who work with a CFP professional feel their financial affairs are on track versus 54 per cent • More Canadians who engage with a CFP professional believe they are closer to achieving some of their life goals as a result of planning than those working with a noncertified professional (70 per cent versus 61 per cent) • More Canadians who are using a CFP professional believe that financial planning has helped them achieve greater peace of mind than those working with a non-certified advisor (73 per cent versus 61 per cent) • Canadians spend 36 per cent more time with their CFP professional than those working with a non-certified advisor.

• CFP professionals continue to have longerterm relationships with their clients – on average 6.2 years – than non-certified advisors – on average 4.6 years.

MOVING FORWARD Once a financial advisor obtains their CFP – or PlFin in Quebec – they can move on to more specific and in-depth designations, such as the CLU (for risk management and wealth transition), CFA (for investment planning), CHS (for living benefits planning/risk management), and TEP (for estate planning).

Financial planning is a complex, high-stakes activity. To reduce the probability for error, clients should know exactly what to expect from the individual managing their affairs. There should be a professional body to ensure those standards are upheld.

Additional designations can help to set the advisor apart and improve the likelihood of longer -term relationships – a win-win for advisor and client.

Nick Bakish: CFA, F.Pl, CLU, TEP Scoring in the top 10 – No. 6 to be exact – on WP’s Top 50 Advisors in Canada list, released in January. Nick is one of the Investors Group’s most talented consultants, receiving numerous awards of distinction, since his inception there in 2002. With his clients’ interests top of mind, Nick sets himself apart with tireless devotion to continuing education – having obtained his CFA, along with the Trust and Estate Practitioner, Chartered Life Underwriter and Financial Planner designations. Nick is a member of the Financial and Estate Planning Council of Montreal and the Society of Trust and Estate Practitioners. He participated in the Million Dollar Roundtable and was a part of the prestigious Court of the Table. Nick graduated with first class honours in the joint economics and finance program at McGill University.

Joseph Bakish CFA, CFP, CLU, CHS In 2005, Joe began working with Investors Group and has received the Investors Group Pillar award – recognizing an advisor’s outstanding efforts at the beginning of their career – not once, but twice. Acting in his clients’ best interests, Joe continually educates himself having earned the Certified Financial Planner (CFP) designation, the Chartered Life Underwriter, the Certified Health Insurance Specialist and the Chartered Financial Analyst designation. Joe volunteers with the Financial Planning Standards Council marking and designing exam questions for the CFP exam. He also serves on the board of the Financial and Estate Planning Council of Montreal.

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THE BIG INTERVIEW / MICHAEL LEE-CHIN

‘WEALTH CAN BE

CREATED’

But the question is how? asks WP’s Sophie Nicholls.

Michael Lee-Chin’s answers increasingly centre on the private capital market.

Renowned billionaire Michael Lee-Chin has a vision.

It’s a vision tied to a philosophy, he says, and has always been at the heart of his many businesses and at the root of his prosperity.

The philosophy? Buy, Hold and Prosper: an investment strategy from fellow-billionaire Warren Buffet and one Lee-Chin proudly embraces.

The vision? Cultivate wealth for every Canadian investor – not just those with highest net worth, but retail clients as well.

The reason? Coming out of the 2008-09 financial crisis relatively unscathed (and figuring out why), Lee-Chin decided his new mission would be to ensure investors from varying demographics are also able to ride the economic waves.

The action item? Push to open up the private capital market (exempt market), so that every investor – regardless of personal wealth – can have a piece of the pie.

WP’s Sophie Nicholls sat down with Michael Lee-Chin to find out how exactly he plans to do that through his new endeavour, Mandeville Holdings, Inc.

“Coming out of the 2008-09 financial crisis relatively unscathed (and figuring out why), Lee-Chin decided his new mission would be to ensure investors from varying demographics are also able to ride the economic waves.”

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THE BIG INTERVIEW / MICHAEL LEE-CHIN

HARD FACTS

THE RETURN

WP: Mandeville has been described by the industry as a comeback, of sorts, for you. From your vantage point, what does this endeavour mean to you?

MLC: Mandeville was started because when you look at the landscape of how advice is given in the marketplace and you look at what clients expect – in terms of the portfolio that they end up with – it is very dysfunctional.

What every client says to an advisor implicitly is: ‘Advisor, I want you to do four things for me: I want you to protect my capital, don’t lose my principal; I want to you give me growth; I want you to give me some income when I need it; and, I want for you to minimize my taxes.’

If the advisor does a good job at optimizing those four needs, the net effect is that wealth is created for the client.

CREATING WEALTH

WP: In your opinion and through your experience, how exactly is wealth created?

MLC: If you were to do a survey of any wealthy person, anywhere in the world, invariably they do five things: Number one, they own a few high quality businesses – not too many; number two, they make sure they really understand those few businesses; number three, they make sure those few businesses are domiciled in strong, long-term growth industries; number four, they make sure they leverage people’s money prudently; and, number five, every single wealthy person in the world created his own wealth by simply holding those businesses for the long run.

That’s not only unique to how individuals have

THE TIMELINE Billionaire Michael Lee-Chin’s Life in a Nutshell 1951: Michael Lee-Chin is born in Port Antonio, northeast Jamaica (eldest of 9 children) 1970: Comes to Canada on a scholarship to

study civil engineering at McMaster University in Hamilton, Ont. 1974: Graduates from McMaster and returns to Jamaica to work for the Jamaican government on the Nelson Mandela Highway as a civil engineer.

created wealth. The pension funds, Ontario Teachers, CPP, OMERS … their behaviour also is such that the portfolios that they construct are a combination of public securities and private assets.

So, with wealthy individuals, their portfolios invariably end up with public exposure and private exposure.

THE PRIVATE CAPITAL MARKET

WP: There seems to be a stigma against the exempt market in Canada. How do you feel about the perception that the private capital market is more risky than the public markets?

MLC: The perception is wrong because the hallmark of an investor is to understand what you own. When you buy a private business, you have the opportunity to get every piece of information available from that business. You can go and look at the assets, the liabilities, you can look at email trails, you can go to the HR department and look at compensation packages etcetera, etcetera.

Conversely, when you buy a stock, the information you have access to is what the investor relations department gives you, which is a fraction of the information you can get from a private business.

So, if you conclude that having more information will make you understand the asset better, you’d have to conclude that owning a private business, from an investor’s perspective, can help you make better decisions because you have more information.

WP: Why are retail investors typically discouraged, even

1976: Returns to Canada.

1977: Becomes a financial advisor 1979: Employed at the Investors Group in Hamilton and after two years moves to Regal Capital Planners, where he was regional manager.

1983: Invests $500,000 to purchase Mackenzie Financial Group stock.

1987: Acquires a group of companies compromising of an investment planning arm, a securities dealership and an insurance services operation.

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prevented, from investing in the private capital market?

MLC: The securities industry was not designed to create wealth for clients. The securities industry was designed to take businesses from being private, make them public and build an ecosystem around that, trading stocks, funds, etcetera, etcetera.

It didn’t start off saying let us see what the clients’ needs are and build an industry that is going to facilitate those needs – so, there is the disconnect.

As a consequence, the securities industry, the advisors who are employed by the securities industry, the universe of products and the tools that they have are invariably publicly-traded securities. So, clients invariably end up with a portfolio of only publicly traded securities, which is not how wealth is created.

“When you buy a private business, you have the opportunity to get every piece of information available from that business.” their portfolio look like?’ It’s not as difficult to convince clients that this is the right thing to do.

The most successful investor in the world is Warren Buffet and the majority of his portfolio is invested in private businesses. Buffet himself is a disciple of owning both public and private. But, that’s not being done today. Hence, there is a fantastic opportunity to correct that dysfunction.

WP: Do you see the private capital market opening up to the average investor, or will it be left accessible solely to the accredited investor?

MLC: If you’re in Alberta or B.C., as an average

WP: How does an advisor determine whether a client is suited to buy an alternative private market investment?

MLC: Well, firstly, the client has to be accredited.

investor, you would have access to private investments in bit-sized denominations. In Ontario, you have to be accredited. So, you have to qualify.

But gravity is against that format continuing and we will over time have a model in Ontario that is similar to B.C. or Alberta, whereby up to a certain limit, anyone can buy into private assets.

Secondly, I cannot see a reason why a client would not be suited to buy an alternative investment once the size, or liquidity analysis, is done with the client.

MLC: I think investors implicitly know how wealth

WP: Some of the largest institutions in the world have altered their mix to include public and private alternative investments. How can an advisor in Canada follow these investment strategies for their high-net worth clients?

MLC: It’s very difficult being with a traditional

is created because they just look around and ask: ‘Who do I know who is wealthy and what does

firm because in your traditional firm, that is not their business. Their business is not to offer

WP: How do you convince a retail investor that investing in private equity will work?

2002: Michael LeeChin’s international conglomerate, Portland Holdings Inc., acquires 75 per cent in National Commercial Bank Jamaica Ltd. (NCB)

2007: Assets of the Berkshire Group acquired by Lee-Chin in 1987 - exceed $12 billion. Berkshire Group of Companies is sold to Manulife Financial.

2003: Pledges $30 million to Royal Ontario Museum’s Renaissance ROM campaign.

2009: Under Lee-Chin’s stewardship, Portland Holdings, Inc., sells AIC’s retail mutual fund business to Manulife

Financial. AIC Investment Services, Inc. officially changes its name to Portland Investment Counsel, Inc.

2013: The Government of Ontario selects Lee-Chin to receive the Queen Elizabeth II Diamond Jubilee Medal.

2011: Appointed Chancellor of Wilfrid Laurier University.

2013: Wallenford Ltd., a subsidiary of Portland Holdings Inc., purchases the Wallenford Coffee Company.

2012: Forms the Mandeville Group of financial companies.

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THE BIG INTERVIEW / MICHAEL LEE-CHIN

“The financial crisis was an indelible moment for all of us. It happened in the fall of 2008 and a couple of years after, I started to take stock as to how I came through the crisis unbruised? “ alternative investments to clients with a broad enough diversity of offerings, so that the client can have a diverse portfolio. Nor do advisors have the requisite training needed to speak to clients intelligently about owning private assets. That’s not a part of the training in your typical firm. One would have to go to a specialized firm.

RISING FROM THE RUBBLE

WP: The financial crisis of 2008 had a plummeting impact industry-wide on several players, including yourself. How can one prepare for a similar turning of events in the future? What would you do differently today, that you didn’t do back then?

MLC: The financial crisis was an indelible moment for all of us. It happened in the fall of 2008 and a couple of years after, I started to take stock as to how I came through the crisis unbruised?

My conclusion was, if I didn’t have private businesses, I would have come through the crisis a lot more bruised. It was my private businesses that gave me some sort of solace. It was a safe haven.

But, I felt awful because I’ve been an advisor since 1977 and all my clients’ portfolios were 100 per cent public. I’ve always prided myself on leading by example. In this case I didn’t. So, I thought I have two choices. I could have ignored it or I could do something about it. I chose to do something about it because it’s not right.

WP: During the financial crisis, AIC Funds went through a period of redemptions, which would suggest a loss of confidence. How are you gaining the confidence of advisors and investors back as

ICONS AND INVESTMENTS Michael Lee-Chin touches on his ties to the ROM and his hometown, Port Antonio, Jamaica.

