Wealth Professional 3.02 by Key Media

ROBO-ADVISORS ARE HERE WHAT YOU NEED TO KNOW TO COMPETE EFFECTIVELY

Women

NECESSARY DISCLOSURE WILL IT REALLY IMPROVE TRANSPARENCY?

WWW.WEALTHPROFESSIONAL.CA ISSUE 3.2 | $6.95

DON DRUMMOND THE ECONOMIST SPEAKS OUT ABOUT WHAT ADVISORS ARE DOING WRONG

OF INFLUENCE MEET 34 WOMEN CHANGING THE FACE OF CANADIAN WEALTH MANAGEMENT

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Sentry, Sentry Investments and the Sentry Investments logo are trademarks of Sentry Select Capital Corp.

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CONTENTS

4 | Industry intelligence This month’s key mergers, acquisitions and new products – including a look at RBC’s deal with City National

8 | Statistics The best ways to capitalize on the growing global ETF market

10 | News analysis With the arrival of roboadvisors, is the wealth management industry in for a radical round of digitally delivered change?

36 | What’s next for hedge funds?

54 | The seven deadly sins of marketing

Tenacious fund manager Veronika Hirsch weighs in on the future of hedge funds

How many are you committing?

40 | Industry icon

For Victor Ghodino of VTAG Financial Group

Former TD Bank economist Don Drummond talks to WP about the economy’s (and the industry’s) biggest challenges

46 | Guest column Advisor John De Goey reconsiders his position on necessary disclosure

56 | Ten questions

48 | Advisor profile Why Elie Nour chose to move his firm from Montreal to Toronto

50 | Use video to grow your business An expert shares the best ways to use video to connect with potential clients

52 | Social Media 2.0 Where advisors are going now online

16 COVER STORY

Women of Influence

issue

3.2

These top female professionals are leading the Canadian advisor industry into the future

Women

OF INFLUENCE

MARCH 2015 | 1

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EDITORIAL

COPY & FEATURES EDITOR Vernon Clement Jones SENIOR WRITER Jeff Sanford WRITERS Samo Ayoub, Will Ashworth COPY EDITOR Clare Alexander CONTRIBUTORS John De Goey, Nancy Harris, Maggie Crowley, Jamie Thomas, Iain Hopkins

ART & PRODUCTION ART DIRECTOR Daniel Williams GRAPHIC DESIGNERS Marla Morelos, Kat Vargas

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 TRAFFIC Kay Valdez 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 Wealth Professional is part of a international family of B2B publications and websites for the finance industry Offices in Toronto, Sydney, Auckland, Manila, Denver 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 WP magazine can accept no responsibility for loss.

WILL YOU SURVIVE THE ONSLAUGHT OF ROBO-ADVISORS? This fall, the Canadian financial advisory industry was invaded by an entirely new species of practice model. Between August and the end of December, a half-dozen so-called robo-advisors emerged. Taking a business plan from similar companies south of the border, these firms announced plans to compete against existing investment managers through a fascinating new tech-heavy business model. At a time when many advisors are worried new CRM2 rules are going to squeeze advisors, the arrival of the robo-advisors is another potential disrupter. Will these new firms put traditional advisors out of business? Or are they the answer to the question of how to service the broad Canadian middle class without the use of trailer fees? If, as many expect, the price of advice drops below 1% of assets under management, advisors with smaller books will find it unprofitable to operate in this new world. The existing advisor force will undergo a radical restructuring and downsizing, a shift that could leave many middle-class Canadians without access to advice. Could robo-advisors be the answer to maintaining middle-class access to advisor services? By utilizing Skype, email, algorithms and high-end computing power, the new robo-advisors purport to be able to offer portfolio management and advice to any size portfolio at a cost below 100 basis points. This new practice model might not be the big disruptor many predict, but it might force a change in the nature of the advisor’s job. According to adherents, advisors working in these firms will spend less time prospecting and much more time giving advice. Many are worried about the arrival of the robo-advisors, but it may not be the dystopian disaster many suggest. Canadians will continue to invest in funds. Whether this happens through traditional channels, or more techoriented ones, is a side question. Perhaps our new robo-advisor overlords will be the ones to save the middle-class from being locked out of the wealth advisory industry altogether.

Jeff Sanford Senior Writer

CONNECT

Contact the editorial team:

Al av m ch ho be m

vernon.jones@kmimedia.ca

2 | MARCH 2015

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INDUSTRY INTELLIGENCE

Wealth Professional’s regular wrap of all the important industry moves and plays

CORPORATE MOVES Manufacturers Life Insurance Company, a subsidiary of Manulife, has successfully completed its previously announced acquisition of Standard Life’s Canadian operations. “Standard Life allows us to significantly increase our presence in Quebec, and dramatically increases our scale in a number of highly strategic lines of business,” said Manulife CEO Donald Guloien. Sun Life’s wealth management division has acquired Ryan Labs, a New York-based institutional money manager with $5.1 billion in assets under management, specializing in liability driven investing (LDI) and total return fixed-income strategies. Sun Life is using the acquisition as a springboard into third-party asset management in the US market. The company expects the deal to close sometime in the first quarter.

APPOINTMENTS & DEPARTURES The Public Sector Pension Investment Board has appointed André Bourbonnais as president and CEO. Bourbonnais comes over from rival pension fund CPPIB, where he was in charge of private investments. The Canada Pension Plan Investment Board [CPPIB] has named Mark Jenkins to replace Bourbonnais as the head of private investments. Previously, Jenkins was in charge of direct private equity investments and natural resources investment programs. Ontario Securities Commission has appointed three new commissioners to serve two-year terms: William Furlong, a long-time banking executive; Janet Leiper, a lawyer with more than 25 years of legal and regulatory experience; and Timothy Moseley, also a lawyer with more than 20 years of experience in securities litigation.

Raymond James Ltd. has tapped Craig McDougall, the former head of National Bank’s M&A department, as senior managing director and head of the firm’s M&A business in Canada. McDougall brings more than 20 years of investment banking and M&A experience to the job. Horizons ETFs has lost a CEO. In a surprise move, Adam Felesky stepped down from the top job after almost a decade at the helm. Speculation is that poor recent performance by the ETF provider hastened the move by parent company Mirae Asset.

PRODUCT NEWS

> BMO ETFs Formula Growth has launched the Formula Growth Mutual Fund, which invests in small-and mid-cap US equities using a bottom-up security selection in combination with a number of quantitative and qualitative analytical tools that identify superior investment opportunities. > Real North Opportunities Fund has successfully completed its second closing under its initial public offering of an additional 2,277 trust units, generating gross proceeds of $2.3 million. The fund invests in revenue-producing real estate assets in western Canada. > First Asset has completed its initial offering of the advisor units of its First Asset Active Credit ETF. The offering was in connection with the conversion of the fund from a closed-end product to ETF.

4 | MARCH 2015

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Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. JANUARY 2015 | 5

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NEWS ANALYSIS

A NEW LOOK AT THE CITY NATIONAL DEAL What does the move by Canada’s largest bank to acquire a ‘celebrity’ wealth management firm in the States say about your future? By Jeff Sanford CITY NATIONAL AT A GLANCE

NUMBER OF OFFICES

3,600 NUMBER OF ADVISORS

$32.6 billion TOTAL ASSETS

$28.1 billion TOTAL DEPOSITS

$60.8 billion ASSETS UNDER MANAGEMENT

$255.8 million NET INCOME

It doesn’t get any more exciting than this – not in Canadian wealth management, anyway. In late January, Southern California-based financial services firm City National said yes to a deal that will make it the new US base of the Royal Bank of Canada. The $5.4 billion price tag made headlines – this is the biggest banking deal in North America in the last three years, and the biggest ever for RBC. It’s also the first deal for incoming RBC CEO David McKay. As traditional revenue models at the big banks come under pressure as a result of shifting industry trends, this deal says much about the new and exalted status of the wealth management sector at the world’s largest banks. The deal was a bit of a surprise – the Financial Post reported that, at a dinner several months ago between McKay and City National CEO Russell Goldsmith, Goldsmith delivered a resounding “not for sale” to his suitor. But at a follow-up meeting, Goldsmith said yes to the entreaty from RBC. What changed his mind? Some say the timing suggests it might have been motivated by the mass asset exodus from City National subsidiary Convergent Wealth following the apparent suicide of Convergent head David Zier. Upfront, it seems like a good deal for Goldsmith. His family, which has a 13% stake in the firm, will take its payout in RBC stock, which they have pledged not to sell for at least three years. Goldsmith will become the head of RBC’s Wealth Management Unit as the Canadian bank returns to the US for the first time since its retreat in the wake of the Centura Bank debacle. But observers wondered: Is this the right deal for RBC? What is Canada’s most staid, conservative bank doing getting into bed with a flashy LA bank that has a reputation as the wealth manager to Hollywood? Or,

as one analyst put it, “The thought was always that they might sell to Goldman [Sachs] or Morgan Stanley. … But we never thought a Canadian bank would go to California.” City National formed in 1954 to provide wealth management services to the wealthiest among the Hollywood elite. It’s the bank Frank Sinatra turned to when he had to pay off the criminals who nabbed his son in 1963. Michael J. Fox, director Jerry Bruckheimer and producer Brian Glazer are rumoured to be clients. CEO Goldsmith was once the head of Republic Pictures Corp. Bay Street insiders wondered whether RBC had overpaid for the chance to hang with the celebs. McKay has had a good defence against the critics. The last time RBC tried to raid the US border was more than a decade ago, when the bank picked up southeastern retail regional bank Centura. RBC paid relatively little for the asset in comparison to other, similar deals, but after years of trying to make it work, RBC ended up letting Centura go in 2011. Now, McKay seems to have learned a lesson. “We had a poor asset and a bad strategy,” he said in a conference call to reporters announcing the City National deal. If you want to do things right, he argued, you need to pay up for a quality asset. As another analyst pointed out at the time, the bank’s recent acquisition of Blue Bay in the UK was also pricey, but that deal is working out for them now. From a purely financial point of view, City National seems to be doing just fine – the bank had assets of $32.6 billion at the end of 2014. And, McKay pointed out in the conference call, “The combined high-networth population of these three markets is over four and a half times the entire high-net-worth population of Canada.” Some are questioning whether the big Canadian banks could be at a point when growth is going to stall. The downturn in the price of oil has suddenly called into question growth in Alberta. Interest rates are historically low. Canadian retail consumers are in debt and unable to take on more loans. The continued government ban on big bank mergers puts that growth option off-limits. According to a recent report from bond-rating agency Fitch, global banks are increasingly turning to wealth management as a way of preserving growth in an era when more traditional lines of business have given way. One analyst suggested that, because this deal is about the now-trendy wealth management sector, it will pass muster with analysts and shareholders. And that suggests the deal is a win for RBC.

6 | MARCH 2015

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STATISTICS

ETFs expand their empire ETP INVESTMENT TRENDS FOR 2015

The total amount of assets flowing into exchange-traded funds is headed up again this year. Here’s what you need to know about the biggest product in capital markets since the creation of the mutual fund

> JAPANESE EQUITY Flows into Japanese equity reached $13.4 billion in 2014. According to BlackRock, “still-attractive valuations and aggressive government stimulus makes this an important investment theme for 2015.”

WHAT’S IN A NAME? Apparently ETFs aren’t ETFs anymore. BlackRock’s global ETF report uses the term ETP, which stands for exchange-traded products. This phrase takes into account new exchange-traded investment vehicles that are not traditional ‘funds.’

> SMART BETA Breaking away from established index parameters to carve out more beta will be a big trend this year. > US EQUITY EXPOSURE With the US economy seemingly one of the world’s strongest at the moment, investors are pouring into this sector. > LOW VOLATILITY Given that equity markets are quite choppy, low-volatility ETFs are finding buyers. > OIL PRICES With oil prices trading below $50, institutional investors are looking for the ability to get in and out of certain oil-related risk exposures.

THE ETP MARKET IS STILL JUST A FRACTION OF THE MUTUAL FUND MARKET

$1,141

$65

TOTAL MUTUAL FUND ASSETS IN CANADA

TOTAL ETP ASSETS IN CANADA

billion

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WEALTHPROFESSIONAL.CA

FIXED-INCOME FOCUS The amount of money dedicated to fixed-income ETPs grew especially fast over 2014. Global appetite for yield was greater than ever, as global growth was slower than expected. Investors were desperate to squeeze out every bit of yield possible. The low MERs on ETPs allowed investors to make every basis point count. Total ETP fixed income assets swelled 22% to a record $430 billion AUM. Total inflows over the year were a hefty $78.6 billion.

