Wealth Professional 3.08 by Key Media

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ISSUE 3.O8

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CONTENTS

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UPFRONT 04 Editorial

Why you shouldn’t ignore millennials

40 FEATURES

YOUR PERSONAL BRAND

26 COVER STORY

ADVISORS ON FUND PROVIDERS 2015

Advisors share their candid opinions on how their fund providers are doing on everything from fee structures to CRM2 readiness

PEOPLE

INDUSTRY ICON Rod Tyler, the WP Awards Lifetime Achievement Award winner, reflects on three decades of success in the industry

Tips for making sure your online reputation matches your professional vision

06 Statistics

A closer look at Canada’s rising household debt

08 Head to head

CRM2’s potential impact on banks’ proprietary products

10 News analysis

Could dual licencing be the key to post-CRM2 survival?

12 Intelligence

This month’s big movers and shakers

14 ETF update

Why aren’t dealers being held accountable for ‘bad’ commissions?

18 Alternative investment update

42 FEATURES

COMMERCIAL COLLABORATION The benefits of taking a ‘we’ (versus ‘me’) approach to leadership

What Ontario’s newly accessible private market might bring

20 Opinion

Four reasons why blogging pays off

PEOPLE 38 Advisor profile

Richard Van Liempt helps divorcing clients make sense of the financial piece of the puzzle

47 Career Path

Elizabeth Lunney has travelled across the country to rise through the ranks

48 Other life

Advisor Cynthia Kett rocks out

44 FEATURES

IMPROVE YOUR INFLUENCE Four key ways to sharpen this essential skill

2 www.wealthprofessional.ca

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UPFRONT

EDITORIAL

Million-dollar millennials

erhaps no other demographic has been so overlooked by advisors than 18- to 35-year-olds. But advisors – with the exception of robotic ones – are ignoring millennials at their own peril. At the moment, most millennials are in the wealth-creating phase, so many advisors just don’t see the value in this demographic. But that is shortsighted. Millennials are expected to significantly grow their wealth over the coming years. In fact, by 2020, the aggregated net worth of global millennials is predicted to more than double compared to 2015; estimates range from US$19 to $24 trillion, according to a recent Deloitte report.

By 2020, the aggregated net worth of global millennials is predicted to more than double compared to 2015 A few trends point to this potential for growth – chief among them is the fact that millennials are about to enter their prime earning years. According to Deloitte, 54% of millennials have started or plan to start their own business, while 27% are already self-employed, which points to an increase in assets. Millennials also will benefit from the wealth transfer from their Baby Boomer parents. And like their parents, millennials want advice from an advisor – the Deloitte report found that 84% seek financial advice. That said, the way they consume information and choose an advisor is quite different. Blogs are a key way for advisors to cross the divide and speak to millennials. Consistent, quality blog posts position advisors as experts; when that millennial is ready to start investing and wants to talk to an advisor, they are much more likely to go to their trusted source for information. A presence on social media is also paramount – but the content an advisor places on Twitter, Facebook and LinkedIn has to be tailored to suit each platform. Millennials are too big an opportunity for advisors to ignore. While the returns right now might not be as high as with their Boomer parents, advisors who dismiss this demographic will be on the outside looking in in 10 years.

The Wealth Professional team

wealthprofessional.ca ISSUE 3.08 EDITORIAL Editorial Director Vernon Clement Jones Senior Writer Nicolas Heffernan Writers Will Ashworth Justin da Rosa Olivia D’Orazio Donald Horne Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

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IPO

MIDDLEFIELD’S GLOBAL EQUITY TEAM

RESERVED

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PROVIDING INVESTORS WITH ACCESS TO SECTORS THAT ARE UNDERREPRESENTED IN CANADA TORONTO STOCK EXCHANGE SYMBOL: GRL

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OUR TEAM OF GLOBAL EXPERTS (L to R) MATTHEW WATSON, Executive Director, Investments, ROB LAUZON, Managing Director and Deputy Chief Investment Officer, DEAN ORRICO, President and Chief Investment Officer, and ANDY NASR, Managing Director and Senior Portfolio Manager

TORONTO STOCK EXCHANGE SYMBOL: RCO.UN

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TORONTO STOCK EXCHANGE SYMBOL:

MCT

UPFRONT

STATISTICS

Recipe for debt disaster?

DEBT ON THE RISE

Low interest rates are pushing Canadians deeper into debt, at the expense of investable assets INSTEAD OF growing clients’ wealth and preparing them for a secure retirement, many advisors find themselves preoccupied with a fight against their escalating debt. The numbers are more than a little frightening. Canadians owed 85 cents for every dollar of annual disposable income in 1990, but that number has almost doubled today to $1.63. On the other side of the spectrum, Canadians are only saving 3.6% of their incomes today, down from 12% in 1990. It’s setting the country up for potential trouble

$21,028

Average debt for a Canadian consumer, excluding mortgages

Canadian debt is on the rise, while savings are on the decline, a relationship that can have no good outcome for Canadians. Not since the early 2000s have Canadians saved more than their debt

in the future. “The [Canadian] economy’s two main domestic vulnerable areas are its overheated housing markets and high household debt,” wrote Hamid Faruqee and Andrea Pescatori of the International Monetary Fund in a March blog post. The main reason for this rise in debt is the drop of the overnight lending rate, which has fallen from 5.5% at the turn of the millennium to just 0.5%. It’s driven the housing boom, which has led to increased mortgages and increased debt.

Savings (% of income) Debt (% of income)

$23 billion $1.8 trillion $1.29 trillion

Amount households borrowed in the first quarter of this year

Total debt owed by all Canadians as of the end of March

Total Canadian mortgage debt

Source: The Globe & Mail, May 2015

DEBT RISING ACROSS THE BOARD

DEBT BY AGE GROUP

Most types of debt have exploded between 1999 and 2012. Mortgages, lines of credit and vehicle loans have seen the largest spikes since the turn of the millennium

Canadian debt peaks between the ages of 35 and 44 – the time when most people are buying homes and raising families. Unsurprisingly, as people head into retirement, the amount of debt falls

1999 $453.6 billion

Mortgages

Credit cards

$1.003 trillion $33.2 billion

$120,000

$144.9 billion $18.5 billion $35.3 billion

Student $19.6 billion loans $28.2 billion Vehicle loans Other

$87,800

$90,000

$60,000

$49,300 $39,300

$37.1 billion $75.8 billion

$30,000

$18,000

$24.1 billion $22.9 billion

$0 billion

$200 billion

$400 billion

$600 billion

$800 billion

$1 trillion

Source: Statistics Canada/The Globe & Mail, May 2015

$142,600

$150,000

Median household debt, 2012

Lines of credit

2012

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0 under 35

35 to 44

45 to 54

55 to 64

65 and up Source: Statistics Canada

14%

12% The percentage of income saved by Canadians took a tumble through the ’90s; although it rose slightly after the global financial crisis, it’s since fallen to 3.6%

10%

170%

Meanwhile, debt expressed as a percentage of annual income has steadily risen, driven largely by lowinterest-rate mortgages

160% 150% 140% 130% 120% 110%

4% 100% 2%

90%

80% 1990

1995

2000

2005

2010 Source: The Globe & Mail, May 2015

HOLDING ONTO FALSE HOPE?

WEST LEADS IN DEBT

Despite the amount of debt most Canadians have, the vast majority of the country has a surprisingly optimistic financial outlook. In most provinces, the percentage of people who expect their finances to worsen was below 20%

Western Canada is accumulating more debt than any other region in Canada – BC and Alberta are far and away in the lead in terms of average household debt $150,000 $124,838

$125,000 Ontario 13%

Atlantic provinces 9%

$99,834 Average household debt, 2014

B.C. 21%

$100,000

$68,437

$75,000

$67,507 $59,805

$64,120

$50,000

$25,000 Alberta 34%

Saskatchewan/ Manitoba 18%

Quebec 9%

0 BC Source: CPA Canada

Alberta

Sask./Man.

Ontario

Quebec

Atlantic

Source: BMO Annual Debt Report, 2014

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UPFRONT

HEAD TO HEAD

Will CRM2 kill banks’ proprietary products? Many financial institutions have been faulted for failing to disclose all the fees associated with their own wealth products

Michael Gentile

Adrian Spitters

Greg Hall

President Benefits Plus & Personalized Investment Plannings

Senior wealth advisor Assante Capital Management Ltd.

Investment advisor RBC Dominion Securities Wealth Management

“CRM2 is all about providing the client with cost-efficient service and advice … but also meeting consumer demands. Because banks tend to have a limited number of products, I could see those institutions actually adding more funds or resources so they’re able to compete on the broader spectrum. But that’s only one part of the solution. CRM2 also considers advisors’ longterm relationships with clients. Given the limitations to product and income potential, turnover of in-house advisors is significant. So increasing product offerings can help to retain both advisors and clients.”

“If bank advisors fully disclose what they’re doing and they’re adding value for the price clients are paying, I don’t think so. It’s less about the proprietary nature of the products and more about the level of service clients receive for the fees they pay. It is my belief that a lot of advisors aren’t prepared for CRM2. Once people realize what they’re paying for the services they receive, they’re going to gravitate toward the professionals and the independents who can offer a higher level of service. But in that regard, I think the banks will suffer because they can’t personalize the service as much.”

“I don’t sell these products because I believe the fees can be prohibitive. In that respect, CMR2 is going to be lifechanging for many funds, as the high fees will be in plain sight for clients to see. At Dominion Securities, all fees are clear; there are no smoke and mirrors. My other challenge, specifically with mutual funds, is that the fund manager does not know my clients. I know if they are going through a life event that would necessitate a change to their portfolio, and if I make a change, there are no additional fees. However, if I buy or sell a mutual fund, there often are additional fees.”

EYE-OPENER ON THE HORIZON CRM2 will undoubtedly bring many changes, but those advisors who’ve lagged in disclosing costs will certainly be the most affected. Many proprietary products – particularly those sold through advisors at banks – fall into that category, although it’s difficult to say whether CRM2 will push clients away from those bank products. Some advisors believe CRM2 will actually motivate banks to offer service levels more aligned with what independents are already providing – including a longer list of proprietary products.