WP: Do Canadians associate you with the ROM and what is their response to your contribution, The Crystal?

MLC: People are generally nice. They say it’s an interesting design. If someone is really thinking about it they will say ‘it represents a forward-thinking Toronto.’ The crystal exploding from a traditional building – it’s differentiated, it’s noticed, it’s a conversation piece and it’s iconic.

WP: How is your life as an investor in Canada linked with your life in your hometown, Port Antonio?

MLC: It’s linked in the fact that we own a hotel in Port Antonio – The Trident Hotel. The hotel business is a difficult business. But, we did it and we did it right and the Trident has had phenomenal global reviews. I did it because Port Antonio is probably the most beautiful spot on earth and I’m not biased, although I’m from there.

Over the years (the area) has been neglected, but the beauty has not changed.

There’s an opportunity for me to use the podium that I have and some money to try to rejuvenate traffic to the area. I’m doing it mainly, not as an economic investment, but an investment into the long-term sustainability of the town where I am from.

you move through the recruitment process for Mandeville?

MLC: Our philosophy has not changed. Wealth is still being created. Wealth has always been created by buying a few great businesses … in strong, longterm growth industries and holding them for the long run. In other words, wealth is created by buy, hold and prosper. Nothing has changed, whether it’s in the public universe or the private universe.

The problem is that in the retail market, clients have to be tutored to think longer term than the impulsive behaviour that is prevalent. There is a

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responsibility that we have as advisors to make sure that the client’s timeframe matches the needs that they have.

Thirdly, the success of this is a function of bringing high-quality private assets to investors, which hither to now may not have been the case.

INDUSTRY TURBULENCE

BEHIND THE VISION

MLC: Today, advisors are facing headwinds of being

to create wealth for clients, do it in such a way that is akin to how wealthy people in our society do it, and do it in such a way that is akin to how the institutions behave, which is differentiated from how your typical securities advisor advises clients today.

At Mandeville, we’re creating portfolios for clients that are no different from how wealthy entities create their portfolio – a combination of public assets and private securities – while making sure that the private assets we are promoting are of the highest quality, such that the largest, most erudite, professional institution would salivate over them.

WP: How do you see the role of the financial advisor given the current state of the industry?

commoditized. They are becoming more irrelevant, which is paradoxical because at a time when the world is most complex and advice is most needed, advisors are most irrelevant. Therein lies the paradox.

But the common need is that advice is still necessary more so now than ever before. We have to make sure that we are delivering the relevant products and (portfolio) construction to fit the needs of clients. That has not been the case to this point.

It’s very difficult as an advisor to differentiate themselves from everybody else. And, whatever products your typical advisor sells, clients can buy the same product, less expensively. So, the value proposition that an advisor has today is becoming very imperceptible. Only if you can show complete differentiation in the marketplace will you be relevant.

WP: How do you see the democratization of the private market impacting the future of investing in Canada?

MLC: It is going to be more and more the way to go because already, in Alberta, for example, private investments are available to everybody up to a certain amount without being accredited. That will eventually come to investors (in Ontario). It is the way of the future.

WP: What changes need to take place in the finance industry to truly democratize private investments?

MLC: First, it’s primarily regulatory. We need to have consistency.

Secondly, it’s a matter of having access. Everybody has access whether they are accredited (investors) or not to private securities except in Ontario. But, that is going to break down and Ontario will eventually (give the access to) our citizens that is prevalent elsewhere, like Alberta and B.C.

WP: What is Mandeville’s value proposition?

MLC: Mandeville’s value proposition is

WP: How is Mandeville qualified to pursue this endeavour – the democratization of the private capital market?

MLC: What qualifies us is that, through our conglomerate, we own private businesses and we manage private businesses. We have taken over private businesses, dusted them off and created a lot of wealth. What qualifies us is that we manage a private equity fund also and our clients would include the Treasury of the United States, OPIC, Export Development Canada – a Treasury of the Canadian government – The European Investment Bank, Funds of Funds representing the State of New York – the city of New York pension fund. So, we have the main experience at managing private equity funds, at owning and managing private businesses, and also managing public portfolios. We have all the requisite ingredients to put this together.

There are very few money managers or investors who would have all the domain experience necessary to put this together. Also, we have the experience of putting together a financial advisory network and dealing with retail clients.

So, we are perfectly suited for this mission and a mission it is.

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INSIGHTS / PASSING THE TORCH

PASSING

THE TORCH Retirement: It’s as inevitable as the setting sun for most advisors. But their departure doesn’t mean their clients depart with them. Industry veteran Tony Bostock discusses his own succession plan, now in action

Tony Bostock has been involved in the industry long enough to know that change is unavoidable. Over time, the William Douglas Group advisor built up a book of loyal, reliable clients. But recently, the veteran has been mulling over his eventual retirement. He is, in fact, in the throes of selling his book, a gradual process that will see his clients transition to a new advisor he personally handpicked.

Bostock initially began planning for this changeover “about two years ago. I collected as much accurate information as I could about my practice, and then I tried to determine who would be the best resource to get the word out into the marketplace,” he says.

SELECTING A SUCCESSOR The decision to sell a book is one that departing advisors don’t take lightly. Just like talent shows on television, the advisor often goes through a list of potential candidates. Others might take a younger advisor under their wing and transfer their book to them upon their retirement. Bostock didn’t need to look far to find his heir, but he wanted to ensure that his successor was a credible individual who would be able to live up to and eventually surpass the expectations of his clients.

“I went through my personal contacts and (examined) their personal exposure, backed up by really solid references and recommendations from

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other people in the industry whom I respect and trust,” Bostock says.

That vetting process led to one choice, with Bostock reaching out to communicate the change to clients. But, here again, the transition is being carefully managed from both ends of the transaction – by both selling and purchasing advisor.

“I spoke to (my clients) on an ongoing basis for a 12-month period about the fact that I would be slowing down to what may appear to be a standstill for a while,” he says. “Continuity and succession should always be among the considerations when choosing an advisor in any profession.”

A SLOW TRANSITION In a recent interview with WP, Worldsource Financial’s Peter Bailey noted that several older advisors don’t have a plan in place for their eventual retirement (a remarkably different tack from Bostock’s methodical succession planning). As a result, for their clients, an informal search often commences and that in turn amplifies the possibility of client flight.

While some clients may be eager to jump ship, Bostock aims to slowly transition his own client base to his replacement as a way of maximizing retention. It’s a strategic move on his part, one that gives clients the opportunity to share concerns. Part of that involves a face-to-face meeting between Bostock, the new advisor and each client.

“We really worked as a team, kind of like Batman and Robin,” says Bostock. “We met a significant number of my clients together, and introduced (the new advisor) as the successor agent either now or in the future, depending on what the client wants and what I want.

So if I do leave the picture completely, they know who he is.”

FACING CHALLENGES On paper, a transition from one advisor to another seems relatively simple. The book changes hands, and the clients’ investments remain unchanged.

But in practice, the process can be a bit more difficult. As Bostock explains, the issue is not with

A GRACEFUL EXIT? There are three basic exit strategies for advisors looking to pull down their shingle and retire:

1

Maximize your income: Hang onto your book indefinitely, until you, ahem, go.

2

Monetize your business: This is the “sell and stay” or the “exitentrance” strategy.

3

Mergers and acquisitions: This could net you the best return but takes five years.

By succession expert and advisor Jerry Butler at Queenston Consulting

the method, but instead with the clients themselves.

“There’s the normal anticipated resistance to change,” he says. “There were a couple of clients who were just simply resisting change. It had nothing to do with myself or (my replacement). In a couple of cases, we had to overcome human nature and reassure some clients that the only thing that is changing is the name that appears on their statements.”

DEPARTING OBSERVATIONS As the industry continues to evolve, with more new advisors joining, Bostock envisions them encountering more obstacles along the way. Some of the biggest challenges involve the often high costs involved with being an advisor.

“There is the cost of staying compliant and staying relevant with little initial income,” he says.

“It’s about infrastructure and time.”

New advisors sometimes act rashly, which can hurt them in the long run. Bostock believes they should focus on pacing themselves.

“They’ve got to provide their own infrastructure and they need the time to educate themselves and wait for their businesses to evolve, as it doesn’t happen overnight,” he says.

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ALTERNATIVE INSIGHTS / PRIVATE CAPITAL OPPORTUNITIES

?

Rick Couronne, Advisor, Privest Wealth Management Inc., Calgary, Alta.

Glenn May-Anderson, Principal broker/ President, FDS Broker Services, Mississauga, Ont. Nadine Wellwood, President, Wealth Terra Capital Management, Cochrane, Alta.

Wealth Professional: Why are some yieldfocused investors changing their attitudes about exempt-market opportunities?

Rick Couronne: Investors today are much more sophisticated and looking for alternatives to public market volatility. I find most clients have a strong appetite for non-correlated investments, with exempt marketing fitting the criteria.

Nadine Wellwood: As the markets continue to be volatile and with no real reprieve in sight, I believe that the demand for exempt-market products will continue to increase.

Glenn May-Anderson: Not fair for me to answer, since we offer an alternative investment that wealth advisors can distribute to their clients. However, I can tell you that the advisors that have embraced our product have been very happy indeed with being able to offer their clients a stable 8 per cent rate of return annually. We are seeing more and more clients showing interest.

ago, joined an EMD as a rep; however, just since I’ve come on board, I find clients becoming more aware and open to private market investments.

NW: The last five years have been very interesting for the exempt market. We have seen the worst financial crisis of our lifetime and that has brought significant fear to the financial industry in general. But for many it was a wake-up call and the need for true diversification in truly uncorrelated assets classes has become a new reality of investing. The old adage of “do not put all your eggs into one basket” has come home to roost. The exempt market and private capital markets can offer true diversification.

GMA: Many clients are becoming frustrated with lacklustre returns and high management expense ratios associated with mutual funds, and low interest rates have made money markets and bond funds a poor performer as well. As a result, syndicated mortgage investments, such as the one we offer, are being embraced by more and more investors.

WP: How has this shifted over the last five years?

RC: I started out with the Alberta Stock Exchange in 1987 and only recently, a year and a half

WP: Where do you see the exempt market heading over the next five years, 10 years?

RC: With the OSC looking at changing the criteria for new capital raising and clients looking

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for diversification within their portfolio and transitioning a portion of their portfolio to private market investments, I believe we will continue to see expediential growth over the next 5-10 years.

NW: I see the exempt market growing and expanding into a more mature and professional industry.

I believe that all industry players will need to come together to support best practices and to better educate the public of the many benefits it can offer investors.

GMA: Once the Ontario marketplace opens up for Exempt Market Dealers (as it has in Western provinces), and once there is clarity on new Crowdfunding guidelines, I see this market expanding rapidly. One only needs to look at the number of EMDs based in the West that are becoming registered in Ontario to know that massive growth is on the horizon. What will matter most in the long-term, however, is how diligent these EMDs are at following KYC, KYP and suitability guidelines to ensure consumers are fully aware of any risks associated with these exempt market products.

WP: What impact will this have upon investor attitudes?