MARKET GROWTH The expanding ETP market was driven by record inflows and increased adoption among investment professionals

$2.7

15%

trillion

TOTAL GLOBAL ETP ASSETS

INCREASE IN THE SIZE OF THE ETP MARKET IN 2014

$267.9

trillion

billion

AMOUNT GLOBAL ETP ASSETS ARE EXPECTED TO REACH OVER THE NEXT FIVE YEARS, ACCORDING TO BLACKROCK

TOTAL INFLOW INTO ETPs THROUGH NOVEMBER 2014

TOP-PERFORMING CANADIAN ETPs, 2014

+45.8% +39.8% +39.2% +37.6% +36.2% ISHARES S&P/TSX CAPPED CONSUMER STAPLES ETF (XST)

ISHARES INDIA INDEX ETF (XID)

BMO INDIA EQUITY ETF (ZID)

BMO LOW VOLATILITY US EQUITY ETF (ZLU)

ISHARES S&P/TSX CAPPED INFORMATION TECHNOLOGY INDEX ETF (XIT)

MARCH 2015 | 9

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NEWS ANALYSIS

TIME TO REPEL THE ROBO-ADVISORS Can the modern advisor survive the attack of this army of robots who are threatening the livelihood of flesh-and-blood humans? You betcha ...

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WEALTHPROFESSIONAL.CA

Elon Musk, the future-oriented entrepreneur behind PayPal and Tesla, worries about it. So does superbrain-physicist Stephen Hawking. Rapid advances in artificial intelligence are happening so fast, humans are in danger of falling victim to super-intelligent computer systems. “Humans are limited by slow biological evolution,” Hawking said in a recent interview. “The development of full artificial intelligence could spell the end of the human race.” If recent developments in the Canadian robo-advisor space are any sign, could it already be too late for humans? Over a couple of weeks this past fall, it seemed that not a day went by without another robo-advisor launching in the Canadian market. Along with Wealthsimple, the onslaught included WealthBar, Invisor and Nestwealth, a group of firms using a new tech-heavy business model to redefine the way wealth management services are offered in this country. According to the digital utopians founding these firms, this is a new and revolutionary practice model. Advisors are based in large central offices and work with clients through Skype and email. By commoditizing the delivery of advice, the cost is compressed to less than 1%. Leveraging new communications technology, these firms claim to be able to extend advisor-based wealth management to a larger group of lower-net-wealth people than ever before. In the case of Wealthsimple, the firm is hoping to appeal to a newly emerging cohort of young, citydwelling millennials. At a lunch seminar, reps from Wealthsimple explained to the crowd how too much of a person’s retirement can be ‘lost’ to high fees over time. They outlined how their low-cost index funds (and accompanying advice) can be offered for less than 1%, freeing up money to be invested. They went on to describe how computer algorithms can slot investors into pre-packaged, low-cost investment portfolios. According to a participant in the seminar, the pitch went over well with the up-and-coming, high-net-wealth workers of tomorrow. “A lot of people were impressed. They seemed to think this is was a good idea.” Did the traditional Canadian wealth management industry just run into its future-found nemesis? According to the experts, the predictions of imminent doom are, like a bad movie, a bit over-boiled.

THE GENESIS OF ROBO-ADVISORS The first robo-firms landed in America just a couple years ago. Firms like Wealthfront and Betterment have rolled out low-cost, tech-based portfolio management,

“For us, it’s always been about building a fullservice offering. We find that the advisor is still important. There is a segment that need and want advisors. There is always going to be a need for real advisors” Chris Nicola, WealthBar have been signing up clients for a couple years. The US robo-advisors have now packed on more than $2 billion under advisement, and it didn’t take long for the trend to move to Canada. The arrival of Wealthsimple this past fall marked one of the earliest forays of a robo-advisor into this country. Like many of the executives in this space, CEO Michael Katchen credits the current wealth management business model with inspiring the creation of his company. “I was really surprised at how much higher the wealth manager fees were here,” he says, describing them as “double” what he was used to in America. He convinced members of his Silicon Valley team to relocate to Toronto to work on Wealthsimple. There are some impressive names betting that this digital horse has legs. Eric Kirzner, the John H. Watson Chair in Value Investing at the Rotman School of Management and former director of the Investment Industry Regulatory Organization of Canada [IIROC], is on the investment committee. Kirzner designed the portfolios and indexes the company will use. Joseph Canavan, former chairman and CEO of Assante Wealth, has signed up as an advisor. Roger Martin, the former dean of the Rotman School and a well-known business ‘thinker,’ is in as an investor. “These are people who have been involved with every major advance in Canadian capital markets over the last several decades,” Katchen says. Wealthsimple is not the only firm in this space. Another is a home-grown player, WealthBar, launched within a few weeks of Wealthsimple. WealthBar has a former Sun Life advisor on staff to build out its team. The so-called ‘wealth concierges’ will dish up advice MARCH 2015 | 11

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NEWS ANALYSIS

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*Based on $4.65T in AUM as of 12/31/14. iSharesÂŽ ETFs are managed by BlackRock Asset Management Canada Limited. Commissions, trailing commissions, management fees and expenses all may be associated with investing in iShares ETFs. Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. ÂŠ 2015 BlackRock Asset Management Canada Limited. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and | MARCH 2015Used with permission. iSC-1523-0215 12 elsewhere.

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WEALTHPROFESSIONAL.CA

on insurance, RESPs, RRSPs and taxes. It’s just that contact will typically happen through web-based communication. This is simple economic evolution, says CEO Chris Nicola. “The wealth management industry needs to modernize. People want advice, but they want it at lower cost. Over the years, as the top advisors moved upmarket to the fee-based world, there has been less advice given to lower-net-wealth clients. Eventually, people were paying full a commission on mutual funds at the banks but were getting no advice whatsoever.” But even if contact is digital, WealthBar makes a point of emphasizing access to an advisor. The original US robo-advisors offered only automatic portfolio investing. WealthBar (along with Wealthsimple and the rest of the Canadian firms) add advisors to the mix. This is an important difference, says Nicola. “For 1018657P – iShares – XSI – BOTTOM RHP us, it’s always been about building a full-service offerFile Name: 1018657P-iSH-XSI_WealthPro_RHP_E ing. We find that the advisor is still important. There 7.125" xthat 4.95"needs and wants Safety: Trim: is a segment advisors..25" There is Bleed: N/A

always going to be a need for real advisors.” It is not a surprise these firms launched when they did, just in time for the arrival of CRM2. The coming regulatory shift seems to have many thinking this is the time for the robo-advisors to strike. Nicola is betting his firm will is one of the beneficiaries in the new CRM2 world. “We’re still working out where we want the pricing to be, but we think we can get it down to 35-40 basis points on investments and 30 basis points on advice,” he says. WealthBar portfolios offer costs of just 0.35–0.6%, which includes all trading costs, financial advice and administrative fees. There are other advantages that a more ‘digitized’ industry will introduce. “There is still a lot of paper being shipped around,” Nicola says. “But we can let clients know automatically about things like RRSP deadlines and rebalancing. The whole process of proAd#: BOTTOM RHP viding wealth management becomes easier. There are Pub: Wealth Professional fewer mistakes. Taxes are easier to do. There are fewer V.O.: missed opportunities.”

Colours: CMYK

Built: 2/3/15

Strategic income. The changing face of bonds. Put BlackRock insight to work with iShares funds. Insight: With income harder to find, a traditional bond approach may be too confining. n

Global bond markets may offer attractive opportunities as Canadian yields decline.

Shorter durations can cushion against volatility in diverging Central bank policies.

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BlackRock is trusted to manage more money than any other investment firm in the world.*

*Based on $4.65T in AUM as of 12/31/14. iShares® ETFs are managed by BlackRock Asset Management Canada Limited. Commissions, trailing commissions, management fees and expenses all may be associated with investing in iShares ETFs. Please read the relevant prospectus before investing. The funds are not guaranteed, their values change frequently and past performance may not be repeated. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. © 2015 BlackRock Asset Management Canada Limited. All rights reserved. iSHARES and BLACKROCK are registered trademarks of BlackRock, Inc., or its subsidiaries in the United States and elsewhere. Used with permission. iSC-1523-0215 1018657P-iSH-XSI_WealthPro_RHP_E.indd 1

2015-02-04 9:54 AM

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NEWS ANALYSIS

One of the key differentiators between firms in the years to come will be those who are most competent in terms of tech. The disaster over breached client data at JP Morgan this past year has emphasized an important point: The companies that can keep client data safe and secure are those that will have an advantage. This is an important point the robo-advisors are already working on at a time when the rest of the industry is, arguably, lagging.

THE NEW KIDS IN CLASS Meet the robo-advisors who are shaking up the Canadian advisory industry WEALTHSIMPLE Headquarters: Downtown Toronto Launch date: September 2014 Leadership: CEO Michael Katchen worked for McKinsey & Co. and consulted in the financial services area before moving to Silicon Valley to work in tech. He returned to Canada to start Wealthsimple. Business model:Algorithm-based asset allocation, index-fund based, advisor access WEALTHBAR Headquarters: Gastown, Vancouver Launch date: November 2014 Leadership: Founder Chris Nicola is the son of John Nicola, the CEO and founder of Nicola Wealth, a company that has been providing ‘traditional’ wealth management services to West Coasters for years. Chris Nicola formulated the idea of WealthBar during a stint in the IT department at Nicola Wealth. Business model: Algorithm-based asset allocation, index-fund based, advisor access, insurance INVISOR Headquarters: Oakville, Ontario Launch date: November 2014 Leadership: CEO Pramod Udaiver was born and raised in India; he immigrated to Canada in 2001 and started in the advisory industry managing portfolios at TD Asset Management. Business model: Algorithm-based asset allocation, indexfund based, advisor access, with plans to add financial planning tools, insurance, advice and solutions NESTWEALTH.COM Headquarters:Toronto Launch date: August 2014 Leadership: The firm was launched by Randy Cass, a CFA holder and an anchorperson on BNN. Business model: Index-tracking ETF portfolio with a flat $80/month fee (with a half-off discount for investors under 40)

WEAK SPOTS There are critics of this new way of doing things – and you don’t have to go far to find them. The first criticism of robo-advisors is a basic one: Slotting of clients into portfolios according to a programmed algorithm will see clients lose the attention of an advisor who can help them understand what they are doing. “Being an advisor is not about going through a questionnaire and figuring out what your risk,” says Wade Baldwin, a CFP with Sun Life in Calgary and a member of the Advocis’ National Chapter Board. There is an educational component to what an advisor does, he explains. “People don’t understand the differences between various markets. Once you help people understand [the] basics, they answer the questionnaire in a completely different manner. Part of advice is education on how the market works.” Pramod Udaiver, CEO of Invisor, another new Canadian robo-advisor firm, explains that the algorithm is only one part of the picture. “Typically advisors come up with a recommended picture of the client’s goals, but we build that client experience online,” he says. “Then we provide an investment proposal online. If the client moves forward with the proposal, that’s when a rep from our client gets in touch with the client and goes through to makes sure this is right. We believe this is an important step. To move from full-service advice to online is a big step. However, Baldwin also worries that robo-advisors won’t be able to help clients deal with temporary drops in the market. “There are so many of these do-it-yourself investors who think they know best, but if all you have to do is press the sell button, and there is no intermediary talking you ‘off the ledge,’ then sell orders flood the market. But if there is an advisor to talk them off the ledge, and keep them from selling out of that portfolio, the client does better over the long-term.” Critics also point out that these firms have yet to be tested in a bear market. So far, no one knows how ‘sticky’ the assets will be or how loyal those customers will be over time. If markets suffer a severe contraction, will robo-advisors’ clients suddenly disappear? Many think the robo-advisor business model, while impressive in theory, will run into more practical issues. “My take on this … is that this trend is grossly overplayed and over-hyped,” says Michael Kitces, a partner in a US-based wealth management firm and publisher of a popular industry blog. “When you put it in terms of market share, these firms are very far from being disruptive. There is $28 trillion in assets

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to be managed in the US. All the robo-advisors advisors together have $3 billion. After five years, they still have only one-hundreth of 1% of the industry’s assets? Arguably, they haven’t really done much yet.” The real effect of robo-advisors may be something other than what many have predicted – advisory firms may be the ones to actually use these platforms. Rather than buy index funds through an intermediary manufacturer, advisors will be able to buy and hold the individual stocks that make up an index fund. By doing so, advisors’ clients will gain tax benefits by being able to harvest losses on individual stocks – something that’s not possible with index funds. Thus, the advisor uses the robo-advisor platform as the trading firm instead of a traditional platform. “Once you have the software to do this, to build your own index fund and begin to do tax harvesting, that opens up whole other possibilities,” says Kitces. As evidence of this trend, Kitces points to two major robo-advisors who have already begun to offer an institutional service, or ‘white label offering,’ as they shift their business strategies. “This is indexing 2.0,” he says. Some in the Canadian advisor industry are picking up on this idea, too. “We see robo-advisors as an extension to the advisor industry, not a substitute,” says Tony Mahabir, CEO of Canfin Financial Group. “We have to accept the reality that there are lots of people out there who don’t need high-touch, human advisors. A lot of people don’t have complex planning situations. You have to know when you have a simple client, and when you have someone with a complex financial situation that involves wealth preservation, estate optimization and sophisticated tax strategies. “You have to remember, you are not trying to be everything to everyone, but everything to one value segment,” he continues. “This addresses the lower end of the investment scale. The bottom line is that some people are going to need these services. [The robo-advisors are] providing advice to a segment of the market that hasn’t had access to an advisor before, which is a good thing.” This might be the best way to think about this invasion. By getting young 20-somethings to invest, robo-advisors are creating future clients who are used to financial advice. When the millennials reach their 40s and run into more complex financial needs, they’ll need to switch up to a real human advisor. “If you provide a system where your young clients have access to a robo-advisor, but then get married and run into multi-jurisdictional tax issues, there is a very

“I was really surprised at how much higher the wealth manager fees were [in Canada]” Michael Katchen, Wealthsimple

good case to be made that these services will be a good thing,” says Mahabir. The real shift coming in the industry is partly generational. Kitces says there is already a subset of younger advisors who will build out their practices around these technologies. These advisors might never take up a relationship with a traditional investment manager. “As the industry continues to move away from a purely investing model to a more holistic planning model … advisors will want to build around a robo-advisor platform, where they are trading and clearing in-house,” he says. “Traditional clearing houses have the Baby Boomers. But the robo-advisors will get generation Y.”

