Wealth Professional 4.07 by Key Media

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WWW.WEALTHPROFESSIONAL.CA ISSUE 4.7 | $12.95

2016

CERTIFICATION

SURVEY Which certifications do you really need to get ahead in today’s wealth management industry – and which ones can you skip?

CREAM OF THE CROP

Get to know 14 of the industry’s leading BDMs and wholesalers

TARGETING THE MILLENNIAL INVESTOR How the growth of ETFs is perfectly timed with the rise of millennials

TIME TO GET ACTIVE

Why actively managed funds are crucial for a diversified portfolio

WHO WOULD YOU SHARE YOUR FINANCIAL DREAMS WITH? THERE ARE FEW THINGS MORE PERSONAL THAN YOUR FINANCIAL FUTURE. That’s why you need someone with the PFP® (Personal Financial Planner) • A PFP® brings deeper knowledge and personalized planning skills to the table • Focused on building client relationships based on trust, credibility and superior performance • Having a well-qualified, designated financial advisor sure beats the alternative Learn more at www.PFP.ca

ISSUE 4.07

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CONTENTS

22 2016

CERTIFICATION

SURVEY

plus.google.com/+WealthprofessionalCa facebook.com/WealthProfessional Canada

CERTIFICATION SURVEY 2016

In the sea of advisor certifications, which ones are truly beneficial? Wealth Professional polled the industry to find out

PEOPLE

INDUSTRY ICON Karl Cheong, head of ETFs for First Trust, discusses the perfect marriage between millennials and ETFs

02 Editorial

The importance of continuing education

04 Head to head

Should the CSA ban embedded commissions?

06 Statistics FEATURES

THE HIGH-NETWORTH FUTURE

A new designation is poised to help advisors better serve the growing population of high-net-worth clients

CANADA’S LEADING

COVER STORY

UPFRONT

Who’s spending more – foreign investors in Canada, or Canadian investors abroad?

08 Opinion

Where CRM2 falls short

10 News analysis

Why responsible investing is the next big thing

12 Intelligence

This month’s big movers and shakers

BDMs

14 ETF update

WHOLESALERS

What’s the answer to Vancouver’s out-of-control housing market?

AND

FEATURES

A US-based ETF giant comes to Canada

16 Alternative investment update

LEADING BDMs & WHOLESALERS

FEATURES

PEOPLE

Get to know 14 of the best sales partners in the business

52 A better way to study

A new study aid for time-poor advisors

50 Advisor profile

William Vastis’ secret to success: always look back

54 Career path

Doug Macdonald became an industry figurehead by going against the grain

55 Other life

Hitting the links with Steve Tate FEATURES

ACTIVELY MANAGED FUNDS Two industry experts weigh in on why every portfolio should have actively managed funds

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

UPFRONT

EDITORIAL

Investing in education

ducation is the operative word in this edition of Wealth Professional. Our certifications and designations issue usually provokes a strong response among our readers, and this year is no different. In 2016, there’s a plethora of options out there for those who wish to hone their skills and increase their know-how in financial planning. That goes for recent university graduates and industry veterans alike – as the wealth management business continues to evolve, anyone standing still is simply falling behind. In an attempt to gauge the value of continued learning, we spoke to the accreditation bodies that award many of these certifications. More telling, perhaps, are the comments of those who have done the work, taken the tests and earned their designations. While the general consensus seems to be that having a couple of acronyms beside your name on a business card is advantageous, just which courses offer the most benefits is a matter of contention.

As the wealth management business continues to evolve, anyone standing still is simply falling behind Also in this issue, we spoke to some of Canada’s leading business development managers and wholesalers. The role of the financial advisor is in a state of flux, but one thing that doesn’t change is the need for good relationships with fund providers. A constant stream of new products means it can be challenging to keep abreast of the latest developments, so these partnerships are crucial. Finally, in our News Analysis this month, we look into the growth of responsible investing. Speaking to some experts in the field, it’s clear that pursuing profit and upholding strong ethical beliefs need not be mutually exclusive. Our look at the Boreal Leadership Council makes it clear that much progress has been made between Canada’s leading resource companies, financial institutions, environmental organizations and First Nations groups. Hopefully this will become the standard for natural resources across the country heading forward.

The team at Wealth Professional

wealthprofessional.ca ISSUE 4.07 EDITORIAL

SALES & MARKETING

News Editor David Keelaghan

National Accounts Manager Dane Taylor

Writers Joe Rosengarten Libby Macdonald

Associate Publisher Trevor Biggs

Executive Editor – Special Features Ryan Smith Copy Editor Clare Alexander

CONTRIBUTORS Carl Cansino

ART & PRODUCTION Design Manager Daniel Williams Designer Kat Vargas Randy Pagatpatan Production Manager Alicia Salvati Traffic Manager Kay Valdez

General Manager, Sales John Mackenzie Marketing and Communications Claudine Ting Project Coordinator Jessica Duce

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

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Overcome income inertia Active Income Forum 2016

Live webcast

September 14 at 5:00 p.m. ET

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Portfolio Manager Vice President, Investments iA Clarington

The webcast will provide expert perspectives on income-related investing topics that you can put into action, and also includes a live Q & A session.

To register visit: activeincomeforum.com Dealer use only. The iA Clarington Funds are managed by IA Clarington Investments Inc. iA Clarington and the iA Clarington logo are trademarks of Industrial Alliance Insurance and Financial Services Inc. and are used under license.

UPFRONT

HEAD TO HEAD

Is it time for Canada to ban embedded commissions? The CSA has started making moves toward an embeddedcommission ban, but many advisors feel it’s not warranted

Thane Stenner

Brent Vandermeer

Director StennerZohny Investment Partners

Portfolio manager and director Vandermeer Wealth Management

“This issue should be investor-driven, not regulatory-driven. I simply don’t see the demand coming from investors to ban trailer fees. To ban trailer fees without seeing verifiable investor demand doesn’t seem logical. So long as advisors are properly and fully disclosing trailer/service fees on mutual funds, and the majority of investors seem to be accepting of this, there is no need to ban them. With CRM2 coming in, investors will see fees flowing back to the investment advisory firm along with their annual performance data. Full and complete transparency is what is needed, not a fully changed business model.”

“Canada shouldn’t blindly follow other countries. Our situation is unique – all the different provincial commissions, regulators and types of registrations require a careful and strategic solution. That said, it goes without saying that clarity on fees and costs is a no-brainer. Clients should know this information, and most won’t dig into the details themselves to find it. As an industry, we should continue to move toward greater transparency in an effort to build trust and alignment with our clients. Nonetheless, haphazardly banning from one segment of the market without proper study and careful nuanced implementation would be foolish.”

Christopher Dewdney Principal Dewdney & Co.

“The consumer should be able to choose their own [fee] structure. What you will find, however, is that the more affluent client will probably opt for fee-for-service while the mid- to low-income client will opt for the opposite. Without choice – and if the regulators go for the ban – my fear is that you will see a mass exodus of advisors, which would hurt not only the consumer, but the industry as a whole. The people who would need the advice the most would not be able to afford it, with the remaining advisors and firms only focusing on larger, more profitable accounts.”

A DONE DEAL? The Canadian Securities Administrators revealed this summer that it plans to gather industry comments in the fall on a proposed policy to ban embedded commissions on mutual funds in favour of a fee-for-service model – a course of action that has already taken root in Australia and the UK. Despite widespread outcry from the industry, Ontario Securities Commission vice-chair Grant Vingoe, speaking in an interview shortly after the statement was released, seemed to consider the banning of such fees a certainty: “We’re very open to commentary that addresses how we should do it and how the industry would transition from the present situation to these direct pay arrangements,” he said.

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UPFRONT

STATISTICS

Funds in, funds out

INTERNATIONAL INVESTMENT POSITION, JUNE 2016

Canadian investments continue to entice offshore investors, while Canadian investors spend big abroad JUNE SAW the largest level of foreign investment in Canadian equities in more than a decade – the $13.4 billion recorded for the month outstripped every month since April 2004. The bulk of this investment stems from the issuance of new Canadian shares to non-resident portfolio investors due to cross-border mergers and acquisitions. Also adding to the inflow of funds was the foreign purchasing of $2.6 billion of Canadian shares on the secondary market.

$9 billion

$4 billion

Foreign investment in Canadian securities during the month of June

Canadian investment in foreign securities during the month of June

UNITED STATES

However, foreign investors also decreased their holdings of Canadian debt securities in June – offshore investment in Canadian bonds was reduced by $3.4 billion, while money market instruments dropped by $1 billion and federal government bonds by $8.1 billion. Meanwhile, Canadian investors bolstered their portfolios with $5.7 billion of foreign equities during the same month – the largest investment so far this year.

$24 billion

The net inflow of funds into the Canadian economy in the second quarter of 2016

Canadian bonds

$654.2 billion

Canadian money market instruments

$81.9 billion

CANADA’S PLACE IN THE WORLD A breakdown of all foreign holdings in Canada by geographical region reveals that the biggest market for both Canadian bonds and Canadian money market instruments is our neighbour to the south – American investors accounted for the lion’s share of foreign investment in this country.

$52 billion The equivalent figure for the first quarter of 2016

Sources: Statistics Canada, August 2016

HOME VS ABROAD

BUYING IN

The quarterly picture shows that international transactions in Canadian securities dipped slightly from the first quarter of 2016, while Canadian purchases abroad rose significantly over the same period.

Holdings of Canadian securities in the hands of foreign investors rose by $9 billion in the month of June, almost entirely attributable to the highest level of investment in equities in more than a decade. Canadian bonds and money market instruments proved less popular among foreigners, however.

$ BILLION

$13.6 billion

-$8.8 billion

$2.1 billion

-$960 million

$37.6 billion

30 20

$ BILLION

10 0 -10

$42.7 billion

$18 billion $37 billion

5 0 -5 -10

Q3 2015

Canadian securities

Q4 2015

Q1 2016

Q2 2016

Foreign securities Source: Statistics Canada, August 2016

FOREIGN INVESTMENT IN CANADIAN SECURITIES

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JUN 2015

JUL 2015

AUG 2015

Money market instruments

SEPT 2015

OCT 2015

Bonds

NOV 2015

DEC 2015

JAN 2016

FEB 2016

MAR 2016

APR 2016

MAY 2016

JUN 2016

Equity and investment fund shares Source: Statistics Canada, Canada’s international transactions in securities, August 2016

UNITED KINGDOM Canadian bonds

$203.9 billion

Canadian money market instruments

$8.3 billion

OTHER EUROPEAN UNION COUNTRIES Canadian bonds

$47.4 billion

Canadian money market instruments

$2.1 billion

JAPAN Canadian bonds

$81.6 billion

Canadian money market instruments

OTHER OECD COUNTRIES Canadian bonds

$49.2 billion

Canadian money market instruments

$846 million

Source: Statistics Canada, Canada’s international transactions in securities, June 2016

ON THE RISE

INVESTMENT SURGES

So far this year, foreign investment in Canadian securities is far outpacing Canadian investment abroad – net inflows for the second quarter of 2016 were up to $24 billion, down from the recordhigh $52 billion in the first quarter.

After trending downward at the beginning of 2016, Canadian investment in foreign equities hit $5.7 billion in June, marking by far the largest investment to date this year.

BALANCE OF INTERNATIONAL TRANSACTIONS IN SECURITIES

CANADIAN INVESTMENT IN EQUITY AND INVESTMENT FUND SHARES

2012

2013

2014

2015

Q4 Q1

2016

Source: Statistics Canada, Canada’s international transactions in securities, August 2016

APR 2016

-13.1

-15

-19

MAY 2016 JUN 2016

-13

-20

FEB 2016

-3

-1.4

-3.5

MAR 2016

-9

-1.1

-4.4

DEC 2015

-1

-10

-5 -10

OCT 2015

-2

NOV 2015

5.1 5.7

JAN 2016

9.6 0.5 1.2

SEPT 2015

JUL 2015

7.9

5.8

4.8

AUG 2015

JUN 2015

$ BILLION

Source: Statistics Canada, Canada’s international transactions in securities, August 2016

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UPFRONT

OPINION

GOT AN OPINION THAT COUNTS? E-mail wealthprofessional@kmimedia.ca

CRM2 isn’t the full picture Industry modifications designed to provide investor clarity don’t completely address every possible nuance, writes Carlo Cansino SWEEPING CHANGES in the financial services industry are in full swing, and Canadian investors will benefit. CRM2 is intended to provide greater transparency around what investors are – or should be – most concerned about: performance and fees. Effective for 2017, advisors must deliver two new annual reports to clients, informing them about their personal money-weighted rate of return (which will be influenced by the timing of any deposits or withdrawals from the portfolio) and the charges/fees incurred to work with their advisor. These changes are a step in the right direction for our industry, but they still do not level the playing field for advisors of different compensation models. Understandably, a regulatory body’s first priority should be to support clients and their experiences with professionals in our industry. Improvements to fee and performance transparency have been a long time coming. As helpful as the new reports will be, the less astute investor will not see the entire picture. Stand-alone numbers on a statement do not paint a detailed picture of the overall relationship or the value the advisor brings to the table. Unfortunately, in the eyes of most clients, an advisor’s value is derived by his or her ability to provide absolute returns. A money-weighted rate-of-return calculation can negatively affect an advisor’s investment strategy through no fault of their own. For example, an investment may have provided a 5% calendar-year return, but that doesn’t mean that the investor’s account had a personal rate of return of

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5%. If the investor withdrew funds from the investment midway through the calendar year at a time when the investment itself was down 1% year-to-date, then the investor’s personal rate of return would be less than 5%. Because losses are not realized until a sale takes place, if an investor sells units/shares at an inopportune time and realize losses, that affects the investment’s rate of return.

fee is $10,000, but a management fee is also charged by the mutual fund company within the management expense ratio [MER]. The management fee within the MER is also expressed as a percentage, similar to the service component, but is not required to be disclosed in dollars and cents. Thus, investors will continue to be unaware of the total fees charged. Advisors compensated on a fee-based model may be inaccurately evaluated, given this omission. CRM2 could be improved by implementing changes that don’t put the focus of advisor evaluation on factors out of their control. For example, if personal rates of return are disclosed, then a benchmark for comparison purposes (i.e. commercial index, peer group index) should also be included. Doing so would suggest that any underperformance of the portfolio from the benchmark could be due to the timing of deposits and withdrawals and not the advisor’s lack of skill or expertise. Alternately, the personal rate of return could be calculated using methodology that does not consider the timing of deposits or withdrawals.