RC: As investors become more aware and knowledgeable they will continue to seek out new investment alternatives in the private markets.

They will also be more demanding on the investments that are available.

NW: I believe investors have a great deal to gain from the exempt market but like everything it comes with risks. There have been some big failures and prior to September 2010, it was truly an unregulated space.

I feel that regulation will have a positive impact on the public perception of the industry although it does and will continue to present some challenges as well.

Overall it will attract much more positive attention in the years to come from other financial industry players, as well as investors.

GMA: Again, this depends in large part on how EMDs conduct themselves in terms of best practices and compliance with regulations and guidelines. If the industry has a long-term view, and takes rapid action against those who might be less diligent in order to make the “fast buck,” then it is ultimately better for investors. Associations like the EMDA will be crucial in setting the tone; the better their efforts, the less the regulators will have to get involved.

WP: What impact will it have on how

advisors conduct their business/deals with their clients?

RC: Advisors will have to continue to seek out opportunities that fit the client’s demands, as well maintain a high level of integrity and knowledge on behalf of their clients.

NW: More opportunity will mean better service and better products for investors. If all you have is a hammer, everything is a nail. If advisors have a broader and more diverse basket of goodies to choose from, they will be better able to meet the needs of their clients.

GMA: You can’t be a jack-of-all-trades in today’s financial services environment. This is a significant opportunity for advisors to get a leg-up on Schedule 1 Banks and their wealth management divisions, as independent advisors are far more flexible and can adapt to changing market conditions in a more rapid fashion.

WP: What exempt market opportunities are your clients attracted to? And why?

RC: With our aging population, I find a lot of our clients are looking for income and lower volatility, they want to see that 8-10 per cent income product, paying monthly distributions.

WP: What regulatory measures need to be put in place to ensure the investor is protected when pursuing exempt market opportunities?

RC: In September 2009, the National Instrument Policy was implemented. Dealing reps must now be licensed and have completed either the CSC or EMP course and must be registered. This has driven out those reps who cannot get licensed due to securities violations. They have increased the standards of the industry to protect the investors and increased the responsibility of the dealers. I also believe some onus should be put on dealing reps to continue their education within the industry, as well as adhere to ethical conduct and business practices.

NW: I do not believe further regulation is the answer to protecting investors. Too much regulation can have a very negative impact on a vibrant sector of the economy and I think regulation should be a last resort. However, if a change is to be made, it should be on tougher laws and more appropriate punishment for issuers who blatantly disregard their fiduciary duty and responsibility to investors.

RISKY BY DEFINITION Everything in this industry is considered to be high risk according to the Securities Commissions, says Nadine Wellwood, president of exempt-market player Wealth Terra Capital Management.

“Every investor signs a 45-106 - Risk Acknowledgment acknowledging that they can lose all of their money. But within the industry every product comes with its own unique set of risks and potential for reward.

A mortgage product presents different risks than a land development opportunity, and income-producing real estate has different risks in comparison to an oil and gas opportunity.”

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ALTERNATIVE INSIGHTS / EXEMPT MARKETS

NEW NAME.

Mic

SEN POR

MANDATE? What’s in a name? In the case of the EMDA, an outmoded and potentially restrictive moniker. The association’s executive director explains

Geoff Ritchie

Earlier this year, the EMDA – The Exempt Market Dealers Association of Canada – underwent a rebranding that hints not only at the transformation of its investment space but the expanding interest of Canadians.

“The new name is the Private Capital Markets Association in Canada,” Geoff Ritchie, executive director, tells WP. “Our members have very strongly said they think the term ‘private capital’ better reflects our constituency and our mandate. It captures what our professionals do in the market. They do everything.”

In short, that’s everything outside the public markets and on the other side of a dividing line many advisors have been reluctant to step across. It also better aligns with the realities of the market.

“Increasingly our dealers and advisors are all moving towards the language of the private capital market in part because that’s certainly how the institutional side of the market uses that language,” says Ritchie. “But really the other problem that we have is that people consistently misunderstand or misrepresent the exempt market and often it leads

Gu

INV

them to the suggestion that the exempt market is less regulated or more lightly regulated than any other part of the market and unfortunately the regulators in choosing the term ‘exempt market’ kind of feed that.”

But those attitudes, particularly among Ontario’s sophisticated accredited investors, are starting to yield to more expansive thinking.

Ritchie’s association may have had a role in changing attitudes among investors and the advisors who serve them.

Since its conference last spring, the association has focused on changing the conversation and highlighting the positive role the private capital markets have played not only on capital markets but in in the economy.

“It’s not about moving away from “exempt markets” as a term,” says Ritchie, “but it’s about ensuring that people are focussed on what we’re really talking about and that is that there are segments that are overall capital markets and the private capital markets are incredibly large, particularly in Ontario, and in Western Canada.”

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MAN1

IS PLEASED TO WELCOME THIS DISTINGUISHED GROUP OF FOUNDING ADVISORS TO THE MANDEVILLE FAMILY!

Michael Prittie*

Duane Francis*

Robert Roby*

Geoffrey Charlton*

Blake Williams*

Paul Lee-Chin*

Paul Herd*

Jerry Santucci*

Guido I. Camaiani**

John Moir*

Sean Moir*

Alex Binko**

Peter Graceffa**

Frank Carobelli**

Tim Leonard**

Laura Fitzsimons**

SENIOR FINANCIAL ADVISOR AND PORTFOLIO MANAGER

INVESTMENT FUNDS ADVISOR

SENIOR FINANCIAL ADVISOR AND PORTFOLIO MANAGER

SENIOR INVESTMENT ADVISOR

INVESTMENT ADVISOR

INVESTMENT ADVISOR

INVESTMENT ADVISOR

INVESTMENT FUNDS ADVISOR

INVESTMENT ADVISOR

INVESTMENT FUNDS ADVISOR

INVESTMENT ADVISOR

INVESTMENT FUNDS ADVISOR

INVESTMENT ADVISOR

INVESTMENT FUNDS ADVISOR

SENIOR INVESTMENT ADVISOR

INVESTMENT FUNDS ADVISOR

DIFFERENTIATE YOURSELF AND RAISE YOUR PRACTICE TO A NEW STANDARD OF EXCELLENCE At Mandeville, our investment approach is based on the concept that since the needs of the affluent and institutional investor are the same as the retail investor, the portfolio profiles should be similar.

We therefore offer access to a full range of high quality investment solutions including: TRADITIONAL PUBLIC EQUITY + PUBLIC FIXED INCOME

AND

PRIVATE EQUITY AND ALTERNATIVE OFFERINGS

TO LEARN MORE ABOUT THE MANDEVILLE GROUP, PLEASE CONTACT ODED ORGIL, SVP, MANAGING DIRECTOR AT 905-331-4255 EXT. 7014

Mandeville Holdings Inc. is the parent company, of the Mandeville companies which includes Mandeville Private Client Inc., Mandeville Wealth Services Inc., Mandeville Insurance Services Inc. and Portland Investment Counsel Inc. The Mandeville group of companies is committed to providing clients with outstanding personal service and high quality products. Mandeville offers a differentiated approach to wealth creation by providing traditional investment products as well as private and alternative investment opportunities. Mandeville Private Client Inc. is a member of the Canadian Investor Protection Fund and a Member of the Investment Industry Regulatory Organization of Canada. Mandeville Wealth Services Inc. is a member of the Mutual Fund Dealers Association of Canada. *Registered with Mandeville Private Client Inc. **Registered with Mandeville Wealth Services Inc. WWW.MANDEVILLEINC.COM MAN14-001-E Wealth 35 Professional.indd 1 34_37-Attitudes.indd

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ALTERNATIVE INSIGHTS / EXEMPT MARKETS

A DIFFERENT

TACK?

Big players are making a move into the exempt market space, but advisors across the country have been slower to steer their clients in the same direction. That may be about to change, reports John Tenpenny

Trying to fit a square peg into a round hole – it’s an expression that used to come to mind for many advisors when discussing exempt market products and their suitability for even the most risk-tolerant of clients.

In speaking with advisors across the country regarding their current perceptions and their clients’ attitude towards exempt market opportunities, Wealth Professional is hearing much the same, with many actively ushering clients away from some opportunities.

“Having been an advisor for over 22 years,” says Rob McClelland of The McClelland Financial Group, a specialized distributor of Assante Wealth Management, in Thornhill, Ont. “I have learned to avoid exempt market investments. They don’t fit the profile for my average client.”

BIG PLAYERS, SHIFTING ATTITUDES But those attitudes may soften for a growing number of advisors, with the entrance of one big player. Sun Life Financial recently announced that it is planning a major expansion of its asset management business, aiming to sell the insurance firm’s private market and long-term investment expertise to pension funds.

The insurance giant’s executives see huge

potential, with managers of defined-benefit pension plans expected to seek more reliable ways to meet their promises to generations of retirees.

“We fully expect we’ll be managing billions of dollars on behalf of institutional clients,” Steve Peacher, Sun Life’s chief investment officer, told reporters at the time of the launch.

Private markets command a higher premium because they lack liquidity, but while many pension funds might seek out that kind of yield, they don’t have the size or staff to participate in private fixed income deals, Peacher explains.

In addition to a pooled, private fixed-income fund, Sun Life says it plans to launch a commercial mortgage fund and a Canadian real estate fund.

SAFETY FIRST While Rona Birenbaum, a financial planner with Caring for Clients in Toronto, says her investment dealership is licensed as an exempt market dealer and can make those products available to clients, she says the firm generally does not.

“On the whole, I tend to counsel clients away from those products, because they don’t generally offer the same type of protection to investors that a prospectus-issued offering would. There isn’t any sober second look by regulators.”

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One of the biggest issues with exempt market investments Birenbaum sees is a potential lack of liquidity.

“Even if they allow for monthly liquidity, in the case that there are a lot of investors in that product wanting to withdraw at the same time, there is a freeze on redemptions and it could take time for clients to actually get their money.

“I think the investment landscape is broad enough that the average investor can access everything they need without going to the exempt market.”

McClelland agrees. “My objective for portfolio management is to keep total costs low (between 1-2 per cent) all in and have complete liquidity. Neither of these requirements work well in the exempt world.”

He also thinks there is often a conflict of interest involved in many exempt market investments.

“Their sole purpose has been to make lots of money for the promoter and possibly the advisor – the client a distant third.”

Birenbaum agrees that there just isn’t the same degree of transparency with exempt market investments.

BIG RISK, OUT OF REACH That being said, there are investors who are interested in supporting venture capital in Canada, argues Birenbaum, and, generally speaking, there are those with a great deal of personal wealth participating in some of these opportunities, which are suitable for a very small percentage of Canadian investors.

“In my view, it is a very small market and I think an investor has to have a fairly high appetite for risk and a fairly large portfolio to make it a sensible thing to do,” she says.

Real estate-related exempt market opportunities are what she sees attracting some investors.

“Investors looking for yields that are higher than GICs, are seeing exempt products that have fixed-income characteristics where they pay a monthly distribution well above GIC rates, so they

are attracted to those products and enquiring about them.”

When it comes to individual investors, Birenbaum doesn’t see increased demand for exempt-market products, with the exception of this yield space, and that’s a reflection she says of perpetually low interest rates.