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STRONG CONNECTIONS AREN’T MADE BY THOSE WHO GO HALFWAY

UPFRONT

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UPFRONT

NEWS ANALYSIS

The dual decision As CRM2 increases the need for advisors to show value, the addition of an insurance licence is increasingly recommended

ADVISORS WHO market themselves as financial planners could be missing an important tool in the toolbox if they don’t have an insurance licence. “I think if you want to do the job 100%, you should have both the hammer and the saw,” says Michael Gentile, a chartered financial consultant with Benefits Plus. “It’s like building a house. You don’t want to furnish it without putting a roof on it. If you don’t, on the first rainy day, you have a problem. The roof, in effect, is the insurance component. It’s all about weighing off the needs and the balance. We want to make sure we have all the pieces in place. It makes good sense to be dually licenced.”

out to the public as a financial planner or a holistic planner, then you better be dually licenced,” says Brad Jardine of CIC Financial Group. “If you are a stock jockey and you just want to do investments only, then it’s not that imperative. But I think our world is changing – with CRM2 coming down the pipe, people have higher expectations. Certainly when they see how much we’re getting paid, they’ll have higher expectations of their advisors.” Besides, wealth management and insur ance are not mutually exclusive. A client’s insurance situation is something a financial advisor needs to know in order to do his or her job properly. “A good insurance program goes hand

“I think you’d be hard pressed to find someone who is dually licenced to be negative on the idea” Michael Gentile, Benefits Plus That’s especially true as CRM2 is poised to change the landscape for wealth advisors. As clients start to see the costs for the service they’re getting, any value-add will hold an advisor in good stead. Not every advisor needs to be dually licenced, but for the vast majority, it’s very useful, if not an outright requirement. “If you are a CFP and you hold yourself

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in hand with investments and savings. In essence, it’s all part of the package,” Gentile says. “As a financial planner, you need all the tools. You’re building, in effect, retirement plans. It takes more than just a hammer and nails.” The issue is that while most clients love to talk about new ways to make and grow their money, they’re loath to discuss

their mortality and insurance needs. It’s a difficult conversation for advisors to initiate, but if they’re taking a holistic approach, insurance has to be on the table. “You’re trying to disaster-proof their life first,” Jardine says. “Sure, it’s exciting and fun and interesting to talk about different investment options and retirement options and plans, but you have to cover the morbid stuff first to make sure that everyone is looked after – death, disability and then retirement.” Another benefit of discussing insurance up front is that it can help weed out clients during initial meetings who won’t be a good fit over the long term. “For example, if a younger couple with three kids and

BENEFITS OF AN INSURANCE LICENCE

Allows advisor to take a holistic approach

Better equips advisors to navigate CRM2 Insurance strategy complements investment strategy Advisors can vet clients with their responses to insurance questions Allows advisors to supplement wealth income Source: NFIB Small Business Economic Trends

significant mortgage debt laughs off insurance questions by saying, ‘Yeah, we’ve

If the cost dissuades them, that’s also a red flag.

“If you are a CFP and you hold yourself out to the public as a financial planner then you better be dually licenced” Brad Jardine, CIC Financial Group got three kids and a $400,000 mortgage, but she can remarry,’ it’s a warning sign,” Jardine says. “I may say up front, ‘If you’re serious about that, I don’t think this is going to work out for both of us on a long-term basis.’”

“If they can’t afford $100 a month for an insurance product to look after their family, there’s not a chance they’re going to save $500 a month for an RRSP,” Jardine says. “They are not mutually exclusive. As a matter of fact, they should go together.”

Especially for younger families, insur ance is a very real need, even though most consumers might not see it. That tends to change, though, as they mature. “Insurance to protect family is the most important in the early years,” Gentile says. “Over the longer term, the accumulation of financial assets – wealth – should begin to take precedence as you approach retirement, and it’s prudent decisions: how much and when you need to invest, how much capital can be freed up.” Yet despite the importance of insurance, it will never outstrip wealth as the main money-making vehicle for advisors. “From a time perspective, I would say insurance is 20–25% of our time, but from an income perspective, it might be 10%,” Gentile says. That being said, “I think you’d be hard pressed to find someone who is dually licenced to be negative on the idea,” he adds. “It’s comprehensive financial planning.”

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UPFRONT

INTELLIGENCE CORPORATE

FUNDS

ACQUIRER

TARGET

COMMENTS

B2B Bank

TD Bank

B2B Bank is set to acquire TD’s $603 million investment loan portfolio, solidifying its position as a leader in the field of investment lending

BCE

Globe & Mail

BCE has sold its 15% equity position in the Globe & Mail Inc. to the Woodbridge Company

Caisse de dépôt et placement du Québec

WSP Global Group

The institutional investor has made a $62.5 million equity investment in the global engineering leader, whose head office is in Montreal

Co-operators Group

Carleton Insurance Brokers

The wholly owned subsidiary has purchased the Ottawa-based insurance brokerage, whose portfolio includes personal and commercial insurance policies

Investment Planning Council

Independent Planning Group

IPC has successfully converted IPG’s data from the existing competitor system to IPC’s UNIVERIS environment

North Waterloo Farmers Mutual Insurance

Oxford Mutual Insurance

North Waterloo’s mutual policyholders have voted overwhelmingly to approve the amalgamation of the two companies to create Heartland Farm Mutual Insurance

OneCap Investment Corp.

MTS Data Centre Project

The capital pool company announced it was cancelling its qualifying transaction to acquire 50% interest in the MTS Data Centre

SS&C Technology Holdings

Citigroup Alternative Investor Services

The $425 million acquisition includes hedge fund services and private equity fund services

NEI Investments merges 12 funds into six

NEI Investments has received securityholder approval for its proposal to merge key mutual funds, the Terminating Funds and the NEI Northwest Macro Canadian Asset Allocation Corporate Class. NEI Investments is jointly owned by the Provincial Credit Union Centrals and Desjardins Group. This backing of its co-operative owners allows NEI Investments to actively support business growth in these networks as well as independent advisor channels.

Smart Investments terminates three funds

Sun Life acquisition boosts asset management business

Insurance Giant Sun Life continues its asset management growth strategy with the finalization of its purchase of Bentall Kennedy, one of North America’s largest real estate investment advisors. Bentall Kennedy’s current management, led by CEO Gary Whitelaw, will continue to run the real estate business, which manages $48 billion in assets for more than 550 institutional clients. Bentall Kennedy’s former shareholders, the British Columbia Investment Management Corporation and the California Public Employees’ Retirement System, will stay on as key clients.

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Mississauga-based Smart Investments is terminating the Pro Money Market Fund, Pro Fundamental Bond Index Fund and Pro Fundamental Balanced Index Fund. Smart Investments notified unitholders of its intention to terminate the funds earlier this year. Unitholders continue to have the right to redeem their units in the funds prior to termination date; all units not redeemed prior to the termination date will automatically be redeemed. Smart Investments rebranded the Pro-Index Funds after acquiring the fund company at the beginning of 2015.

PEOPLE Scotia bond fund changes course

ScotiaFunds, managed by 1832 Asset Management, has been approved to change the investment objective of its Scotia US $ Bond Fund. The new objective will be to provide a high level of interest income. The fund invests primarily in bonds and treasury bills that are denominated in US dollars and are issued by governments, corporations or supranational entities around the world.

NAME

COMPANY

COMMENTS

Karen Badgerow

Isle of Man Financial Services Authority

The former CDIC exec and OSFI veteran is taking the reins of the UK island’s financial services regulator

James Beattie

Global Maxfin

Beattie departed as CEO of the Richmond Hill, Ont.-based company after less than a year on the job

Dario Di Napoli

Manulife Asset Management

The insurer’s asset management business has hired Di Napoli as managing director of institutional sales; he will be based in the firm’s Toronto office

Shirley Lam

Manulife Asset Management

The asset manager promoted the longtime executive to the newly created role of head of wealth, affiliate wealth and asset management for Asia

Dennis Mitchell

Sprott Asset Management

The former CIO of Sentry Investments has resurfaced, joining Sprott Asset Management as senior portfolio manager and senior vice president, pending regulatory approval

Roy Murzello

DealNet Capital

The 15-year consumer lending veteran will become DealNet’s senior vice president of consumer financial services

Kelly Schmitt

Sodium Capital

The leading global provider of software-as-service for equity administration, financial reporting and compliance announced Schmitt will join its executive team as CFO

Ken Tam

RBC Global Asset Management

The asset manager announced the appointment of Tam as managing director of its Asia-Pacific region

Fiera Capital closes two funds

Fiera Capital Corporation announced its intention to terminate the Fiera Tactical Bond Yield Fund and the Fiera Tactical Bond Yield Fund II. As a result, the investment activities of the funds have been suspended and, effective immediately, closed to new purchases of units. This decision was made primarily as a result of the small number of unitholders and assets under management in the funds. Unitholders will be provided 90 days’ advance written notice of the termination.

Investors Group unitholders vote on fund mergers

Investors Group securityholders recently approved two fund mergers. The IG AGF Canadian Growth Fund will merge into the IG Mackenzie Canadian Equity Growth Fund, while the IG AGF Canadian Growth Class will merge into IG Mackenzie Canadian Equity Growth Class. The mergers are expected to result in a larger asset base, providing the potential for efficiencies in investment management and more comprehensive investment exposure for securityholders.

OSC gets a new vice chairman

The Ontario Securities Commission has announced the appointment of D. Grant Vingoe as vice-chair for a two-year term. Vingoe has been a partner of law firms in both New York and Toronto, most recently practicing with Norton Rose Fulbright, where he specialized in the regulation of financial institutions and capital market transactions. A former independent director of the Investment Industry Regulatory Organization of Canada, where he served as chair of its Corporate Governance Committee, Vingoe has extensive experience with cross-border securities initiatives, as well as a strong understanding of corporate governance and regulatory policy.

Long-time OSC employee joins Investors Group

Winnipeg-based IGM Financial has announced that Rhonda Goldberg, most recently director of the investment funds and structured products branch at the Ontario Securities Commission, is joining the firm as vice president of regulatory affairs. While at the OSC, Goldberg became quite the regulatory advocate, launching the Fund Facts short-form disclosure document to make it easier for investors to understand what they were investing in. Her new job will see her working with all IGM stakeholders, including regulators, to ensure the company able to introduce new investment products without any difficulties.

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UPFRONT

ETF UPDATE NEWS BRIEFS Trio of funds for retirees launched BMO Investments has launched the BMO Retirement Portfolios, a series of flexible and cost-effective managed investment solutions designed to help those in or near retirement preserve and potentially grow their wealth. The funds are intended to provide smoother returns with lower volatility for a range of risk profiles. With Canadians living longer, the managed solution is designed to ensure a retiree’s savings last longer. The portfolios provide globally diversified exposure to fixed income and equity asset allocation without increasing risk.

CI develops real estate pool for affluent investors Signature Asset Management, a division of CI, has developed the Signature Real Estate Pool, an investment vehicle designed to provide affluent investors with access to a professionally managed, diversified portfolio of REITs and equity-related securities issued by global companies or entities in the real estate industry. Signature is one of Canada’s largest investors in publicly traded securities in the real estate sector. Ryan Fitzgerald, CFA, will serve as the lead portfolio manager of the Signature Real Estate Pool.