“These changes are a step in the right direction for our industry, but they still do not level the playing field for advisors of different compensation models” An investor should know what he or she is paying in fees. But even more important, an investor should know what services he or she is being provided for the fees agreed upon. The shortcoming of CRM2 is that it doesn’t address the two components of an advisor’s fee. The fee for the service component (i.e. financial planning, portfolio rebalancing, plan maintenance/review, etc.) is distinct from the fee for investment selection (i.e. selecting and maintaining the investment solution). Under CRM2, only the service component must be disclosed as a dollar amount, which may not provide the entire cost picture. For example, a fee-based advisor may charge 1% for the service component, but may use mutual funds for the investment selection of the portfolio. On a $1 million portfolio, the

CRM2 should also require that all fees (i.e. mutual fund companies’ management fees) are disclosed so that investors are fully aware of the fees they are ‘paying’ for the advice. Improving transparency not only benefits clients directly, making them more aware and able to make informed decisions; it also requires advisors to up their game to justify their fees and explain their value. Raising the level of advisors as a whole will benefit the end-user.

The opinions expressed here are those of the author.

Carlo Cansino is a senior financial planner for The McClelland Financial Group of Assante Capital Management.

MORE EQUITY INCOME. MORE OPPORTUNITY. Dynamic Funds hits the road to introduce four new funds: Dynamic Global Strategic Yield Fund I Dynamic Global Equity Income Fund Dynamic U.S. Strategic Yield Fund I Dynamic U.S. Equity Income Fund KINGSTON Monday, Sept. 12

CALGARY Thursday, Sept. 29

BURLINGTON Tuesday, Sept. 13

EDMONTON Friday, Sept. 30

ST. CATHARINES Wednesday, Sept. 14

BARRIE Wednesday, Oct. 5

MISSISSAUGA Thursday, Sept. 15

HALIFAX Thursday, Oct. 6

MARKHAM Friday, Sept. 16

TORONTO Thursday, Oct. 13

NORTH YORK Monday, Sept. 19

MONTREAL Friday, Oct. 14

WINNIPEG Wednesday, Sept. 21

OTTAWA Tuesday, Oct. 18

SASKATOON Thursday, Sept. 22

QUEBEC Wednesday, Oct. 19

KELOWNA Monday, Sept. 26

LAVAL Thursday, Oct. 20

VANCOUVER Tuesday, Sept. 27

AJAX Monday, Oct. 24

VICTORIA Wednesday, Sept. 28

WATERLOO Tuesday, Oct. 25 LONDON Wednesday, Oct. 26

Hear from Dynamic’s Equity Income Managers Oscar Belaiche, Eric Benner, Tom Dicker and Fixed Income Managers Christine Horoyski and Domenic Bellissimo.

SEATING IS LIMITED. REGISTER TODAY. dynamic.ca/Register

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

UPFRONT

NEWS ANALYSIS

The ethics of investment Since the Paris Agreement last December, Canada’s investment community is increasingly turning toward environmental, social and governance practices to build portfolios

MORE SO than most countries, Canada finds itself in a catch-22 situation regarding environmental issues. The resource sector has a dominant position in the overall economy, so simply deciding to eliminate fossil fuels is a non-starter. Compromise clearly is the best way forward – and the Trudeau government’s first step in that direction was to sign on to the Paris Agreement in December 2015, promising to take steps to help limit climate change. Socially responsible investing using environmental, social and governance [ESG] practices is on the rise throughout the wealth management industry. Robert Walker is the vice-president of ESG services for NEI Investments, where he helps drive the firm’s Responsible Investing Program in its mission

to build the Northern Gateway Pipeline from Edmonton through BC to the coast,” he says. “I was with Ethical Funds at the time, and we owned stock in Enbridge, which in many ways is an excellent company on a variety of fronts, including its renewable energy portfolio.” Like the conflict between the resource industry and environmental groups, the schism between native populations and big business is another of Canada’s major conundrums. The problem is not unique to this country, however, which is why the UN has set guidelines on this issue. “We engaged in dialogue with the company almost right away,” Walker says. “We asked them to observe the concept of free prior informed consent in the context of the UN Declaration of Indigenous Peoples. They

“There is a real pipeline crisis. It is not all about indigenous issues, but a lot of it is, and it’s a real failure by this country” Robert Walker, NEI Investments to boost returns and create long-term sustainable value for investors. Central to Walker’s job is meeting with corporate leaders and explaining the merits of ESG practices. Often, he says, these meetings can go either way. “In 2004, Enbridge announced its intention

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just didn’t want to go there, so we ended up divesting in 2012, and the pipeline still hasn’t been built.” The Enbridge case is far from isolated, as many newspaper headlines over the last two years attest. For Walker, the fact that these disputes still rumble on is a national shame.

“The opposition to pipelines has spread beyond the Northern Gateway and beyond indigenous peoples to TransCanada’s Keystone pipeline, Energy East,” he says. “There is a real pipeline crisis now in this country. It is not all about indigenous issues, but a lot of it is, and I think it’s a real failure by this country.” That’s not to suggest that progress isn’t being made – far from it, in fact. Building bridges between Canada’s corporate interests and those who are most affected by new developments such as pipelines or mines is a priority for a great deal of people. Walker is one such individual, but his voice isn’t alone. The Boreal Leadership Council [BLC], founded in 2003, is a collection of leading conservation groups, First Nations, resource companies and financial institutions that have an interest and a stake in the future of Canada’s Boreal Forest. In Walker’s view, groups such as the BLC

BOREAL LEADERSHIP COUNCIL: FAST FACTS Founded in 2003 by signatories to the Boreal Forest Conservation Framework

The International Boreal Conservation Campaign (Ottawa) serves as the secretariat of the BLC Includes finance, environmental, resource and First Nations representatives, including TD Bank, Ducks Unlimited Canada, Suncor and Poplar River First Nation

The forest makes up 55% of Canada’s land mass

are vital to maintaining good relations before any disagreements turn sour. “The levels of ignorance around this history are pretty high,” he says. “Much of it is not very pleasant for Canadians, but we need to

Society, First Nations representatives like Kaska Nation, resource companies like Goldcorp, as well as financial institutions like NEI Investments. Having one of Canada’s Big Five banks on board was a clear goal for

“I have taken a lot of heart from Paris; I don’t think I have ever seen such willingness and alignment ...” Karen Clarke-Whistler, TD Bank face up to this as a country. We need to find a way to move forward on these projects. The idea of going to court for the next 30 to 40 years doesn’t make much sense, so the BLC is finding ways to come together.” The BLC includes environmental groups such as the Canadian Parks and Wilderness

the BLC, so when TD Bank joined, it was a real coup. The institution has made ESG investment a priority, demonstrated by its appointment of environmental scientist Karen ClarkeWhistler as chief environment officer in 2008. “We were the first major asset manage-

ment group to belong to the UN Principles for Responsible Investing,” Clarke-Whistler says. “In 2008–2009, we came out with a couple of dedicated sustainability funds before it came into vogue. We have since wound those down because our approach now is on mainstreaming ESG so it is part of everything we do.” Clarke-Whistler considers Canada’s signature to the Paris Agreement reason to be hopeful after many false dawns. In her view, the different sides are largely in concert regarding the world’s pressing environmental concerns. “I have taken a lot of heart from Paris,” she says. “I don’t think I have ever seen such willingness and alignment among federal, provincial, municipal, corporate and environmental groups. I think that means good things will happen, and we are all very excited about it.”

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UPFRONT

INTELLIGENCE CORPORATE ACQUIRER

TARGET

PRODUCTS COMMENTS

GMP Capital

FirstEnergy Capital

GMP will acquire FirstEnergy for $98.6 million, consisting of around $58.9 million worth of GMP common shares

Irish Life Group

Aviva Health Insurance Ireland

The acquisition will make Great-West Lifeco subsidiary Irish Life Group a driving force in the Irish market

Raymond James

MacDougall, MacDougall & MacTier

3Macs expands Raymond James' current private client business by adding more than $6 billion in assets

PARTNER ONE

PARTNER TWO

COMMENTS

BMO InvestorLine

Aequitas NEO Exchange

Clients of InvestorLine now have access to the securities listed on the NEO exchange

Sun Life Financial

MaRS Discovery District

The insurer hopes the partnership with the innovation hub will allow it to tap into startup knowledge

TD Asset Management switches US subadvisor

TD Asset Management has switched the subadvisor of one of its funds while adjusting the risk rating of a separate fund. The firm’s US counterpart, TD Asset Management USA, will no longer act as subadvisor for TD’s US Monthly Income Fund. TDAM will continue to oversee the investment decisions and asset allocation of the fund, and the fund may gain exposure to US fixed-income securities by investing in TD US Corporate Bond Fund, which is still subadvised by TDAM USA. TDAM also is lowering the risk rating for its TD Canadian Core Plus Bond Fund from ‘low to medium’ to ‘low.’

Raymond James completes acquisition of 3Macs

After a unanimous vote, the employee shareholders of MacDougall, MacDougall & MacTier, commonly known as 3Macs, elected to combine the firm with Raymond James. Founded in 1849, 3Macs will add more than $6 billion of client assets, managed by more than 72 advisors for individuals and families, to Raymond James’ current private client business. The combined firm’s AUM will exceed $34 billion, and will be handled by more than 440 advisors and portfolio managers, making it, in effect, Canada’s largest independent investment dealer. “We are extremely excited about this new opportunity with 3Macs and gratified by the overwhelmingly positive endorsement received from our new partners,” said Paul Allison, chairman and CEO of Raymond James. “Together we will focus on creating a new legacy of excellence serving Canadians with their wealth management needs.” In recognition of 3Macs’ multi-generational legacy and history of serving Canadian families, it continues to operate under the 3Macs brand as a division of Raymond James, following the close on August 31.

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Canoe Financial completes income fund merger

Canoe Financial has merged its Floating Rate Income Fund with the Canoe Floating Rate Income Fund, an open-end mutual fund managed by Canoe. Unitholders of the Floating Rate Income Fund transferred their units to the Continuing Fund in exchange for Series Z shares of the Continuing Fund; each unitholder of the Fund received 0.87 shares for each unit of the Floating Rate Income Fund. The Continuing Fund is an open-end mutual fund that aims to provide a steady flow of income and capital growth through diversified investments, primarily in Canadian equity and fixed-income securities.

PEOPLE Manulife shakes up investment pools Manulife Financial has introduced a new international equity investment option to its Manulife Private Investment Pools program. Manulife International Equity Private Trust provides a non-North American equity option for investors in Manulife Private Investment Pools, which are targeted at affluent investors. In order to make the program more accessible, Manulife has reduced the minimum investment to $100,000. “The new pool offers investors another way to diversify with investments outside of North America,” said Bernard Letendre, president of Manulife Investments.

Bridgehouse reduces fees on Brandes and Sionna funds

Bridgehouse Asset Managers, the retail trade name for Brandes Investment Partners & Co., has implemented management fee reductions for a number of its Brandes and Sionna funds. Investors will now pay lower fees for the Brandes Global Equity Fund, Brandes Global Equity Class, Brandes International Equity Fund, Brandes Global Opportunities Fund, Sionna Canadian Equity Fund and Sionna Canadian Equity Private Pool. The fee reductions apply to Series A, AH, D, F and FH. The management fees for Series K, L and M of the Sionna Canadian Equity Fund also will be reduced.

Monarch Wealth introduces private client portfolios

Monarch Wealth Corporation has launched its private client portfolios, teaming up with thirdparty portfolio consultant Westcourt Capital to provide exclusive market perspective, commentary and portfolio analysis on its model portfolios. In this advisory capacity, Westcourt helps Monarch offer MFDA advisors a viable alternative to fund-of-funds and in-house products with a sophisticated feebased, model portfolio platform. Advisors can now offer Monarch’s private client portfolios directly to their clients without entering into any kind of referral arrangement with the portfolio manager.