“Interest from what was traditionally the market for exempt products, which was the high net-worth market – I don’t see that growing.

“I think some of the larger institutions that are getting into the exempt market are launching products that are more hedge fund-like than they are traditional mutual fund or pooled funds structures.”

Birenbaum thinks those type of products are designed for the sophisticated investor and a lot of the problems that the exempt market has encountered have been a result, in her opinion, of the market not being as diligent about ensuring that investors fall into that sophisticated investor category and therefore there is often a mismatch between the investor and the product from a suitability standpoint.

“Part of that problem is with the guidelines and rules for who qualifies as ‘accredited investor,’” she says. “There are net worth and income requirements, for example, that are disregarded if you have a minimum investment of $150,000. And investing $150,000 doesn’t make you a sophisticated investor.”

STICKING WITH WHAT YOU KNOW What it comes down to for Birenbaum is that it is her job as a financial advisor to ensure her clients are fully informed of the associated risks of investment products, including exempt market products, which to some clients look attractive.

“The reality is that is if an investment is paying four times the GIC yield, there has got to be a whole lot more risk associated with that investment and that is something investors, at least when they are inquiring, don’t necessarily appreciate until we get into the nitty-gritty of product.”

IS YOUR CLIENT READY FOR THE EXEMPT MARKET? Three easy questions may reveal that answer 1) Does he want the P chance to make more money if it also means he may lose money?

2) Would he rather Omake less and keep his principal safe?

he need to be Oable3) toDoes get access to his money quickly?

(source: NEMA)

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ALTERNATIVE INSIGHTS / LIQUID

LIQUID HOUSES

Advisors are increasingly coming up against a hard truth: Clients whose net worth is overwhelmingly tied to their homes.

But there’s a new twist on turning bricks ‘n’ mortar into liquid assets, says Jeff Spencer, vice president of national sales for HomEquity Bank It’s a dilemma more and more clients are facing courtesy of a Canadian real estate market that continues to defy all odds and an average lifespan that does the same. But chalk it up to whatever else you want, a growing number of Canadians are now entering retirement as house-rich and relatively cash-poor. WP talks to a veteran of the financial planning industry about changing realities and changing mandates for advisors.

Wealth Professional: Advisors, certainly in the retail space, have clients who are essentially house rich and asset poor – outside of pensions and savings accounts, that is. How likely is this phenomenon to grow given the real and continuing growth we’ve seen in property prices?

Jeff Spencer: That phenomenon is, of course, dependent on the ability of our savings rates to increase. But should they remain at similar levels, this trend will continue and the average Canadian will, based on some of the data we’ve seen, have in

EATING MORE OF THE RETIREMENT PIE

excess of 75 per cent of their net worth tied up in their real estate.

WP: Traditionally, what are advisor perception or misperceptions about reverse mortgages?

JS: The first thing that often springs to mind for advisors when they consider reverse mortgages for their clients is likely that they think the rates are too high. That opinion is based on a time period that was prior to HomEquity becoming a bank and having more attractive pricing; the second perception out there is a misconception, namely, that reverse mortgages are only for those that have little or no investment assets; and the third is that reverse mortgages are for those that are late in retirement.

The reality is that with their clients living longer there is a greater need to ensure that there is sufficient income out to age 90 and real estate is a core asset that should be utilized with the same type of diversification and tax efficiency during retirement as was suggested pre-retirement.

Diversified Approach - Access home equity + other assets Other Assets

Traditional Approach - Only liquidate ‘other assets’ Other Assets

23%

23% Home Equity

77%

Home Equity

77%

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WP: How have those attitudes differed with the launch of the Income Advantage Solutions program?

JS: To date, we have been very well received by our banking, credit union and independent financial planning partners. It is still very early days for this new solution. The type of retirement planning we are suggesting is necessarily based on demographic trends and tax savings opportunities but we anticipate the trend to continue to be positive.

“The bottom line is financial planners educate clients on the importance of diversification pre-retirement. ”

WP: Why wouldn’t advisors recommend clients first look at taking equity out of their homes by traditional means, including HELOCs, refinancing and second mortgages?

JS: The primary purpose of this solution is to create more tax-efficient cash flow during retirement or to simply provide much-needed additional income to those that don’t have enough pensions or investments to fund their income needs. That being said, a traditional mortgage comes with the need to qualify and make payments. If you are using your real estate asset to create cash flow most would not be looking to make payments and for some it may also be difficult to qualify for a traditional mortgage depending on income sources. As it pertains to HELOCs, although attractive in price, they come with the same reliance on qualifying and making payments in some cases can be difficult to manage. More importantly it takes a very disciplined person to not access more than they intend from their available credit.

Our solution does not come with debit cards, cheques or online banking and that provides for a more-controlled and conservative approach to using real estate as part of a retirement plan. Too often an advisor sits with a client at review time and finds that they have deviated from the plan and spent more than originally planned and one of the easiest places to overspend is from the readily available access to credit provided by their HELOC. Additional benefits with our solution are that there are no credit reports taken, no income verification is needed and payments are of course not required.

money out of real estate in order to place it in equities or alternative investments of another kind?

JS: No we do not. This is not a leverage play. Clients simply get approved and start a monthly cash flow based on the time horizon outline in their retirement plan. Using real estate at the front end of a retirement plan will allow them to have a longer time horizon potentially with their existing investment portfolio, hopefully drop them down from a tax bracket perspective, maybe alleviate potential claw backs and have true diversification during retirement. We also think that it can potentially enhance the advisor’s ability to produce optimal levels of return for clients, assuming it fits their risk tolerance and the asset allocation is sustainable longer into retirement. The bottom line is financial planners educate clients on the importance of diversification pre-retirement.

We are simply putting a tool in the hands of financial planners that allows them to use that same advice.

WP: Investors are increasingly fixated on high-yield returns, but the value increases we’ve seen in some property markets are pretty hard for the TSX to beat.

Do you really anticipate clients will look to take

WP: It may sound crass, but what’s the comp. or finder’s fee for advisors?

JS: I would suggest that most advisors will not be focused on compensation for this offering, as they will be more concerned about creating better tax efficiency and diversification. However, we do offer a referral fee to advisors that is similar whether a client takes $500 a month or they borrow a lump sum for some other estate-planning need. We don’t want to put any advisors in a position where they would be influenced by compensation.

WP: How does it compare to the standard reverse mortgage, for example?

JS: The referral fee is less than a traditional reverse mortgage; however, it is competitive.

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INDUSTRY ANALYSIS / BIG DEALS

COOPERATIVE COMPETITION

The men at the top of Richardson GMP and Dundee Goodman Private Wealth are offering WP readers a behind-the-scenes look at the deal that took the independent channel by surprise.

Marking a new year, two of Canada’s top independent advisory firms – and direct competitors – made industry headlines.

Richardson GMP Ltd. (RGMP) and Dundee Goodman Private Wealth (DGPW) – a division of Dundee Securities Ltd. – announced in January that 60 financial advisors and their staff would jump ship.

The advisor acquisition is no small feat for DGPW. The team is worth a collective book of $2 billion, catapulting the firm’s portfolio value to more than $6 billion with 100 investment advisors located across Canada and beyond with global offices in Toronto, Montreal, Calgary, Vancouver, Ottawa Victoria, Dubai and London, U.K. In a candid Q&A with the firms’ top brass – RGMP President and CEO Andrew Marsh, DGPW’s Executive VP, CFO and COO Robert Sellars and Head of Retail John Cucchiella – WP finds out exactly what’s behind the deal, how these firms plan to work together, if at all, down the line and what they feel the future holds for independents in the wealth management sphere.

THE RIGHT STUFF Q: What does this deal mean for the industry?

Andrew Marsh: From an industry perspective I Andrew Marsh

think it means that, we believe – and my friends

at Dundee Goodman I know feel the same – that Canada needs to have more strong independents, that clients deserve more choice than just dealing with bank firms and the strength of an independent landscape is very important. So, this deal, I think, represents the importance of having strong independents in Canada.

Q: Why weren’t these advisors considered a good fit for Richardson GMP? AM: We have a model that Richardson GMP has been built on for the last 10 years, and it has always been focused on addressing the cost structure of a business, which is that scale is not just the number of bodies. We believe that scale is the most assets with the fewest and highest quality, most professional advisors. So, the people involved in this transition to Dundee are all really good people. They just didn’t meet our financial requirements for the disciplined model that we’ve had for building Richardson GMP.

Q: What made the advisors a good fit for Dundee Goodman Private Wealth?

Robert Sellars: We think they are a very good fit because we are not as focused on the size of book and we feel that these advisors can grow their

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books. Our average book was in that $100-million range before. We did have a certain number of advisors that were below that who we think are very good advisors, so we feel that acquiring these 60 advisors and $2 billion of AUM gives us some added scale to a platform that we are going to grow. We’ve met many of them and we feel that they’re a very good fit for the Dundee platform.

Q: What kind of books do they bring – feebased or traditional, commission-based books?

John Cucchiella: They are mixed assets because we’ve acquired approximately a billion dollars in AUM assets and approximately a billion dollars in transactional assets. So, the books are mixed.

They’re not all transactional. There’s a lot of feebased. There’s a lot of management and there is transactional business there.

Q: What does Dundee Goodman Private Wealth have to do to transition the advisors over?

RS: We are working with RGMP technology people and back-office people to work on a transfer of all the data and all the clients. We have a period where we need to have a certain amount of days pass for CRA to approve a change of trustees, at least 60 days. Then we have to work with the data providers to move that data.

So, that’s the bolts of getting the transfer done.

On top of that, John and I will be taking an across-the-country road show – we are halfway through it – to meet all these advisors to talk to them about Dundee. In the next 60 days, John will be on the road a lot to reconfirm our position with these people and get to know them better. That’s the human part of the transition.

JC: The benefit we have as well from this transition is that from the top of the house to my level, we all have good relationships with RGMP …. so it works out well for us.

Q: What percentage of the advisors moving to DPGW were previously with RGMP, but had moved over Macquarie?

AM: They were all part of the advisors that we acquired through Macquarie, so they were 100 per cent Macquarie advisors that are being transitioned over to Dundee. There are a handful of advisors that were previously with Richardson,

who are now with Macquarie, some of those are involved in this transfer and some are not. It’s just a handful in total, so maybe two or three teams.

Q: What are you looking for in terms of advisor retention at Richardson?

AM: Our efforts were to consolidate and retain over the last few months … and we are quite pleased with our progress. We have retained probably 95 per cent of what we thought we could. We have lost people along the way; no questions. But we are holding steady at $27 billion and the feeling I get is that advisors are either committing to this new company or they’re at least giving it a chance over the next 12 months to prove how good a firm we are. I will say retention has gone very well and results are better than expected.

INDUSTRY TALK Q: What is your reaction to hearing other industry players saying RGMP and DPGW are just shuffling advisors back and forth?

JC: Having the independents work like this and having the independents with the strength that they have like an RGMP and ourselves, this is a great opportunity for clients because it gives them choice. From an advisor’s perspective, advisors who are entrepreneurial and have a mindset of open architecture and creativity. Let’s call a spade a spade here. It’s a bit more difficult to do that under a bank structure. We can argue that point until the sun rises, but at the end of the day that’s the truth. By having two strong, or other independents that are strong and financially strong, it gives advisors a choice to be creative and it gives clients the ability to be part of an environment where if they too would like to be creative in the investments they choose to invest in, that, that opportunity exists for them.