Horizons ETFs goes global with new ETF Horizons ETFs has launched the Horizons Managed Global Opportunities ETF, a globally focused, actively managed ETF sub-advised by Forstrong Global Asset Management. Trading on the TSX under the symbol HGM, the fund’s investment objective is to use flexible tactical asset allocation

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among multiple global asset classes to seek long-term growth, while also seeking to protect against downside risk. The ETF will invest in other ETFs that are traded on North American exchanges. The three-tier investment model combines long- and short-term macroeconomic views, statistical analysis and currency management to determine growing global trends while managing downside risk.

BMO adds four new ETFs to its lineup BMO Asset Management has introduced four new ETFs that help investors manage risk, enhance yield and provide exposure to international markets to capture growth opportunities outside of Canada. The four funds are the BMO Low Volatility International Equity ETF, BMO International Dividend Hedged to CAD ETF, BMO Europe High Dividend Covered Call Hedged to CAD ETF and the BMO US Put Write ETF. BMO now has 63 ETFs and $22.9 billion in assets under management and 26.7% market share.

Canoe Financial wins prestigious award Five of Canoe Financial’s mutual funds have been recognized by Fundata Canada with FundGrade A ratings, signifying superior risk-adjusted returns as well as consistent top performance as of June 30, 2015. Fundata rates a total of 20,000 mutual funds using an objective rating system that takes into account a fund’s risk-adjusted returns. Canoe Financial manages almost $3 billion for Canadians in a diversified range of mutual funds and other investment products; the company’s disciplined investment approach delivers strong absolute returns for its unitholders.

The dealers’ role In cases of fraud, why aren’t dealers equally responsible for ‘bad’ commissions? In an increasingly familiar scenario, advisors have found themselves paying the price for regulatory misdeeds, while dealers often get to keep their share of the compensation from those transactions. A recent IIROC settlement agreement saw a big bank representative pay for forging a transfer document in order to move a client’s shares into a newly opened account. The rep also was prohibited from conducting securities-related business in any capacity while in the employ of or associated with any MFDA members for four months. But it begs the question of why the dealer didn’t also pay a financial price for actions of its advisor. “Dealers must be held accountable for the actions of those who put the advisor into the marketplace,” wrote investor advocate Ken Kivenko. “Why aren’t dealers always required to disgorge the commissions they received via the abusive actions of their advisors?” Many advisors are wondering the same thing. WP reached out to Warren Funt, IIROC’s Western Canada vice president of enforcement, who explained the reasoning behind the apparent double standard. “It is difficult sometimes to figure out exactly what the profit is. It’s not always as obvious as you might think,” Funt says. “It’s a conscious decision that is made by a panel, usually on the recommendation of staff.” In the case outlined above, for example,

Q&A

it would have been virtually impossible for IIROC staff to calculate any profit. It’s possible that the client profited by the transfer getting completed in a more expedient manner, but that’s not relevant to the question at hand. “We will look at how much money could have been made and whether compen-

“It’s difficult sometimes to figure out exactly what the profit is” sation has been paid,” Funt says. “Those are things that we at least consider in cases where there is a loss – and again, compensation isn’t the same as disgorgement. “The panel is only able to act on the parties before it,” he continues. “If [the bank] had profited and [the advisor] hadn’t, the panel couldn’t order BMO to pay compensation. That would be a separate disciplinary event.” While it seems dealers rarely get disciplined, Funt points to the August settlement agreement between IIROC and Scotia Capital, which saw the bank pay a $500,000 penalty for letting advisors sell funds to clients under prospectus exemptions that didn’t exist.

Justin Bender Portfolio manager

The passive strategy

PWL CAPITAL

Years in the industry: 9 Fast fact: Bender created Canadian Portfolio Manager, a blog focused on marketbased or passive investing, to educate do-it-yourself investors and advisors alike .

Given the current market conditions, do you favour an active core approach over a passive approach? I think anytime is always a good time for a passive approach. Not just now, but really during good times or bad times. During times when people are a bit nervous, I think a passive approach is better for behavioural reasons in terms of tracking relative to the index. They’re less likely to stray from their long-term investment plans if markets are down but their investments are tracking the markets. When markets recover, they’ll recover as well. It’s a lot harder with an active strategy where they have less holding – it’s less diversified; they’re not sure when markets recover or if they’re going to recover to the same extent. A passive strategy is probably the starting point for most investors, and probably where they should stop as well.

What’s your approach to actively managed ETFs? The one issue I see all the time with active ETFs is behaviour. You could have a portfolio with maybe just five ETFs in it, so when ones go down, it’s much easier to rebalance that. Again, behaviour-wise, when you’re rebalancing a core strategy, you’re not second-guessing the strategy as much as you might for doing some kind of active ETF approach. Selling for taxable investors is much easier and safer. The core passive ETFs all have similar securities you can switch to from other providers like BMO, iShares or Vanguard. So if one is down, you can just sell it and buy back something that’s basically going to behave the same way. With active ETFs, the strategies are very different from each other – at least most of them – so if you sell one to crystallize a loss, there aren’t really a lot of substitute securities that will behave the same way to switch to, so you could have bad tracking that way against your whole strategy. The costs are going to be lower for a passive ETF strategy than an active one. During bad times, people will focus on costs a lot more, and they’ll start favouring the passive strategy. The last point is that passive ETFs are generally more taxefficient, so they trade less – there’s less turnover expected; there are fewer capital gains expected. They might have lower dividend yields if they’re being compared to a high-dividend active strategy. So with that, for taxable investors, it could make more sense to have a passive-type core approach. I’d probably push more toward a passive core approach than active ETFs.

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UPFRONT

ETF UPDATE

Cap weight or equal weight: what’s in your index?

In highly technical sectors such as healthcare, innovation is key. Pharmaceutical giants tend to invest in growth by acquiring smaller, more innovative companies, as evidenced by the flurry of consolidation in 2015. These smaller, more dynamic firms are the future leaders in the industry and have higher growth potential. Any underweighting may lead to underperformance. Rebalancing instills an unbiased discipline – i.e., profits are automatically taken, and companies that have declined in value are bought. In other words, you are adhering to the oldest mantra in investing – buy low, sell high. The Russell Equal Weight Health Care Index rebalances quarterly. The result, in this particular case, is that the EW index outperformed the CW index. The return for the Russell 1000 Equal Weight Health Care Index for the 10 years prior to December 31, 2014, a period that included the global financial crisis, was 16.10%. This bested the CW index’s return of 11.33% by 42%*.

A case study of the Russell 1000 Equal Health Care Index Growth of $100 1400 1200 1000 800 600 400 200

Russell 1000 Equal Weight Health Care Index

In market capitalization weighting [CW], a stock’s allocation is determined by its total value in proportion to the total value of the entire index. Alternatively, equal weight [EW] indices assign, as the name suggests, an equal proportion to all constituent holdings in the index. The EW method of index and portfolio creation, despite having the simplest approach, has just recently come to fore in a meaningful, investible way. The evolution of ETFs provided the vehicle by which investors could express their strategies in a liquid, cost-effective way. This innovation is viewed by many investors as a solution to the short-

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11 /20

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Index weighting 101

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/20

Russell 1000 Health Care Index

TO EXAMINE the differences between traditional market cap weighting and equal weighting strategies in index construction and their effects on return and risk characteristics, let’s look at the Russell 1000 Equal Weight Health Care Index and its market cap weight counterpart.

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Source: Russell Investments, as of December 31, 2014

falls of traditional CW indices.

Why equal weight? The EW index has the potential for higher returns by mitigating concentration risk and mega-cap tilt while instilling automated discipline and increasing diversification. CW indices overweight exposure to mega-cap stocks. In this example, the top three stocks are pharmaceutical giants Johnson & Johnson, Pfizer and Merck. They represented roughly 25% of the entire index as of December 31, 2014. This overexposure to mega-cap stocks skews the index and decreases diversification. In the EW index, each stock represents roughly 1%, which redistributes the opportunity set. This lack of diversification in CW indices does not represent the average company in the index. For instance, the median market cap for both indices in question was US$10.98 billion. By comparison, the average market cap for the CW index was US$99.08 billion, while the EW index was US$28.51 billion.*

Risk vs. reward This potential excess return does not come without its own inherent risks. First, the rebalancing means a slight tilt toward value stocks. Second, the bias to smaller-cap companies is accompanied by higher volatility (as measured by standard deviation), which was 13.93% and 15.26% for the CW and EW versions, respectively, as of December 31, 2014. However, factoring the reward one gets for a unit of risk as measured by the Sharpe ratio, the EW index makes a compelling argument. The Sharpe ratio (the higher the better) for 2004 to 2014 was 0.96 for the EW index, compared to 0.78 for the CW index. In conclusion, as evidenced by the Russell 1000 Health Care Indices, the EW indexes can outperform their CW counterparts by mitigating concentration and mega-cap tilt risk while introducing disciplined rebalancing. *Source: Russell Indexes Performance, December 31, 2014. Questrade Wealth Management Inc. (“QWM”) is a registered portfolio manager. QWM manages and issues the QWM family of exchange traded funds. The views and opinions expressed herein are those of the author and do not necessarily reflect the view of QWM. QWM does not guarantee the quality, accuracy, completeness or timeliness of the information provided. QWM assumes no obligation to update the information. QWM disclaims all warranties, representations and conditions regarding use of the information provided.

James Youn, CFA, is a senior portfolio manager with Questrade Wealth Management.

UPFRONT

ALTERNATIVE INVESTMENT UPDATE

New opportunity brings sexy back What the private-funding success of the ‘female Viagra’ in the US could mean for the Canadian market

randum and crowdfunding exemptions being implemented by the OSC in the fall will ultimately provide much greater capital access for entrepreneurs in search of seed capital while giving everyday Ontario residents a chance to truly invest at the ground floor,” says Craig Skauge, executive vice president and director of Olympia Capital and president of the National Exempt Market Association. “Presumably, [that] includes companies not unlike Sprout.”

“These exemptions … won’t usually get a company all the capital they’ll need throughout their life cycle”

The FDA’s approval of the ‘female Viagra’ in the US is highlighting the kind of sexy new investment opportunities investors can anticipate with coming changes to Ontario private equity regulations. Private investors contributed $50 million to help develop Sprout Pharmaceutical’s Addyi. “Our model has always been to raise privately,” says Sprout’s CEO, Cindy Whitehead. “I think it’s become truly one of

NEWS BRIEFS

our greatest assets.” It’s almost an unheard-of amount of private funding for a pharmaceutical company, and Sprout’s success could pave the way for this trend make its way up to Canada – particularly in Ontario, where new regulations are expected to open up private markets to all investors, freeing them to invest at least $10,000 annually. “The combination of the offering memo-

Alignvest announces firstquarter results

Alignvest Acquisition Corporation has reported its first financial results as a public company. The business is a newly organized special-purpose corporation created to acquire one or more businesses. Alignvest Management Corporation, the sponsor of Alignvest Acquisition, was formed in 2011 as an alternative investment management firm with the founding principle of increasing alignment between asset managers and their clients. Alignvest has raised equity and investment capital from a number of private family offices and institutions. 18

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While this could be a huge windfall for advisors and investors alike, it also highlights the potential challenges facing advisors in this new world. With an investment like Addyi, for example, external factors could throw the potential return on investment into doubt. “These exemptions are meant for start-ups and won’t usually get a company all the capital they’ll need throughout their life cycle,” Skauge says. “What they’re aimed to do is get them the capital they need in their formative stages to get to proof of concept, where capital is easier to come by. If these exemptions do what they’re supposed to, the historically limited access to start-up financing should increase significantly.”