NAME

LEAVING

JOINING

NEW POSITION

Craig Alexander

C.D. Howe Institute

The Conference Board of Canada

Chief economist

Julie Lalonde

N/A

Fiera Capital

EVP of retail markets

Elio Luongo

N/A

KPMG Canada

CEO

Nevin Markwart

Canoe Financial

Front Street Capital

President and CEO

John McKinlay

Bentall Kennedy

LaSalle Canada

Chief executive officer

Gaelen Morphet

Empire Life Investments

Sentry Investments

Chief investment officer

Jay Rajarathinam

Intercontinental Exchange

TMX Group

Chief investment officer

Conference Board names new chief economist The Conference Board of Canada has named Craig Alexander as its new chief economist, replacing the outgoing Glen Hodgson. The organization has acquired a reputation as one of the nation’s foremost authorities on economic matters. Alexander takes the prestigious post after excelling as vice-president of economic analysis at the C.D. Howe Institute. “The job has a number of different dimensions,” he said after his appointment. “One of the key parts is overseeing economic forecasts, and that’s something that I’ve done for close to 20 years – projections for the global economy, the US economy, the Canadian economy and all the way down through the provinces to the metro level.”

Aquila head takes over at Fiera Infrastructure Fiera Infrastructure, the result of Fiera Capital’s joint venture with Toronto-based Aquila Infrastructure Management, will have former Aquila president Alina Osorio overseeing operations. Osorio has more than two decades of investment experience, with stints at RBC, Macquarie and OPTrust. Her success at Aquila made her a natural choice to take over operations at Fiera Infrastructure, which boasts committed capital of approximately $500 million and an exciting pipeline in the works. “The infrastructure asset class is increasingly attractive and becoming more prevalent on the investment side,” Osorio said. “Fiera now has added a new asset class to the range of offerings they provide for their investors.”

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UPFRONT

ETF UPDATE NEWS BRIEFS Jamaican ETF to offer sunny money to Canadians

Looking to take advantage of its excellent 2015 stock market performance, Jamaica hopes to tap investor interest in Canada with a new ETF that tracks the Caribbean island’s index. Jamaica’s benchmark index increased 97% last year in local currency and 87% in Canadian dollars, making it the best performer among more than 100 national indexes tracked by Bloomberg. “It’s definitely going to happen next year,” said Robin Levy, deputy general manager of the Jamaican Stock Exchange. “We want to shape other ETFs for the rest of the Caribbean.”

Two ETF firms go global with new funds Mutual fund giant Legg Mason and financial planning/investment advisory firm WBI Investments have put down a marker for their global ambitions with the launch of two new global ETFs. The new International Low Volatility High Dividend ETF (LVHI) from Legg Mason, launched on July 27, offers investors the benefits of dividends, low volatility and currency hedging. Meanwhile, WBI’s Tactical Rotation Shares Fund (WBIR) is considered a ‘global allocation fund,’ which allows investors to own practically any asset class and type, stretching from corporate bonds all the way to Malaysian stocks.

Active ETFs set record highs globally ETFGI, the leading independent research and consultancy firm that follows trends in the global ETF/ETP ecosystem, reported that investments in active global ETFs/ETPs reached a new record high of US$38.19 billion at

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the end of June. The firm also noted record asset levels for US-listed active ETFs/ETPs of US$26.38 billion, and for Canada of US$4.46 billion and Asia Pacific (excluding Japan) of US$1.56 billion. As of the end of June, the global active ETF/ETP industry had 272 ETFs/ ETPs listed on 17 exchanges in 14 countries.

ETF industry accused of poor practices In a blog published on the Steadyhand Investments website, portfolio manager Salman Ahmed said that while he likes ETFs, he sees changes in the ETF space that are not in investors’ best interests. He pointed to product proliferation and a ‘flavour of the month’ attitude among providers as reasons for concern. “Like any growing industry, the Canadian ETF space is changing, but many of the changes will lead to a poor investor experience,” he wrote. “ETF providers are increasingly engaging in the same bad behaviours that the mutual fund industry has been guilty of.”

Utility ETFs provide safe option for investors A report from the website Seeking Alpha has pegged utility ETFs as being among the safest investment options out there. According to the site, utility ETFs are safe options because utilities are a highly regulated business; that regulation gives their revenue a high level of certainty. “After all, these companies providing basic services can never go out of business – this is their most basic fundamental strength,” the report said. Utilities also have a strongly domestic focus, which helps to insulate them from foreign currency translation issues. Many utility ETFs have returned in excess of 21% year to date.

WisdomTree enters Canadian ETF space The sixth-largest ETF provider in the US has entered the Canadian space with the launch of nine new ETFs The growth of ETFs in Canada continues to gather pace with the introduction of WisdomTree into the market. The firm, which is the sixth-largest ETF provider in the United States and has global assets of US$38 billion, has set its sights on Canada, launching nine new ETFs that provide various dividend themes. Daniel Straus, an analyst with National Bank Financial and an expert on the ETF industry, outlines the strategy behind WisdomTree’s entry into the Canadian ETF space at this particular time. “The ETF market here is growing rapidly,” he says. “We crossed the $100 billion milestone recently, and ETF assets have more than doubled over the past five years. ETFs are under-represented in terms of mutual funds and managed assets here compared to the US. There is probably more room to grow on a relative basis in Canada than in the US.” Another factor behind WisdomTree’s decision has been the introduction of CRM2 and the industry’s move toward a fee-based model. That shift will be complemented by the rise in ETFs, according to Straus. “We heard directly from [WisdomTree’s] senior management about regulatory changes in terms of disclosure for fund providers in Canada being very favourable to the ETF industry,” he says. “After CRM2, a

Q&A

lot of advisors are transferring from commissions to fee-based, and ETFs fit naturally with that business model.” WisdomTree’s new offerings for Canada fall under its dividend-centric approach, which uses a variety of currency-hedged,

“There is probably more room for ETFs to grow on a relative basis in Canada than in the US” Canadian dollar-hedged or dynamically hedged products. The formula has proven successful for the firm both in the US and internationally, and it’s banking on Canada to follow that pattern. “They basically have three ways to slice and dice dividend investing,” Straus says. “They hedged equity, high-dividend and quality-dividend growth. The international products followed their dividend growth methodology. For the US, they used high-dividend and quality-dividend growth.” The nine funds provide choice under the labels WisdomTree Europe Hedged Equity Index, WisdomTree International Quality Dividend Growth, WisdomTree US High Dividend Index ETF and WisdomTree US Quality Dividend Growth. In Straus’ view, the selection covers all bases for Canadian investors, and could have other advantages. “A lot of Canadian investors invest in US assets, so with these ETFs, there is a choice of a growth dividend exposure or a higher yield,” he says. “For Canadian investors with room in their RRSP accounts, there could also be tax advantages to putting in some US dividend ETFs in.”

Mark Raes Head of product BMO GLOBAL ASSET MANAGEMENT CANADA

The building blocks of a portfolio

Years in the industry 20

ETFs have really started to take off in Canada over the past few years. Do you see this trend continuing?

ETF potential “When you look at the fact that ETFs are 12% of what mutual funds are in the US, and it’s 7% here – there is a real catch-up opportunity there”

ETFs are growing at a smaller pace, so it’s easier to sustain that growth rate. Also, a lot of ETFs are coming from direct securities, so there is a huge opportunity there to gather assets and be a more liquid position in people’s portfolios. So I definitely think this growth rate will persist.

What sectors are doing well in the ETF space? It’s coming from two directions. One was a momentum trade in the first half of the year when oil and materials were doing well, so ETFs exposed to that did, too. The second is with defensive sectors. When you look at the Canadian market, it is concentrated in financial and resources, so by buying sectors that offer different exposures – industrials, consumer stocks, utilities, REITs – we are seeing a lot of differentiated exposure that way.

So have you noticed a big difference between 2015 and this year in terms of which ETFs are popular? When it comes to sectors, absolutely. Overall, though, it’s still those broad-exposure funds that act as building blocks for a portfolio that are most popular. On the fixed-income side, we are seeing more and more investors moving towards ETFs. That’s from advisors right through to institutional, and it’s because of the lack of liquidity in the underlying fixed-income markets.

Is the growth in fixed-income ETFs a relatively new development? It’s something that investors have just started to catch on to. You take all the benefits of ETFs, and while they make a lot of sense with equities, they make even more sense with fixed income. With the added regulation and scrutiny, there is less inventory for bonds, so using an ETF as a buy-and-hold position or as a more tactical trade, it’s so much easier than the cash bond market.

How has Brexit affected the ETF market? Currency has been one of the biggest moves of Brexit – people wanting to get away from pound and euro exposure and moving toward a hedge product. Canada has always been ahead of the curve when it comes to currency-hedged ETFs, so there are a lot of good products here to make that switch. The other major move after Brexit was toward defensive exposure. That may be increasing your fixed-income allocation of moving your equity away from Europe and towards the US or Canada.

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ALTERNATIVE INVESTMENT UPDATE

Supply is the only answer in BC One real estate investor says Vancouver’s tax hike on foreign investors will do little to curb escalating prices

game it? The high-net-worth people who want to buy these properties. The answer is supply.” Olin believes that Vancouver’s hot market can be traced back to a lack of long-term planning. “You have a lot of environmentally conscious people in British Columbia,” he says. “You have agricultural reserves in the city, and there is a perception that is an environmentally sensitive thing to do. It’s actually the reverse.

“There is a massive supply of land that could be used to build affordable housing”

When it comes to real estate in Canada, the Vancouver market tends to dominate the headlines. Sky-high property prices are a concern in the province, and there is a real fear that middle-class families are being priced out of the city. Foreign speculators are the villain in this particular narrative, so it wasn’t that surprising when the provincial government announced plans to increase property tax for foreign investors to 15%.

NEWS BRIEFS

The move has been praised and derided almost in equal measure. Supporters say the tax hike was a necessary step to address a situation that is fast becoming untenable, while critics argue that action is indeed required, but not in this manner. “This tax can be gamed,” says Jeffrey Olin, president and CEO of specialist real estate investor Vision Capital Corporation, “and who are the people who can spend the money to

Regulators need to better understand exempt markets

In June, the CSA introduced new disclosure rules for the exempt market, calling for companies and underwriters to report certain exempt distributions to the OSC. Craig Skauge, president of the National Exempt Market Association, called it a step in the right direction, but one that requires further work by regulators. “I think there is such a thing as regulatory overreach, and in certain cases, they go too far in terms of what they want to gather,” he said. “Overall, we agree with the regulators that we need better data in this marketplace.”

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“Maybe they were appropriate 40 or 50 years ago,” he continues, “but today we are building highways that travel past these reserves to build homes far out from the cities. Would it not be more prudent to create more density closer to the city? Agricultural land does not need to be in the city.” Certainly, nobody wants to live in a concrete jungle devoid of green space, but Olin argues that the reserves have a huge cost to bear – a cost that is being placed on homebuyers. “There is a massive supply of land that could be used to build affordable housing,” he says. “In my mind, that is more environmentally sensitive – having greater density in the urban centres served by public transport. If you are pushing those who want to live in the greater Vancouver area an hour away where there is no public transport, that’s not environmentally sensitive.”

LaSalle Investment Management taps new CEO for Canada

LaSalle Investment Management has named John McKinlay to replace Zelick Altman as CEO of the firm’s Canadian arm. A 20-year industry veteran, McKinlay was EVP of acquisitions for Canada at Bentall Kennedy prior to landing at LaSalle. “I will be looking for continuity – building on what Zelick and his team have done over the last 11 years in terms of reputation and brand in Canada,” McKinlay said. “I will certainly be looking to build on that and launch new products that are tailored to investors in the Canadian market.”

Q&A

Ian Mellot

An advocate for the exempt market

CEO DIAM CAPITAL MARKETS

Years in the industry 32 Biggest career challenge “I left Bay Street in 2005 and went on to start two companies. The first was called Strategic Product Partners, and we provided sales and marketing to small and medium-sized product manufacturers. I sold that and made a profit and started corporate finance firm Capital Partners International in 2012. I ran that business for three years and made a significant profit there also”

What was the genesis of DIAM Capital Markets? The company hasn’t been around that long. As an exempt market dealer, we got our licence in Alberta, BC and Ontario last June. DIAM was originally started to fund our own real estate developments.

So when did you come on board? I came in as CEO in January of this year, and in March, I made the strategic decision that we would become a fully fledged exempt market dealer – we would deal with third-party issuers and not just proprietary products. So we started to build our advisor network and build our infrastructure. With the recent legislative changes to the OM exemption here in Ontario, there is a tremendous opportunity for an exempt market dealer to grow. This is the greatest opportunity available today in the investment industry.

The first year is always difficult in any business; how has it gone so far for you? The biggest challenge I’ve had so far is educating advisors, whether they are IIROC or MFDA, just to look at EMD. This is where capital is going over the next 20 to 30 years. I thought those conversations would be easy, but there is a resistance there due to lack of education. I want DIAM to be the educator in the industry on the exempt market. You can’t just go out and push products on people without them understanding the advantages of investing in private companies over public ones.