Anatomy of the Deal

60

Number of advisors transferred

$2 B

Collective book value of the 60

100

Number of DGPW advisors, post-deal

$6 B

Collective DGPW book value, post-deal

AM: What we’ve done is sent a message internally and externally that we’ve got a disciplined business model that we’re not willing to compromise on. I can tell you the response from our partners internally here, have been remarkably positive. So, we think it’s quite meaningful for both parties.

John Cucchiella

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INDUSTRY ANALYSIS / BIG DEALS

ON THE HORIZON Q: How do you feel about the injection of advisors into banks vs. independent firms? Is the goal to have bank advisors move over to independents?

JC: Organically, we are not going try to stop that

Bob Sellars

train. We want to grow organically, as well, by individually selecting advisors to join us and obviously the biggest pool comes from the bank environment. So, will advisors from banks move to independents? I strongly believe they will, provided the independent firms are strong, provided they have a robust platform and that they are able to support it. Advisors at bank-owned firms are getting to a point, from my own intelligence and the research that we’ve done, where they feel restricted on the business that they are able to do. It just becomes another notch of one of those push factors. For us being strong, and being willing to support it, it gives them a choice to move. Do I believe that advisors from banks will move? Absolutely. Do I feel that there is an opportunity and support, and the ability to give these guys an environment where they can participate just as well as where they are currently? Yes.

AM: I’ve been at this building Richardson GMP from scratch for 10 years and we now have 222 advisory teams and 95 per cent of them came from bank firms. I think what’s going on is – and we expect to capitalize on it – the frustration with the bureaucracy with large companies is leading entrepreneurial advisors to look for an alternative that reminds them of the days when the investment industry was filled with independent boutiques. And that’s not so long ago. Maybe 25 years ago, there were the Wood Gundy’s, the McCleod Young Weirs, etc. And a lot of people remember those days as very positive cultures. I think a lot of bank advisors are going to start to say, where do I want to spend the next 10 years of my career?

And, they want to enjoy work. They want to be at a firm that supports them and how they want to grow their business. What we’re benefitting from just in the short time since our acquisition at $27 billion, is that we’re also recognizing that they’re concerned looking at the independent space. How do I make a move to a firm that may or may not make it? So for us at $27 billion, extremely well capitalized, and our friends at Dundee at $6 billion and also extremely well capitalized, (we) give them options. I think they

are all looking for something. They want to be part of a culture where they matter; where they’re not a tiny blade of grass in a great big field. I think that trend is going to be very strong as business conditions improve over the next number of years.

Q: Does this deal signal a more cooperative approach for independents like yourselves?

RS: I would say that we cooperated with RGMP, and RGMP cooperated, with us. RGMP started this whole process by senior executives contacting some of our senior executives. Negotiations on any deal have their ups and downs, but overall it was good teamwork between the two firms. But we are still going to be very competitive with each other on a go-forward basis. So, it’s not going to be a big co-op.

AM: I’m OK with competition. I hope it signals more respect for each other and I think it’s a sad thing that independents have been sniping at each other at the expense of each other at the end of the day because here we are at Richardson GMP after 10 years and we’ve got $28 billion in assets and we are miles ahead … It’s unfortunate that our industry has separated the banks from the independents and the independents have not been very friendly to each other. I think it will signal continued competition. I think that competition should be more healthy and respectful. Maybe even find opportunities to create platforms together, so that we can share efficiencies. And, I hope that is where this is taking us. Hopefully this is a transaction that signals that.

RS: I concur with what Andrew is saying there …

Andrew is probably right. We will look at some opportunities to work together in the future and strengthen the independents on the street.

AM: The beauty of being an independent firm, and I can see this in my friend over at Dundee Goodman, is that I hope it reminds people of the fantastic cultures that existed at boutique firms. In fact, the creativity to even do this deal is remarkable. This is an interesting transaction. I don’t think it’s ever been done before. I think it’s to the credit of two smart, entrepreneurial, nimble firms to get something like this done. That’s where I think ... the return of the boutique culture is something that I’d love to see.

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SOCIAL MEDIA / BLOGGING

BLOGGING FOR

BUSINESS

Advisors are more comfortable reading balance sheets than writing blogs, but the latter is increasingly key to generating organic leads on the Web, writes industry expert Maggie Crowley

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A great website isn’t really that great if no one visits and uses it. One key indicator of performance is the amount of traffic and engagement it receives. I get a lot of questions from advisors asking how to create a website that really maximizes its potential.

My answer? Blogging. One of the most effective (and economical) ways to increase the number of people visiting and using your website is through financial blogging.

On average, we know that about 90 per cent of the traffic an advisor’s website receives can be broken down into two groups: prospective clients who visit your site to learn more about your firm and your services and; existing clients who want to access their account information and get updates on your firm. From a web marketing perspective, your website can—and should—cater to both of these groups.

A blog gives you the ability to maintain client relationships while answering questions and nurturing prospective clients. Just to be clear, here’s a quick definition of what a blog really is according to Oxford Dictionaries: ‘A personal website or web page on which an individual records opinions, links to other sites., etc. on a regular basis.’

Simply put, a blog is a section of any website that’s updated with valuable information on a regular basis. The most successful financial blogs offer a variety of content (articles, video clips, images, infographics, white papers, etc.) that is targeted towards a specific audience.

Maintaining a financial blog requires the time and effort necessary to publish original content, but the rewards of blogging offer advisors a pretty hefty return on the investment. From a marketing perspective there are two primary benefits.

The first and, arguably most important, reward of blogging is all about search engine optimization.

By now, you’ve probably heard of the term (SEO) – at its core, SEO is the process of improving the visibility of a website in a search engine’s results.

The earlier and more frequently a site appears in the search results list, the more visitors it will receive from the search engine’s users.

SEO isn’t that big of a deal until you consider the number of Canadians who turn to Google for help when making a buying decision. Director of Google

Canada Chris O’Neill pegs that number at upwards of 86 per cent. Canadians seeking a new financial advisor begin looking for more information online first.

Search engines such as Google really love the fresh and original content that is published on a blog, websites with a blog regularly rank higher on a search results page. What does that mean for you as an advisor? Basically, blogging is a great tool to help the people who are looking for you online (ie, potential clients) find you.

Besides the technical side of SEO and creating fresh content for your website, blogging allows financial advisors to connect with their clients and prospects and build a unique rapport that is incredibly cost- and time efficient. Financial blogging provides a platform for you to position yourself as an expert in the industry.

Picture this scenario: an advisor who specializes in creating retirement plans publishes a blog article entitled, ‘Six steps to a worry-free retirement.’ A well-crafted, informative article will answer reader’s retirement questions and, the advisor who authored this post automatically becomes an expert in the eyes of the reader.

The impact on website traffic is remarkable for financial advisors who blog. According to Hubspot, companies that blog receive 55 per cent more website visitors. The results don’t stop there; Hubspot also reports that 57 per cent of those companies have acquired actual paying clients from their blog.

WHERE DO ADVISORS GET CUSTOMERS?

Q. Has your company ever acquired a customer using a lead from the following sources? (*graph illustrates ‘Yes’ responses) 80% 70% 60%

Banking/financial advice services

50%

Marketing agency

40%

Other professional consultants

30% 20% 10% 0%

Facebook

LinkedIn

Blog

Twitter

Google+

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SOCIAL MEDIA / BLOGGING

Maggie Crowley is the Vancouver-based marketing coordinator for AdvisorWebsites.com, a global leader in website software for financial services. She educates industry professionals on how to maximize the potential of a strong web presence.

Although the benefits are tangible, the majority of advisors have yet to take advantage of a financial blog. Last year, Advisor Websites ran a poll with WealthManagement.com and asked questions about financial web marketing. The results reveal a huge opportunity: Only 5 per cent of financial advisors are blogging for business.

Ready to get started with you financial blog?

Based on trial and error from my own blogging experience, here are four ideas to make sure every piece of content you publish on your blog is successful:

IRRESISTIBLE TITLE There is a saying that those who write for an online audience should spend 10 per cent of their time writing the body of an article and 90 per cent of their time creating the perfect, irresistible title.

While I don’t necessarily agree with that theory (if the title is that great, surely readers will be disappointed with the actual writing, right?), it does get the point across: the title is important.

A few tips for creating an irresistible title: • Use action words • Explain what the article is about • Know your audience

CREATE QUALITY CONTENT Quality content is 100 per cent based around your audience. Write with your readers in mind. Get into the mind of your readers: what are their problems, what do they do for fun, what’s interesting to them, and mostly, how can you help?

As an advisor, use your blog to share your knowledge and expertise. The Internet provides a world of opportunity to present yourself as

a thought leader in the financial planning community. Use this to your benefit by explaining current events or answering frequently asked questions.

BE REAL Online readers generally appreciate not being sold to. Be real, speak from the heart and don’t be afraid to show flaws. Another tip? Instead of talking about your audience, talk to them. The easiest way to do this is to use words such as “you, we, and me.”

If you treat writing more like a conversation than a textbook, readers are more likely to enjoy the experience. And actually read it.

SHARE ON SOCIAL Don’t assume that your ideal target audience is reading your blog just because you are publishing awesome blog content. First, you need to let them know that your blog exists. Don’t be shy about spreading the word – especially if your blog is new.

By using a tool like Hootsuite, you can streamline your social media efforts. Hootsuite offers a free service that allows advisors to create and schedule social media posts in advance.

MEASURE YOUR SUCCESS Measuring the number of views your blog receives can be really insightful. Here’s the simple truth: Tracking the performance of your financial blog is vital to identifying whether it’s actually doing its job of generating traffic to your website. If not, then you know it’s time to make some changes.

Two of the most important metrics that determine the success of your blog are individual post views and traffic sources.

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21/10/20136:23:35 2:17:11 PM 25/02/2014 AM

BUSINESS STRATEGY / TIME MANAGEMENT

TIME MANAGEMENT:

ARE YOU A TIME SAVER OR A TIME SPENDER?

Do you feel like there is simply never enough time in the day to get your business firing on all cylinders? Your personal time management beliefs may well be contributing to your productivity downfall, but a change in mindset can do wonders for business as well as your stress levels, argues Nikki Heald Do you ever wish you had more hours in the day?

Do you find yourself stressed, anxious and a little overwhelmed when tasks are incomplete? Well, if you think it’s getting harder and harder to manage your time, you’re certainly not alone. More and more professionals are complaining about the pressure on their time and that their workload appears to be increasing.

We each have 24 hours in our day, so why is it that some people breeze seamlessly through their tasks and others struggle with time?

Time management is really about managing yourself. While we can’t control the number of hours in our day, we can control the way we work. Interestingly, your personal time management beliefs may well be contributing to your productivity downfall. Are you convincing yourself that there is not enough time? Do you refrain from delegating because it’s easier to do it yourself? Are you in the habit of always saying yes to others? Do you believe that multitasking makes you more efficient?