ORPP looks to alt investments for growth

Ontario Finance Minister Charles Sousa released additional details about the investment mandate of the portfolio managers being used for the Ontario Retirement Pension Plan. The ORPP won’t be forced to invest the funds in provincial roads and transit projects; instead, managers will be able to search globally for the best investments to grow the plan’s assets. According to Ontario’s government, the investment managers will be able to invest where they see fit, including in alternative investments such as real estate and hedge funds.

Q&A

Andrew Torres Founder and chief investment officer LAWRENCE PARK ASSET MANAGEMENT

Years in the industry: 20 Fast fact: Following a 14-year career at TD, Torres moved to the UK to work as a senior portfolio manager before moving his family back to Toronto to launch Lawrence Park Capital in 2011

The low-volatility answer What’s the inspiration behind your fixed-income strategy? The strategy we came up with at Lawrence Park was to create a fixed-income product that emphasized corporate credit risk over interest rate risk. We felt we were near the bottom of a multi-year interest rate cycle and that investors would be disappointed with the returns from their fixed-income portfolios in years to come. We also wanted to help investors lower the volatility in their portfolios. Investment-grade credit, which is what we’re focusing on, is inherently far less volatile than equities or interest rates. So I believed we could offer a product that would deliver steady, consistent returns and was still trading in liquid products. It’s not like investing in private debt.

Are you seeing many advisors pursuing this vehicle? There’s a clear appetite for this type of product as a diversification tool, and I sense many advisors are keen to differentiate themselves by offering alternative investment opportunities. Certainly the ones that have the discretion and understand how the strategy can fit into an overall portfolio, we’re definitely seeing action [there] for the strategy.

What’s the main thing advisors should know about this strategy?

Richardson GMP puts the spotlight on alternatives

Advisors at Toronto-based investment firm Richardson GMP will gain access in early 2016 to alternative investment options such as real estate, solar energy and structured notes through the acquisition of CQI Capital Management, which will be rolled into Richard GMP, providing advisors with an in-house alternatives platform. Partnering with global hedge fund and alternative investment managers, Richardson GMP advisors will have access to third-party management to provide their ultra-high-net-worth clients with a suite of non-correlated assets.

Most importantly, it avoids some of the pitfalls you get by investing in a traditional fixed-income strategy – negative returns if interest rates start to normalize to more historic levels. We are really focused on maintaining low volatility in our return profile. Traditionally, equity has about a 10% volatility profile, and traditional bond funds have about 4–6% volatility profile. Our volatility profile runs about 2%. That means the type of steady, consistent returns that investors love to see in their portfolios.

Does a solution like this work best during periods of economic uncertainty like we’re experiencing now? It really is about understanding the framework of the market environment we’re in – yields are incredibly low, and I don’t think traditional thinking in fixed income works anymore. It’s a dangerous game to think that bonds are going to work as a hedge against losses in your stock portfolio. We really think that alternative fixed-income strategies make a lot of sense. You can go for high yield; you can go for cash; you can go for private debt. Each of those strategies has its own set of opportunities and pitfalls. Our credit fund is another opportunity on the spectrum, and we think it’s worth a look by advisors who are looking to create a diversified portfolio that’s designed to preserve their clients’ capital and still offer decent returns.

Citigroup’s alt investment division settles with SEC

The alternative investment arm of Citigroup, along with an affiliate, settled with the US regulator, agreeing to pay $180 million to resolve charges that hedge funds under Citigroup’s control misled investors. The bank sold the investments as if they were similar to bonds, when in fact they were much riskier. The two hedge funds raised more than $3 billion from 2000 to 2007 before collapsing in 2008. The settlement will be returned to hedge fund investors in two funds. If Citigroup repeats the offence, it will face stiffer penalties in the future.

American Century launches alternative investment brand

Kansas City-based American Century Investments is expanding its line of alternative mutual funds and creating a new brand to house them all. The new AC Alternatives suite of mutual funds will delineate alternative strategies from the company’s legacy products while providing enhanced performance for its retail and institutional investors. The fund company has hired Perella Weinberg Capital Partners to provide investment management and allocation services, and to recommend subadvisors for the five investment choices. www.wealthprofessional.ca

UPFRONT

OPINION

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

4 reasons you should blog Blogging isn’t just for millennials. In fact, as Sandi Martin explains, it could not only make you a better advisor, but also win you more clients I CAN’T make it any simpler than this: If you’re in this business to help people understand their financial choices and implement their financial plans, you should be blogging. Oh, and it’s also a good way to get new business – that is, if you’re patient. By taking the time to write blog posts, and by doing so with your specific clients in mind as your target audience, you can add value to your existing relationships and cultivate new ones all at the same time, with the added benefit of becoming a better financial advisor while you do it. Ah, but there’s the rub: time. Blogging well requires an investment of your already scarce time, both in researching, developing and writing good content, and in waiting for your work to pay off in tangible ways. Translation: If you’re swimming in happy and well-served clients, or you’re fending off a crowd of potential new clients every time you go to the office, then maybe you don’t need to blog. But if that’s not you, here are four reasons why blogging is a great investment of your valuable time.

1. Blogging makes you a better financial advisor Writing for the public should be a little intimidating. You should be worried about how your audience will receive your blog posts – but just enough that it motivates you to go to greater heights of accuracy and relevancy. Forcing yourself to write well and write often about the ideas your clients are interested in makes you a better communicator – and, as it turns out, communi-

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cating is one half of your job. There’s very little point in developing a great financial plan or an investment strategy if you can’t communicate the reasons why it’s so great to the client who paid for it.

services or transfer their assets on the strength of one meeting. By blogging, you have a chance to get in front of potential clients over the time it takes to convince them of your competence and compare you – hopefully favourably – to their existing advisory relationships. The best part is that you can do all that without leaving your office.

4. Blogging weeds out leads you shouldn’t be spending time on The flip side of writing directly to the clients you serve best is that your writing won’t resonate with everyone. Turning non-ideal clients away is a good return on investment for the time you spend blogging. Think of it this way: Would you rather have 30 meetings with potential clients and close 10 of them, or have 15 meetings with potential clients and

“There’s very little point in developing a great financial plan or investment strategy if you can’t communicate why it’s so great to the client who paid for it” 2. Blogging adds value to your existing client relationships Your clients already get enough financial news. They’ve already been told that the Bank of Canada didn’t raise rates, that the Vancouver real estate market is overvalued, and that 70% of women in their 60s are worried about outliving their retirement savings. What they want to know is what that means (or, more often, that it doesn’t really mean anything) for them, and blogging is a way to serve them by helping them think more deeply about the issues that really matter.

3. Blogging warms up potential clients before you meet them Before you even get a phone call or email from a potential client, you know that they have already checked you out online, and what they found likely played a big part in their decision to get in touch with you. It’s pretty rare for someone to retain your

close nine? If your time is valuable enough to stop you from blogging, it’s probably valuable enough that using it to meet with clients outside of your target demographic is the same thing as wasting it. My hometown of Gravenhurst, Ont., located two hours north of Toronto, isn’t exactly a centre of influence, even (maybe especially) during peak cottage season. Yet I’ve had a full slate of clients after only six months of opening my (virtual) doors as a fee-for-service financial planner. In that time, I’ve paid exactly zero dollars for advertising. Every client who has retained me came to me either directly or indirectly from my blog and the resulting online relationships I’ve developed with colleagues and journalists.

Sandi Martin is a fee-for-service financial planner. She blogs at www. springpersonalfinance.com.

Are you ready for CRM II? At Invesco Canada we’re committed to supporting you through the implementation of the Client Relationship Model, Phase II (CRM II). Our online Guide to Cost Transparency is designed to help you discuss these reforms with video and print materials tailored to existing, new and prospective clients. For more advisor support materials, log in to www.invesco.ca/CRM2 or contact your Invesco Sales representative.

Connect with us:

Invesco is a registered business name of Invesco Canada Ltd. Invesco® and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence. © Invesco Canada Ltd., 2015

FEATURES

INDUSTRY ICON

CHANNELLING THE FORCE After three decades in the industry, veteran advisor Rod Tyler is able to stand back and rely on wisdom espoused by an iconic Star Wars character

AFTER 30 years in the industry, Rod Tyler has developed quite an unlikely role model. “Yoda,” he says. “That’s my hero, Yoda. ‘Do or do not. There is no try.’ That’s how I see the world.” The Regina-based advisor broke into the industry in the early ’80s before starting The Tyler Group. He’s seen the business evolve over three decades, but he’s showing no signs of packing it in. “I’m not retiring, but I’m changing what I do because there are a couple of young people … that we’re mentoring into roles who can do jobs that I used to do,” he says. Besides, he plans on getting better with age. “I have a lot of friends who are artists of significant renown in Canada, a lot of them are senior citizens,” Tyler says. “They’re doing their best work now in many cases, and when you ask them when they’re going to retire, they look at you as if you’re crazy. Why would you retire when you’re doing something you love? Your contributions may change, but not the passion for what you’re doing.”

A rough start While Tyler might have the benefit of wisdom and experience now, he didn’t have

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such an easy start in the industry. After graduating from the University of Regina, he was living off a scholarship in northern Manitoba while writing his thesis. “I was running out of money,” he says. “This was in the ’70s when inflation was really high.” He was working several jobs until an accountant asked him to run a truck

thanks to role models like Kathy Kolbe, who developed a mechanism to identify a person’s unique ability, and Dan Sullivan, who runs a strategic coaching program for entrepreneurs. “Those two things put together told me clearly and unequivocally that what I needed to do was create an advisory firm rather than just being an individual,” he

“Why would you retire when you’re doing something you love? Your contributions may change, but not the passion for what you’re doing” rental, leasing and operations company. He stayed in northern Manitoba for nine years. “But I knew I wanted to go back to my true calling,” he says. He went home to Regina to start the career in finance that he’d always wanted, but his timing couldn’t have been worse. “The economy was in a free fall, and firms weren’t hiring.” In 1981, he finally managed to get a job at Investors Group, which was then called Investors Syndicate. But Tyler had the entrepreneurial bug

says. So in 1990, he launched The Tyler Group. “When I set out, there were three things I wanted to accomplish,” he says. “[First], you need to do what you’re really good at. [Second], you need to be of service to other people, and [third], you need those clients who will reward you, whether it’s in the fee-based environment we have now or all commission, as at that time.” The impact Tyler has had over his threedecade career is evident in the people

PROFILE Name: Rod Tyler Company: The Tyler Group Title: Founder/advisor Years in the industry: 30+ Career highlight: Receiving the Lifetime Achievement Award at the WP Awards. “The presentation by Scott McLean was very genuine,” Tyler says, “and I truly appreciated those comments from someone I admire as a person and who has always been a pleasure to work with in our business interactions.”