NEW OFFERINGS FROM THE OLD GUARD Big investment firms are getting in on the robo-advisor game, too Questrade recently announced plans to launch Portfolio IQ, a customized investment portfolio created entirely online. Investors go online, answer a few simple investment questions about their goals, time horizon, and tolerance for risk. Charles Schwab plans to begin offering a free robo-advising service, Intelligent Portfolio, to consumers next quarter and plans to roll out similar services to registered investment advisors soon after. Fidelity has formed a partnership with robo-advisor Betterment, which will see advisors who do clearing with Fidelity working through that channel. Fidelity also recently announced it will acquire eMoney Advisor. TD Ameritrade is said to be making robo-technology available to the 4,000 independent registered investment advisors who use its custody and tradeclearing services. Vanguard recently announced that it has $4.5 billion invested on its robo-advisor platform, and the firm hasn’t even gone public with it yet. Merrill Lynch is rapidly shifting advisors over to its Merrill Edge platform, which advisors describe as being identical to the offerings from Wealthfront and Betterment.

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Women FEATURE / WOMEN OF INFLUENCE

OF INFLUENCE

Be inspired by the female advisors and executives who are making things happen in the Canadian wealth management industry in 2015

For years, wealth management has been thought of as a male-dominated industry. But with evidence that more and more Canadian women are taking charge of their finances (one recent report suggests that one-third of financial assets in North America are already under the care of women; another suggests that at some point, 90% of Canadian women will manage the wealth of their households), it’s no wonder so many are taking note of the importance of female-centric wealth management. But Jennifer Reynolds, the CEO of Women in Capital Markets, says that while the financial services sector “has done better than other sectors in Canada with respect to the proportion of women in the industry,” it still has a long way to go in terms of advancing women into senior leadership roles. “Moving more women in to leadership roles, specifically profit and loss leadership roles, is the key step to the advancement of women and to capitalizing on 100% of the talent pool in the industry,” she says. If the women featured on the following pages are any indication, that advancement is already well underway.

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INDEX BY NAME NAME

COMPANY

PG.

Amsden, Barbara

IIAC

Baxter, Susan

RBC Wealth Management

Bergevin, Cristiane

Desjardins Group

Bristow, Diana

Bristow Financial Group

Chaput, Jocelyne

Goodman Dundee Private Wealth

Cimoroni, Sandra

TD Bank

Cliff, Leslie

Genus Capital Management

de Cordova, Michelle

NEI Investments

deGraaf Hastings, Léony

deGraaf Financial Strategies

Dolby, Petrina

PricewaterhouseCoopers

Flanagan, Kate

Investors Group

Galpin, Cheryl

BMO Nesbitt Burns

Goldring, Judy

AGF Management Limited

Gravel, Monique

CIBC Wood Gundy

Harris, Marianne

Sun Life, IIROC

Hastings, Léony deGraaf

deGraaf Financial Strategies

Hirsch, Veronika

Arrow Capital

Horwood, Rebecca

The Horwood Team

Hudon, Isabelle

Sun Life Financial

Jalasjaa, Tuula

HollisWealth Network

Keene, Alison

BMO Nesbitt Burns

Laing, Jolene

Laing Portfolio Management /ScotiaMcLeod

Lunney, Elizabeth

Fiduciary Trust

Manson, Anne

CI Investments

O’Connell-Campbell, Colleen ScotiaMcLeod

Reynolds, Jennifer

Women in Capital Markets

Riyahi, Flora

ELITE Wealth Advisors

Rooney, Jane

Financial Consumer Agency of Canada

Stovel Rivers, Gillian

ELITE Wealth Advisors

Taylor, Kathleen

RBC

Tory, Jennifer

RBC

Upshaw, Lisa

Manulife Financial

Verch, Sybil

The Verch Group

Vrooman, Tamara

Vancity

Wu, Sonia

Sun Life Financial

Q&A

Jennifer Reynolds President and CEO Women in Capital Markets WP: What has been the biggest challenge of your career? Jennifer Reynolds: I think overcoming the unconscious bias that women face when they’re having children. I don’t think this issue is unique to me; I think it’s one many women or perhaps all women face. Often people assume if you’re having kids, you’re downshifting in your career and your aspirations are different. WP: What are your goals? JR: Primarily, when I think about what we need to do to see more people in leadership roles in our economy, it really is to get men involved in the dialogue. I think too often a lot of women’s initiatives have been run by women, designed by women and only include women. I don’t think we will see significant change unless we involve men and engage men in initiatives to advance women. WP: What advice do you have for the next generation? JR: When I look to the next generation, what I’d really like is both men and women … to expect that they see both men and women in leadership roles – in the economy and politics and in society more broadly. I want their generation to expect to be very different from past generations on that front. I hope they all aspire to work and hopefully to lead organizations that are truly diverse that reflect the real face of Canada, both from gender and a cultural perspective. If this country is going to be competitive in this century, we need to use the full talent that we have at or disposal, and diversity is only going to help us. WP: What are some lessons you’ve learned? JR: My philosophy was always to work as hard as I could and get as much experience as I could. I always put up my hand when there was a challenge in front of me. I would encourage all young people to do just that. The other thing I would say is the ability or that willingness to take a risk, even when you didn’t perhaps have 100% of the qualifications – I think that’s very important for young women and young men. MARCH 2015 | 17

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The Executives FEATURE / WOMEN OF INFLUENCE

Tuula Jalasjaa Managing director and head HollisWealth Network Last year was a busy one for wealth managers. But for Tuula Jalasjaa there was an extra bit of work – rebranding the 900-advisor-strong HollisWealth network. Back in 2011, Scotiabank picked up the network from DundeeWealth. Scotia was licensed to use the DundeeWealth trademark for a period, but when that licensing agreement ended, the company was rebranded as HollisWealth, and it was up to Jalasjaa to implement the new brand. “It’s not just changing the cards and ordering stationary … rebranding is a huge job. It touches on every aspect of the organization,” she says. “The good news from our perspective is that we successfully implemented all the regulatory and branding changes, on time and smoothly. And we still managed to enhance our platform while experiencing double digit growth in AUA.” This recent challenge is just the latest chapter in Jalasjaa’s long and successful career with Scotia. Over 18 years, she has worked as managing director and head of investment management services, and even ran the private investment business for a while. Reflecting on the challenges that come with being a female executive at a major bank, Jalasjaa is candid. “I think probably the biggest challenge is, and I say this is true generally speaking for women, is that they still tend to do the balance of work at home and caring for elderly parents. Trying to balance that while taking on more senior roles … it can be done… but that has been a challenge.” It helps that Canadian banks are evolved, sophisticated organizations and conscious of gender issues. “I can say that taking on big leadership roles has not been a challenge,” Jalasjaa says. “When you work for an organization that takes the time to adequately prepare you and train you … that hasn’t been a challenge.” As for challenges in the years to come, she hopes to continue to lead businesses. “When you see a businesses grow and flourish … creating that culture where employees want to come to work every day, there is a lot of personal satisfaction in that,” she says.

Veronika Hirsch Fund manager, Exemplar Canadian Focus Portfolio Arrow Capital Veronika Hirsch has had a long and storied career on Bay Street. She was a high-flying and much sought-after mutual fund manager in the days when mutual fund managers commanded rockstar status on Bay Street. Today, Hirsch manages a hedge fund for Arrow Capital that is open only to accredited investors, is primarily invested in Canadian mid- to large-cap companies and uses both long and short positions to generate returns. Hirsch’s portfolio has produced a cumulative return to date of 116% and an annualized return of 12% – stellar stats by any measure. The fund has provided investors with substantial global exposure and strong foreign content, and has been substantially underweight natural resources, always a consideration in a country with a stock exchange weighted toward that sector.

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Elizabeth Lunney President and CEO Fiduciary Trust Fiduciary Trust may not have the biggest brand recognition in the industry – but that’s the point. The company, a member of the Franklin Templeton Investments family, has been around for 25 years, working quietly with individuals, estates, trusts and families. As president and CEO, Elizabeth Lunney brings more than two decades of experience in portfolio management to the role. Prior to joining Franklin Templeton, she spent six years as portfolio manager with a large pension fund. When the investment committee of that organization initiated an external benchmarking exercise of pension funds across Canada, she had an epiphany that technology was fundamentally changing the industry. “I realized it was going to be possible to deliver pension-like investment disciplines to individual clients,” she says. “I was hooked. This was an opportunity to make a real difference in the lives of individual investors.” Since then, she has applied those philosophies at Fiduciary Trust. She has created a unique business model that pairs investment management with professional estate and trust services to compete in the high-net-worth market. In addition to leading both the proprietary management team and the trust and estate team, Lunney is also a portfolio manager with her own book of clients.

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FEATURE / WOMEN OF INFLUENCE

Sandy Cimoroni Senior Vice President and Chief Operating Officer, TD Wealth “Life is full of challenges, and frankly, these are what make life interesting,” Sandra Cimoroni says. As the VP of wealth management at TD Bank, one of Cimoroni’s personal challenges has been “approaching tough problems with a ‘perfectionist lens,’ which unfortunately can cause burnout.” She has figured out that the key to success is to “surround myself with a talented team and empower them to challenge me, and each other.” But she also learned to “forge ahead when something is ‘good enough’ – it’s incredibly liberating,” she says. Her support for women in the industry goes back 20 years when she first began working on a team delivering seminars and education to women. The program, “Women in the Know,” was an early victory. “My involvement in this program set me on a path for my future,” Cimoroni says. “It made me appreciate the need for education and the importance of taking care of financial well-being as it relates women and how they shape their future. To this day, I’m still very much aware of the continued need to educate and empower women about their finances.”

Sonia Wu

Judy G. Goldring

Financial Centre Manager Sun Life Financial When Sonia Wu first immigrated to Canada in 1988 she had trouble finding a job in her chosen profession (medicine). When she was offered a chance to work as an advisor in 1993 she jumped at the opportunity. She has since become an icon at the company. When Wu was appointed manager of a financial center in Vancouver that was ranked almost dead last in terms of service and profit, she rose to the challenge. By the end of 2010, the center finished third in performance among all Sun Life Financial centers nationwide. She credits her success to the culture she has created among her employees. “This did not happen overnight. Over the last five years, we’ve built up the culture,” she says. There is an open-door policy that makes senior employees available to more junior staff. Older advisors go out with new advisors without sharing commission. That collaborative – but still competitive – approach has allowed Sun Life to grab a much larger share of the expat Chinese market in Vancouver, which was previously dominated by Manulife. “Once these immigrants get here, they realize Canada is different,” Wu says. “They really need someone to do the financial planning for them.”

Executive vice president and COO AGF Management Limited As executive VP and COO of one of Canada’s biggest independent mutual fund companies, Judy Goldring is a pillar in the industry. A member of the board of directors, she provides strategic leadership and vision. She is deeply involved in the long-term growth, planning and strategy at the firm. She’s also oversees the firm’s operations, IT, legal, compliance, HR and compensation teams, while supporting AGF’s Canadian and global offices. As a senior leader, she says her corporate objectives for 2015 are all about “providing a positive workplace for all my employees. At AGF, I have been working with my team to bring forward various initiatives over the last few years to help employees live and work better through wellness initiatives, mindfulness activities, all within a culture of candor. I am building on this theme and rolling out a program that encourages physical awareness and healthy eating.”