Healthcare REIT acquires Brazil hospitals

Toronto-based NorthWest Healthcare Properties Real Estate Investment Trust has announced the completion of its $25.7 million acquisition of Hospital Ifor. The REIT waived due diligence for the separate $117 million acquisition of Hospital Santa Helena. Together, the transactions expand NorthWest’s Brazil portfolio to seven hospitals near major gateway cities Sao Paulo, Brasilia, and Rio De Janeiro, and represent another step in the REIT’s continuing consolidation of private hospitals in the region.

What are your plans for the business heading forward? We have four full-time advisors, and my goal is to have six by the end of the year. In the next two years, I would like to be up to 30 to 35 advisors. We can be a very profitable firm at that level. We are building a dealership around the advisors and the investors, so my advising team will become the greatest voice for our organization.

Have you had this confidence in the exempt markets for a while? If you look at the S&P/TSX over the past five years, it’s basically been flat. The economy is global now, so what happens in Europe, China and Russia affects Canada. We are a commodity-based market, so oil prices being off has had a huge impact on not just oil & gas stocks, but bank and manufacturing stocks, too. In the exempt markets, these are typically small and medium-sized enterprises and aren’t swayed by the ebbs and flows of the public markets. It’s the great secret that nobody knows that investors have been getting significant returns with these private companies over the past 10 to 20 years. Now with the OM exemption, these are companies that average investors can have access to.

Alternatives primed for growth, says AIMA Canada COO

According James Burron, COO of the Alternative Investment Management Association Canada, there is plenty of growth potential for hedge, futures and currency funds in the coming years, thanks to a proposal from regulators to modernize the industry with liquid alternatives and retail hedge funds. “Mutual funds in Canada in the mid-’90s were about $40 billion; now it’s over $1 trillion,” Burron said. “Hedge funds currently are about $35 billion, and as soon as you have retail investors and banks looking at this, the popularity will light up.”

Report calls for better value on fees

In a recent report, Brian Johnson of Unigestion detailed how fees could be restructured to better align the interests of clients and fund managers, calling for an end to managers who receive their cut regardless of performance. “Investors in hedge funds have been frustrated by the lack of returns they were accustomed to prior to the financial crisis,” he said. “They are asking why they are paying upwards of 4% to 5% in expenses to hedge fund managers who are delivering a 3% to 4% return if they are lucky.”

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PEOPLE

INDUSTRY ICON

TALKING ABOUT MY GENERATION According to Karl Cheong of First Trust, the investment community can’t afford to ignore millennials, considering the major generational transfer of wealth that’s in the cards

IT’S A common criticism of financial planning that the makeup of the industry is far too old, male and white. While Wealth Professional’s Women of Influence and Young Guns features show that this perception isn’t entirely true, the fact is that this can be a difficult industry to really build a reputation in before the grey hairs set in. With 14 years in the industry to his name, Karl Cheong is far from a novice, but he is a good example of the new breed of wealth professionals making a name for themselves. The generation gap in the industry, he explains, means that younger investors are largely being ignored. “When I think about the financial services industry, there is no real leadership speaking for millennials,” he says. “One of the largest transfers of wealth in history will be going to millennials, but firms are only now starting to really target them as a consumer base.”

The millennial investor At First Trust, where Cheong is head of ETFs for Canada, clearly there is a different view. In Cheong’s opinion, the fact that much of Canada’s wealth will be passed down through the generations in the decades

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ahead means advisors can’t afford to put off building those relationships. “This generation is very heterogeneous,” he says. “Myself, I am biracial; my family is from China and South America. I’m bilingual; I grew up in Quebec. When I see a lot of the students coming from universities that I want to hire, I can relate to them because a

“Millennials have been shaped by events in their lives,” he says. “The older ones went through the tech crash, so they have experienced two massive market corrections. This generation tends to be very risk-averse, and they often carry a lot of student debt.” Being in the red – or having just escaped from that state – means this generation

“Millennials have been shaped by events in their lives. The older ones went through the tech crash, so they have experienced two massive market corrections. This generation tends to be very risk-averse” lot come from immigrant families.” Another characteristic of millennials, and one that’s contrary to their political and social leanings, is how conservative they tend to be as investors. Having much less wealth than older generations tends to affect your proclivity for spending, of course, but Cheong also points to the fact that the 2008 crash still looms large in the memory of this generation.

tends to hold the purse strings tight – and so, on the whole, they favour less costly investment options. “ETFs are low-cost, which fits with the mindset of millennials,” Cheong says. “They are frugal with their money and like to shop around. Think of the growth of companies like Amazon. ETFs are the best offer out there when it comes to fees. They are also very transparent – they publish holdings daily.”

PROFILE Name: Karl Cheong Company: First Trust Title: Head of ETFs Years in the industry: 14 ETF pedigree: Responsible for launching the first US dividend ETF, first European ETF, first managed futures ETF and the first broad commodities ETF in Canada

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PEOPLE

INDUSTRY ICON

Dawn of the ETF era Cheong broke into industry in 2002 with AIC and later built his reputation in ETFs with Claymore Investments. At that time, there were a handful of ETF providers, but that number has since ballooned. The firstever ETF was, in fact, traded on the TSX: the Toronto 35 Index Participation Fund (TIPS), which still trades today, albeit under a different guise (XIU). The US followed suit

amount of ETFs. Regardless, Cheong is confident that ETFs will continue to gain ground on their more established rival – thanks in no small part to the next generation of investors. “Millennials don’t have hundreds of thousands of dollars to invest,” he says. “When you have an ETF that packages a full industry for you and gives you that exposure, it helps as a learning tool as well. One stock does not give you that diversification or that instant gratifi-

“The ETF structure held up extremely well during the financial crisis, and there has been even more growth since then. If you look at them compared to mutual funds, it’s a no-brainer. ETFs are to mutual funds what the internet has been to newspapers” with its first ETF in 1993 (SPY) and since then has outpaced Canada’s growth considerably – ETFs account for $2 trillion in the US, versus $100 billion here. It was Cheong who brought Canada its first US dividend ETF, first European ETF, first managed futures ETF and first broad commodities ETF, so he is well placed to discuss how the industry has grown from a niche product when it was born in Canada back in 1990 to the $100 billion it accounts for today. “The industry only really started to grow after the financial crisis,” he says. “The ETF structure held up extremely well during that time, and there has been even more growth since then. If you look at them compared to mutual funds, it’s a no-brainer. ETFs are to mutual funds what the internet has been to newspapers.” It’s a bold statement to make, considering mutual funds in Canada still account for more than $1 trillion in assets, about 10 times the

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cation that millennials like so much.” According to a recent ETF study by Charles Schwab, the numbers are striking: “A recent study I read showed that 41% of millennials’ portfolios are in ETFs; that compares to 21% for all other investors,” Cheong says. “When you think about it, ETFs are millennials, too – they just turned 25 this year.” Another feature of the changing face of investment in Canada is the emergence of digital advisors. Similar to ETFs, Cheong believes this development will be embraced much more by the millennial generation. “Robo-advisors and automated investment services make a lot of sense for younger people,” he says. “[Millennials] are somewhat forgotten by advisors, who only want to focus on client accounts of over $500,000. Robo-advisors will help these people grow their wealth. Younger people want an online option for everything, so that is transferring to investments, too.”

FAST FACTS ON MILLENNIALS

Born between the years 1980 and 2000

This generation now makes up the largest demographic in North America

A recent study from Sun Life Global Investments showed that 44% of millennials classify themselves as somewhat or highly risk-averse

A survey conducted by Ipsos Reid found that Canadian millennials were far more likely than Gen X or Baby Boomer investors to show an interest in responsible investing

ACTIVE INVESTING FOR AN ACTIVE RETIREMENT Every investor has a different vision of the perfect retirement. Helping your clients retire on their terms requires a comprehensive plan and actively Investing for What’s Next™.

Find out more at franklintempleton.ca/whatsnext

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COVER STORY: CERTIFICATION SURVEY

2016

CERTIFICATION

SURVEY Competition is fierce in the wealth management industry, and staying one step ahead of the game is what will separate those at the top from the rest. But which certifications will truly propel your career forward?

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IN THE midst of a challenging investment climate and a tightening regulatory landscape, those in the financial planning industry must navigate a playing field that is constantly evolving. Add to that the fact that clients in 2016 have a wealth of information available to them 24/7, and consequently, those entrusted to advise them must be on top of all the latest developments in order to provide the best possible service – something that’s often easier said than done. Clearly, advisors are best served by building their knowledge across all areas of finance. That includes the financial products they deal with on a day-to-day basis, of course, but also the industry in general. Education is a process that should continue throughout life, and that certainly rings true in wealth management. There are a variety of professional certifications and designations available in 2016 – a quick glance at the websites of Canada’s main awarding bodies reveals a raft of options for any aspiring wealth professional. Whether you specialize in estate planning or tax affairs, life insurance or portfolio management, there is a certification for you. Niche areas like responsible investing also have courses these days – choice has never been greater. WP’s annual Certification Survey delves deeper into which courses are most popular with advisors and why. The plethora of certifications isn’t welcomed by all, however, and plenty of our readers believe the system has been diluted. It’s a universal belief among advisors that standards must be raised in order to protect the reputation of the profession. Is less really more when it comes to certifications, though? We spoke to a number of representatives

of awarding bodies and advisory groups to get their opinions on the value of certain designations over others and what it all means for the future of advisors.

The country’s top designation Our annual Certifications Survey does throw up some surprises each year, but one area that is pretty easy to predict is Canada’s most popular financial planning designation. That honour goes once again to the FPSC’s Certified Financial Planner certification – a sure sign of

the FPSC seeks to address with its certification program. “I think there is a great deal of confusion among consumers around who to trust because financial planning is not regulated in Canada – anyone can say they are a financial planner whether they have a relevant designation or not,” Yudelson says. The CFP certification, however, immediately assures clients that an advisor understands the professional standards required. “Individuals who hold the CFP certification must meet highly rigorous education, exam-

“I think there is a great deal of confusion among consumers around who to trust because financial planning is not regulated in Canada” Joan Yudelson, Financial Planning Standards Council its reputation among advisors in this country. To really gain a foothold in wealth management, the CFP certification is as close to a necessity you will find in the industry. “When looking at financial services designations, it’s important to look at the organization behind them,” says Joan Yudelson, vice-president of professional practice at FPSC. “FPSC and our sister organization in Quebec, the IQPF, set and maintain the standards for financial planning in Canada. These organizations have a public interest mandate. We are not accountable to shareholders or members; we set the standards and enforce those standards in the public interest.” In some cases, the role of the advisor hasn’t always been held in the highest regard, which

ination and work experience requirements and are held to significant standards of practice, conduct and ethics, including a requirement to put their clients’ interests first,” Yudelson says. Advocis, the Financial Advisors Association of Canada, works closely with the FPSC in improving standards in the industry. “We are involved with the delivery of three designations in the country,” says Advocis president and CEO Greg Pollock. “The CLU, which is for wealth management and estate planning; the CHS, which specializes in health insurance products; and finally, the CFP for financial planning.” According to Pollock, while there’s a raft of designations available for more specialized

ABOUT OUR SPONSOR The Canadian Securities Institute [CSI] is Canada’s leading provider of financial services education and credentials. Valued for its expertise in Canada and abroad, CSI offers more than 200 courses, including the Canadian Securities Course [CSC®]; 13 certificate programs; and specialized designations such as the PFP®, CIM®, CIWM®, MTI® and the Fellow of CSI [FCSI®]. Since its establishment in 1970, more than 750,000 financial professionals have chosen CSI for their career training and development. A thought leader and partner to regulators, CSI is an IIROC-approved provider of licensing courses and is endorsed by other Canadian Financial Services regulators. CSI operates as part of the Training and Certification arm of Moody’s Analytics.

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COVER STORY: CERTIFICATION SURVEY areas, the three certifications it oversees will give any wealth professional a solid grounding in the industry. “If you were going to be involved with advanced investment strategies, then you might do the CFA or the CIM,” he says. “But

Designation pros and cons Dan Goodman is the president and CEO of GFI Investment Counsel and also a CFA designation holder. He looks back on how the certification process has changed over the years. “When I first got into the business 25 years

“If a person has the CFP, CLU and CHS, then they are more than covered to deal with the vast majority of problems or concerns Canadians will have” Greg Pollock, Advocis generally the CFP is quite broad and deals with risk management, debt, savings and insurance. The CLU and the CHS are pretty focused, too, so if a person has those three designations, then they are more than covered to deal with the vast majority of problems or concerns Canadians will have when it comes to financial planning.”

ago, there was the investment funds course offered by the Investment Funds Institute of Canada,” he says. “I did a training program and a conduct and practices course with the CSC, and then along the line, I got my CFA designation. To become a portfolio manager, you needed to have at least Level One in the CFA to do that.”