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22-25_Industry Icon-SUBBED.indd 24

2015-09-23 9:59:51 AM

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Inception

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8.6%

9.2%

10.3%

Dynamic U.S. Dividend Advantage Fund

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Dynamic U.S. Monthly Income Fund

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Performance as at August 31, 2015. Inception date for Series F of Dynamic Value Fund of Canada is March 4, 2002. Inception date for Series F of Dynamic U.S. Dividend Advantage Fund is May 13, 2013. Inception date for Series F of Dynamic U.S. Monthly Income Fund is October 1, 2013. Commissions and trailing commissions are not payable on Series F units of the Fund but management fees and expenses may be associated with these investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemptions, distributions or optional charges or income taxes payable by any security holder that would have reduced returns. 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 ofwww.wealthprofessional.ca 1832 Asset Management L.P. 25

FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

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SILVE R

ADVIS OR

ND PROV N FU ID O S

015 S2 ER

GOLD

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ADVIS OR

S R O S I V D A ON FUND BRONZE

S R E D I V PRO 2015 l advisor a u n n a s lâ&#x20AC;&#x2122; a n ssio Wealth Profe ting insights a in c s fa s e id e survey prov ised to chang o p ip h s n o ti into a rela M2 thanks to CR

AN ADVISOR can offer excellent advice and develop the perfect financial plan, but if the products fail, that advisor is going to have to answer an angry clientâ&#x20AC;&#x2122;s call. This makes fund providers one of the most important players in an advisorâ&#x20AC;&#x2122;s sphere. As such, WP has completed its second annual Advisors on Fund Providers survey. With CRM2 on the minds of everyone in the industry, this survey sought to highlight the fund providers that are best preparing advisors for the coming changes. Advisors gathered in large numbers to tell us how fund providers are adapting to the new regulatory landscape, and to offer their takes on everything from fee structures to back-office efficiency. Advisors pulled no punches, leading to some interesting results.

METHODOLOGY Advisors rated their fund providers on a scale of 1 (poor) to 5 (excellent) based on 10 criteria: CRM2 preparedness Back-office efficiency Advisor support Overall service levels

Fees Product range Product performance Fee model

IT/technology Marketing

All the fund providers represented here received a minimum number of individual advisor ratings to earn a place in the final rankings. The top three firms were awarded gold, silver and bronze; the rest of the top 10 in each category are listed in no particular order.

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FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

Score out of 5

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

CRM2 PREPAREDNESS

Gold medal

Investors Group

4.67

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Silver medal

4.27

Invesco

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CI Investments

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BRONZE

Special commendations*

Quadrus Investment Services Fidelity Franklin Templeton Mackenzie Investments

Dynamic Funds Sentry Manulife Investments

*Note: Outside of the top three performers in each category, the names of other top-scoring fund providers appear in random order

Overall average: 3.75 A new category included in this year’s survey, CRM2 is the topic no one in the industry can stop talking about. And, as an overall average score of 3.75 indicates, some providers are doing much better than others at addressing the new regulatory environment. According to advisors, Investors Group is leading the pack, earning a score of 4.67. “Investors Group has done an exceptional job of providing information and proactive steps to [prepare] for CRM2,” said one advisor. They were followed closely by Invesco, which posted a score of 4.27. “Invesco provided a seminar last fall with a complete

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two-hour session dedicated to CRM2 and how, as advisors, we can and should be preparing ourselves in advance of complete implementation,” an advisor wrote. Rounding out the top three was CI Investments, which got a score of 4.23.

Room for improvement So just how big a part do fund providers play in the CRM2 equation? According to one advisor, not much. “I don’t think they can do anything. It is between client and advisor.” But that was the lone voice in the wilderness, drowned out by a cacophony of advisors offering suggestions for fund providers. In fact, 41.9% of advisors

believe CRM2 is the most important issue that will affect the advisor/fund manager relationship in the next six to 12 months. As is the case with so much in life, advisors’ main concern was communication – not only with advisors themselves, but also with clients. The companies that rated well in the survey went out of their way to help advisors prepare for CRM2, and many advisors feel that should be standard practice. “I would like to see more of the fund companies provide advisors with resources and information to assist with the transition,” one advisor said. Other advisors called for specific resources. “Keep us in the loop with executive summaries and suggested action steps periodically as material [develops] or timelines approach,” another wrote. Seeing client statements could help light a fire under some advisors, others pointed out. “Provide us with actual client statements as they will appear when CRM2 is rolled out. The impact will be motivating and will help us prepare for those client meetings.” In terms of client communications, most of the advisors’ concerns centred on simplicity. “Put things in plain English so clients can understand things better,” said one advisor. In fact, that perceived lack of transparency proved to be a hot-button issue for many advisors. “More and complete transparency with fees ... in everyday English that we, and clients, can understand and make sense of,” was one advisor’s recommendation for fund providers. “Break down fees on client statements, including all the fees that could be charged and then the ones that the client is paying for and to whom, dealer and the advisor,” suggested another. Advisors also asked fund providers for help in challenging the government on its policies. “More lobbying regulators,”

“Provide us with actual client statements as they will appear when CRM2 is rolled out. The impact will be motivating and will help us prepare for those client meetings” requested one advisor. “It is getting more costly [for compliance] to help the small investor, and they are usually the ones who need the most help.” Advisors also agreed that a large problem around CRM2 and providing advice in general is the lack of awareness on the part

of the public. They think fund providers have a role to play in the process of educating Canadians, asking for “marketing that emphasizes the value of advice” and “advertising to the general public to inform them of the value of advice.” The biggest takeaway, though, is that

advisors want a more integrated CRM2 approach from fund providers. “Build as much of the CRM2 [regulations] into the process and clearly state what the equivalent advice would cost if fee-only,” offered one advisor. However, even though fund providers, advisors and the industry in general have been working to prepare for CRM2, one advisor added that many are still woefully underprepared for the change. “I think in general the industry has their head in the sand on CRM2,” he wrote, “and we will lose many advisors when the shock hits.”

50 years of creating solid partnerships Since 1965, CI Investments has been managing money on behalf of your clients. At the core of our business are the long-standing partnerships we’ve built with financial advisors. Together, we manage the savings of over two million Canadians who have entrusted us with more than $100 billion in assets. We recognize the value of these enduring relationships and thank you for your ongoing support. With a proud history of growth, product innovation and top portfolio management expertise, CI is Canada’s Investment Company.

Visit ci.com or contact us at 1-800-268-9374 to learn about our comprehensive lineup of investment solutions. 1508-1416 CI - 50 years of creating solid partnerships ad - 7.5 x 5.indd 1

2015-09-11 1:07 PM

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FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

ND PROV N FU ID SO

Silver medal

CI Investments

4.38

ND PROV N FU ID SO

Bronze medal

Investors Group

4.36

4.59

Invesco Silver medal

Investors Group Bronze medal

EdgePoint

4.54 4.50

Special commendations

Franklin Templeton Mackenzie Investments Sentry

Overall average: 3.91 Given all the time and effort advisors put in to help clients, it can be ‘out of sight, out of mind’ when it comes to the behindthe-scenes machinations. It’s often not until something goes wrong that a provider’s back-office efficiency is truly appreciated. Fund providers received an average score of 3.91 in this category, indicating that they’re doing a fairly good job of making sure advisors are receiving support from back-office staff. Comments from advisors like “provided good support” and “great reporting” bear this out. Invesco climbed the leader board from last year’s rank of ninth to claim the top spot for this category, earning a score of 4.45. CI Investments and Investors Group were hot on its heels, posting scores of 4.38 and 4.36, respectively.

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Gold medal

BRONZE

Special commendations

EdgePoint Fidelity AGF Dynamic Funds

ADVIS OR

ND PROV N FU ID SO

015 S2 ER

SILVE R

015 S2 ER

SILVE R

BRONZE

ADVIS OR

ND PROV N FU ID SO

ADVIS OR

GOLD

015 S2 ER

ADVIS OR

4.45

Invesco

015 S2 ER

Gold medal

Score out of 5

ND PROV N FU ID SO

GOLD

015 S2 ER

ADVIS OR

ADVISOR SUPPORT Score out of 5

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

BACK-OFFICE EFFICIENCY

CI Investments Sentry Manulife Investments Fidelity

IA Clarington Franklin Templeton Mackenzie Investments

Overall average: 4.07 Being an advisor can be a lonely profession at times. The industry is chock-full of single-advisor firms, so advisor support can be a key area where a fund provider can set itself apart from the pack. With an average score of 4.07, fund providers received a healthy endorsement from advisors. “They keep me constantly informed on market happenings,” said one advisor. Another commended providers for helping him build his business: “They provided real-world insight into practice development and successes.” The top-rated firm for advisor support was Invesco, which moved from the silver position last year to take the gold this year with a score of 4.59. Investors Group narrowly missed out on top spot, earning a score of 4.54, and EdgePoint rounded out the top three with a score of 4.50.

ABOUT OUR RESPONDENTS Score out of 5

FUND PROVI D ON

015 S2 ER

ADVIS OR

OVERALL SERVICE LEVELS

Gold medal

Investors Group

4.58

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

GOLD

How long have you been an advisor?

2.3% 1-2 years

0.8%

9.3%

Less than a year Silver medal

Invesco

2-5 years

4.50

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

SILVE R

Bronze medal

EdgePoint

4.41

BRONZE

Special commendations

Sentry CI Investments Mackenzie Investments Fidelity

IA Clarington AGF Manulife Investments

Overall average: 4.00

87.6% 5+ years

How many fund providers have you bought products from in the last 12 months?

12.4%

46.5%

7.8%

When it comes down to brass tacks, the advisory business is really a service industry. And overall, it appears fund providers are doing a good job when it comes to service, judging by the average score of 4.00. Advisors definitely didn’t shy away from offering their opinions on this category, though – both good and bad. “Provide comments from managers and provide insight into what is happening as critical events unfold,” suggested one advisor. Investors Group took the gold here with a strong score of 4.58, jumping up from third place last year. Invesco took silver, scoring 4.50. They were followed by EdgePoint, which garnered a score of 4.41.