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1260_

WEALTHPROFESSIONAL.CA

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

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FEATURE / WOMEN OF INFLUENCE

Susan Baxter Vice chair RBC Wealth Management Susan Baxter graduated university with a degree in pharmacology. When she found herself unexpectedly working at a boutique M&A firm, she discovered that the research discipline, math and analytic skills she had developed were exactly the skills she needed. After a few years, she left Toronto to move to London, looking to gain some international experience. “I found a job in corporate finance as an analyst at a large US investment bank,” she says. “It was very challenging to adjust to both a new culture and a tough and competitive work environment … within which I was one of very few women. But I took on a number of roles that broadened my experience.” Baxter ended up as COO of a $3 billion credit fund. “There were lots of sleepless nights along the way, but I was able to navigate my way through with the help of a committed and talented team of colleagues, some great mentors and a fantastic network to help educate me on my new roles,” she says. “Being patient and focused during challenging situations brings great opportunities for learning and development.” Today, Baxter is back in Toronto and focused on building relationships with Canada’s top enterprises and families as the vice chair of RBC Wealth Management. Serving the needs of ultra-high-net-worth clients and helping them achieve the goals for themselves and the next generation is her passion. Her lesson for younger women just coming up in the industry: “Build and cultivate a strong network of colleagues, friends and family that can serve you in so many different ways – from mentorship, to finding a job, to achieving life goals.”

Isabelle Hudon Executive chair, Quebec Sun Life Financial Isabelle Hudson has been Sun Life Financial’s Quebec president since August 2010. Under her leadership, Sun Life Financial has seen impressive growth in all business lines in the province. And thanks to Hudson’s work, Sun Life is once again a welcome player in the province after moving its headquarters from Montreal to Toronto when the separatists came to power. From 2004 to 2008, Hudson was president and CEO of the Board of Trade of Metropolitan Montreal, where she contributed significantly to the revitalization of the Board’s activities. A recipient of the Queen Elizabeth II Diamond Jubilee Medal in 2005, she was named one of the 40 most successful Canadians under the age of 40. She is also board member of Hydro-Québec, Holt Renfrew Canada, the Mount Royal Club and the Canada Council for the Arts. Her advice for younger women in the industry: “Find a sponsor who will help you grow and develop.”

Kathleen Taylor Chair of the board RBC Kathleen Taylor became the first woman to lead the board of a major Canadian bank when she took the chair at the Royal Bank of Canada at the beginning of 2014. Prior to her current role, she had been an independent director since 2001. She also has worked on the bank’s audit and risk committees, and has been chair of the human resources committee since 2010. Taylor is the former president and CEO of Four Seasons Hotels and Resorts, where she held a number of senior leadership roles during a 24-year career.

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FEATURE / WOMEN OF INFLUENCE

Jane Rooney Financial literacy leader Financial Consumer Agency of Canada Appointed in April 2014, Jane Rooney is Canada’s first financial literacy leader. She will work to coordinate the financial literacy initiatives of the federal government. She is also a member of committees working on financial literacy abroad, including the OECD’s International Financial Education Network and the Canadian government’s Interdepartmental Committee on Financial Literacy. Her previous experience includes almost eight years as a policy analyst at the Canadian Payments Association. In her new position, her goal is to complete the development of a national strategy for strengthening the financial literacy Canadians, which will be publically launched in 2015. “Today, people are living longer. That means they are often working longer, but also living longer during their retirement,” she says. “So the key message to me is to start thinking of planning for their financial future. It is so important to start that savings pattern at a young age. Throughout your life you’re building a nice nest egg so you can live in retirement in the lifestyle that you want.”

Christiane Bergevin Executive vice-president of partnerships and business development Desjardins Group Since joining Desjardins Group in 2009, Christiane Bergevin has led strategic acquisitions and partnerships to significantly increase the reach and scope of the firm, including the recent acquisition of State Farm.

Marianne Harris Board member Sun Life, IIROC Marianne Harris has 29 years of advisor-related work in the US and Canada, including as managing director Bank of America Merrill Lynch Canada, as president of corporate and investment banking for Merrill Lynch Canada and as head of the financial institutions group at RBC Capital Markets. In addition to sitting on the Sun Life board of directors, she serves on the audit, compliance and review committee and the governance, nomination and investment committee. She is also a director and chair of the investment committee for the Princess Margaret Cancer Foundation Board, and a director of the dean’s advisory council for the Schulich School of Business.

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Charyl Galpin Head BMO Nesbitt Burns It has been said that Charyl Galpin was born into her job. As her father climbed through the ranks at BMO, Galpin moved around with him. As a young 18-year-old fresh out of high school, she landed a job as a teller at a BMO branch in an Ajax, Ont., strip mall. Seven years into her career, she moved into the world of securities and joined the legendary Canadian investment bank Burns Fry. When the big banks were allowed to buy up investment banks, BMO stepped in, bought up two brokerages – Nesbitt Thomson and Burns Fry – and merged them together to create the modern investment banking arm of BMO, Nesbitt Burns. By 2006, Galpin was the firm’s COO. The latest promotion sees her take the top spot at the investment bank and puts her in charge of a network of more than 1,300 investment advisors at 60 branches across the country, managing $135 billion in client assets. Earlier this year, Galpin launched BMO’s first women-focused affinity group, centered on the well-being and success of women at the bank. She’s also been involved in a website aimed at recruiting female investment advisors.

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FEATURE /WOMEN OF INFLUENCE

Alison Keene *Compared to the S&P/TSX Composite Total Return Index. Volatility is measured by standard deviation of the daily returns over the periods June 18, 2008 to March 9, 2009 (Fund: 12.50, Index: 56.01) and April 5, 2011 to October 3, 2011 (Fund: 6.10, Index: 23.11). Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The information presented is accurate at the time of first printing, and is subject to change without notice. Management fees for Class A and Class F units are outlined in the Fund Facts and Simplified Prospectus. Please read the Fund Facts or the Renaissance Investments Simplified Prospectus before investing. Mutual funds are not guaranteed, their values may change frequently and past performance may not be repeated. ÂŽ Renaissance Investments is offered by, and is a registered trademark of CIBC Asset Management Inc.

Senior vice president and managing director BMO Nesbitt Burns Alison Keene is a 33-year industry veteran whose experiences range from trading equities as a floor attorney at the old Alberta Stock Exchange to managing a boutique brokerage firm. In 2001, she was named managing director of BMO Nesbitt Burns in Calgary. She oversees the firmâ&#x20AC;&#x2122;s private client business unit for the province of Alberta, and leads a team of five professionals providing wealth management for 300 high-net-wealth clients. Keene holds the Certified Investment Management designation and is a Fellow of the Canadian Securities Institute.

Leslie G. Cliff Director of wealth management and founding partner Genus Capital Management A founding partner of Genus Capital Management, Leslie Cliff serves as chair of the board, oversees client relationships and handles wealth management marketing and sales initiatives for the firm. The Vancouver native has worked in portfolio management since 1986; she is a past president of the Estate Planning Council of Vancouver and a past chair of the ICBC Investment Committee. The former Olympic swimmer (she won the silver medal in the 1972 Olympics) also serves on the board of Swimming Canada. 26 | MARCH 2015

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Tamara Vrooman CEO Vancity Tamara Vrooman is a bit of a legend on the West Cost. As the story goes, she was rejected for a lowly job at British Columbia’s ministry of finance in 1992, which she felt was an instance of gender-based inequality. To prove her interviewers wrong, she entered UVic’s Master of Public Administration program and took every hard-core finance course she could. Two years later, she returned with her A+ transcripts and stunned the panel of interviewers. She eventually became B.C.’s deputy minister of finance, the first (and youngest) woman to hold that position. There, she oversaw $36 billion in spending. When she applied for maternity leave, she discovered that discovered no deputy minister had ever applied for maternity leave in the province before, so she instituted a new policy. Today, she has been tapped by the Pope to provide advice on the “economics of peace.”

($ Value in 000) 15 14 13 Global Financial Crisis 12 11 10 9 8 7

12 cDe

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07 c-

Managing director Investment Industry Association of Canada Barbara Amsden has more than 20 years of experience in the Canadian financial and investment industry. She rejoined the Investment Industry Association of Canada in 2011 as managing director and is responsible for a range of issues relating to the advancement of Canadian capital markets. Her areas of expertise include federal and provincial finance issues, retirement savings and pension policy, tax policy and reporting, as well as operational matters. In addition to her roles with the IIAC, Amsden has been a director of research at the Investment Funds Institute of Canada [IFIC], executive director of the Canadian Capital Markets Association [CCMA], assistant vice president of strategy at the Canadian Depository for Securities Limited [CDS], and vice president and treasurer at the Canadian Bankers Association [CBA].

Barbara Amsden

Renaissance Optimal Income Portfolio S&P/TSX Composite Total Return Index

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Petrina Dolby Senior advisor, Canadian wealth management consulting practice PricewaterhouseCoopers In 2013 PwC conducted its 20th Anniversary Global Wealth Management Survey, which found that wealth managers were failing to capitalize on intergenerational and gender opportunities. At the time, Petrina Dolby was quoted as saying that women “do not feel empowered in the wealth management space.” She understands where current trends are heading: “Women tend to outlive their male partners and stand to gain control of wealth through not only their own efforts, but also through inheritance and divorce,” she says. In addition, women are gaining more seniority as business leaders and are often the decision makers in next-generation wealth transfers within family groups. “Wealth managers need to better understand the different networks of influence [that] younger generations and female clients rely on for decision-making, including that access to the matriarchal side of the family can provide great connections to the next generation.”

realoutcomes.ca

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2011 Downturn

6 5

Source: Morningstar Direct as at December 31, 2014

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FEATURE / WOMEN OF INFLUENCE

Jennifer Tory Group head, personal and commercial banking RBC Jennifer Tory has held a variety of leadership roles since joining RBC in 1978; today, she heads up RBC’s banking businesses in Canada, the US and the Caribbean. She is one of eight executives responsible for setting the overall strategic direction of RBC. She received Queen’s Jubilee medal in 2013 and the Catalyst Canada Honour in 2011 for championing women in business.

Anne Manson Vice president of strategic business development CI Investments Anne Manson has experience in several different firms, including Assante Wealth Management, Heritage Education Funds and CXM Inc. She has extensive experience in practice management and professional development programs for financial advisors, and is an expert at driving sales and revenue growth through advisory distribution channels. She has directed national sales and marketing initiatives, as well as product launches, business retention and crossmarketing programs. Her specialties include training and development for advice sales channels in financial services.

Monique Gravel Managing director and head CIBC Wood Gundy When Victor Dodig, the former head of wealth management at CIBC, was named the bank’s new president and CEO, he announced a new executive committee for CIBC to replace the bank’s old senior executive team structure. At the time, CIBC also created a new operating committee, which includes Monique Gravel. As the current managing director and head of CIBC Wood Gundy, she oversees one of this country’s largest and most successful advisor networks.

Michelle de Cordova Director of corporate engagement and public policy NEI Investments For the last seven years, Michelle de Cordova has worked within the environmental, social and governance [ESG] services team at NEI Investments. The company is the home of Ethical Funds; de Cordova is responsible for the corporate engagement program attached to those funds. Before joining NEI, de Cordova served as a diplomat and worked as a staff member and consultant for environmental and social development organizations in Canada, Europe, Asia and Africa. She also has authored and co-authored a variety of publications on responsible investment topics, ranging from oil sands to executive compensation.

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Sybil Verch Founder, The Verch Group The energy Sybil Verch brings to her career as a financial advisor is inspiring and infectious. The founder of the Verch Group just finished filming two seasons of a reality show, The Hard Way, and is working on a new finance-focused TV show aimed at helping Canadians make the most out of what they have. She’s also working on a book that will encourage women to step up to leadership roles in finance – and she’s leading a program to advance the recruitment of female advisors at Raymond James, all while juggling some philanthropic ventures that are also taking up time. But her current success has not come without struggle. Verch began her career more than 21 years ago as co-op student at a brokerage. As a female in what was a male-dominated industry, Verch had a steep hill to climb. “Once I was in the industry and decided I wanted to be an advisor, I realized the firm didn’t want to hire me. They made me a deal where I would work under someone else,” she says. “I said, ‘Just put me on the grid like anyone else.’” They did, and she posted immediate and impressive results – during her first year in the industry, Verch brought in $23 million in assets. She learned an important lesson: “Don’t let anyone else tell you what you can or cannot do. Believe in yourself. And go for it.” Today, her Victoria, BC-based practice operates under the tag line “Empowering Women to Take Control of their Finances.” She feels that women are still largely underserved by the financial industry. “Women are controlling more money than ever today,” she says. “The average age of divorce is 45. The average age of widowhood is 58. At some point in their lives, women will be controlling their finances.” Recognizing this, Verch is leading a new program to increase the number of women advisors Raymond James hires. “Women are only 15% of the industry. This is not enough. My mandate is to get Raymond James to have 25% of the force female by 2025.”