While recognizing the merit of certifications, Goodman adds that there is a downside to them, as in any other industry. In his view, despite the advanced content the courses may have, candidates can never really be fully prepared for the job until they are on the front line. “I don’t believe much in the science of portfolio management,” he says. “A lot of people like to take this industry and package it into a program, saying there is a formula for that, whether it be a discount-divided model or capital-asset pricing.” That said, as an employer and someone who is directly involved with hiring new advisors, Goodman acknowledges that holding a CFA is a considerable advantage toward making your way in the industry. “The CFA designation goes a long way to getting yourself looked at,” he says. “When I see someone has the CFA, I know they have put the time and effort into completing the program, and it’s not easy. So even if I disagree with some of the content of the program, it says a lot

WHICH OF THE FOLLOWING DESIGNATIONS DO YOU CURRENTLY HOLD? The financial planning industry has experienced plenty of change over the past year, but one constant is the preeminent status of the CFP among advisors. With 77.38% of the vote, it remains on top of the pile in 2016 – and by a large margin. Second place goes to the CIM, which rose one rank from last year.

0.82% 1.63% 3.27% 3.54% 3.54% 4.09% 4.63% 5.45%

Certified Management Accountant (CMA) Chartered General Accountant (CGA) Chartered Financial Analyst (CFA) Certified International Wealth Manager (CIWM) Trust and Estate Practitioner (TEP) Registered Financial Planner (RFP) Chartered Accountant (CA) Chartered Financial Consultant (ChFC)

12.26% 13.08% 16.35% 19.62%

Chartered Life Underwriter (CLU) Fellow of the Canadian Securities Institute (FCSI) Personal Financial Planner (PFP) Chartered Investment Manager (CIM)

77.38%

Certified Financial Planner (CFP) 0

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about the individual that they have a lot of grit and determination.”

Changing with the times The financial planning industry is constantly evolving (the last wave of CRM2 going into

the world-renowned Moody’s Analytics group, is the other major force offering designations across Canada. Its CSC and IFC certifications are considered the starting point for the majority of young professionals going into financial services, but the group also offers

“A designation is a mark of professionalism. It says you have invested in yourself in terms of building your knowledge” Marie Muldowney, Canadian Securities Institute effect last month, for example), so these courses must also change with the times. “We believe there is a lot of rigour within these programs and they are properly updated and targeted for the current needs of clients,” Pollock says. “Those three [the CFP, CLU and CHS] we think are paramount in the industry. There’s no doubt the CSI has investment designations that add value in the marketplace, too, though.” The Canadian Securities Institute, part of

courses across the full spectrum of banking, wealth management, investing and trading. Marie Muldowney, managing director of the CSI, explains the importance of continued education. “A designation is really a mark of competency and professionalism,” she says. “It says you have invested in yourself in terms of building your knowledge. When you get to the final level, you also have committed to a level of competency, a code of ethics and a certain

amount of work experience on an annual basis.” Like the FPSC and Advocis, the CSI must also keep up-to-date with the changing face of the industry – which often can present quite the challenge. “All the courses we do under our IIROC agreement have to be updated on a yearly basis,” Muldowney says. “Sometimes we may have just finished updating a course, and a new rule will come in, and we have to reopen them and do it again.” The endgame of these certifications and designations is an industry full of professionals who not only have expertise in their field, but also follow ethical considerations that protect the good name of the profession. “There has been a lot more focus over the years on how to give advice in order to make sure you are taking the best interests of the client into account – matching the right product with the right client with the right risk profile,” Muldowney says. “All of the courses must be able to teach how to do that properly.”

WHAT CERTIFICATION HAS BEEN MOST USEFUL IN YOUR CAREER? The CFP was also the clear winner in terms of its impact on an advisor’s career, garnering almost 65% of the votes among our survey respondents.

0.27% Chartered General Accountant (CGA) 0.54% 0.82% Chartered Financial Analyst (CFA) Certified International Wealth Manager (CIWM) 1.09% 1.09% Trust and Estate Practitioner (TEP) 1.91% Registered Financial Planner (RFP) 2.18% Chartered Accountant (CA) 2.72% Chartered Financial Consultant (ChFC) Chartered Life Underwriter (CLU) 4.36% Fellow of the Canadian Securities Institute (FCSI) 6.27% Personal Financial Planner (PFP) 6.81% Chartered Investment Manager (CIM) 7.36% Certified Management Accountant (CMA)

64.58%

Certified Financial Planner (CFP) 0

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FEATURES

COVER STORY: CERTIFICATION SURVEY WHAT DESIGNATIONS DO YOU PLAN TO GET IN THE FUTURE? The Trust and Estate Practitioner designation leads the way here, reflecting Canada’s aging population and the fact that advisors who specialize in this area won’t be short of work in the years ahead.

0.54% 1.36% 1.63% 1.91% 3.27%

Certified Management Accountant (CMA) Chartered General Accountant (CGA) Chartered Accountant (CA) Chartered Financial Consultant (ChFC) Personal Financial Planner (PFP) Registered Financial Planner (RFP) Certified International Wealth Manager (CIWM) Chartered Financial Analyst (CFA) Fellow of the Canadian Securities Institute (FCSI) Chartered Life Underwriter (CLU) Chartered Investment Manager (CIM) Certified Financial Planner (CFP) Trust and Estate Practitioner (TEP)

6.27% 6.81% 10.08% 13.08% 16.62% 18.26% 19.07% 32.15% 0

IS THE CURRENT CERTIFICATION REGIME IN CANADA ADEQUATE IN TERMS OF TRAINING AND EDUCATION? The number of advisors in Canada who are satisfied with the certification bodies increased slightly this year, but a vocal minority still insists that improvements need to be made.

HOW LONG DID IT TAKE TO ACHIEVE YOUR CURRENT LEVEL OF CERTIFICATION? 1 year

26.70%

5 or more years

14.44%

29.16%

2 years

21.25% 4 years

10.63%

3 years

24.52%

Yes

73.30% HAVE YOU EVER FAILED A CERTIFICATION EXAM? ADVISORS SPEAK OUT There are too many worthless designations that require minimal training I believe the certification regime for the CFP designation is adequate. I have discussed the PFP certification process with holders of that designation, and I believe the PFP does not provide the same depth of knowledge as the CFP certification I think we need more barriers to entry to our profession – it’s too easy to get into, and as a result, a lot of people aren’t professional enough. If [advisors had] to obtain a minimum of CFP, CLU or the equivalent before being able to manage people’s money, there would be much more professionalism in the industry

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Yes

18.53%

81.47%

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COVER STORY: CERTIFICATION SURVEY HOW WELL DOES EACH DESIGNATION’S ACCREDITATIONGRANTING ORGANIZATION POLICE AND CENSURE ADVISORS? Not well Adequately Sufficiently

Very well No opinion

WAS YOUR OVERALL EXPERIENCE WITH A CERTIFICATION-GRANTING INSTITUTION POSITIVE OR NEGATIVE? Generally positive, though more transparency should be required with regards to how exams are marked, how work experience is evaluated, etc. Mixed – sorting out CE credits is a nightmare Negative – teaching experience was very positive, but dealing with Advocis and FPSC was time-consuming and bureaucratic Positive – lots of hard work and time spent, but well worth it in the end

Certified International Wealth Manager (CIWM) Fellow of the Canadian Securities Institute (FCSI)

DO THE COSTS OF MAINTAINING MULTIPLE CERTIFICATIONS OUTWEIGH THE BENEFITS?

Certified Financial Planner (CFP)

Yes

43.05%

Personal Financial Planner (PFP) Chartered General Accountant (CGA) Certified Management Accountant (CMA) Chartered Accountant (CA) Chartered Financial Analyst (CFA) Chartered Financial Consultant (ChFC)

56.95%

Chartered Investment Manager (CIM) Chartered Life Underwriter (CLU) Registered Financial Planner (RFP) Trust and Estate Practitioner (TEP)

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HOW MUCH TIME AND/OR MONEY ARE YOU CURRENTLY SPENDING TO MAINTAIN YOUR CERTIFICATIONS? At least 30 to 40 hours annually and $1,000 to $1,500 A lot – thousands in fees and many hours gathering CE credits $4,000 and 150 hours per year If I added up all the time throughout the year, I would have approximately three weeks and a cost of $8,000 on plane tickets/ hotel rooms and food. I go to conferences across North America to obtain my CE credits

WHAT ARE THE TOP THREE DESIGNATIONS IN TERMS OF SERVING THE CLIENT?

1ST Certified Financial Planner (CFP)

3RD

DO CERTIFICATION-GRANTING ASSOCIATIONS MARKET ENOUGH TO THE PUBLIC ABOUT WHAT THEIR CERTIFICATION MEANS?

79.84%

Yes

20.16%

2ND Chartered Life Underwriter (CLU) ARE MARKETING MATERIALS DIRECTED TO ADVISORS BY CERTIFICATION-GRANTING ASSOCIATIONS USEFUL?

Chartered Financial Analyst (CFA)

Yes

51.50%

WHAT ARE THE TOP DESIGNATIONS IN TERMS OF PUBLIC NAME RECOGNITION AND MARKETING? No

48.50%

1ST Certified Financial Planner (CFP)

3RD

Chartered Financial Analyst (CFA) Chartered General Accountant (CGA)

2ND Chartered Accountant (CA)

HAS THE VALUE OF DESIGNATIONS BEEN DIMINISHED BY THE PROLIFERATION OF TITLES? No

16.35%

Yes

83.65%

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FEATURES

COVER STORY: CERTIFICATION SURVEY WHAT BEST DESCRIBES WHAT’S KEEPING YOU FROM GETTING EACH OF THE FOLLOWING DESIGNATIONS? Lack of time and money Insufficient client recognition

Repetitive of other designation Poor-quality coursework

Insufficient value add for clients

Outside of my interest/practice

Certified International Wealth Manager (CIWM) Fellow of the Canadian Securities Institute (FCSI) Certified Financial Planner (CFP) Personal Financial Planner (PFP) Chartered General Accountant (CGA) Certified Management Accountant (CMA) Chartered Accountant (CA) Chartered Financial Analyst (CFA) Chartered Financial Consultant (ChFC) Chartered Investment Manager (CIM) Chartered Life Underwriter (CLU) Registered Financial Planner (RFP) Trust and Estate Practitioner (TEP)

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DOES AN MBA HOLD VALUE FOR A FINANCIAL PLANNER? YES All designations have value when applied in a customer-centric way. MBAs are particularly valuable for business owners If the MBA is specialized in financial services, it can add to the breadth and depth of knowledge of the planner. If it is a general MBA, then it is probably only advantageous if the planner intends to supervise a broader group of planners rather than run his/her own practice and serve clients I have a business degree, and it helped a lot in achieving the CFP Might be good value, if an MBA can help the financial planner understand business financials and ownership structures so that they can better serve their clients NO It’s a waste of money for those with business backgrounds. It has some value if you have a non-business background and plan on going into middle management I don’t think it’s worth pursuing given the cost – having an MBA won’t change an advisor’s income Added education is always useful, but this designation is not on my radar, given the investment of time necessary There’s no value for a retail client advisor, but it has significant value for a manager or institutional financial planner

EXAM HORROR STORIES I stopped drinking coffee for a week before Level One CFA and got headaches during the actual writing. I missed passing by a few percentage points ... my first failed exam, all because I thought I didn’t have enough time to go to the bathroom The exam computer system broke down for about five minutes. I messed up my thought process, and I failed the exam by 1.23%

ADVISORS ON PERFORMANCE

THE VETERAN’S VIEW

We asked advisors to rate their designations on a scale of 1 (poor) to 5 (excellent) based on nine criteria, from the quality of course content to the potential for career advancement. Here are the certifications that came out on top.