3 4

16.3%

17.0%

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FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

EdgePoint

4.90

GOLD

ND PROV N FU ID SO

Silver medal

3.71

Fidelity

ADVIS OR

GOLD

ND PROV N FU ID SO

Bronze medal

CI Investments

3.70

Gold medal

CI Investments Silver medal

Investors Group Bronze medal

Fidelity

4.70 4.58 4.43

Special commendations

Sentry Franklin Templeton IA Clarington AGF

Overall average: 3.50 If CRM2 is the new issue advisors are dealing with, fees are the perennial issue that’s always on advisors’ minds – and it’s an area where advisors think fund providers still have a lot of room for improvement, judging by the paltry average score of 3.50. Advisors were quick to sound off with recommendations: “Reduce management fees and lower thresholds for better rate funds,” wrote one advisor. “Transparency of fees – clearer, simpler explanation of all costs,” said another. However, while the industry as a whole isn’t garnering much praise from advisors in terms of fees, at least one company is doing something right: EdgePoint took home the gold in this category with an almost-perfect score of 4.90. It was a big drop from there to silver and bronze, which went to Fidelity (at 3.71) and CI Investments (at 3.70), respectively.

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Score out of 5

BRONZE

Special commendations

Investors Group Invesco Mackenzie Investments Dynamic Funds

ADVIS OR

ND PROV N FU ID SO

015 S2 ER

SILVE R

015 S2 ER

SILVE R

BRONZE

ADVIS OR

Gold medal

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

Score out of 5

015 S2 ER

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

PRODUCT RANGE

015 S2 ER

ADVIS OR

FEES

Invesco Manulife Investments Mackenzie Investments Dynamic Funds

Franklin Templeton Sentry IA Clarington

Overall average: 4.06 The proliferation of funds has continued unabated this year, as the seeming arms race keeps heating up. With so many products on the market, we wanted to know which providers advisors thought had the right range of products. While the average overall score of 4.06 indicates that most fund providers are doing a good job of offering advisors variety, advisors’ comments suggested that with ETFs charging full steam ahead, fund providers need to adapt. “Fund providers need to evolve to keep pace with ETF growth,” said one advisor. “MFDA platform-based advisors need to be able to access lower-cost products to serve our fee-conscious clients.” CI Investments cemented its place as the leader in this space with a score of 4.70. Investors Group climbed the rankings from fifth last year to second this year with a score of 4.58, while Fidelity jumped from a sixth-place finish last year to take the bronze, posting a score of 4.43.

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FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

PRODUCT PERFORMANCE

FEE MODEL

ADVIS OR

5.00

ND PROV N FU ID SO

Silver medal

CI Investments

4.29

ADVIS OR

GOLD

015 S2 ER

ND PROV N FU ID SO

Bronze medal

4.20

Sentry

BRONZE

Gold medal

EdgePoint Silver medal

CI Investments Bronze medal

Investors Group

4.60 3.86 3.71

BRONZE

Overall average: 3.84 Product performance can be a tricky category, especially in uncertain times like these – and this year’s average score of

ND PROV N FU ID SO

015 S2 ER

Mackenzie Investments Dynamic Funds Franklin Templeton

ADVIS OR

Special commendations

Fidelity Manulife Investments Investors Group Invesco

015 S2 ER

SILVE R

015 S2 ER

SILVE R

ADVIS OR

EdgePoint

GOLD

015 S2 ER

ADVIS OR

Gold medal

Score out of 5 ND PROV N FU ID SO

015 S2 ER

ADVIS OR

Score out of 5 ND PROV N FU ID SO

Bronze medal

3.71

Sentry

BRONZE

Special commendations

Invesco Fidelity Mackenzie Investments

AGF IA Clarington Dynamic Funds

Overall average: 3.61

3.84, a dip from last year’s average, reflects that. For the most part, advisors understand that it’s impossible to predict the future or direction of the markets. But they don’t like the wool being pulled over their eyes. “Stop merging underperforming funds into funds that are performing better,” said one advisor. Another advisor took a rather different stance. “Actual fund performance isn’t terribly relevant,” he wrote. “The performance of wholesalers can be dramatically different – the best ones rarely talk about product, and I have zero interest in hearing about new ideas. If I want new ideas, I’ll ask for them.” EdgePoint took top spot in this category with a perfect score of 5.00. CI Investments earned silver with a score of 4.29, while Sentry settled for bronze at 4.20.

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CRM2 has pushed the eternal debate about fee models to a whole new level – and advisors think fund providers have a lot of work to do, given the lousy average score of 3.61. Most of their dissatisfaction stems from DSCs. “Lead the charge to do away with DSCs,” wrote one advisor. “Start by automatic free unit conversions. Most importantly, reduce the MER on the FE version of the fund as compared to the DSC and LL version of the same fund.” Another advisor was even more blunt: “Get rid of DSC once and for all. If GICs paid 5% upfront, then the same clowns who sell DSC funds would be selling GICs. It’s just plain wrong to get paid 5% for any investment product.” EdgePoint led the pack at 4.60. CI Investments won silver at 3.86, while Investors Group and Sentry tied for bronze with 3.71.

IT/TECHNOLOGY

015 S2 ER

ADVIS OR

Score out of 5 ND PROV N FU ID SO

Gold medal

EdgePoint

4.32

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

GOLD

Silver medal

Investors Group

4.25

HOW DO YOU PREDICT COMPENSATION WILL EVOLVE IN THE NEXT ONE TO TWO YEARS?

20.9%

6.9% Increase

Move to a feeonly structure

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

SILVE R

Bronze medal

CI Investments

4.11

BRONZE

Special commendations

Fidelity Franklin Templeton Sentry

Mackenzie Investments Dynamic Funds Manulife Investments

Overall average: 3.74 Technology has come a long way since the average advisor entered the business, and most advisors have been forced to embrace the new world order. But it seems that most fund providers haven’t been as receptive to new technologies, judging by a middling average score of 3.74. But there are a few companies that are bucking the trend, and advisors rewarded them. EdgePoint won gold with a score 4.32. Investors Group finished second with a score of 4.25, edging out CI Investments, which took home the bronze with a score of 4.11.

“Stop merging underperforming funds into funds that are performing better”

40.3% Stay the same

31.9% Decrease

Advisors seem to have given up on the idea of a raise – just under 7% expect an increase in compensation. That’s down from the 10.3% last year who expected an increase. Nearly half of advisors (40.3%) expect fees to remain the same, a dramatic increase on the 26.5% of advisors who thought so last year. There was a 10% reduction in the number of advisors who think there will be a move to a fee-only structure, but roughly the same amount of advisors as last year (31.8%) expect compensation to decrease.

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FEATURES

COVER STORY: ADVISORS ON FUND PROVIDERS

MARKETING

ADVIS OR

Score out of 5

41.9%

14.7%

Gold medal

Investors Group

4.16

GOLD

New regulations (CRM2) ADVIS OR

ND PROV N FU ID SO

015 S2 ER

Compensation structures

ND PROV N FU ID SO

015 S2 ER

WHAT DO YOU THINK IS THE MOST IMPORTANT ISSUE THAT WILL AFFECT THE ADVISOR/ FUND MANAGER RELATIONSHIP IN THE NEXT SIX TO 12 MONTHS?

Silver medal

CI Investments

4.04

15.5%

27.9%

Market performance

Product performance

WHAT ARE THE MAIN REASONS YOU CHOSE THE FUND MANAGER (OR ETF PROVIDER) YOU DID?

2.6% 19.4%

Client preference

Compensation

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BRONZE

Bronze medal

Manulife Investments

4.00

Special commendations

Fidelity Invesco Sentry Dynamic Funds

Franklin Templeton Mackenzie Investments AGF

Overall average: 3.74

0% Marketing

Service

2.8%

ND PROV N FU ID SO

015 S2 ER

ADVIS OR

SILVE R

75.2% Product offering

Financial literacy is at a low in Canada at the moment, and given the regulatory changes on the horizon, the value of marketing is not lost on advisors. It appears that fund providers have some work to do in this category, though, judging by an average score of 3.74. That work, advisors say, is largely needed to help Canadians understand the value of having a financial advisor. “Help communicate the value of using an advisor,” suggested one survey respondent, while another thought marketing could “help with educating clients and the public on fees.” There are a few fund providers who are getting things right: Investors Group took the gold with a score of 4.16. CI Investments finished second with a score of 4.04, an improvement on their fifth-place finish last year. Manulife Investments came in third with a score of 4.00.

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PEOPLE

ADVISOR PROFILE

Bridge over troubled waters Divorce is never easy, but Richard Van Liempt’s analytical approach helps his clients see their uncertain financial futures a little more clearly AT A TIME when many financial planners are skeptical of the value of additional designations, Richard Van Liempt has added one more to his toolbox: Certified Divorce Financial Analyst [CDFA]. The decision to add that particular designation came from a conversation with friends, many of whom were divorced. “We realized there was a lack of financial information for divorcing individuals,” he says. “They wished they had known more financially and what the impact would be.” Knowledge is power, and Van Liempt believes people going through divorce would be able to do so a bit more rationally if the financial uncertainty were taken out of the equation. Van Liempt is no stranger to financial analysis. He entered the industry by way of real estate, assessing the financials of potential fix-and-flip investments. “I enjoyed the analytical side and the financial side and the joint venture side,” he says. “Instead of expanding my own renovation/ contracting company, I wound that down and got my got my mutual fund and insurance licences in 2009.” Van Liempt immediately began working as a sole proprietor, contracting his services to a variety of insurance companies. But he soon decided the salesperson approach wasn’t for him. “I realized when I spoke to clients, the financial aspects of a person’s life and their life goals are often intertwined,” he says. “I needed a more holistic approach and to look at the big picture for the client.”

He earned his CFP designation in 2014 and quickly found the underserved niche of divorcing clients.

Facing the facts Many divorcing couples have a dynamic that is unique to them. In some, only one individual is fully aware of the couple’s finances. In others, certain aspects of the couple’s estate are more important than others. Van Liempt points to the common instance of one spouse choosing to keep the family home. “It may look good in the first few years – there may be child support or spousal support – but there are other factors, like maintaining the house and taxes,” he says. “Is [that party] willing to sell the house? They may not want that realization after the fact; they may want to know that at the time of divorce and be prepared so they’re not caught off guard.” Working with divorcing couples can be especially emotional, and that was a concern Van Liempt faced when deciding if he wanted to get his CDFA designation. “There is a lot of charged emotion, and a lot of it is around the money part,” he says. “But if I can bring the analytical, non-emotional information, it becomes more matter-of-fact and the emotion is taken out of it.” That, he says, allows the couple to focus on bigger issues, like determining the future of the family house. Helping to move the process along in a more timely fashion is one of the best parts about working with divorcing clients, Van Liempt says, and that comes from having a good relationship with the lawyers and

“I realized when I spoke to clients, the financial aspects of a person’s life and their life goals are often intertwined”

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ALPHABET SOUP For Richard Van Liempt, designations are more than a collection of letters. These are his designations – and what it took to get them. Chartered Financial Planner (CFP): To earn this designation, advisors must have three years of related experience, write two exams and complete 25 hours of continuing education each year. Certified Divorce Financial Analyst (CDFA): This designation requires three years of related experience, plus four exams and 15 hours of continuing education every two years. Elder Planning Counselor (EPC): While this designation doesn’t have any prerequisites, advisors are required to write an exam and earn 30 continuing education credits each year. Certified Professional Consultant on Aging (CPCA): This designation also doesn’t require any prerequisites, though advisors do need to write an exam and complete 15 hours of continuing education every two years. mediators involved. “There are financial recommendations I can make based on what I see,” he says. “So having that good relationship and being transparent and being able to move back and forth with changes quickly and being able to model changes quickly will help alleviate some of the stress and move the process through a little more quickly.”