First, in order to make positive time management changes, it’s important to develop the mindset that your time is valuable. In other words, recognize the importance of what you do and decide what deserves

your energy. The essence of working effectively is firstly knowing what to do, and secondly just doing it.

TRIVIAL INTRUSIONS While these may appear to be very simple steps at first glance, with so many distractions and interruptions in the workplace, it’s easy to lose focus.

Research has demonstrated that about 2.1 hours per day is wasted on trivial intrusions. These time wasters destroy any attempt at effective time management if they are not identified and eliminated. Some interruptions, of course, are necessary and cannot be avoided, but many are just needless annoyances.

Think about your working day and consider all of the inconsequential disturbances that may occur.

Some of the biggest time wasters include checking Facebook, texting, social chit-chat, smoking breaks, IT issues, humorous emails, feeling tired, personal phone calls, questions from colleagues and notifications. It’s easy to see just how quickly 2.1 hours can accumulate.

Additionally, a lot of time may be spent on low payoff activities, rather than high payoff activities.

Our high payoff activities are those that bring us maximum return. Essentially, they are tasks or actions

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TOP 10

TIME MANAGEMENT TIPS

that are the most significant. High payoffs are duties that are generally aligned with our key performance indicators (KPIs) or targets, or form part of our job description.

Low payoff activities are those activities that, in reality, don’t significantly impact results or the bottom line. And yet it’s often these tasks that get the majority of our attention. Why? Well, first off, they often require minimal effort and can be done quickly. This provides us with instant gratification – we feel as though we’ve been busy. Additionally, because they are easier, they may be more pleasant and enjoyable to complete than high payoff tasks.

IDENTIFY AND ELIMINATE High payoff activities will vary from person to person, job to job. A low payoff for one individual may well be a high payoff for another. Either way, it’s vital you have a clear understanding of what your high payoffs are. That way, you can ensure that maximum time is devoted to these.

In theory and ideally, we should be aiming to work on high payoffs for around 70–80 per cent of our working week. Unfortunately, research has demonstrated that realistically only about 40 per cent of our working week is actually spent on them.

The trick is to identify your low payoffs and, once you’ve done so, consider ways to remove or eliminate them. Not everything has to be done by you. Create a list outlining low payoff tasks in one column and high payoffs in the other. Doing this will provide clarity about where the majority of your time is being depleted, and allow you to recognize where your time should be invested.

Learning to manage your time wisely not only improves productivity but also has important health benefits. When we feel more in control of our workload it’s only natural we are likely to feel less stress. How many times have you taken work home or logged on remotely late at night? If you find yourself doing this consistently, it’s important to recognize the toll on your health, well-being and ability to relax. See Top 10 Time Management Tips’ at (right), for advice that may assist you in increasing efficiency and managing your day better.

Remember, good time management is about managing yourself. We all have the same amount of time, but what we do with it and how we use it will determine whether or not we are successful. Happy planning!

1. Take time to plan your day either first thing in the morning or in the afternoon before you leave work. Create a to-do list or a system that you can refer to. Invest planning time to save working time.

2. Diarize and allocate specific times to attend

to certain tasks. Be sure to set time limits and stick to them. Utilize your most productive time.

3. Consider the 4 Ds of time management:

Do it – Only if it takes less than two minutes to complete Delegate it – Many low payoff tasks can be delegated. Ensure the person you delegate to has the required competency or skills Dump it – Trivial or meaningless information or emails that are not required Diarize – Non-urgent tasks can be diarized to be done in the future

4. Keep track of time spent on low payoff

and high payoff activities. Try to keep a schedule for the week.

5. Batch or chunk similar work, such as

processing or filing. This ensures you are in the headspace of doing repetitive work, and it promotes efficiency.

6. Avoid the urge to multitask Research has

demonstrated that multitasking slows you down and increases the likelihood of error.

7. Allocate contingency or buffer time in

between tasks. This will allow for unexpected interruptions and distractions.

8. Plan for periods of relaxation, and try not to be a workaholic. Ensure you take your lunch break – resting improves focus and attention.

9. Don’t always be a ‘yes’ person. Saying yes

to others will certainly increase your popularity, however it will impact negatively on your personal productivity. Learn to say no nicely.

10. Finally, resist the urge to check your inbox constantly – some things can wait and don’t require your immediate attention.

TOP TIP Think about when you are at your most productive, and then plan important tasks for this time.

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How to deliver

EXCEPTIONAL SERVICE SERVICE It’s the little things you do that create a great client experience, explains Nikki Heald Often we’re so intent on making the sale that we have a transactional view of our clients rather than taking time to build relationships or demonstrate service excellence. We use them (to increase our profits), abuse them (by giving them inferior service), and then treat them like a one-night stand— attentive today, neglectful tomorrow!

Sounds silly? Well, complaints such as ‘you never call’, ‘you’re always too busy,’ and ‘why were you late?’ are legitimate gripes made by disgruntled clients. In today’s competitive market,

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DID YOU KNOW?

6–7

It’s times more expensive to gain a new client than it is to retain an existing one

It’s not safe to work on the premise of ‘no news is good news.’ Chances are, if your client is not happy they’ll walk, and won’t even forewarn you of their departure

client service expectations have increased. Clients are savvy, realize they have a multitude of choices, and expect to be treated exceptionally by their insurance brokers.

So what is exceptional service? Exceptional client service is about going beyond what is realistically expected of you. It’s about surprising and often delighting clients, turning them into enthusiastic referral sources who will stick with you not only because you do great work but also because of the value you bring. Imagine, if you could get existing clients to tell others about how wonderful you are. It would certainly save on all of those marketing and networking costs.

Great service is not about just doing your job, it’s also about establishing connections on an emotional level. It’s about adding value and finding ways to be unique. Interestingly, research suggests that emotion influences purchasing decisions six times as often as rationale. Think about it: when something makes us feel good, we are more inclined to buy.

Unfortunately, many businesses believe that delivering standout service will cost them too much in staff time, training and developing service standards and procedures. These in-focused organizations are only concerned with company profit and cutting costs, and little thought is given to how to make clients happy. Additionally, staff recognition and retention are low, which can also impact significantly on growth and profit.

When you think about it realistically, bad service is actually more costly to your firm than great service. Bad service creates more than just a negative customer experience — it reduces revenue and drives up costs. It damages public perception, credibility and market reputation. As we all know, a dissatisfied client is more likely to spread the word

93%

of customers indicated that quality customer service was vital to maintaining brand loyalty

about a poor service experience than a positive one.

Providing exceptional service is not overly difficult, and it’s important to recognize that even little things count with clients. So what are some simple things you can do to ensure your service is exceptional?

1

RESPOND AS SOON AS YOU CAN

Speed is everything, so try to reply to your clients as soon as you can and keep them in the loop about your progress. Procrastination doesn’t help anyone, and you’re going to have to respond sooner or later— may as well do it now.

2

LISTEN TO YOUR CLIENTS

Avoid speaking, and really listen to what they’re saying. It’s important you understand what your clients are communicating to you. That way you will be able to meet their needs successfully and provide the correct product or coverage.

Exceptional client service is about going beyond what is realistically expected of you. It’s about surprising and delighting clients, turning them into enthusiastic referral sources

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FEATURE / BUSINESS STRATEGY

If you say you’re going to do something, then make sure you do it.

It enhances your professionalism and personal brand, and demonstrates that you value your client SERVICE EVALUATION What systems do you have in place to determine whether your clients are happy? Try to gather feedback — but remember, feedback is only useful when acted upon

3

KEEP PROMISES

One of the biggest gripes in business today is that people simply don’t do what they say they are going to do. If you say you’re going to do something, then make sure you do it. It enhances your professionalism and personal brand, and demonstrates that you value your client.

4

KNOW YOUR STUFF

The perception of your client is that you are the paid expert. That’s why they have come to you. So it is imperative that you keep yourself up to date and top of the game within your profession. Be ready to

DELIVERING EXCEPTIONAL SERVICE  Lower cost to manage and service client base = higher profits  Increased client loyalty raises revenue, lowers marketing fees  Increased staff loyalty = better service culture

answer client questions. Unfortunately, if you convey a lack of knowledge, then you risk ruining your credibility.

5

GIVE A LITTLE

If a client asks you to do something that really won’t cost you a lot in time or money, then treat it as an opportunity to go the extra mile.

By doing so, you will not only have a contented and indebted client but someone who is more than happy to refer others to you.

6

USE YOUR KNOWLEDGE

Once you’ve built an emotional connection with your client, you will have figured out how they prefer to communicate. Some clients are not detail driven and won’t require excessive information. On the other hand, some prefer to know every step of the process. Learn to gauge your client’s preferences and use this knowledge appropriately in the service experience.

Finally, within financial planning, it goes without saying that advisors really should view their book of clients as their most valuable asset and take good care of them. More than that, they should take the time to develop longlasting relationships by keeping in touch regularly, both in good times and bad.

It’s not sufficient to wait for that annual review to contact your client; instead, the communication should be ongoing.

Remember, you’re not just selling a product but providing expert advice that can significantly impact on people’s livelihood. So, if you haven’t given much thought to your service levels, then perhaps it’s time to conduct a self-audit.

Remember, if you don’t make the client feel valued, respected and important, your competitors will.

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JANUARY 2014 | 53

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FEATURE / BUSINESS STRATEGY

BUILD THE ULTIMATE SAFETY NET

Strategic networks are built on relationships, but what type of networker are you? Julia Palmer explains how all advisors can strengthen the connections absolutely essential to building a book

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Nearly every person I have trained to network throughout the years has shared the sentiment that they dislike networking.

There is no escaping the fact that the word “networking” has a dirty connotation in business. In my opinion, this is because most people have been taught the wrong way to network or not been taught period.

It is an expectation of each role in some capacity or another, but unfortunately most people fear, dread, or simply avoid it. Worse still are those who feel forced to network and put on a different persona to help them cope, making them quite awkward or turning them into fake versions of themselves — never nice to meet.

The financial services industry is one of the most networked, but the last few years have seen the gaps widen and the pressure increase. Having worked closely with some of the market’s biggest banks, insurers, mortgage originators and financial planners, I know only too well how vital relationships are to

By taking a look at how you network and by making changes to be more strategic, you can increase your influence and operate in stronger networks

success. The good news is that by taking a look at how you network and making changes to be more strategic, you can increase your influence and operate in stronger networks.

There is no doubt that the global financial crisis permanently altered the business environment that we work in, and the rate of change in organizations is only going to increase. With this in mind, I hope to help shine some positive light on networking and consequently the networks we produce, with a view to helping individuals and organizations get better returns from both.

Apply your networking strategy to all your relationships — organizational, industry, suppliers, stakeholders, clients, community and, of course, personal.

MODERN-DAY NETWORKING DEFINED Networking has a somewhat bad reputation, mostly due to how it is undertaken. But this view is changing as people realize the power that lies in having strategic connections that align with their business and personal goals.