Having started his career as a financial planner back in 1982, David Christianson has amassed quite the collection of certifications – not only is he a Fellow of FPSC, but he also holds CFP, RFP, TEP and CIM designations. Having such acronyms beside one’s name doesn’t come without a lot of hard work. As such, Christianson is expertly placed to discuss the current state of certifications. “I think all the organizations that are currently providing these designations are doing a great job,” he says. “The RFP was always the gold standard, but in my view, the CFP has now caught up with it. If you have received the CFP in the last five years, it means you have a significant amount of education, exams, experience and ethics.” That opinion was reflected in our survey results again this year; the designation was by far the most popular among financial advisors. Even so, other certifications allow you to specialize much more, something that Christianson himself felt compelled to do. “The TEP, Trust and Estate Practitioner, means that I have developed expertise in estate planning as opposed to life insurance,” he says. “If you have a CLU, then you have extensive education in life insurance and estate planning, but TEP is more in the legal and tax aspects.” Improving education and industry standards is an obvious passion of Christianson’s, judging by his two books for financial advisors, The Structure of the ClientCentred Practice, published in 2002, and Managing the Bull: A No-Nonsense Approach to Personal Finance, published in 2012. Even in the midst of authoring books and building his business, Christianson Wealth Advisors, he hasn’t neglected his own personal development, something he recommends for advisors across the board. And while the courses weren’t exactly a cakewalk when he sat the exams, Christianson believes they have only increased in difficulty over the years. “The standards for all of these designations have risen greatly in the last 20 years,” he says. “I got my RFP in 1998, and it was difficult then – it’s much tougher now. ” So which designation is the most challenging to earn, in Christianson’s view? “I’m not a CFA charter holder, but I have the utmost respect for anyone who is,” he says. “I took courses one and two, so I know the breadth of knowledge required. It seems David Christianson ironic to me that the CIM gets CFP, RFP, TEP, CIM, Fellow of FPSC you the same licence as the CFA, CHRISTIANSON WEALTH because I think the CFA is much ADVISORS, NATIONAL BANK more difficult to achieve.” FINANCIAL

COURSE CONTENT QUALITY

RECERTIFICATION SYSTEM

Average score

3.9

TOP DESIGNATIONS

3.4

TOP DESIGNATIONS

CFA

4.9

CAIA

4.3

CAIA

4.5

CGA

4.2

CA/CPA, CFP

3.8

TEP, CA/CPA, CLU 4.3

GOVERNANCE: GLOBAL RECOGNITION EASE AND COST OF MAINTENANCE Average score

3.3

TOP DESIGNATIONS

Average score

3.5

TOP DESIGNATIONS

CFA

4.9

RRC

4.1

CAIA

4.5

CAIA, CGA

4.0

TEP, CA/CPA, CFP 4,3

TEP

3.9

CLIENT RECOGNITION

MARKETING AND PROMOTION

Average score

2.8

TOP DESIGNATIONS

2.8

TOP DESIGNATIONS

CA/CPA

4.1

CA/ CPA

4.1

CFP

4.0

CGA

4.0

CGA

3.8

CFA

3.7

VALUE FOR MONEY

POTENTIAL FOR CAREER ADVANCEMENT

Average score

3.5

TOP DESIGNATIONS

3.2

TOP DESIGNATIONS

CFA, CAIA

4.5

CFA

4.8

CA/CPA, CGA

4.2

CGA, CA/CPA

4.2

CFP

4.0

CAIA

4.0

CLIENT VALUE-ADD Average score

3.6

TOP DESIGNATIONS

OVERALL Average score

3.5

TOP DESIGNATIONS

CFA

4.8

CFA

4.6

CAIA

4.5

CAIA

4.3

CFP, TEP, CGA

4.2

CGA, CA/CPA

4.2

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FEATURES

COVER STORY: CERTIFICATION SURVEY NEW CERT ON THE BLOCK There’s no shortage of courses out there for financial advisors interested in bolstering their resume with a certification. Our survey focused on the 13 key designations that those involved in the financial planning business are most likely to hold, but that doesn’t tell the entire story. There are myriad alternatives out there with different areas of speciality. One of the more recent additions to the world of financial certifications is the latest offering from the Responsible Investment Association. “We offer three different designations,” says Dustyn Lanz, the RIA’s director of communications and member affairs. “Our newest one is the Responsible Investment Specialist program, or RIS. We launched two in 2014 called the Responsible Advisor Investment Certification [RAIC] and the Responsible Advisor Professional Certification [RAPC].” The RIA is dedicated to advancing ethical investing across Canada. Its members run the gamut of the investment industry and include mutual fund companies, financial institutions, asset management firms, advisors, consultants, investment research firms, asset owners and individual investors. As such, those looking to gain the three RIA certifications are a diverse bunch. “The RAIC is suitable for IIROC-licensed investment advisors and portfolio managers, while the RAPC is for professionals such as consultants, lawyers, analysts who work on issues related to responsible investing but don’t

provide investment advice,” Lanz says. “The new course is called Responsible Investment Essentials, and it’s offered by our partner, the PRI Academy.” The new course requires 15 hours of study for those from an investment background and gives participants a year to complete the course after enrolment. The course launched in June, but already more than 50 mutual fund advisors have either enrolled or completed the program, according to the RIA. “It starts from the ground up with really introductory content,” Lanz says. “Understanding environmental, social and corporate governance issues are material to investment decisions and how you incorporate them into your company evaluation.” The thirst for knowledge when it comes to responsible investing is something the RIA predicts will only increase in the years to come. “A growing number of investors have expressed interest in investments that are dedicated to social and environmental issues,” Lanz says. “The millennial generation is more than twice as likely as Baby Boomers [to want] these types of investments, so more Dustyn Lanz clients and their kids are having RESPONSIBLE INVESTMENT these conversations with advisors.” ASSOCIATION

DESIGNATIONS EN ROUTE TO SWITCHING CAREERS For Val Cattelan of Cattelan Private Wealth Counsel, earning an MBA and later a CIM designation represented a leap into a new world. While quite a few of the respondents to this year’s survey questioned the value of completing an MBA program, for Cattelan, its worth was clear. “The MBA was something that I wanted to do because I was transitioning from the public sector into private,” he says. “I managed a juvenile probation office before, so that was pretty different from financial services. I thought an MBA would give me a broad scope of the business world and some knowledge of accounting, marketing and business management.” After receiving his MBA, Cattelan got his first taste of financial services by working as a mutual fund representative. Portfolio management was his real ambition, though, so he decided to take the Canadian Securities Institute’s CIM course, which he completed in 2013. Cattelan now oversees his own team at HollisWealth, so it certainly appears that gaining the designation was a

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worthwhile pursuit. “For me, the CIM meant I could acquire knowledge in portfolio strategies,” he says. “Also, I think it increases the level of professionalism in the industry and creates higher standards. When I received the designation, I announced it to my clients because I thought it was important for them to know. They liked the idea that their advisor was increasing his knowledge base and level of professional standards.” In Cattelan’s view, building knowledge is something that should never stop, no matter how many certifications one might hold. “In terms of the academic content, it does help you to understand the different elements of the job,” he says. “Of course, it’s important to put that Val Cattelan, MBA, CIM into practice – and you can always CATTELAN PRIVATE WEALTH learn more.” COUNSEL

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SPECIAL PROMOTIONAL FEATURE

DESIGNATIONS

Into the high-networth future Changing demographics will facilitate a massive transfer in wealth over the coming years. How can financial planners ensure they aren’t playing catch-up?

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GENERATIONAL WEALTH The CSI’s report showed that more than 60% of Canada’s high-net-worth households are made up of people ages 65 and over.

2,344

0-24

25,346

25-34

73,748

35-44 AGE

WHILE CATERING to high-net-worth clients might once have been considered niche, that’s no longer the case. A recent joint study by the Canadian Securities Institute and Investor Economics revealed that the number of households with liquid assets over $1 million (the general threshold to be considered HNW) is set to grow by close to 70% between now and 2022. The fact that Baby Boomers control most of Canada’s wealth is no secret, nor is it a secret that Canada is in the midst of a demographic shift that will see the greatest generational transfer of assets in the nation’s history. This, in turn, will create a whole swath of new HNW families, so financial institutions are introducing a range of new products and services tailored to their needs. “We have observed over a number of years that divisions within banks are really

145,311

45-54

164,192

55-64

242,553

65 0

50,000

100,000

150,000

200,000

250,000

NUMBER OF HOUSEHOLDS Source: “Defining the Wealth Management Industry and Practice in Canada,” CSI and Investor Economics

putting more focus on servicing the highnet-worth client,” says Marshall Beyer, the senior director of credentials and licensing strategy at the CSI. “It’s particularly clear in the IIROC world, where it has gone more and more fee-based. In a fee-based business, you cannot profitably cater to smaller clients.” While managing money for those with much greater resources will have obvious financial benefits, these clients will also have higher expectations for their financial advisors. Those deemed experts must therefore demonstrate their value to those seeking guidance. In response, CSI launched its Certified International Wealth Manager [CIWM] designation in 2014. Prior to that, CSI had offered the Chartered Strategic Wealth Professional [CSWP] certification, before a partnership with the Association of

International Wealth Management brought about the globally recognized CIWM. “The designation consists of three courses,” Beyer says. “One covers investment management, one covers retirement planning, and one covers estate and legacy planning. It culminates in what we call a ‘360 project,’ where candidates complete a wealth management plan for a client and then present that plan to a panel of experts.” Those who enrol in the program usually complete the three courses in 12 to 18 months – a significant commitment, but one that will ultimately prove greatly rewarding for those with an eye on the future of wealth management. Phoebe Kim is a CIWM-certified senior private banker with TD Wealth Private Client Group. A graduate of Kyungwon University in South Korea, she worked on the retail side of the bank prior to moving into wealth management. “When I started the program, I was kind of new to the wealth business, so it provided me in-depth knowledge around wealth planning,” Kim says. “I was debating whether to do the CFP or the CSWP, which is now the CIWM, and my manager said to do the CSWP if I wanted to stay in this business.” Kim says that the designation is becoming a must for those seeking to join TD Wealth because the bank, like all its competitors, has identified the HNW segment as a priority heading forward. “Some high-net-worth clients have a very good relationship with their investment manager, and some with their banker,” Kim says. “Wealth cannot just be discussed in one aspect. It involves a lot of different businesses, investment specialists, the banking and the credit side. The clients want a one-stop-shop. That is what we provide at TD. I can provide different solutions for my clients when we develop our relationship. It’s a holistic financial solution when we look at their overall portfolio.” In 2015, CSI published a competency profile for wealth managers based on interviews and surveys with industry experts. It concluded that wealth management is a field

of practice that requires specialized knowledge and skills that must be both broad and specialized enough to deal with the complex issues HNW clients may face. The projected 70% increase in HNW households revealed in the CSI report may be startling to some, but many in the wealth management industry are already moving toward this new paradigm. According to Beyer, expanding your knowledge in this area is a sound investment for any wealth professional in 2016. “There are different tiers of advice in financial planning, and we would say wealth management is a different skill set,” Beyer says. “The CIWM is built to provide the knowledge and skills a wealth manager needs to fully serve the HNW segment, and in that respect, it is different from the many other designations out there.”

THE RISE OF HIGH-NETWORTH HOUSEHOLDS

653 000

Number of high-net-worth households in Canada in 2013

15.4 MILLION

Number of households in Canada in 2013

1.14 MILLION

Projected number of high-networth households in Canada in 2022

17.4 MILLION

Projected number of households in Canada in 2022 Source: “Defining the Wealth Management Industry and Practice in Canada,” CSI and Investor Economics

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FEATURES

BDMs AND WHOLESALERS

CANADA’S LEADING

BDMs AND

WHOLESALERS Wealth Professional spoke to some of the nation’s leading BDMs and wholesalers to gauge how widespread change in the financial services industry has affected their profession IT’S OBVIOUS that the wealth management industry is currently experiencing a great deal of change. That applies to those on the advisory side of the business, of course, but also those on the sales end of the spectrum. This month, Wealth Professional turns the spotlight on Canada’s many hard-working business development managers and wholesalers. Tasked with bringing financial products from provider to advisor to investor, their role is crucial in the supply chain.

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Speaking to a cross-section of these individuals, it’s clear that their job involves more than just selling advisors on the merits of their latest mutual fund or ETF. Rather, sound advice and solid guidance are the main commodities they trade in. Considering the upheaval currently underway in the industry, between CRM2 and the seemingly inevitable shift towards a fee-based system, some wise words can prove quite valuable indeed.

RICHARD POULIN

LIAM HELT

VP of regional sales, Niagara BMO Global Asset Management

District VP, Ontario Fidelity Investments

The implementation of the third phase of CRM2 in July was a long time coming, and something advisors had readied themselves for. A former advisor himself with AIM Trimark, Richard Poulin understands the concerns surrounding regulatory changes – and he believes keeping up to date with those changes is central to his role as a VP of regional sales with BMO. “There are a lot of advisors thinking about migrating to a fee-based model right now with the rumblings that trailers are going away,” he says. “Being on top of that and helping advisors know their next step is the most important part of what I do. I see my role as being a problem-solver and a consultant to advisors.” Beginning his career in financial services as an advisor at Berkshire Securities, Poulin moved into the sales world with AIM Trimark before arriving at BMO just over eight years ago. His background is something he considers a major asset today. “It is a huge advantage in having firsthand insight into how advisors manage their practices,” he says. “Having had them myself, I understand the type of conversations they have with the retail investor.” Overseeing sales for the bank in the Niagara region, Poulin deals in mutual funds, ETFs and seg funds. While mutual funds remain the bulk of his business, that ratio is changing as the rise of ETFs continues. “BMO having such a big footprint in the ETF business in Canada means every one of my meetings will have some part of the conversation devoted to ETFs,” Poulin says. “We may not discuss a particular ticket, but we have wrapped a number of our ETFs in mutual funds, and that is a lower-cost solution for our clients.” Now approaching a decade with BMO, Poulin has noticed that his interactions with advisors have started to revolve around a familiar theme, especially over the last few years. “There are a lot of conversations about fees,” he says. “I think advisors are really thinking about CRM2 when they are building portfolios. They are wondering about what their clients will see on a statements that they haven’t seen before, and they are preparing for that.” As a wholesaler, Poulin feels remaining one step ahead in a constantly evolving marketplace is a real challenge, but one that’s entirely necessary. “The environment that we operate in in the investment world is changing very quickly,” he says. “How things were done even two years ago has changed materially. Being on top of that and preparing for what is coming is most important for what I do on a day-to-day basis.”

Liam Helt is clearly an example of someone who values continued education. A graduate of the University of Western Ontario with a degree in commerce, he has since received designations for Chartered Investment Manager, Investment Funds In Canada, the Canadian Securities Course, Investment Management Techniques, Portfolio Management Techniques and the Derivative Fundamentals Course. It’s proof that Helt is dedicated to understanding the industry from top to bottom. And his reputation for excellence among advisors, who praise his ability to deliver high-quality products at lower prices, suggests he’s accomplished that feat.