Education and empowerment Van Liempt is also intent on educating his clients as to what their financial future might look like, which helps take a load off of the couple’s shoulders. “It’s empowering people with the knowledge that they have options,” he says. “Ideally, both parties will walk away feeling they’ve both been heard, and it’s an equitable separation. They know what’s going to happen in the future financially for them.” But that goal – bringing education to the masses – is hardly exclusive to his divorcing clients. Van Liempt aims to help all his clients be better prepared for their financial futures. “My goal is to bring more information, more advice to that household level so that people can make good decisions,” he says. “I don’t think anyone wants to go through a divorce or get to retirement and realize they’re in a bad spot because they didn’t know the outcome. I want to model that outcome the best I can.”

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Your personal brand: from ‘now’ to ‘wow’

When you Google yourself, what’s the first thing that comes up? Is this image consistent with how you want to be portrayed? Nikki Heald explains the importance of consistent personal branding

TODAY, IT’S more important than ever for you to make your personal brand stand out. The idea of personal branding is certainly not new and has been bandied around for many years. Simply put, it relates to the way you market ‘you’ to the outside world. It’s about your professional profile and reputation. It’s about the value that others perceive you possess. Branding incorporates reputation and credibility. It influences whether people will buy from you, do business with you or even want to associate with you. If you want to

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stand out from competitors and position yourself to win, then developing, fine-tuning or tweaking your current brand is the way to go. The good news is that you can shape and control your brand. Personal branding should be an integral part of your overall marketing strategy – and if you don’t particularly like the term ‘personal brand,’ then substitute it for another term such as ‘personal visibility,’ ‘personal perception’ or ‘professional profile.’ Ultimately, it doesn’t matter what you call it; the fact is, there is a proven link between

projecting a professional image and success. Celebrities are good examples of personal brand managers. They work tirelessly and consistently to promote their visibility in their fields of expertise. They find ways to be unique and memorable. However, you don’t have to be a superstar or celebrity to build a strong and unique brand proposition. Whether you wish to market yourself for a new career, increased sales or diverse opportunities, it’s essential that your brand is genuine and promotes authenticity. How well you know yourself is vital. Do you have a strong sense of your professional message? Do you know your brand story? Do you communicate your brand consistently using multiple sources? Identifying what distinguishes you from others is no easy task, especially in this world of marked competition, but it’s unquestionably worth the investment. For those of you who own a business, perhaps you’ve spent loads of money on marketing campaigns to promote your business, but when was the last time you invested in you?

Where do I start? The first step is to reflect upon your current

brand and then determine whether this is your ultimate or desired personal brand. Ask others around you for feedback – clients, colleagues and your management team. What words do they associate with you? What do they believe are your strengths? What areas do they perceive you may be able to develop? What makes you different from others? A clear understanding of what your brand looks like now as opposed to what you would like it to look like in the future allows you to identify those gaps that will require your attention. Generally, the identifiable gaps will fall under one of the ‘Five Keys to Personal Branding’ that I have developed and use in my workshops: 1. Presentation: Dressing to reflect your position and meet client expectations; good grooming, hygiene and presenting an image that conveys credibility 2. Communication: How you position yourself verbally, nonverbally and in written communication; ensuring your online presence communicates the right messages 3. Behaviour: How you conduct yourself at business events, meetings and day-to-day interactions; demonstrating courtesy, respect and correct protocol for the situation 4. Skills: Ensuring you keep your knowl edge and competencies up to date; being on top of what’s happening in your profession through training, mentoring and coaching 5. Service: Providing exceptional service to both internal and external parties; doing what you say you are going to do and finding ways to delight your clients After you’ve carefully analyzed these five core areas and discovered the gaps, the next step is to determine what action you plan to undertake to take your brand from ‘now’ to

‘wow.’ Remember, this will take time, energy and effort; it won’t happen overnight.

Social media and branding The growth of LinkedIn, Twitter, blogs and Facebook has made it even easier for prospective clients to research you – and believe me, they will. In this digital day and age, people rely heavily on social media, and what you post is of interest to them. People are using Google personally and profes-

future of personal branding. Take time to create some short videos (ideally, no more than 90 seconds) about who you are, what you do and the value you are able to offer. Load them onto You Tube, your website, LinkedIn or other relevant sites for current or prospective clients to view.

Broadcasting your brand After all the time, energy and effort you’ve invested into cultivating your ultimate

“The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post” sionally on a daily basis. The first thing to do online is to find out what is being said about you and what information comes up in searches. Google your name and see what comes up. What do social media sites reveal about you? Does the content support the brand or perception you wish to convey to others? Could they be updated or improved to enhance your online image? The reality is that you will lose control of how you appear online if you are not the one in charge of managing your presence. Be mindful of what you publish or post. From a business perspective, LinkedIn’s powerful position in search engines means that your LinkedIn profile will probably come up first. Make sure you have a professional photo that creates a great first impression (not a dodgy one taken after a few drinks); provide all necessary contact information; customize your profile URL; load your summary, skills and work history; and add recommendations and honours or awards you have achieved. Social media is just one way to promote your visibility, and while blogs, articles and LinkedIn assist with this, video is the

personal brand, you need to do something with it – otherwise, you’ve effectively wasted your time! There are countless ways to communicate your value to both internal and external markets. Don’t be shy – it’s your time to shine and get your name out there. Here are a few ways that you can build your presence: sponsorship, community involvement, networking, hosting an event, chairing a meeting, getting involved in committees, producing a white paper, speaking at events, or writing articles, newsletters or a book. Remember, discovering or enhancing your personal brand is not difficult and will have a significant impact on sales and career advancement. Your individual marketing campaign is essential to building credibility and confidence but must be backed up by consistent, day-to-day action.

Nikki Heald is the managing director of Corptraining. Heald co-authored the book Views On The Way To The Top, publishes numerous articles, and her input is sought by various media channels.

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Commercial collaboration: the operating system of the future A new methodology of collaboration is necessary to keep pace with the speed of today’s business environment, according to Janine Garner THE PHENOMENAL speed of change that got us to the 21st century’s technological frenzy is not going to slow down any time soon – and it is creating an uncertain future on a global business level. There is an ongoing war between the need for stability and the need for growth. It is up to each of us to actively listen to the demands of this society and evolve how we operate accordingly so that what we do aligns with – and leads – the new paradigm. We live in a highly connected world. The constant transformations happening on both domestic and global levels are affecting us as we try to maintain balance in our personal lives while striving for our dreams. Business is under pressure – evolution within society demands constant innovation and invention in product design, delivery, communication, marketing and customer service, as well as in business itself, from office layouts to organizational structures, from leadership styles and culture to working hours and communication platforms. Societal evolution is driving a feeling of uncertainty about what the future will hold – especially for Gen X and the Baby Boomers, who have had both financial and philosophical certainties stripped away over the last decade. For these two generations in particular, who make up the majority of the leadership pool

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at present, this feeling of the unknown is resulting in business methodology regression. Regression to what? To the comfort of the known, of protecting ‘me,’ when what is actually needed is the courage, confidence and bravery to move to the new operating system of ‘we’ – one that will enable leaders to create the solutions needed to future-proof personal, business and team successes. Those who are willing to be a part of a collaborative working environment are doing so because they want to be challenged. They want the opportunity to constantly learn from others, and to share what they’ve learned. To engage on an intellectually challenging level with like-minded thinkers. To see their

own business benefit from the knowledge of specialists. To be happy knowing that they are on the edge of technological advancement, constantly pushing the ‘what if ’ button – because as a team, they feel secure enough to take risks.

Moving from ‘me’ to ‘we’ The concept of commercial collaboration, and the move from the ‘me’ space to the ‘we’ space, is not for the faint-hearted. It’s for those who can see the far-reaching benefits of what the ‘we’ space is about — and yes, it is a gradual move, one that involves challenging thinking. But it is not something one has to contemplate in solitude.

THE BENEFITS OF ‘WE’ Leaders who are already operating in the ‘we’ space: Are able to think big

Promote based on merit, irrespective of gender or age

Recognize the need to act as a team

Are innovative

Embrace fears and vulnerabilities

Disrupt the status quo

See the value in helping others see their worth

Lead with a questioning spirit

Actively engage with others

See what commercial collaboration brings to an entrepreneurial mind

Act with bravery

A COLLABORATIVE ENVIRONMENT This new operating system is one where: Networks of connected individuals, communities and businesses work together to drive success We can bring our skills, strengths and talents to the table, and together amplify and share expertise to create progressive, results-oriented solutions Collective intelligence means we work smarter and quicker together Diversity and difference of opinion is actually the new competitive advantage Commercial collaboration: Creates momentum Drives new thinking Builds resilience and determination to succeed Enables individuals and businesses to explore possibilities and develop strategies to future-proof success Every part of the ‘we’ space has the backing of others. Overcoming fear and facing up to vulnerability are done with full disclosure and honesty, with the knowledge that by sharing your fears, you are empowering not just yourself, but those who work with and for you. You are giving the team the opportunity for empowerment and trust. When you disrupt the status quo, when you disturb the accepted and the everyday, you are forging a new strength and getting rid of the weak and humdrum, which bog down business decisions and keep processes stale and stagnant. In the spirit of openness and full disclosure, you are not moving secretively, but so that those in your team or circle of excellence are aware of your thought processes and why you are taking the actions you are. In this way, you have backup – and trust in your actions.