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The Advisors FEATURE / WOMEN OF INFLUENCE

Gillian Stovel Rivers

Senior wealth advisor, branch manager ELITE Wealth Advisors, Assante Wealth Management Gillian Stovel Rivers owns and operates a boutique wealth management practice that specializes in helping retiring and transitioning couples. Rivers came to the wealth management business in 2004 from a career in marketing communications, corporate event production and internet-based education. Together with her father and mentor, Gord Stovel, Rivers developed The Family Wealth Process, a simplified annual process for clients that helps them achieve peace of mind concerning personal finances. Her goals for the year ahead: “Simplify, clarify, focus,” while keeping up with the technological change that is working through the industry. “It is a continuous cycle for our practice and our clients … there will always be change, and also faster technology and greater demands on our time and our capacity. We are always working to optimize and automate some things so other parts of our clients,” she says.

Kate Flanagan Senior financial consultant Investors Group As a senior financial consultant with Investors Group, Kate Flanagan is focused on her clients’ long-term goals. For each client, she devises a detailed plan that is regularly reviewed and updated in order to keep those goals on track. For Flanagan, building long-term relationships is the key to success – and she’s clearly doing something right; she’s been with Investors Group for 20 years.

Colleen O’Connell-Campbell

Wealth advisor ScotiaMcLeod Flora Riyahi The wealth management office of Colleen O’ConnellCampbell is a dedicated female-dominated practice. In the Independent inancial advisor fall of 2000, O’Connell-Campbell joined the Ottawa office ELITE Wealth Advisors, Sun Life Flora Riyahi and her family moved to Truro, of ScotiaMcLeod as a dedicated financial planner, and Nova Scotia, in 1991. She spotted an ad looking within a year, she had begun developing her own clientele. for someone with a financial background and She believes in ethically responsible investing and takes jumped at the opportunity to put her particular satisfaction in helping other women achieve accounting degree to work. She started with financial success. O’Connell-Campbell is also involved in Met Life in 1991 and has been an advisor since. Women for Mental Health, an organization of which she is “Building clients in a community where you a founding member. don’t know anyone is not an easy task,” Riyahi says. After 24 years, she has a solid list of clients she has built up carefully over time by respecting relationships and building trust. “I cherish each and every one of them, and I am so honoured to have the privilege of helping them with their Jocelyne Chaput financial needs.” SVP, Investment advisor Goodman Dundee Private Wealth Riyahi also makes a point of giving back to the community. She is When Jocelyne Chaput entered the investment industry currently the chair of Nova Scotia Minister of Immigration Advisory in 1987, it was a turbulent period, to say the least – but Board, and she was the first female to serve as the Chair of Board of that trial by fire shaped her philosophy of disciplined Colchester Regional Development Agency. “I have lived in four counties investing, sound planning and diligence in selecting on three continents, visited more than 30 counties and lived in four investment vehicles. With more than 23 years of Canadian provinces. The opportunity to live in many different communities experience behind her, Chaput continues to provide and interact with people with diverse backgrounds has heightened my comprehensive investment services for her clients. understanding of cultural differences and the role diverse cultures and norms play in community development,” she says. 30 | MARCH 2015

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Jolene Laing Associate director of wealth management, branch manager, Scotia Mcleod Associate portfolio manager, Laing Portfolio Management After graduating with an associate in commerce degree with a major in finance from Vancouver Island University in 1999, Jolene Laing started out doing cold-calls at three different Vancouver Island branches of RBCDS. In 2001, Laing moved to Vancouver to work in sales at Fidelity Investments. In 2005, she moved on to ScotiaMcLeod in White Rock, where she took over part of a book of business in 2007 and focused exclusively on growing her own business. In August 2010 she became a portfolio manager; three months later, she was named branch manager. Since then, she has focused on the growth of the branch through competitive recruiting and growing the business of existing advisors. Her dual role has led to a tight book of only 90 clients, whom she’s currently moving into discretionary fee-based portfolios that she manages herself. “This has proven to be much more efficient and profitable for the clients because I’m able to be nimble and move quickly when opportunities present themselves,” Laing says. “I love the investment management part of this business and don’t generally give up the management of assets to third-party providers unless they focus on a niche or industry in which I don’t have expertise.” MARCH 2015 | 31

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FEATURE / WOMEN OF INFLUENCE

Rebecca Horwood Director of wealth management and portfolio manager The Horwood Team There are few whose legacy runs deeper in the Canadian wealth management industry than the inspired, disciplined and deeply experienced Rebecca Horwood. One of this country’s first female investment advisors, Horwood started out on Bay Street back in 1980. “My colleagues were all men,” she says. “Behind my back they would say, ‘She doesn’t know how to pick stocks.’ Competition was fierce. I am sure they were laughing at me.” But Horwood was ahead of her time. She had a vision to develop a practice that provided conservative long-term investment strategies that would make investing understandable to the average Canadian, male or female. “I saw a trend and realized women – professionals like me, divorcees and widows – needed help investing and were intimidated by men, as they still are today,” Horwood says. But over the years, she learned that men were also intimidated by fast-talking investment advisors that spoke only in technical terms. “The men also wanted to learn in a non-threatening way how to invest,” she says. She began hosting investment seminars and taught people how to invest and to save on their taxes by using the dividend tax credit. “I focused on growing their capital by investing in stocks and mutual funds. I developed relationships with accountants and lawyers and together we worked to help our clients develop a team of professionals today called ‘The Family Office’,” she says. She also developed an education series, “Financial Strategies for Women” that provided an advanced version of a family-office approach to investing. Today, she is focusing on the transition of the practice to the next generation. Both of her daughters, Alexandra, 28, and Rosemary, 26, have joined Horwood and her husband, John, as part of the Horwood Team, which has $750 million in assets under management and has spun off two other independent advisors.

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FEATURE / WOMEN OF INFLUENCE

Léony deGraaf Hastings Independent financial advisor deGraaf Financial Strategies Léony deGraaf Hastings grew up in the financial industry – her father was an advisor for more than 45 years. Learning the business ‘through osmosis,’ Hastings began her own career in the family firm more than 15 years ago. Since then, she has built her own successful practice in Burlington. After losing her mother to breast cancer in 2000, she found herself gravitating toward helping seniors and their families with retirement and estate planning. Recognizing this passion, Hastings took specialized courses to earn her elder planning counselor designation. “I can talk openly about end-of-life planning with clients and to empathize with grieving clients and beneficiaries,” she says. She recently enjoyed a career milestone when she was presented with a Leadership Award by peers in 2012 for heading up a female advisors group that meets monthly to discuss and share business ideas. “This was a huge honour, coming from my colleagues,” Hastings says.

Diana Bristow Financial advisor and owner Bristow Financial Group, Raymond James Diana Bristow began studying for the exams required to become a stockbroker when she was 13. In 1983, she started full-time in the industry, working as an assistant portfolio manager at a boutique firm prior to starting her own practice. She quickly rose to be one of the top female advisors after joining BMO Nesbitt Burns. She was nominated, and became, a vice president at the firm, and won awards annually as a leading advisor. In 2008, when her daughter turned two, she decided to move her office closer to home and ventured out on her own. As part of the Raymond James network, she says she appreciates the “wonderful” support system the company has for female advisors.

Lisa Upshaw Banking consultant Manulife Financial Previously a financial consultant with RBC, Lisa Upshaw took that experience to her current role as a banking consultant with Manulife, where she has dedicated herself to providing excellent customer service. At Manulife, Upshaw focuses her efforts on the company’s ‘One’ concept, helping clients become comfortable with the all-in-one account.

RUSSELL INVESTMENTS CREATES FEMALE-CENTRIC SEMINAR It began with a group of women wondering what advisors could do to reach female clients. “A lot of what we do in practice management is that we try to get advisors to grow their referrals and their business,” says Julie Zhang, a PM consultant with Russell Investments. “One of the areas we thought they were missing out on in terms of demographics was this focus on women and investing.” Although women are being courted more seriously than ever by financial advisors, this demographic is still underserved, says Zhang. “There are relatively few advisors who really cater to the needs of the female crowd. This is a relatively small component of the industry. But we spoke to some of our top female advisors in the US and Canada, and they gave us a few ideas as to how it is they were successful.” Then they did some research. “At first it was a sort of side project. But it turns out the findings were really interesting,” Zhang says. According to research uncovered during the project, the average woman has slightly fewer assets to manage than a man, $454,440 versus $587,570. But a higher percentage of those assets, 56% versus 53%, are with a primary investment advisor. The women typically stay with the advisor longer – 9.3 years for women versus 8.9 for men. In other words, although women have only 77% of the assets of men, they generate 82% of the revenue due to the greater

concentration of assets with their primary advisor. In addition, when experiencing market volatility, women tend to take a long-range perspective. They are more methodical, less fast-twitch. They think about things like taxes, estate planning and insurance planning. They also have a greater willingness to trust and depend on a primary advisor. In contrast to the stereotype of women being ‘high maintenance,’ women actually require fewer resources than men. “They also make referrals much more than men,” Zhang says. “They make great clients. Dollar for dollar, you get more revenue from a female client than a male client. They need to be brought into the conversation.” These findings were eventually turned into a seminar, which has now been given more than 100 times in the US, and is coming to Canada soon. “These events were way more busy … than typical seminars,” says Zhang. “Typically, what we find is that the female client and the female client’s friends love to share. Advisors tend to learn a lot about how to improve their own practices.” One advisor who hosted this seminar even went on to create a female advisory board with four of his top clients. “What some of the research has done is given over the power to those female clients … once the females feel they are empowered … the rate of referral grows astronomically,” says Zhang.

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WHY MENTORS ARE IMPORTANT

Mentorship is key to helping the next generation of women succeed in the financial industry It’s early into 2015, and we’ve already seen an increase in discussions regarding women in leadership roles, specifically in the financial services industry. Women are a powerful force and well-represented in Canadian business, so it’s not surprising there has been an intentional shift toward encouraging the industry to welcome more women into leadership roles. From Janet Kennedy at Microsoft Canada to Betty Devita at MasterCard Canada, female leaders are making headlines. As we know, it hasn’t always been this way, and women still make up a small percentage of the industry. That’s why it’s so important for women to build a strong network of other women who are facing similar experiences and challenges. We often fall into the trap of believing that we are alone in the obstacles we face and the self-conscious uncertainties we may feel (and sometimes even in the success we celebrate), but truth be told, another woman has likely already been there and done that. They might even have failed – but they’ve also grown from the experience. These women make great mentors, and I strongly encourage you to seek these successful women out and connect with them. Learn from their mistakes and, just as important, from their wins. If you are looking for a mentor, start with your own network, tap into industry organizations or attend networking events. There are a number of different networks and professional groups you can join, including several that are specifically geared toward women, such as The Women in Biz Network, which, in partnership with Sage North America, recently launched Mentor Her Biz, a program that matches

“It’s so important for women to build a strong network of other women who are facing similar experiences and challenges”

female entrepreneurs with committed mentors. A mentor can offer advice and support when you need it, while also giving the confidence to trust your gut. Here are a few reasons why connecting with a mentor can help boost your confidence:

GET SOME PERSPECTIVE No doubt, one of the best values a mentor can provide is their experience and perspective. Having the ability to tap into the mindset of someone who understands what you are dealing with, and the challenges you may be facing, is immensely helpful. Learning from their wins – and mistakes – can provide not just valuable lessons, best practices and the skills you need for success, but also a fresh perspective. Use your mentor as a sounding board for your ideas.

ESTABLISH PROFESSIONAL GOALS A mentor can help facilitate your professional and personal growth by providing feedback and helping you set goals. Define what success looks like to you. Set short- and long-term goals, and share them with your mentor to determine the path you need to take to achieve these goals. More often than not, your mentor has experienced the same things and knows what it takes to be successful.

HAVE NO FEAR Find a neutral spot to meet with your mentor (coffee shop, restaurant, park, etc.). Meeting in a relaxed setting will encourage you to loosen up. Your mentor is lending her time to you because she wants to help with your success; she isn’t there to judge. Ask the questions you are afraid to ask at the office – and the ones you think you should know the answer to. A good mentor will champion your strengths, and a great mentor will also bring light to your weaknesses and then help you conquer them. Take advantage of the time you have with your mentor and ask, ask, ask! Most important, don’t stress. It’s easy to be worried about wasting someone’s time or “looking stupid,” but a mentor will understand where you’ve been, as they’ve been there before, too. There’s no reason to be intimidated by a successful professional – they’re in a leadership position for good reason!

Nancy Harris is senior vice president and general manager for the Canadian market at Sage North America, where she is responsible for building the Sage brand and growing market share in Canada, as well as driving the strategy and day-to-day operations for the small business portfolio.