GREG RANK District VP, retail sales Mackenzie Investments

IGM Financial, of which Mackenzie Investments is a part, has risen to become the largest independent asset manager in Canada, boasting $142 billion AUM. Mackenzie alone, where Greg Rank has been a mainstay of the operation since 1998, has $61 billion AUM. Starting out as a sales rep, he went on to become regional sales manager, then worked his way up through progressively higher sales roles before becoming district VP of retail sales in 2015. His rise is a testament to the advantages of staying the course with the one firm, as Rank is now one of Mackenzie’s most valuable assets.

BRUCE MCADIE District VP, British Columbia Fidelity Investments Canada

A graduate of Columbia University, Bruce McAdie clearly had an impressive pedigree before arriving at Fidelity Investments in 1995. Regardless, excelling in the sales world means climbing the ladder, and the first rung usually involves customer service. So it was for McAdie, but it wasn’t long before he had progressed to the sales department and ultimately to his current position as district VP for Vancouver. Now approaching his 20th anniversary in the role, McAdie has seen Fidelity emerge as one of the world’s largest mutual fund companies, currently holding more than US$2 trillion in assets.

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FEATURES

BDMs AND WHOLESALERS

DARREN GAZDAG

STEVE MANTROP

SVP of business development Excel Funds Management

District VP, Alberta Canoe Financial

Regular readers of Wealth Professional are no stranger to Excel Funds, one of Canada’s leading providers of emerging market funds. As low yields become the new normal in Western nations, investment in high-growth economies abroad looks increasingly attractive. “The general acceptance of emerging markets has improved dramatically,” says Darren Gazdag, Excel’s senior vice-president of business development. “There are better growth prospects, better yield opportunities, valuations as a whole are more attractive, and earnings are more robust with EM.” That goes not only for individual investors, but also the whales of the industry. “You can look at what the smart money is doing, whether that’s the large sovereign wealth funds, the largest endowments, pension plans – in some cases, they are allocating as much as 15% to EM,” Gazdag says. The reasoning behind this shift is the same principle that guides investment decisions anywhere else – reducing risk while increasing reward. “They are ultimately looking for ways to enhance return and reduce volatility,” Gazdag explains. “In emerging markets, they can certainly do both. Whether they want growth opportunities or to augment or supplement income, certainly the lineup under the Excel umbrella can facilitate all of that.” While Excel has a global focus, it’s fair to say the nation it’s most associated with is India. The firm was founded in 1998 with the launch of the Excel India Fund, which has since become the largest and longest-running India-focused mutual fund in Canada. “Most recently we launched two new Indian products – the India Balanced Fund, which is 60% equities, 40% fixed income,” Gazdag says. “The second offering is the India New Leaders fund. It is focused on mid- to small-cap Indian companies. Those two have been live for three months now.” The pace and scale of India’s recent growth has seen many observers calling it the new China. But while China itself is no longer expanding at a double-digit rate, Gazdag feels the world’s second-largest economy is far from a spent force. “Most pundits speak about a slowdown in China, but it had growth of 6.5% in the last quarter on an $11 trillion economy,” he says. “That’s about $500 billion more in total global contribution than the last time it grew at double digits. I don’t think it will have a hard landing, and I think China is shaping up to be a good story going forward in 2017.”

In bringing Canoe’s latest products to the Alberta market, Steve Mantrop can call on a wealth of experience that stretches across continents. He previously worked in Germany with Bertelsmann AG as a multi-national distributor in its finance department. His success there led him to CI Investments, where he worked for 11 years, becoming the firm’s VP of sales and marketing. A graduate of Acadia University and Germany’s Bielefeld University, Mantrop is now based in Calgary, where he drives business for Canoe in the region.

WARREN MILES-PICKUP Wealth sales director Sun Life Global Investments

Warren Miles-Pickup’s career has a certain symmetry to it. Beginning with a major institution (Scotiabank) back in 2006, he now finds himself with another industry giant, Sun Life. What’s different is his role within the organization: At Scotia, he worked in customer service, while he now serves as wealth sales director for the Global Investments arm at Sun Life. In between, he had stints at Nicola Wealth Management and AGF Investments before signing on with Sun Life in 2013. Since then, he has developed a reputation among the advisors he does business with for his excellent product knowledge.

RAHIM MULJI Regional director Russell Investments

Similar to a number of this peers in the wholesaling industry, Rahim Mulji’s career has seen him change course from one of the industry’s giants to a more specialized operator. The firm in this case is Russell Investments, which may not be at the scale of his previous employer, TD Bank, but still has more than $316 billion in assets under management. You don’t get numbers like that without some good people in your wholesale department, and Mulji certainly plays a role in that. In 2015, the company celebrated its 30th year in Canada, and now Mulji and his team are working to ensure Russell Investments continues to grow in the years ahead.

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CARYN MAXWELL-SMITH VP of business development Dynamic Funds

Designations and certifications (the subject of this month’s cover story) are becoming ever more important for financial professionals – and that includes BDMs and wholesalers, too. In the six years she’s been with Dynamic Funds, Caryn MaxwellSmith has clearly excelled in boosting the Dynamic brand across Canada. Regardless, she decided that continued education was necessary for her to provide the kind of service Dynamic has built its reputation upon. “There has to be a real focus on understanding a client’s business model,” she says. “On a personal level, I have decided to pursue my MBA as a way to round out my business experience. I have been working in mutual fund sales since 2000, so I chose the MBA as a way to broaden my exposure in other areas.” Starting her career with IA Clarington, Maxwell-Smith moved to Dynamic Funds as a sales representative in 2005 before

becoming VP of business development in 2010. “I lead a small team, and we represent Dynamic Funds to advisors in the Oakville, Burlington and Guelph area,” she says. “Our job is to understand each advisor’s business model and find relevant solutions that fit. The challenge there is that everyone’s business model is different, so it requires wholesalers to be quite flexible and knowledgeable about their businesses.” Given the rapid pace of change in today’s wealth manage ment industry, Maxwell-Smith sees the key to success as having products that investors truly value. “What we see are that more advisors are focused on a feebased platform, and many are becoming portfolio manager licensed,” she says. “Their focus is high-quality investments at a lower cost and being able to provide something different and unique to their clients.”

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FEATURES

BDMs AND WHOLESALERS

GREG LAGASSE Partner EdgePoint Wealth Management

The winner of BDM/Wholesaler of the Year at this year’s Wealth Professional Awards, Greg Lagasse of EdgePoint Wealth Management firmly believes that quality trumps quantity – especially in the investment industry. In his view, there are simply too many products and too many companies providing them today. “We started with four products; this November, we will be eight years in operation, and we still only have four products,” he says. “I think we are the only business in this industry that has not launched a new product in that timeframe. We are not trying to be all things to all people. We offer products where we feel we are extremely good that are broader products with fewer mandates.” Having built his reputation in sales at Invesco and Manulife, Lagasse made the somewhat bold decision in 2008 to leave a Canadian institution for an upstart

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firm where there were no guarantees of success. “The four founders of EdgePoint were disillusioned with the industry – they felt that doing what was right for people was now more focused on just gathering assets,” he says. “They thought there were two options: leave in disgust or be an agent for change.” This led to the creation of EdgePoint Wealth Management, and it wasn’t too long before their ethos really started to gain traction. “Their message really appealed to me after being in the industry for decades,” Lagasse says. “So I took a leap of faith and a huge pay cut, and borrowed a lot of money to buy into the partnership because I believed in what they were doing.” What they were doing was, and continues to be, serving the clients’ best interests – a simple enough business model, but not as common as one would

hope in wealth management. “This industry is really good at packaging up what people want to buy, not what is necessarily good for them,” Lagasse says. “A sales- and marketingbased firm will ask, ‘Will a product sell?’, while an investment firm like ours will ask, ‘Should we be selling it?’” The four funds EdgePoint built its business on continue to attract investors around Canada. It’s an increasingly competitive marketplace, so it’s the job of Lagasse and his team to ensure that the brand maintains and enhances its reputation. “The biggest challenge for us is the fact that advisors are trying to consolidate their suppliers,” he says. “Getting shelf space in that environment is a challenge. People are also wondering about the impact of the regulatory changes, so advisors are trying to get ahead of that. They really want to articulate to clients the value they bring.”

RYAN LEESUI District VP of sales Mackenzie Investments

Ryan Leesui has a long-standing connection to Mackenzie Investments. He began his career with the firm in 1999 and stayed for five years. Opportunity soon came knocking in the form of Putnam Investments in Boston, but after Leesui spent four years there, Power Financial’s acquisition of Putnam meant he was soon back where it all began, albeit a few years wiser. “I started in client services like most of the folks in our industry back then did,” he says. “I started in 1999 on the phones, and by 2000, I was in the sales department.” Fast-forward to 2016 – Leesui has risen to the position of district VP of sales with Mackenzie. His role means regular contact with advisors, and he has noticed a clear shift in the conversation over the past few years.

“Now they mostly want to know if Mackenzie has fee-based versions of the funds, what are the MER costs – questions like that,” he says. “There is a lot more sensitivity about fees now.” Mackenzie offers a broad range of products across the mutual fund/ETF/ private wealth spectrum, and Leesui has really noticed the evolution of the offerings available to investors today. “The products today are really tailored to demand, whereas 20 years ago, it was more like they were built in a lab,” he says. “Clearly you can’t stay stagnant in this business, or you’ll be passed by. Mackenzie tries to be creative and cutting-edge, asking, ‘What can we provide for advisors that they can’t do themselves?’” Staying ahead of the pack is no easy task for Mackenzie and its peers in the

space. It’s a challenge, but one that Leesui embraces. “In many ways, the industry evolves every day,” he says. “As a firm, we need to be flexible, so the challenge is providing ideas that advisors will want to present to their clients. They have a lot more access to information nowadays, so investors are a lot smarter than 30 years ago.” Although living in the information age means his job has changed greatly since 1999, the advantage technology provides in 2016 is something Leesui definitely welcomes. “That access to information spans creativity, innovation and choice for the investor, which ultimately is the party in all of this that matters most,” he says. “The main challenge for Mackenzie is making sure we are relevant in portfolios today.”

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FEATURES

BDMs AND WHOLESALERS

ALAIN DESBIENS VP of sales, Quebec and Atlantic, BMO ETFs BMO Global Asset Management

Alain Desbiens’ two decades in the investment industry have provided him with a sharp insight into where things might be headed. As such, he is happy to be in the business of selling ETFs for BMO. The bank put its faith in the growth of ETFs six years ago, and that decision has been more than vindicated. “I think it was really timely after the global crisis to build better portfolios,” says Desbiens, who won the 2015 Wealth Professional Award for BDM/Wholesaler of the Year. “The penetration of ETFs in the Canadian market is growing quite fast. When BMO created their division, we were the fourth ETF player in Canada. Now there are more than 20.” Desbiens’ arrival at BMO came after a career marked by a variety of different roles, including advisor, branch manager, trust officer, business development for retail sales, wholesaling, management, investment education and individual financial planning. Now overseeing BMO’s ETF sales in eastern Canada, he looks back on joining the nascent division in 2009. “At the time, it was a great opportunity to work with the people who first created ETFs – Rajiv Silgardo and Kevin Gopaul,” he says. “They were with the iShares team that developed TIPS, HIPS, XIU. When we started, we had $500 million under management, and now we have $30 billion. We are in the top 20 ETF providers in the world. So it’s been a great six years for me.” During that time, the ETF industry in Canada has more than tripled to upwards of $100 billion in assets across almost 400 different ETFs. “More and more mutual funds are now using ETFs,” Desbiens says. “It allows you to create a solution for a client that is less costly – they are transparent, so portfolio managers and IAs can do a better due diligence. We have also seen an explosion of smart beta, which is quite helpful for currency management and hedging. We saw how important that is after Brexit.” As for the future, BMO and Desbiens have every intention of continuing down the same path with ETFs. “We will be launching some new ETFs in the fall,” he says. “We have launched a lot of smartbeta and index solutions, so we will continue in that state of mind. We want to provide more currency exposure for our clients.”

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JOSEPH CARINO VP of business development Horizons ETFs Management

The sales world is relatively new to Joseph Carino, who started his career as an equity trader. His decade on the trading floor serves him well for his current position as VP of business development at Horizons, in that it provided him with exposure to ETFs. Now that he’s selling those products to advisors, he’s prepared to field the detailed questions that come with the territory. “A lot of advisors are very smart, and they do their due diligence in regards to products,” Carino says. “They know all the major players like iShares, BMO and Vanguard, but they are looking for something unique that they cannot get at marketcap-weighted shops like Vanguard. They are looking for a global currency product or a risk parity product.” Prior to his arrival at Horizons last September, Carino spent two years as a BDM at US-based investment giant Vanguard, where he garnered great insight into where the ETF market in Canada might be headed. “It was refreshing to work at a company like Vanguard that is so large in the US and learn what is going on with ETFs there,” he says. “We are years behind them in product development, but I

can see we are going that route.” In switching to Horizons, Carino left behind many of the economies of scale afforded to him at Vanguard. But he sees plenty of advantages of being with a smaller but much more nimble firm. “Vanguard is a very well-run company, and I’m still in contact with a lot of people there,” he says. “With Horizons, we launch new products due to investor and advisor demand. For example, if someone were to ask for something, we would put them in contact with our product team. If it makes sense and it’s something we see value in, we will launch it.” Horizons hasn’t been slow in that regard, launching a number of new ETFs in 2016. With the industry at large expanding rapidly in terms of providers and products, the firm has ambitious plans to extend its reach in the space, Carino says. “We launched some new products recently – HXH is the Canadian High-Dividend product, and that launched with over 100 million subscriptions from a handful of advisors,” he says. “We have more on the way later this year; we recently filed to launch some new ETFs.”