Let’s define strategic networking by outlining what it’s NOT:  It’s not just having 500+ friends on a social networking site  It’s not getting as many business cards as you can at a social or business gathering  It’s not about knowing lots of people and wanting to have coffee with all of them  It’s not simply wining and dining clients or prospects through expensive hospitality It IS about:  Planning and establishing key connections  Knowing the right people, and knowing them well  Building a set of quality, two-way relationships — and not simply collecting a large quantity of connections  Becoming a trusted ally of your connections and becoming a hub — the “go-to” person in a network

ARE YOU AND YOUR ORGANIZATION RELATIONSHIP FOCUSED? The highest performing companies worldwide are differentiated by their ability to attract, leverage and retain relationships. Networks are more than just your customers; attention must also be given to MARCH 2014 | 55

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FEATURE / BUSINESS STRATEGY

WHAT TYPE OF NETWORKER ARE YOU?

STRATEGIC

This group is the rare few who have invested in two-way reciprocal relationships.

Influence, visibility and communication is strong.

INVOLVED

This group is active and often has quite big networks. They can lack focus, which impacts the quality and outcomes from their network.

shareholders, partners, industry, the community, and employees. However, research has shown that 75 per cent of business people find their existing networks do not support the results they need, and 99 per cent would like specific training on networking and network management.

The questions to consider are:  Is there a gap between your intention and how you are perceived in your relationships?  How conscious or deliberate are you at creating a network that is aligned to your role?  How conscious or deliberate are you at managing a network so that it benefits you and those in it?

Networks are powerful and relationships are important. Combine these two things with thought to the future and you have strategic networks — a strong set of relationships that can deliver mutual value to those involved. Built and maintained with care, strategic networks can then go to the next level, allowing you potentially to leverage the power of other people’s networks.

WHAT TYPE OF NETWORKER ARE YOU? Given that we all network in some capacity, it pays to look at how you do this and if it is working.

Unfortunately, many people have been taught the wrong skills and may spend a considerable amount of time and effort with no return. On the flip side, we all know someone who is a born networker as well.

Start by identifying where you fit and then look at the steps you can take to improve (see “What type of networker are you?” above).

??

ACCIDENTAL

MISGUIDED

This group doesn’t really think too much about networking but may be in the right place at the right time, so get occasional rewards from it.

This group exhibits incorrect skills, and often they are detrimental to relationship building.

They are card collectors.

BENEFITS OF A STRATEGIC NETWORK There is a growing body of research that correlates the importance of relationships with business outcomes. Let’s face it, every time you interact with someone (potentially new or existing in your network) you can either build or lose credibility.

The approach you take directly impacts the quality of the networks at your disposal.  A strategic network will give you access to people with knowledge and authority. As you build relationships with these people, you will build your own knowledge and also gain authority by association.  A strategic network will deliver you introductions, referrals and endorsements that will lift you above the commodity debate. But you’ll need to deliver real value.  A strategic network will help build your personal brand and allow you to be introduced as an authority, someone who delivers on commitments, someone worthy of doing business with.

In today’s ever-changing world, this is the best insurance against the winds of change that any individual can invest in. Your very livelihood depends not only on what you know, but also who you know, who knows you, and, even more importantly, who is promoting you.

Julia Palmer is a respected networking strategist who provides training to create and manage networks that work.

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SPECIAL PROMOTIONAL FEATURE / FUNDSERV

CONNECTING A DIVIDED INDUSTRY FundSERV Inc. facilitates the administration of client accounts through its fund transaction system, but more than that, it’s getting industry competitors to talk to each other

Uniting an often-divided industry, FundSERV, Inc. offers dealers and their advisors a comprehensive fund transaction platform to help create, adjust and access client accounts.

Product innovation is driven by feedback from industry players – competitors who sit across from each other and discuss how their needs could be better served. It’s an effort FundSERV prides itself on and that differentiates it from others in the industry.

FundSERV CEO and President Robert Smuk gets candid with WP, sharing the history and vision for the product as his team strives to keep costs and risks low, while reducing the time spent on gritty tasks that inevitably come with a more strictly regulated industry.

INDUSTRY IMPACT

WP: How has FundSERV impacted the investment services industry across its two-decade span?

Robert Smuk: What FundSERV was really created to do was reduce time, cost and risk from the industry.

The premise of FundSERV was to connect the distribution side of the industry to the manufacturing side of the fund industry with, for the lack of a better term, a common language. What we’ve been able to do is accomplish that in a very cost effective manner.

So, instead of every distributor having to connect into every fund manager, and for all of those entities figuring out how they are going to talk to each other, we’ve done it by being that central translation group to make the communication flow very effectively.

The proof is in the pudding. In 2013, we had over 36-million transactions flow through FundSERV with a net settlement north of a $100 billion, and that was a record year. If you look year-over-year really

since the creation of FundSERV, almost every year, we are breaking the record of the previous year. That’s not us doing the selling, that’s just the industry seeing the cost-effective way that FundSERV works and leveraging it.

WP: How has FundSERV evolved with the industry shift that have taken place over time?

RS: In over 20 years, everything has changed. The type of products, the regulation, the technology, it’s all changed, and it’s changed many times. What I think is really intriguing here is that FundSERV can’t make a change by itself because we impact the entire industry. So, when a change happens, the entire industry is in lock-step. It’s really a flexible community.

We all have to be flexible. Sometimes one of the changes is going to benefit one of your competitors more than it’s going to benefit you but we have to accept that knowing that sometimes we will have greater gains.

The most intriguing aspect of FundSERV for me is that we have committees and that’s where we take a lot of our direction from. Our committees are heated competitors that sit across the table from each other and work with us to create a solution that is the most efficient for the industry. They take their hats off from their individual firms at the door and say how can we make this industry more efficient? I’m sure they walk out the door and immediately try to compete with each other, but at least they don’t do it on the 17th floor of the Exchange Tower.

WP: How does FundSERV differentiate itself from competitors?

RS: We really don’t look to compete with

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other industry service providers. We try to create industry-wide solutions that can benefit the entire ecosystem, whether that’s distributors, fund manufacturers, or transfer agents. I would say that that is our premise; to not compete. If we do around the edges have a product that other organizations are also trying to sell, I’d say our relationship with the industry would be the strongest, and second, we do work on a cost-recovery basis. So at the end of the year, we rebate any excess back to the industry based on usage. Let’s say, for example, that we brought in $100, and we only used $80 for all the expenses, there would be an additional $20 that we rebate the back to the industry.

PRODUCT DIFFERENTIATION

WP: Based on the industry feedback to FUNDcom, how does the current version differ from previous versions?

RS: It’s the usability and the mobility. The main thing

“The main thing we’re hearing from the advisors is make it easier, make it better and make it mobile. ” manufacturer to the dealer and the advisor, so that they can have the full conversation with the end investor. As we worked with the industry, we saw that we could facilitate that through FundSERV. So to make sure that it was there in advance of the changes, the industry has agreed to implement it as part of our electronic standards release in September 2014.

WP: How is FundSERV ensuring that the needs of advisors come first, and what are you doing to address these needs for their day-to-day businesses?

RS: This would be one of the biggest shifts in

we’re hearing from the advisors is “make it easier, make it better and make it mobile.” You’re able to store your favourite searches and consolidate the views of the fund companies. That’s kind of basic, but that’s where it wasn’t, so that’s where we needed to move it to. The future is duplicate tax receipts and duplicate statements. We know that the advisors would love to see matured units, and that’s where we really need to be, at the centre point of the industry, to make sure that the entire industry sees the value. There has to be work done, there has to be development and technology costs from the fund manufacturers to be able to allow all of this to occur.

And so, what we want to be able to do is that, that there is a great deal of value in being able to spend some money to get that information out to the advisors. It will really improve the advisor-andclient experience. That’s what we’re looking at here with any of the solutions on FUNDcom.

FundSERV in the last year. We’re trying to expand our ecosystem to include everyone who’s a part of the fund industry. We really think that FundSERV has the ability to help the advisor improve the ease of doing business. We’re at a point right now where there’s a huge amount to learn and … we’re starting to get the discussion and dialogue going with the advisors. The proof point of this is that we’re just re-launching the redevelopment of our advisor portal, FUNDcom. We have an agreement from the dealer head offices to meet with some of their advisors to understand what they like and don’t like through the needs analysis so we can improve the tool for usability, look and feel. We have just handed it over to the pilot group, which can start to leverage it, use it and give us feedback.

MOVING WITH THE TIMES

RS: In a lot of cases, it’s very similar. We have the

manufacturer and distributor need to exchange data it affects us. One of the examples coming up in the next year-and-half is account-level service fees.

That is the information passed from the funds

exchange of data coming from their organization back and forth to fund manufacturers, so that’s really what we help streamline. What we ensure is that we have employees from both MFDA and IIROC firms on our committees. We want to make sure that both groups are well-established within the FundSERV ecosystem. We’ve actually increased our relationship management team to make sure that we do get more face time out with all of the participants of IIROC and MFDA.

WP: The industry is currently in a state of flux, with stricter regulation waiting in the wings. How will new regulation, such as CRM, affect how FundSERV does business?

RS: Any time that there is a change in the way the

Robert Smuk

WP: How does FundSERV serve the needs of IIROC and MFDA members differently, if at all?

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ADVISOR-TO-ADVISOR ADVICE / RRSPS

INS AND OUTS OF THE RRSP

Client resolve around RRSP contributions isn’t what it should be, but Sun Life’s Shelby Kramp-Neuman shares tips and tactics for winning commitment from even the most errant of clients

Advisors can, and often do, talk to till they’re blue in the face about RRSPs and their suitability for almost every Canadian – from the novice investor and young family to the pre-retirement baby boomer.

But Shelby Kramp-Neuman, an advisor with Sun Life Financial, says it’s not necessarily a matter of making your clients believe in the RRSP. After all, 36 per cent of Canadians make contributions, according to a 2013 Sun Life survey.

“RRSPs were created back in 1957 … to address the needs of Canadians who didn’t have that formal pension plan to save for retirement. Since then the RRSPs have become the number one individual platform to enhance a client’s retirement income with hundreds of billions of dollars that can accumulate,” says Kramp-Neuman.

“Personally, I’d be hard-pressed to find something that’s better for most people.”

THE HOOK Kramp-Neuman identifies key benefits to the RRSP, beyond the tax breaks, including deferred growth and income-splitting features, or the homebuyers’, life-long learning or the physically/mentally-

challenged family plans. “There’s a huge mass appeal and there’s accessibility to it.”

She believes that any resistance from clients links to a misperception, lack of understanding or a general gap in financial literacy. A collaborative approach, where the client’s needs are fully assessed and the role of the RRSP is adequately explained, can help seal the deal and move your client’s financial plan along.

“Rather than convincing the clients, I believe in engaging the clients in a collaborative type of fashion,” she says. “Naturally every client is different, but ultimately we all operate in the same financial environment. If there is a full understanding of the client’s values and intentions then it’s a lot easier to position. You have to look at the big picture.”

OUT OF LEFT FIELD So, you’ve hooked the client and now two years later they come back to you insisting that they need to withdraw a large sum of money from the RRSP to finance a family emergency, or better yet, on the advice of their neighbour, they’ve decided they want to embark on a new course in saving for retirement.

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What do you do?

In the former scenario, Kramp-Neuman recommends discussing all the alternative options with a client before pulling out that last straw – processing the withdrawal. Explain that the lower the income – typical in one’s retirement years – the better the tax breaks, and offer up other payment options such as a low-interest line of credit.