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FEATURE / HEDGE FUNDS

What’s next for hedge funds Arrow Capital portfolio manager and Bay Street legend Veronika Hirsch weighs in on new regulations that will open up hedge funds to a wider segment of investors They say if you plug away at anything long enough, you’re bound to achieve greatness in at least one person’s eye. But Veronika Hirsch has done more than that – many of Canada’s financiers consider her to be an extremely competent and consistently effective professional, so much so that her reputation for tenaciousness has achieved pseudocelebrity status. Having come up through the shoulder-padded financial powder keg of the ’80s, survived the economic complexity of the ’90s and borne witness to the radical transformations of the digital age, Hirsch was in a reflective mood when she sat down to talk to WP. The benefit of a lifetime’s worth of experience is fully evident as she compares and contrasts yesterday’s events with today’s realities. While not quite a reality, much-anticipated rule changes by the Ontario Securities Commission are already the subject of controversy in the hedge fund sector. In broad strokes, the changes could expand the current definition of ‘accredited investor,’ allowing a much wider aspect of the market to invest in hedge funds – from an approximate 2–5% of investors to 30%, which many say would open the floodgates on a substantial amount of funds. “To me, these changes make sense,” Hirsch says. “People should have access to whatever products are available, but it’s how you define those products and what products are appropriate for which segment of the investor market.”

Even in the hedge fund niche, product diversity is a reality. There are hedge funds that increase volatility and ones that decrease it. Hirsch believes access to hedge funds that genuinely decrease volatility and hedge away a proportion of the risk are most appropriate for the broadest aspect of the market. “It’s easy to assume that this minimizes the upside,” she says, “but what it really does is minimize the downside and still provide an attractive upside. Because what you really want to minimize is the scary experience of 2008.” It’s no secret that a majority of the population was terrified of even considering financial investments following the global financial crisis. In subsequent years, 2% to 3% annual returns were far from appealing – hardly a retirement nest egg. Thus, having access to funds that a majority of the market would consider appealing is by all accounts a logical solution, and hedge funds appear to be the most viable product. However, some differentiation may be in order as well. Instead of just calling everything a hedge fund, some rebranding and market education would help, Hirsch says. “I wouldn’t mind seeing some new terminology for funds that focus on risk [to differentiate them] from those funds that focus on returns. You can always look at a prospectus, and look at the history of a fund, and that will give you an idea what the focus of the fund is.”

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“People should have access to whatever products are available, but it’s how you define those products and what products are appropriate for which segment of the investor market”

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INDUSTRY ICON / DON DRUMMOND

INDUSTRY ICON

The economist

For years, Don Drummond was the public face of TD Bank. Now semiretired, the brainy economist continues to think through the deepest issues facing the Canadian economy – and, indeed, you By Jeff Sanford His name will be familiar to anyone in financial services. For a long time, Don Drummond was a regular presence in the Canadian business pages. As the former senior vice president and chief economist of TD Bank Financial Group, he was a trusted, much-quoted source. So when the Liberal Ontario government wanted a report on the state of the Ontario economy, it was no surprise that they turned to Drummond. The 2012 report of the Commission on the Reform of Ontario’s Public Services was the result. (It’s commonly known as the Drummond Report, so key was the economist to its authorship and direction). Since then, Drummond has hunkered down at Queen’s University, where he is the Matthews Fellow and Distinguished Visiting Scholar in the School of Policy Studies. But, judging by his interview with WP, he’s still got a head full of provocative ideas about the direction and future of the modern Canadian economy, including the opportunities being missed by advisors.

“I don’t yet see a wholesale effort to revamp our understanding of economics and policy. Rather, I continue to see some countries and international agencies advocate bad policy. The bright side is that there will still be jobs for economists and policy wonks who want to get it right”

Wealth Professional: What are you thinking about these days? Don Drummond: I am thinking about the unwarranted smugness of many economists and policy makers in the mid-2000s. They thought they had it all figured out. They assumed that individuals act in their self-interest, and the aggregation of that behavior is in society’s best interest … ditto for corporations, because companies are just a collection of individuals. These beliefs justified a laissez-faire approach to the financial sector. It was believed that if the monetary authorities just kept inflation low and stable, there would not be any wild economic cycles. Even if there were, a tweak of interest rates would right the ship. The belief was that we didn’t need to worry much about Japan’s two-decade stagnation because the conditions there reflected conditions particular to that country. Of course, just when everyone got good and smug, the world economy blew up, and we’re still trying to pick up the pieces. I don’t yet see a wholesale effort to revamp our understanding of economics and policy. Rather, I continue to see some countries and international agencies advocate bad policy. The bright side is that there will still be jobs for economists and policy wonks who want to get it right. WP: What are your thoughts on the modern Canadian wealth management industry? DD: I think the wealth management industry in Canada does not do a good job advising people on reasonable expected rates of return. I believe future returns will be lower than most investors expect. Consequently, most people are not setting aside enough money to achieve the income flow they

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“I believe future returns will be lower than most investors expect. Consequently, most people are not setting aside enough money to achieve the income flow they desire in retirement”

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INDUSTRY ICON / DON DRUMMOND

DON DRUMMOND’S CAREER TIMELINE 1977 Receives M.A. in economics from Queen’s University 1977 Joins Finance Canada, where he holds several positions, including assistant deputy minister of fiscal policy and economic analysis, assistant deputy minister of tax policy and legislation, and associate deputy minister 2000 Becomes senior vice president and chief economist for TD Bank 2010 Becomes Donald Matthews Faculty Fellow on Global Public Policy at Queen’s University 2011 Becomes co-chair of the C. D. Howe Institute’s Fiscal and Tax Competitiveness Council 2012 Publishes report of the Commission on the Reform of Ontario’s Public Services

desire in retirement. I believe there will be an extended period of zero or even negative rates of return to housing. Shortterm interest rates will unlikely average more than 3.5%. This will be in an environment of continuing inflation at 2%. And longer-term, low-risk bonds will unlikely pay more than 4–5%. Of course, these returns seem high compared to what we face today. But they are well below historical norms – and what many investors remember and expect to realize. But both real economic growth and inflation will be lower in the future. Equities will likely return about two percentage points more than long-term bonds, so about 6–7%. A balanced portfolio might then yield something in the 4–5% rate of return per annum. For most people, that will mean more capital will be required to achieve their retirement goals. Alternatively, they will need to work longer. I think the management fees for some products are too high. I have long predicted, although for the most part have been wrong, that there would be more fee compression for things like mutual funds. When this industry took off, there was a period of double-digit returns, and nobody minded paying two percentage points off that. But it will be a different story if returns are more in the 4% to 5% range. People might as well do their own investing and stick to no-cost government bonds and the like. I think the investment management business puts too much emphasis on chasing clients with $600,000+ of investable assets. If investment advisors checked the data on Canadians’ wealth, they would realize they are chasing a very small number of people. Somebody should be figuring out a profitable model for better serving investors with $200,000 to $600,000 of assets to invest. WP: What did you think of the way the Ontario government handled the recommendations in your report? DD: The Ontario government has implemented more than two-thirds of the recommendations my commission made in 2012. That isn’t bad as far as these things go. I believe it would have been higher had the government not been in a minority situation at the outset. Most Ontarians think the government has acted upon few of the recommendations. This is likely because the government has chosen to never put out a detailed report on the status of the recommendations. They keep such a report … but for

internal purposes only. I believe that if Ontarians saw that report, they would have a different perspective on the government’s response to the Commission. The question is, then, why they are keeping their actions secret? One possibility, if they have learned a lesson from the federal Conservative experience, they have pulled off a miraculous recovery from a huge deficit without ever revealing the details of how it was done, including to Parliament. Perhaps they think there was a lesson when Ontario Conservative Leader Tim Hudak seemed to lose votes by claiming his party would cut 60,000 civil service jobs. The reality is that this may well be the tally under the Liberals as well. But they seem to prefer walking softly while carrying the big stick. WP: What do you miss – or not miss – about working as a chief economist of one of the big Canadian banks? DD: The thing I miss most about working for TD Bank is the connection to real life. For 23 years at Finance Canada, I worked on the country’s most pressing problems. But they always came to me through a filter, typically through the political arm of government. I rarely got an opportunity to interact with the public, either over the problems they faced or their reaction to the policies put in place to address them. At TD, I got to be an active participant in the running of the business. That inside business perspective was new to me and exciting. I travelled the country endlessly, talking to wealth management and commercial clients. You can’t get your ear any closer to the ground than that. The great thing about working at Queen’s University is that I have the opportunity to ponder some big questions. But real life is again coming to me through filters, in this case usually the media. WP: Had you not become an economist, what would you be doing? DD: My intent until second year university was to be a professor of English literature. This desire had formed from high school. In those days, economics was not taught in school until first year university, so I had no exposure to the discipline. Two forces pulled me away from English and toward economics. The crass reason, and one I should feel ashamed about, was that it was much easier to get a high mark in economics than in

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INDUSTRY ICON / DON DRUMMOND

“[The Canadian stock market] is heavily skewed toward three sectors: energy, materials and financial institutions. If Canadians distribute their investments in accordance with the index … then they will be over-weighted in certain sectors with little or no exposure to others” English. More legitimately, economics really resounded with me. I had a math background, so that part was fine. But I also had a keen interest in social matters, and economics offered a principled approach to that world. Sure, it was in part theoretical, but it seemed it could be applied to the real world problems that interested me. In particular, in second year, I met the Professor Leonard Laudadio, who was the chair of the economics department at the University of Victoria. He has, ever since, been an inspiration and mentor to me. He was passionate about real-world problems and economics, and that enthusiasm was contagious. He always got to the heart of matters – here’s the demand equation, here’s the supply equation, here’s why there is an imbalance, and here’s what can be done about it. Even though Professor Laudadio passed away a number of years ago, he is still in my head and heart. WP: What do Canadians need to be educated on in terms of the economy? DD: A tricky issue for Canadian investors is that the Canadian stock market (the TSX, for example) is not representative of the Canadian economy. It is heavily skewed toward three sectors: energy, materials and financial institutions. If Canadians distribute their investments in accordance with the index, or buy index funds that do this, then they will be over-weighted in certain sectors with little or no

exposure to others. For example, there is little opportunity to invest in healthcare in Canada, yet it is more than 10% of the economy. In part, this requires being strategic about the selection of Canadian investments. It also means opening one’s horizons to investing outside of Canada – at least the major tax obstacle to doing this has been removed. But it introduced extra uncertainty and, of course, exchange-rate risk. WP: Have you made any retirement plans? DD: I am in retirement. I left my full-time position at the TD Bank in 2010. At their insistence, I did one final year part-time. For the past four years, I have had a part-time arrangement with Queen’s University, which I enjoy immensely. I like the opportunity to reflect upon big issues that I was never able to give full attention to when working for Finance Canada or TD Bank. And I love the interaction with the students. I have been teaching in the Masters of Public Administration program and cling to the hope we are helping to develop the civil servants who will lift the public sector’s game in a way my generation didn’t quite pull off. WP: What kind of investments are in your personal portfolio? DD: My personal portfolio is not one that would flow out of any investor’s guidebook. I have some fixed-income products, mainly provincial bonds. But the only equity I own is TD Bank. As a senior civil servant working on budgets, I was not legally prohibited from owning stocks … but there was a messy approval process. And the risk of conflict of interest was high, as I was frequently the recipient of information not generally available to the public. So until I joined TD Bank in 2000, I had never owned a stock. Then at the outset, TD required buying a multiple of my salary in their stock. And much of their compensation was based on TD stock. So my income, a good part of my pension and all of my equities depended upon one company. That is hardly a good model for anyone else to emulate. But on the other hand, even with the recent dip, TD stock today is worth about four times what it was in 2000, and it has paid handsome dividends, which receive favourable tax treatment relative to fixed income. So one could call it a risky investment strategy, but I have no complaints whatsoever about how it has turned out.

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GUEST COLUMN

Is NECESSARY DISCLOSURE a good thing? Recent changes in the industry have led outspoken advisor John De Goey to rethink his position Over the past few months, I‘ve been thinking about the appropriateness of something I have been championing for well over a decade ¬– the importance and efficacy of disclosure in the world of advice-giving for most retail consumers. Since the turn of the millennium, I’ve used the acronym STAND to promote the idea of Scientific Testing and Necessary Disclosure. In the 2012 edition of my book The Professional Financial Advisor III, I even tied the term STAND to one of professionalism – coining the acronym STANDUP by tacking the words ‘Underpin Professionalism’ to the original acronym. I now think I have been backing the wrong horse and no longer feel that necessary disclosure is the answer. In fairness, I have wanted to eliminate embedded compensation for as long as I have championed disclosure, but that larger objective always seemed so far away. Indeed, Glorianne Stromberg advocated doing so in a seminal report 20 years ago, yet embedded compensation still exists in Canada. Advocating for more and better disclosure was simply easier and more politically correct than advocating for the outright elimination of all compensation that is included in many products. Instead of using the phrase ‘eliminating embedded compensation,’ let’s

use the equally accurate, but more positive-sounding terminology of ‘embedding transparency’ as the objective. In the past few years, however, some countries like the UK and Australia have passed legislation that embed necessary transparency. Others, like the Netherlands, have seen the same change come about voluntarily. Nothing is more transparent than a separate bill with a separate line item showing exactly how much something costs. There are those who say that the ultimate reforms that are under way through CRM2. While that is true regarding the line item, there is no separate billing being contemplated as part of CRM2. Instead, billing would continue as it always has where commission-based products are involved. I don’t believe it will solve our problem – and it may very well exacerbate it. A couple of months ago, when preparing my comments for the Canadian MoneySaver speaker series at the Canadian Money Show, I quipped that perhaps I should change the phrase to STEECUP: Scientific Testing and Eliminating Embedded Compensation Underpins Professionalism – but since my logo for the concept features a guy with his arms raised, I didn’t think the new acronym was a particularly good one. I decided to settle on a slant rhyme instead. My new phrase is STANTUP: Scientific Testing and Necessary Transparency Underpin Professionalism. After more than 20 years in the business, I am simply not confident that any amount of disclosure will lead to outcomes that put investors’ interests first.