Understanding the power of your network and using its potential is intrinsic to the ‘we’ mentality. To care about the well-being of those who are connected to you through business similarities or ethical focus or a desire to advance the same cause – while expecting nothing in return – creates a fantastic opportunity for collaborative relationships, and also for a true value exchange, where ‘what’s in it for me’ turns into ‘what can I do for you.’ The ‘we’ space is not a pipe dream. There are businesses and leaders who are clearly succeeding by operating within this framework. It is the centre of discussion among academics, thought leaders and consulting groups. Those corporations and entrepreneurs who are using the space well, and understand the shift in thinking needed to get there, are seeing procedures streamlined, the bottom line coming up,

and employees happier and more engaged. Their ‘communities’ are becoming actual communities. It is not enough, in the words of Sheryl Sandberg, to ‘lean in’ to future-proof our success, our businesses and our careers. For leaders who are taking teams into an uncertain future, it’s now about leaning out and collaborating with others. Because to lean out means to embrace and engage on an unforeseen aggregated level – where thinking bigger than ever before will bring rewards to a collective commercial mind. Janine Garner is a businesswoman and entrepreneur, and is the author of From Me To We: Why Commercial Collaboration Will Future-proof Business, Leaders and Personal Success. She is the founder and CEO of LBDGroup.

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FEATURES

LEADERSHIP

Four ways to improve your influence We are all in the business of influence – but instead of seeing it as manipulation, Dr. Tim Baker outlines how influence, when used ethically, can be an essential business tool

INFLUENCE IS the lifeblood of business, especially for advisors, who must influence the many stakeholders they deal with on a daily basis. However, the word influence means many things to many people. To some, it means being cunning, manipulative and tricky. Others see influence as ethical and open. In my view, influence is the power to make other people agree with your opinions or get them to do what you want willingly and ethically. The key words here are ‘willingly’ and ‘ethically.’ Sustainable influence is not an exercise in manipulation and trickery. In the context of sales, marketing and professional advice – areas that advisors regularly work in – influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances. People make up their own minds, but they do so on the basis of how they are influenced. This is why influencing must be done from an ethical standpoint. My new model of influencing, the Influ encing Capabilities Framework, illustrated on the opposite page, identifies four primary ways that leaders can and do influence others. You will notice two styles – push and pull. The push style is more assertive, direct and upfront, while the pull style is more collaborative, indirect and subtle. Both are effective

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INFLUENCING CAPABILITIES FRAMEWORK PUSH STYLE

PULL STYLE

APPROACH

Investigation

Calculation

Logical

Motivation

Collaboration

Emotional

in the right place, at the right time, with the right people. The two approaches are logical and emotional. The logical approach is based on fact, rationale, structure and clarity, whereas the emotional approach is based on inspiration, possibility and the ‘big picture.’ Again, both approaches work in the right circumstances. So we end up with four distinct strategies: investigation, calculation, collaboration and motivation. Which one do you favour?

Investigation As a strategy of influence, investigation basi cally means gathering the facts and presenting them in a logical and convincing manner. The presentation of a coherent and assertive argument based on well-founded research is a powerful form of persuasion in the right set of circumstances. People usually are not convinced by someone who does not have a sound grasp of the facts, nor are they influenced by someone with wavering conviction or an incoherent presentation of his or her ideas. Then again, even if you are logical, coherent, assertive and well-researched, that doesn’t necessarily guarantee that you will be persuasive. But these attributes are at least a good starting point. Advisors who have a preference for investigating like to search for supporting evidence and, from this data, generate hypotheses or ideas based on a logical, rational argument. Once investigators have prepared a well-founded case, they assert their ideas to others. Being well-prepared, investigators are typically on solid ground to oppose others’ arguments. In other words, an investigator’s influencing ability is reliant on a carefully researched and assertively communicated

case. Climate change campaigner and former US vice president Al Gore is an example of an investigator.

contribute to the big picture?” is the type of question motivators answer. Former civil rights activist Martin Luther King, Jr. was a motivator.

Calculation Calculation means to influence by clearly articulating the pitfalls of the status quo and demonstrating how those pitfalls can be overcome with a new proposal.

Collaboration The strategy of collaboration fundamentally involves influencing through trust-building and sharing ownership of the leader’s proposal.

Influence is, more often than not, about persuading others to think and act in ways that benefit themselves and their circumstances Psychologists tell us that we are all motivated by pain and pleasure: We try to avoid painful situations as much as we can, such as being late for an important meeting we are chairing. Conversely, we gravitate to pleasurable experiences, such as pleasing our boss by finding the right information in a timely manner. While this should appear obvious, we each have different ideas of what pain and pleasure are, so we interpret the significance of situations in our own way. A potentially painful situation for one person could be viewed as enjoyment by another. Advisors who are calculators are likely to talk up both the advantages and disadvantages of an approach. Former UK prime minister Margaret Thatcher was a calculator.

Motivation The motivation strategy, in essence, means to influence by associating an idea, change or proposal with a clear, compelling and common vision of the future. Advisors who can paint a convincing picture of the future and motivate people with that vision are generally inspirational and influential. Most great leaders have this aptitude. Unfortunately, from my observations, too many people get caught up in the minutiae of what they are doing. Consequently, they often forget to articulate the link between the proposal and the big picture. People in sales don’t always explain the why – why we are recommending this approach or portfolio. “How does what we are currently doing

Clients are more likely to be persuaded by an advisor’s suggestion if they feel they have been genuinely consulted about it. By collaborating with others, the influencer is inviting the people he or she is influencing to be emotionally engaged and involved in the proposal. Clients feel they have a stake in the change and are subsequently more receptive to its merits. Through authentic collaboration, trust builds and influence increases. Collaborators create positive emotional energy. They are concerned with developing a sense of trust and engagement. Collaborators are consultative in their approach to problemsolving; they actively listen to others and are willing to share ownership of the outcomes through open communication. The influence of collaborators permeates from encouraging input and building higher than normal levels of confidence in colleagues. The late activist Mother Teresa was a collaborator. We each favour one of these strategies over the other three. The problem is that, from time to time, we will doubtlessly use the wrong strategy, either for the person we are trying to influence or the situation we are in. Outstanding persuaders and influencers use all four strategies in the right place and at the right time.

Dr. Tim Baker is a thought leader in organizational and leadership development, an international consultant and bestselling author of the book The New Influencing Toolkit: Capabilities for Communicating with Influence.

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JOBS

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PEOPLE

CAREER PATH

ON THE MOVE

A series of relocations took Elizabeth Lunney across Canada and back – and into the upper echelon of her profession 2012

BECOMES PRESIDENT AND CEO Lunney’s contributions to Franklin Templeton hardly went unnoticed. Having grown the company’s investment arm from a small office in Toronto to two branches with a national reach, Lunney was promoted to president and CEO, though she still maintains her own clients “I still am a portfolio manager, and I still have clients’ books. I really enjoy the frontline client interaction”

1999

HEADS TO TORONTO

Lunney and her family stayed in Calgary for about five years before embarking on their next adventure to Toronto. The move also represented a new challenge in her career – she joined Franklin Templeton’s investment arm, Fiduciary Trust Canada, as a portfolio manager in 2002 “My parents had made a point of showing me and my brother Canada – from one end to the next. The move to Toronto was an opportunity for my husband and I to share those opportunities with our children”

2007

RETURNS TO ALBERTA Lunney was excited by Franklin Templeton’s global reach, which complemented her conviction that portfolio construction and diversification not be limited to the North American market. As the company grew under Lunney’s watch, she was afforded the ability to move back to Calgary and continue to head the investment side of the business

1994

MOVES TO CALGARY Even after her maternity leave was over, Lunney’s focus never left her family. It was for their sake that she and her husband decided to make the move to Calgary, where she joined RT Investment Council, Royal Trust’s investment arm “My husband is a tax lawyer, and he was spending far too much time on the highways. It’s difficult sometimes with two careers and a family to coordinate and find those moments”

1990

HAS AN EPIPHANY Before her maternity leave, Lunney and her colleagues were compiling a national benchmarking of best practices for the Fund’s investment policy – work she continued to think about while on leave “I had my epiphany that technology was fundamentally changing the industry, and there was an opportunity to provide pension-like management to individual investors”

During her time at the University of Alberta, Lunney focused on her studies on economics and finance “That was back in the day before they even recognized those majors!”

1983 GETS HER CFA DESIGNATION While working at the Alberta Treasury as a budget analyst, Lunney registered in the CFA program. Partially on the strength of having completed Level 1, Lunney was later able to secure a job with the Alberta Teachers Pension Fund as a portfolio manager

1983

GRADUATES FROM THE UNIVERSITY OF ALBERTA

“I was looking for a new challenge . . I thought, ‘I won’t get bored doing that,’ so I enrolled”

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PEOPLE

OTHER LIFE

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

THE VERTICAL BALLET Financial services veteran Cynthia Kett can’t beat the views – or the mental clarity – that come with rock climbing WHEN CYNTHIA KETT suffered a serious injury playing softball, she decided it was time to take up a safer sport: rock climbing. In addition to providing great exercise and spectacular views, rock climbing also offers Kett, a principal with Stewart & Kett Financial Advisors, the key to work-life balance. “It’s a terrific stress-buster because you can’t really think about anything other than climbing,” says Kett, a nearly 25-year veteran of the financial services industry. “You’re very focused on the moment – if you think about anything else, you’ll fall off.” Kett, who has been climbing for more than 17 years, likens the sport to meditation. “You get into a nice, quiet state of mind as you’re rock climbing,” she says. “It’s social because you might have a group of people you climb with, and you talk between climbs or over lunch, but it’s really you against the rock and you challenging yourself.” KETT’S FAVOURITE CLIMBS

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350 feet

98 feet

90 feet

Mazinaw Rock Bon Echo, Ont.

Kamouraska Bas St-Laurent Gaspésie, Que.

Yangshuo Guangxi Province, China

It’s time to reframe the value of financial advice How much is financial advice worth? At Vanguard, we decided to do the math. Our research discovered that financial advisors can add about 3% in net returns for investors through seven dimensions of advice —including asset allocation, low-cost investing, behavioural coaching and more. So the next time someone asks about the value of financial advice, you’ll know the answer.

Read the detailed report at vanguardcanada.ca/advisorsalpha

TAp into the World of

Emerging Markets

invest where the growth is At Excel Funds, we believe that emerging markets will define the future path of global development. By incorporating this thesis into our investment process, we have built a longstanding track record of delivering exceptional performance and have grown to become pioneers within the emerging markets investment space. Our funds benefit from an extensive network of over 790 portfolio managers around the globe, who all strive to provide superior returns to our clients through optimal asset allocation and disciplined risk management. Invest with Excel Funds to tap into the fastest growing economies in the world.

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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. This document may make forward-looking statements and there are risks that actual results could differ materially from forecasts, projections or conclusions in the forward-looking statements. Certain material factors and assumptions were applied in drawing the conclusions or making the forecasts or projections in the forward-looking statements and you may find additional information about such material factors and assumptions and the material factors that could cause actual results to so differ from the sources provided. The above information should be considered as background information only and should not be construed as investment or financial advice. Further, it should not be construed as an offer or solicitation to buy or sell securities.