“It happens often. It’s a reality … I’m not going to persuade a client, but my role and my responsibility is to give the client as many different options to consider” she says. “If they are going to pull it out, I recognize that life happens, but once the transaction goes through, I’m going to work with them to get them back on track.”

What happens when a client wants to change course? Kramp-Neuman recommends striving for a balanced approach to help re-establish the client’s motivations without compromising their retirement savings goals. For example, focusing solely on paying down a mortgage – though ideal from a mathematical point of view – may not make the most pragmatic sense longer term.

“Switching gears is often attributed to one of the three Ds – Divorce, Disease or Disability. It’s happening more often than we’d like to think,” she says. “Assuming it’s one of those things, you have to respect where the client is coming from and you have to reset the balance in life.”

BALANCING ACT Expanding upon the balanced approach, KrampNeuman says a client should have several investment/ savings strategies to plug into as they move through different life stages. Five or six is ideal, she says.

Realistic? On the other hand, probably not. That’s why working with a client, long-term is essential to build on the financial plan as the years go by.

“What I do for the first five years, I might complement in year six and year seven because you can’t do everything right away. Rome wasn’t built in a day,” she says. “When you plan for retirements you don’t’ plan over a month, you plan over a decade …

You can’t make quick decisions.”

Having said this, Kramp-Neuman admits that there is no right or wrong answer when choosing an avenue – be it an RRSP, TFSA, RESP, critical illness policy or a non-registered account. It depends on the individual client’s needs and the stage they are at in life.

“If there is a full understanding of the client’s values and intentions then it’s a lot easier to position. You have to look at the big picture.”

BEYOND ADVICE Client’s needs extend beyond just the product selected or investment strategy defined. What about their morale and long-term outlook? According to the same Sun Life survey, 56 per cent of Canadians felt they were not any better off financially in 2013 than they were the year before. Meanwhile, we are living twice as long as they were 150 years ago, and requiring far more in retirement savings.

Wherein does the advisor’s commitment to the client lie?

According to Kramp-Neuman, advisors are in the business to make a difference in people’s lives. They have a duty and obligation to help a client see beyond the limitations, find immediate solutions and work towards longer-term goals. The quick transaction, she says, just isn’t good enough.

“It’s a relationship you want to form with the client right from day one … mediocrity in my mind is intolerable,” she says “It’s up to the advisor to raise the bar and act in an ethical way.”

DOWN THE LINE As for Canadian sentiment, Kramp-Neuman believes high expectations (i.e. the instant gratification syndrome), burdening debt, low interest rates, wavering government support and a lack of financial literacy all contribute to a high-pressure environment where guidance from financial advisors is needed more than ever.

“There is concern; there’s no question. But it’s again the responsibility of advisors to get it out there, because they (clients) are not going to walk through the door and say help,” she says. “But as much as the advisor needs to take responsibility, Canadians need to step up to the plate.

“We need to remind Canadians that we are here to help them, but especially younger Canadians need to take responsibility because it is not going to be handed to them.”

Shelby Kramp-Neuman

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LIFESTYLE / DAY IN THE LIFE

“I focus on starting each day on a happy note whether that be through listening to something uplifting, an inspirational reading or positive thinking.”

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Day in the life of...

Kevin Cahill, founder, Canadian Legacy Builder, Guelph, Ont. 5:55 a.m. I make the effort to wake up each day at the same time. After hitting the snooze button once, and once my eyes have opened, I get out of bed. With my first cup of coffee, I focus on starting each day on a happy note whether that be through listening to something uplifting, an inspirational reading or positive thinking. Before getting ready for the day I will look at my to-do list and visualize easily accomplishing the tasks ahead of me. After cleaning out my inbox and commenting on any relevant news items, I am in the shower to get ready to leave around 6:45 a.m. for my 7 o’clock breakfast meeting.

7:00 a.m. I have a business networking meeting at the Delta Hotel and Conference Centre here in Guelph until about 8:30. This is an opportunity for me to connect with my centres of influence as well friends and colleagues. We chat about what we’re up to and we help each other build our businesses.

9:00 a.m. I get to the office. The first hour of the day is dedicated to catching up on emails and important to-dos to start the day. As well, I manage the Google alerts that I set up, my Twitter feed and anything else that needs catching up on.

10:00 a.m. I have my first coffee meeting of the day.

The majority of my meetings are done over beverages or food, with the closest café being the Starberry Café.

11:00-11:30 a.m. This is what I call my ‘defrag and reboot’ time. I find that a lot of the emails I sent in the first hour of the day are now back in my Blackberry, so it gives me a half-hour to sift through them and delete whatever needs to be deleted.

12:00 noon Generally, there is a lunch meeting with a prospective client or centre of influence. I have many go-to spots, with my favourite being a place next to my office called Baker Street Station. There

I can almost guarantee that every day I will have the exact same thing for lunch – their tofu and quinoa salad.

1:30 p.m. I get back to the office again, and this time is generally dedicated to phone calls, emails, contacting my top 20 clients and my farm club to either set up appointments or touch base with them.

3:00-5:00 p.m. I take my personal break of the day.

I either jump on the elliptical for 20 minutes or play tennis or golf. The golf club that I belong to has an indoor golf facility as well as a tennis dome, so it allows me to stay active during the wintertime.

5:00-8:00 p.m. I pick up my son from daycare, and the next three hours are dedicated to him. We get dinner ready, chat about the day and I help him with his homework. He’s in Grade 1, so it’s a very busy time. Swimming lessons and hockey keep us on our toes, and he’s in bed by 8 o’clock.

8:00 p.m. I sit down with a glass of wine and write for about an hour. I spend a lot of my time push marketing, writing articles and blogging. I also use a lot of that time for conversations on Twitter.

I believe that Twitter is a great tool for having conversations. Someone once told me that Facebook is about impressing people you don’t care about anymore and Twitter is about meeting people who you want to connect with. I really love Twitter in that aspect; it has allowed me to meet some really awesome people in the world.

10:00-11:00 p.m. As I wind down my day, I take the time to reflect on what I liked about the day and what I would like to rewrite. A great time of day to focus on what I am most grateful for. I normally curl into bed with a book, but by 10:30 the book is away and I turn on one of my guided meditations.

By 11 o’clock I am safely in dreamland.

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LIFESTYLE / THE CLIENT’S TAKE...

THE CLIENT’S TAKE...

It’s a common advisor complaint – client loyalty extends no further than the first mediocre return. But you may be less familiar with the simple reasons many investors stick around. Mark David shares one client’s take, and his loyalty has little to do with the latest ETF CEMENTING LOYALTY “(My advisor) was actually a client of mine, and I judged him based on his character, and the fact that he was actually more anal than I was,” says investor Michael Minns.

An active investor since the age of 17, Minns is somewhat of a rarity in this day and age. Rather than kicking his advisor to the curb at some point, he has retained the same planner for a decade.

“He was very approachable, and I liked his way of going about things,” Minns says. “He and I were on the same page and felt comfortable (together), so we tried it out for a while. I’ve been doing this with him since 2004.”

Investing is all about risk-taking. Not only was Minns taking a risk with his investments, he was also taking a risk on his advisor.

“He was not in the business for a long time, but I liked his background,” he says. “He had a degree in economics and was also an economics teacher, and was getting into the business.”

As the years progressed, Minns and his advisor built their working relationship. When his advisor announced he was leaving one firm, Minns followed.

There was no question as to who or what owned his business. “(My advisor) has switched firms three times, but I’m unaffected by what (company name) is at the top of the page,” says Minns. “I’m more concerned about the deal I’ve got with him and that it doesn’t change.

If he’s making out better because he’s got a better deal with the company, that’s fine with me, as long as my situation doesn’t change.”

Michael Minns

A STRATEGIC PARTNER As Minns’ advisor learned the ropes, the two devel-

oped a mutual sense of trust. Bearing this in mind, Minns found that his advisor was able to tame his expectation, especially when his investment ideas seemed a bit too ambitious.

“It’s important to me at this stage in the game because he can keep me a little bit grounded, not get off-track, and have some money that you really trust,” Minns says. “I can also have conversations with him in respect to answers I don’t have or information he has at his disposal for my perusal.”

Minns’s growth as an investor saw him develop an investment strategy with the aid of his advisor.

He relies on a buy-and-hold method with a growing interest in U.S. investing.

“I’m not so much a person who buys and sells a lot. I’m a person that buys good things and holds,” he says. “I invest in the U.S., and I’ve upped my percentage of investment in the U.S. to 5 per cent from 3 per cent because I can see that there is going to be much more growth there, and I think that’s going to continue.”

MAINTAINING THE RELATIONSHIP Minns and his advisor have formed a bond that goes beyond the traditional advisor-client relationship.

The two became good friends over time, and even share some common interests.

“I have got a really good relationship with this individual,” says Minns. “We’re friends; we ride motorcycles together and do other things.

“The point is that if I’m dissatisfied about anything, he’s going to address it, and so far, I haven’t had to do that. The type of relationship I have with my advisor is one that will probably go on for some time because we have more than just an advisor-client situation.”

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How to add $229,715 to a portfolio Start by lowering the fees. Vanguard ETF fees are 86% lower than the average Canadian mutual fund.

And that difference could add $229,715 in value to the typical Canadian portfolio over the next 20 years.

TM

Compare your mutual funds to Vanguard ETFs

vanguardcanada.ca/costcompare

Winner - Canada Vanguard Investments Canada Inc. 2013 Morningstar ETF Provider of the Year 2013 Morningstar Best Equity ETF

Morningstar Awards 2013 Š. Morningstar, Inc. All Rights Reserved. Awarded to Vanguard Investments Canada Inc. for Morningstar ETF Provider of the Year and Best Equity ETF, Canada. For further information about the Morningstar Awards, including information relating to the criteria upon which the awards are based, please visit www.investmentawards.com. Source: Vanguard calculations using data from Morningstar, Inc. as of December 31, 2012. The hypothetical examples do not represent the return of any particular investment. The example above assumes a 6% annual return of the underlying investments and an initial investment of $250,000. For the ETF MERs we used the following MERs of the Vanguard ETFs as of December 31, 2012: For Canadian equity, 0.11%, Vanguard FTSE Canada Index ETF; for Canadian fixed income, 0.26%, Vanguard Canadian Aggregate Bond Index ETF; for emerging markets equity, 0.54%, Vanguard FTSE Emerging Markets Index ETF; for global equity, 0.31%, average of MERs for Vanguard FTSE Developed ex North America Index ETF (CAD-hedged) and Vanguard S&P 500 Index ETF (CAD-hedged); for international equity, 0.43%, Vanguard FTSE Developed ex North America Index ETF (CAD-hedged). The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of a Vanguard ETFTM or returns on investment in a Vanguard ETF. MERs for the Vanguard ETFsTM are as of December 31, 2012, and are based upon actual audited expenses including waivers and absorptions. Without waivers and absorptions, MERs would have been higher. Vanguard Investments Canada Inc. expects to continue absorbing or waiving certain fees indefinitely, but may, in its discretion, discontinue this practice at any time. The MER for the mutual funds is the average MER for Series A Funds as of December 31, 2012. For more detailed information visit, vanguardcanada.ca. Š 2014 Vanguard Investments Canada Inc. All rights reserved.

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