COMMISSION OR FEE? That lack of confidence is rooted in two perspectives – the natural behavior of both industry participants and retail investors. Let’s begin with the industry itself, which is not homogeneous in its approach. There are a number of product suppliers who favour necessary transparency/no embedded compensation already. Most, however, do not. The same goes for advisors. It seems there is a tacit war going on between the two camps – and as the saying goes, in any war, the first casualty is truth. For as long as there have been mutual funds, there have been people who refer to the compensation that they pay to advisors as ‘trailer fees’ and others who refer to them as ‘trailing commissions.’ These two terms are about as similar as apples and oranges. While most dictionaries offer similar definitions for the word ‘commission’ and the word ‘fee,’ there are nonetheless some important distinctions to be made. General con-

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sensus suggests that fees are charged separately (usually by professionals) for services rendered, whereas commissions are paid (usually to sales representatives) for placing products. Which do you suppose the industry prefers to use? There are some who will say there is a degree of ambiguity in this matter. For instance, many would argue that financial advisors do both – they recommend products and offer value-added advice. No one is disputing that, but again, that hardly makes the terms synonymous. Most people would agree that giving advice and placing products are very different things, so the question is: What is it that trailers are paid for? The clear answer can be found from our friends in the discount (or DIY) channel. These firms require that their clients (retail investors who choose to invest without input from an advisor) sign legally binding paperwork at account opening that clearly establishes that the discounter will not, under any circumstances, be offering advice or advisory services. Nonetheless, discount brokerages accept trailers. As such, there can be absolutely no doubt that, as a matter of fact, trailers are commissions and commissions only. One fund company is particularly cheeky. They run ads with the slogan “Invest with advice,” and then sell their products through the DIY channel. They have a one-page marketing piece called “Just what do these fees pay for?” In it, they mention a number of advisor activities, including discovery, active advice, portfolio management and review, wealth planning, administration and due diligence. There is no mention in the piece that, if an investor were to buy the same fund in the DIY space, the client cost would be exactly the same, even though none of these services would be provided. Trailers, therefore, do not unambiguously pay for any of those services, but they are nonetheless paid to discount brokerages. If companies like this were sincere, they would refuse to allow their products on the shelf of DIY distributors, which is what one of my favoured suppliers does. Of course, many advisors are playing a similar game in disclosing how and how much they are paid. In spite of dozens of years of effort, study after study has shown that many investors have no idea how or how much their advisor is being paid. How, exactly, can people make informed decisions about value if they have no idea about one half of the equation? Personally, I have very little confidence that CRM2 will make an appreciable impact on that problem going forward.

HOW DISCLOSURES FAIL Perhaps the most compelling reason for embedding transparency is new evidence that shows that disclosure, as we have come to understand it, simply doesn’t work. In fact, disclosure may very well be leading to a number of perverse and unintended consequences. In late October, I attended a presentation given by professor Sunita Sah of Georgetown University, who spoke about her recent paper that delves into

Instead of using the phrase ‘eliminating embedded compensation,’ let’s use the equally accurate, but more positivesounding terminology of ‘embedding transparency’ advisor conflicts and the limits of disclosure. She showed that once basic disclosures are made, consumers often ignore (or at least significantly discount) evidence showing that certain options are not in their own best interest. Furthermore, these people usually do not seek second opinions and feel pressure to comply with the recommendations of the person making the disclosure. As such, an advisor’s disclosure seems to be interpreted by investors as tantamount to a request for a favour, making them more inclined to act on biased advice. Sah’s research shows that advisors generally give more biased advice after making a disclosure than before. Her big takeaway was that disclosure “works best when it changes advisor behavior.” I have no confidence that CRM2 will change advisor behavior, and frankly, fear that things might actually get worse if products are allowed to continue to compensate advisors without full and proper disintermediation. The CSA has commissioned a couple of independent research studies regarding how embedded compensation might impact advisor recommendations. To me, this is like asking two Royal Commissions to determine whether or not the Pope is Catholic. Regulators have shown a remarkable capacity to study things to death when the need for reform is chronic and the solution self-evident. I sincerely hope that they STANTUP and do the right thing for a change.

John J. De Goey, CFP, CIM, Fellow of FPSC, is a vice president and portfolio manager with BBSL. The views expressed are not necessarily shared by BBSL. Contact him at john.degoey@bbsl.ca.

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STRATEGY / VIDEO MARKETING

How to use video to grow your business Videos that promote your business and inform potential customers are now expected by the vast majority of visitors to your website. Video production expert Geoff Anderson reveals what content your potential viewers are looking for If you want to stand out from your competition and be seen as an expert financial advisor, video is an essential tool in showcasing your unique skills and point of difference. Video has the power to move your audience. It can engage them with compelling information and, more important, can connect with your audience emotionally. After all, selling is an emotional sport, so you may as well play the game well! For many, approaching a financial advisor can be an anxious experience. Potential clients are entrusting you with their financial future – they’re counting on you to keep their assets safe and help them grow. With the right type of video, you can assure them that you have the answers and solutions to their financial situation. Video allows you to build rapport before you have even met your customer. It allows you to show some personality

and build trust in an authentic way – in a way that is far more powerful than the written word or that corporate headshot on your website or LinkedIn profile. Video is not going away. It has become the easy way to communicate online, to gain buy-in and to manage expectations. A recent survey found that 96% of consumers say video assists them with their buying decisions. Research also supports that customers now expect video on any reputable website, and 77% of consumers believe companies that create videos are more engaged with their customers. If that weren’t enough, 73% of those interviewed said that they are more likely to purchase a product or service after watching a video that explains it. So, what are you doing to build your business with video? Here are five ways you can use video in your marketing plan.

INTRODUCE THE TEAM

OFFER TIPS FOR SMART INVESTING

Produce short clips – up to a minute maximum – that introduce the people on your team. Build rapport with your customers, and show your viewers who you are and why you do what you do. Share why you love your job and what makes you good at it. Don’t be afraid to include personal information about you – are you married, do you have kids and do you play sport? What hobbies or interests do you have? Let your customers know you are a real person who understands them, as this is a great way to build rapport.

What are some of the common issues you have to deal with? Prepare some tips for your customers to help make their financing journey easier. They could include

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If the market is on the move, then explain why now is a good time to invest.

“Video allows you to build rapport before you have even met your customer. It allows you to show some personality and build trust in an authentic way”

topics such as: • • • • •

Why do you need a financial advisor? What kinds of returns can you expect on your investments? What are the different investment products available? What should you do when there’s a major drop in the market? Why you need a long-term financial plan

COMMENT ON ISSUES

As movement happens in the industry, provide some video commentary about it. Sometimes nothing has happened – the market has stayed relatively stable. Then put out a video to explain why the market is stable and what this means from your client’s perspective.

INTERVIEW SUCCESS STORIES

If you have customers who are doing great things with their investments, then share the love! Interview them about their strategies. How did they get into the market? What are their long-term financial goals (retirement, etc.)? What influences their investing decisions? What types of investment vehicles make up their portfolio?

CASE STUDIES

You also can include case studies. These might be stories from different customers about how you provided the ideal investment strategy for them – often in spite of themselves. If someone else can sing your praises with a specific story, it is extremely powerful. The typical case study will follow this format: What was happening in the customer’s life before you? What was their need? Why did they go looking for you? What did you do for them? (Asked the right questions, showed options they didn’t know existed, explained solutions they hadn’t considered … ) How is their life now? How relieved are they? How happy are they? How are they feeling? How excited are they about the state of their portfolio? I’m a bit of a fan of case studies because it is subtle selling with great power. The story should focus on the journey of the customer. It is about them. It just happens that at a critical time in the story, you were there to provide a solution they needed. And then at the end, they are in a much better place because of it. It’s about providing quality content that your audience will find valuable.

testimonial can give your viewer the reassurance that you understand the individual needs of each customer and can provide the right solution for their situation. A testimonial is different than a case study. A testimonial will usually focus on the quality of the advice you provided and less on how it impacted them. Be smart if you embark on the video production route. Plan your videos and book the video production company so that you can create many videos in the one booking. Generally production companies charge for a half-day or a full-day shoot. If you ask your clients to come by to provide testimonials or case studies, then you could easily fill up the day with filming. This will provide you with plenty of content. If you are presenting to the camera, then consider using a teleprompter. This will enable you to focus on how you deliver the information without the pressure of having to remember the lines. The teleprompter can have the text loaded up for you to read. With a piece of glass that acts as a two-way mirror you can read the text while looking straight down the lens of the camera to the audience beyond. Once you have your content, then be strategic with how you deliver it. Regularity is the key. If you have enough content, then provide a video every month, fortnight or week to your audience. Whatever it is, stick to it. It has been proven that regular content builds and maintains an audience.

TESTIMONIALS

Hearing your customers explain how your advice enabled them to reach their financial goals is very powerful. Video testimonials are more energetic and credible than the written word. A video

Geoff Anderson is owner of Sonic Sight, a corporate video production company. He is also the author of the Amazon bestseller Shoot Me Now: Making Videos to Boost Business. Visit www.sonicsight.com.au

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STRATEGY / SOCIAL MEDIA

Social Media

2.0?

In 2011, when IIROC finally established guidelines for social media use, there was a lot of chatter about where social media would lead the profession – how big of an impact it would make? Looking back, Lisa Langley, who was president at International Product & Service Group at the time, made perhaps the most accurate prediction: “There are many firms who’ll resist opening up to social media, but those who grasp it will have a competitive advantage.” Regulations aside, the other, more obvious (and less discussed) reason many advisors sidestepped social media altogether is that nearly a third of the industry is made up of an older demographic who are less inclined to get involved for lack of knowhow. According to a Wealth Professional survey, more than 30% of Canadian financial advisors are over the age of 55. The average successful advisor has been in business for 14 years and is in his or her late 40s to 60s. This age group would have just missed the social media explosion and may not be particularly adept (and/or enthusiastic) about taking on social media.

PLATFORM IS KEY

We’re all familiar with Facebook, LinkedIn and Twitter. But, asks Maggie Crowley, where does social media go from here? It’s 2015. Social media is no longer new. By now, your firm has made a decision to use it for business (or not). The question now is, has it been worth it? In essence, is social media a profitable practice for Canadian advisors? When I began writing this piece, I had a pretty firm belief in the power of social media. As the marketing manager of a mid-sized Canadian software company, it’s practically in my marketing bible to say yes. Yes, social media is vital for small business owners, and yes, there is an ROI when it’s applied effectively. However, over the course of researching and writing this article, my thoughts have shifted a little: Social media is a powerful tool, but only for some of us. Although Canadian financial firms are embracing social media, acceptance in wealth management hasn’t been easy. Compliance has always proven to be a grey area, so many practices have decided to circumnavigate the entire idea.

Despite the reluctance, there’s an upward trend of social media use in financial services, and we shouldn’t expect a stall in growth anytime soon. Over the next two to three years, Canadian advisors expect to increase their use of social media: According to a 2014 report from Mackenzie Investments, 60% say they will use it to build their brands or profiles, while 52% will use social media when prospecting for new clients. Whether social media is profitable for business depends on how it’s used and, apparently, the platform. “While there is a business case to be made for Facebook and Twitter, if a financial advisor wants to see the biggest bang for their buck, they should master the use of LinkedIn,” says Charlie Van Derven, president of Social Advisors. “As most financial advisors’ business development is dependent on referrals and personal introductions, LinkedIn is the most relevant social media platform.” LinkedIn is the most used social network in the industry (68% of Canadian advisors have a LinkedIn profile) and definitely seems to deliver the most value. Part of this can be attributed to the fact that LinkedIn is ‘the professional network,’

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and users aren’t just there to be entertained. Advisors who see the most success (read: engaging referrals and prospects via LinkedIn) are actively finding ways to participate in conversations and find their niche, which can be time consuming. According to Van Derven, “a huge majority of affluent people don’t like being asked for referrals. LinkedIn facilitates introductions, which is what most advisors are looking for.” He says the best way to get introduced to the right people is to ask your existing clients. “LinkedIn literally shows you who your connections know. If you’re connected to your clients on LinkedIn, it’s likely they will be connected to other people in your niche.” But, cautions Van Derven, don’t use LinkedIn’s in-message mail to connect. Instead, pick up the phone and call your client or connection and ask for a personal introduction. “The in-app message on LinkedIn has a pretty low return rate, but a phone call is personal and effective.”

EMERGING TRENDS We all know too well how quickly technology evolves. So, what’s the next social trend? According to Amy McIlwain, president at Financial Social Media, there’s already a big movement toward paid advertisements on social platforms. Imagine being able to duplicate the demographics and characteristics of your best clients in virtually every way. With sponsored (or paid) ads, it’s possible. Social media networks like Facebook and LinkedIn collect masses of data that users willingly

hand over, making it easy to get in front of precisely the right audience. “With the robust amount of data that Facebook gathers on individual users, advisors can pinpoint an audience based on a huge range of data, including net worth, income, zip code, age, company, profession and even behaviours such as likelihood of needing a full service investor,” McIlwain says. “By targeting exactly the right person at exactly the right time with exactly the right message, advisors can expect to see a high return on their investment.” One key to a successful social strategy is knowing where to find your audience. “Don’t waste your time on channels that your target audience doesn’t use,” McIlwain advises. If you’re not sure what social media platforms your audience uses, start by asking clients. Categorizing social media as ‘marketing’ can be a bit of a catch 22. If we consider social media part of marketing, it can easily turn into a promotional campaign that, in turn, is easy for consumers to ignore. However, using social media to organically share your expertise and provide value to a targeted niche can keep it authentic and be profitable, but it requires more time, effort and genuine elbow grease. So, is social media a profitable practice for Canadian advisors? Yes, but with a huge caveat: It must be applied authentically and with purpose. The ability to consistently illustrate your firm’s value proposition by sharing meaningful information (for free) is a huge benefit.

SOCIAL SUCCESS STORY Cory Papineau is a senior financial advisor at Assiniboine Credit Union in Winnipeg. He’s active on Twitter (@iam_ Canadian) and LinkedIn, and uses his social presence to connect with clients (among others) and “listen in on what’s going on in the community and marketplace.” “Being on social media has helped me rekindle a little passion for the profession,” he says. “I [use social media to] learn and understand what’s going on in my community and how I can help. When I sit down with clients or even prospects for the first time, I know what issues are front of mind.” What about compliance? “I know a lot of advisors

get scared because of the compliance piece. Just like with email and fax - at first people were scared advisors would use it incorrectly. In the long run I think it’s a fantastic way to connect with other advisors and clients.” However, he says, the rewards seem to outweigh the risks. “Leads [from social media] close very high – on average, I see about an 80–95% close rate from Twitter. It’s not me soliciting on Twitter; it’s me sharing my knowledge and expertise. It’s a trust thing. If I’m saying something relevant to them and their lives, it’s more like a conversation, not marketing. “It’s like going to a big dinner party and being able to have a conversation with people,” he adds. “You’re not trying to close someone in the buffet line; you’re having a conversation.”

Maggie Crowley (@ crowley maggie) is the marketing manager for a global leader in website software for the financial industry. She manages the company’s online presence and educates financial services professionals on how to maximize the potential of a strong web presence.

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BUSINESS STRATEGY / MARKETING

DEADLY SINS OF BUSINESS MARKETING

(that every business owner makes – even you!) Jamie Thomas lists the cardinal sins that all business owners commit when it comes to marketing. Take heed or repent at leisure!

The ability to market your business effectively is key to delivering a stream of qualified leads to your door and ultimately determines the level of your business success.* The latest surveys suggest that the average consumer is bombarded with between 3,500 and 5,000 marketing messages per day, every day.** Therefore the challenge to be heard above all others increases daily. In such a crowded space, costly marketing mistakes will inevitably occur. So for all you sinners out there, here are the Seven Deadly Sins that every business owner commits. How many are you guilty of?

SIN #1: LUST PLEASING THE MASSES (OR GETTING INTO BED WITH EVERYONE) “If you try to be everything to everyone, then you’re nothing to no one!” Too many business owners still target the mass market with too general a message.

The misguided belief is that a wider reach with a broader message should produce better results. Cast your ‘net’ wide and reap the rewards? The trouble is, the rules have changed. Today the smarter strategy requires targeting a specific market niche that shares similar needs and wants. By selecting targeted channels where your best customers are more likely to listen, you’re able to create messages that speak directly to and solve your customers’ problems. The big-picture goal? Dominate the market gradually and build up your niches. So resist the temptation to jump into bed with any old customer; be selective and start playing hard to get.

SIN #2: GLUTTONY OVERDOING IT WITH YOUR CONTENT Content is the new king. Business owners who understand how content marketing can help build

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their business’s profits are often guilty of overindulging in the type of content generated as well as the quantity of platforms they use and the frequency of their postings online. Resist the temptation to create content for content’s sake while blitzing your client database. It’s both a sin and a crime against your brand. Always abide by the first marketing commandment: Make all content relevant, engaging and useful, and you won’t stray from the path.

SIN #3: GREED OR, PUT ANOTHER WAY, BEING SELFISH Are you always focusing on yourself and never on your customer? Not knowing your audience is a business owner’s classic cardinal sin. Absolve yourself. Put yourself in your customer’s shoes and brainstorm campaigns that target their specific interests and problems. Don’t be greedy and just promote your product or services. Share your unique IP in a way that resonates with your audience. Entertain and educate first, then learn about the best ways to reach your audience.

SIN #4: ENVY IS SOMEONE DOING ‘BETTER’ THAN YOU? OF COURSE THEY ARE There’s always someone doing better than you are. The likely reason they’re more successful is that they’re working smarter than you are; that’s to say you’re not leveraging your time and bringing in qualified leads. A golden rule of marketing? Get your message out to the market. With only 24 hours in any day, duplicating your messages and attracting leads using new technology and practices is smart marketing. Don’t get left behind in Biblical times. Get up to date!

SIN #5: SLOTH LAZY, LAZY, LAZY YOU! Do you always play it safe? Do you adopt a ‘wait and see’ approach? Do you simply follow what every other business does? This only serves to help you blend into the background. Get up and stand out! Be creative; make some noise and make a statement. How? Publish a unique video, look for a niche, or create a unique online community. Get social or be forgotten. Calculated risks all come at a price, but

they’re usually the ideas that generate the most results and ROI. Get busy; get creative; get moving!

SIN #6: WRATH ARE YOU ANGRY OVER A LACK OF LEADS? ARE YOUR CUSTOMERS ANGRY AT A LACK OF CLEAR DIRECTION? Aside from needing anger management classes, maybe you’re simply not asking for the sale. Remember, always have a clear call to action for all of your marketing campaigns – tell customers what you want them to do next! Above all, make your call to action stand out.

SIN #7: PRIDE OR AS I CALL IT, ‘ME, ME, ME’ CONTENT Pride: the most common ‘sin,’ or symptom of self-obsession. The guilty are easily identified by marketing copy that harps on “company XYZ has been around for 30 years,” or “we’re the market leader” in blah, blah, blah. You’ve lost me already as a prospective customer. It has no place in your marketing collateral anymore. The problem is we’re all masters at marketing to ourselves, and pride has a lot to answer for! Use the words ‘you’ and ‘your’ much more than you say ‘I,’ ‘me’ and ‘our company.’ Stress the benefits of what your business offers – focus on how you solve problems rather than telling customers how good you are. Here’s a wake-up call: People aren’t that interested in you, but they are interested in what your business can do for them. Always stress the benefits; don’t sell on features. Customers primarily buy solutions, but mostly they buy benefits, and invariably they buy how you improve their lives, how you give them more time and how you solve their problems. If your marketing makes no reference to any of these pain points, you’re committing the biggest sin of all. Worst of all, they’re deadly for your business. Learn the lessons from these seven deadly sins; change your ways, see the results, and see your business thrive. * Whatever success means to you – in this case we’re simply implying financial success ** A recent study by Yankelvich Consumer Research, NY

Jamie Thomas believes everyone is a marketer. He is a brand and marketing specialist at Synkd, a Melbourne-based niche marketing, brand, communications and design agency. He is also co-author of Self-Made: Real Australian Business Stories (Busybird Publishing). For more information, visit www.synkd.com.au or contact info@ synkd.com.au.

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TEN QUESTIONS / VICTOR GODINHO

10 QUESTIONS FOR VICTOR GODINHO If there is a poster boy for ambitious young millennials, Victor Godinho is it. In less than three years in the industry, Godinho has already co-founded his own firm, VTAG Financial Group Inc. VTAG, which sits at the centre of Toronto’s trendy Liberty Village – a favourite haunt of up-and-coming one-percenters

1 What do you love about the industry? I love that every day is a completely new day. I enjoy the stimulating activities that come my way while working and growing within this vast industry. I love knowledge and learning, something that the financial industry never stops giving. 2 What are your concerns about the industry? My biggest concern is the fact that our industry makes it quite easy for anyone to become and portray themselves as a financial advisor. I feel the industry should make certain requirements for new advisors to accomplish in the first three to five years so that there are more educated and competent people in the industry. 3 What kind of clients do you have?

My client focus is entrepreneurs and business owners, professionals and high-net-worth individuals. I provide an advice- and planningfocused offering to these clients who require additional care and service, along with access to a vast professional network to help with their other needs: legal, taxation, real estate, etc. 4 Is there a secret to dealing with millennials? Although your main focus is to provide them sound and stable financial advice, you also do not want to tell them what to do and limit their lifestyle needs. It’s a blend of good cop, bad cop – you instil a budget and savings plan, which still provides enough disposable income they can spend to enjoy their travel plans or nights out. 5 If you weren’t an advisor, what would you be

doing? I would most likely be a full time entrepreneur starting and trying multiple ventures. I currently do

have a few businesses and ventures I will be pursuing in the upcoming years alongside my practice. 6 What’s your favourite thing to do outside the office?

I play in an adult soccer league when time permits. I have recently picked up a passion for reading biographies of successful people to learn and improve myself every day. I also enjoy just relaxing and disconnecting from the fast lives we live to enjoy time with family and friends. 7 What is one time you really went out of your way to help a client? When I first started out, I had a client refinancing their house to pay off debt and start an investment and debt elimination program. Due to miscommunication with the appraiser, mortgage broker and the client, the client was left with a $300 +HST bill by the appraiser. The client was pretty upset and not expecting this to happen, so I covered the bill for the appraisal and gave the client tickets to a Blue Jays game. The experience and service is everything to me. 8 What are the challenges of being a younger

advisor? Simply getting in front of older potential clients and dealing with the obvious experience age stigma. I have now developed a response due to facing this question all the time. Now I no longer see being a young advisor as a challenge, but an opportunity to use tools like social media and technology to impress and improve the client experience. 9 What are your own retirement plans? Retirement is not really on my mind since I love doing what I do. With that said, I do enjoy investing in small start-ups locally and starting side ventures with partners. I have a plan to purchase real estate consistently over the years and develop my investment portfolio as well. 10 What’s the best part of the job? Being able to meet new people every day and see what amazing potential grassroots businesses may be the next Fortune 500 companies in the years to come.

56 | MARCH 2015

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GLOBAL

opportunity doesn’t sleep. neither do we.

GAIN FROM THE PERSPECTIVE OF 600+ EXPERTS WORLDWIDE At Franklin Templeton, we have an experienced team of investment professionals on the ground across the globe, actively seeking the world’s best equity and fixed income opportunities. Find out more at www.franklintempleton.ca/global. TEMPLETON GLOBAL BALANCED FUND Overall Morningstar RatingTM–Series A

Source: Morningstar Research Inc., as of 31 December 2014. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers; may not be copied or distributed; and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. The Morningstar Risk-Adjusted Rating, commonly referred to as the Star Rating, relates the risk-adjusted performance of a fund to that of its category peers and is subject to change every month. The Star Rating is a measure of a fund’s annualized historical excess return (excess is measured relative to risk-free investment in Canadian Government Treasury Bills) adjusted for the fund’s historical risk. The overall Star Rating for a fund is a weighted combination of its 3-, 5-, and 10-year ratings. Overall ratings are adjusted where a fund has less than 5 or 10 years’ history. A fund scoring in the top 10.01% to 32.50% of its fund category receives 4 stars. Templeton Global Balanced Fund is rated within the Morningstar Tactical Balanced category. All performance data refers to Series A units. Please refer to www.morningstar.ca for more details on the calculation of Morningstar Risk-Adjusted Ratings. For each of the 3-, 5-, and 10-year performance periods, there were in total 143, 69 and 11 funds, respectively, in the Morningstar Tactical Balanced category. Please refer to www.morningstar.ca for the 1-year information. The historical annual compound rates of return for Series A shares of Templeton Global Balanced Fund as of 31 December 2014 are: 1 year 5.18%; 3 years 12.49%; 5 years 8.02%, and 7.22% since inception (26 June 2008). The indicated rates of return are historical annual compounded total returns including changes in unit or share value and reinvestment of all distributions and dividends and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. © 2015 Franklin Templeton Investments Corp. All rights reserved.

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

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

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

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

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

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

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