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FEATURES

BDMs AND WHOLESALERS

KEVIN PRINS VP, Ontario, BMO ETFs BMO Global Asset Management

As BMO’s VP of ETF specialized sales, Kevin Prins is proud of what the company has achieved since entering the ETF space in 2009 – and rightly so. “The industry certainly has grown, and we have been part of that overall trend, but BMO ETFs have outsold all the other ETF providers over the last five years,” he says. “We are number two in Canada now behind iShares.” It’s been a steady climb for BMO to reach that position, but not exactly a surprise for Prins. The bank decided to make ETFs a major focus of its business back in 2009, and that dedication has clearly paid off. “We were the fifth provider of ETFs at that stage ¬– iShares, Horizons, Claymore and Powershares were there first,” he says. “The leadership of the

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company saw the opportunities in ETFs and put a big focus into it from day one.” BMO was the new kid on the block at that time, but that’s not to say there wasn’t already plenty of wisdom within the ranks. “One of the biggest benefits we had back then was the product experience of the team,” Prins says. “We had Rajiv Silgardo and Kevin Gopaul there, who built the first-ever ETFs. It did make our sales job a little bit easier for a brandnew company.” The rise of ETFs in the US and Canada came as the world economy was still reeling from the crash of 2008. From the ashes of that calamity rose a product that promised greater transparency at a much lower cost. BMO’s entry into the business couldn’t have been timed better.

“The leadership thought ETFs would be a good avenue going forward,” Prins says. “It had nothing to do with capitalizing on the financial crisis. We as a company wanted to differentiate ourselves, and ETFs were a way to do that.” Now that BMO has firmly cemented its position as a leader in the space, its current challenge is to build on that position. To do so, keeping abreast of the industry’s developments is crucial. “Generally what we try to do is really take a gauge of what advisors’ and portfolio managers’ mindset is,” Prins says. “We do a lot of research, and our biggest successes are generally launching products that are in line with the exposures advisors are looking for. We listen to their needs and build products around that.”

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FEATURES

ACTIVELY MANAGED FUNDS

The insider’s view on actively managed funds WP spoke to two industry experts to get their opinion on the role of actively managed funds in a modern portfolio

SOME COMMONLY held misconceptions are preventing Canadians from adding actively managed investments to their portfolios, but in today’s world of market uncertainty, diversification should be a top priority for any conscientious advisor or investor. By investing in actively managed funds, investors may be better prepared to withstand the negative impacts that tumultuous markets can have on their portfolios. “One of the key benefits of an actively managed fund is that you are not relying on an index or the market to guide the direction of the investment,” says Duane Green,

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managing director for Canada at Franklin Templeton Investments. “In utilizing a team of investment professionals, you’re adding the human factor to your portfolio. That helps investors outperform the market during the up times, but also manage the downside capture to outperform the markets when things aren’t going so well.”

The passive versus active debate In recent years, many investors have gravitated toward low-cost, passive ETFs and index funds. Although Green doesn’t see these passive options as bad investments,

he does think that the passive/active debate should not be an either-or scenario – both have roles to play in a diversified portfolio. “Investors need to decide what they want and expect from their investments; price can be an important consideration, but it shouldn’t be the only one,” Green says. “Although cap-weighted index funds and ETFs do provide an inexpensive way for investors to participate in the market, they are not designed to deliver on investors’ objectives of outperformance, downside protection or risk management. High-quality actively managed funds can help address

“Although cap-weighted index funds and ETFs do provide an inexpensive way for investors to participate in the market, they are not designed to deliver on investors’ objectives of outperformance, downside protection or risk management” Duane Green, Franklin Templeton Investments

these gaps in many Canadians’ portfolios.” Eric Frape, senior vice-president of product and investments at iA Clarington, agrees that the main benefit of actively managed funds is their ability to address multiple investment outcomes beyond the potential for achieving above-market returns. He points out that an actively managed investment can achieve a variety of different outcomes. “The value of risk management is often overlooked, but for those approaching or in retirement, managing volatility can be a more important factor than relative return,” he says. “Many don’t realize that an investment with a lower volatility can increase the longevity of savings, even when that investment has a lower relative rate of return. Managing volatility is especially critical when it comes time to draw income. Investors will be dependent on steady and reliable cash flow. Advisors need to help prepare them, and an actively managed income portfolio can help.” Frape also sees the accessibility to bestin-class investment expertise that actively managed funds provide as another benefit. “Many investors cannot meet the minimum investment required to access the expertise of professional portfolio managers outside of a fund structure,” he says. “Active funds can allow any investor access to professional portfolio management.”

Managing volatility Green says that any discussion of actively managed funds should not begin and end with equity-based products. In fact, the current low-yield environment is reinforcing the need for fixed-income managers to take a more unconstrained view of the investment landscape. “For example, the investment managers of our flagship Templeton Global Bond Fund are not afraid to venture off the beaten

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FEATURES

ACTIVELY MANAGED FUNDS

path to find attractive, higher-yield, lowerduration investments, which you simply don’t get with a passive investment,” he says. In recent years, markets have tended to be driven more by macro factors, such as energy and geopolitical uncertainty, rather than fundamentals. Although this has impacted both passive and actively managed portfolios, Green still sees opportunities for investment managers to differentiate themselves, even in the small, heavily concentrated Canadian market. “When you look at the Canadian market

In today’s complex and fast-paced investing environment, access to investment vehicles that mitigate market volatility is essential for all investors. “The active manager has the flexibility to shift a portfolio according to market conditions or their views, so they can capitalize on opportunities or mitigate risk, or both,” Frape says. “In an active situation, the manager can adjust the asset allocation, security selection or deploy other tools to manage things like currency, as we do in the IA Clarington Yield Opportunities Fund, managed by Clément

“Managing volatility is especially critical when it comes time to draw income. Investors will be dependent on steady and reliable cash flow. Advisors need to help prepare them, and an actively managed income portfolio can help”

THE BENEFITS OF ACTIVELY MANAGED FUNDS

They don’t rely on an index or the market to guide the direction of investments

They can help to reduce volatility, manage risk and actively navigate other investment outcomes

They can increase the longevity of savings by lowering volatility

Eric Frape, iA Clarington itself, the S&P/TSX index, it’s dominated by three sectors: financials, energy and materials,” he says. “I look at our Franklin Bissett Canadian Equity Fund, and although it does have exposure to these sectors, it looks nothing like the index. Its active share score is roughly double that of the peer group average, so it doesn’t look like other funds in the category either. And fund investors have been rewarded with strong outperformance versus the index and the category average over most time periods. Sir John Templeton once said that you can’t outperform the market if you buy the market, and to me, that’s why a fund like this can play such an important role in investors’ portfolios.”

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Gignac. With a passive mandate, the investor is on the same ride as the index, up or down.” Frape recognizes that the industry is evolving, but he sees these changes as an opportunity rather than an obstacle. He believes that to help their clients navigate these uncertain times, advisors should continue to look to actively managed funds. “The inherent active layer of management, including currency management, can help build the broadly diversified portfolios advisors want for their clients, along with the ability to capitalize on opportunities or mitigate risk when needed, leaving some precious time to focus on other elements of their clients’ financial planning.”

They provide a ‘human factor,’ which can help investors outperform the market during both good times and bad

They look to untapped sectors and locations for attractive investments

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PEOPLE

ADVISOR PROFILE

Learning from the past William Vastis of RBC Dominion Securities discusses how the tumultuous events of 2016 have precedent that advisors should have been aware of

WILLIAM VASTIS holds forth on the main issues affecting both the domestic and global economy with the confidence of a person who has seen it all before. Vastis is one of the most respected advisors and wealth managers in the country, so it wasn’t much of a surprise when he was chosen as Advisor of the Year at the 2016 Wealth Professional Awards in June. The award was a recognition of his success in overseeing the William Vastis Wealth Management Group at RBC Dominion Securities, which currently has more than $500 million AUM. A guest lecturer at both the Rotman School of Business and the University of Toronto, he clearly puts a priority on imparting knowledge to the next generation of advisors. That guidance is particularly valuable in the current investment climate, as the effects of the oil shock and Brexit continue to take hold. So what are his strategies for navigating choppy economic waters? “History doesn’t repeat itself, but it does rhyme,” he says. “Before the Brexit issue, we saw a correction at the beginning of the year that was very similar to the Asian flu crisis in the late ’90s. We saw a currency shift that was occurring as oil fell.” Taking the lessons of the past to heart, Vastis and his team decided to transfer their US currency assets into Canadian

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dollars, which proved quite lucrative as the loonie rallied over the spring months. Then came Brexit – and again, taking a proactive approach proved beneficial. “Before Brexit, we took a much more pragmatic approach to international investing through ETFs and outsourcing through investment managers,” Vastis says. “The average demographic of our clients has a lower risk tolerance, so we localized investment to North America.” A member of the Canadian ETF Association, Vastis is well versed in the benefits of exchange-traded funds and the diversity they can bring to a portfolio. For him, the regulatory upheaval underway in the industry is another factor contributing to the rising trajectory of ETFs. “ETFs will continue to grow because of CRM2 and mutual funds cracking down on fees,” he says. “With the business being more disruptive, there are ETFs that have mandates

in them where you can specify into micro-sectors or specific geographic locations.” As a discretionary money manager, Vastis also values the convenience of ETFs and the speed they provide when moves need to be made rapidly. “When we had that correction in January, it was a broad sell-off, so everything in the marketplace was exposed to that – not just oil stocks,” he says. “So instead of picking one security and taking that risk, you could buy a basket in ETFs, such as the financial sector, for example.” One of Vastis’ specialties is a concept known as Sudden Wealth Management Strategies, an approach he pioneered specifically for business owners who are facing retirement. This makes him well versed in Canada’s current generation gap, specifically when it comes to investments. “If you look at the age demographic, there are two major generations – Baby Boomers

GIVING A LEG UP Aside from the numerous community organizations he’s involved with and charitable boards he sits on, Vastis is also the founder of the Compete to Complete business suit drive, which aims to help at-risk young men break into the workforce. A collaboration with the national ‘Give a Suit, Change a Life’ effort, the drive asks Bay Street professionals to donate some of their high-end clothing to outfit these young men with the suits they need for job interviews.

THE VALUE OF EDUCATION

Vastis earned a bachelor’s degree in commerce at the University of Guelph

Gained his Family Enterprise Advisor [FEA] designation from the University of British Columbia to deepen relationships with his family enterprise clients

“History doesn’t repeat itself, but it does rhyme. Before the Brexit issue, we saw a correction at the beginning of the year that was very similar to the Asian flu crisis in the late ‘90s” and the Digital Age,” he says. “The Boomers are the main holders of financial securities and are not as growth-oriented as they once were. Their risk adversity is lower, so you would assume that growth would be lower in that context.” The counterbalance to that is the next generation – although they’re lacking in assets, they’re clearly excelling in ingenuity,

Also is a Fellow of the Canadian Securities Institute [FCSI]

Is Canadian Investment Management [CIM] and Personal Financial Planner [PFP] accredited

innovation and impatience. Vastis believes their emergence as an investment force may not be as far into the future as many assume. “Millennials are coming with an aggressive pace of disruptive technologies,” he says. “I wouldn’t be able to calculate how Moore’s Law would be shortened, but from reading about disruptive technologies, you realize that nothing is forever.”

Also a licensed insurance representative, so he can provide life-insurance-based tax deferral and risk management strategies

A member of the Canadian ETF Association, which provides information, education and access to resources on ETF investing in Canada

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SPECIAL PROMOTIONAL FEATURE

EDUCATION

A better way to study Financial advisors have huge constraints on their time, so finding an opportunity to study for a big exam can be challenging. Fortunately, help is at hand

A CAREER in wealth management has always required a high level of competence and expertise, but gaining a foothold in today’s industry requires a considerable amount of continuing education as well. While a bachelor’s or master’s degree is an excellent starting point, increasingly, it’s only the first step. For those just entering the industry, or perhaps pursuing new avenues of opportunity, obtaining a certification or designation (often more than one) is a must. Global publisher Wiley has built its reputation producing educational aids across a wide spectrum of topics. The firm acquired

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Efficient Learning Systems in November 2012, which gave birth to Wiley Efficient Learning. The program encompasses Wiley’s accounting, finance and business exam review products, which are available both on mobile and online. “Wiley aims to be a lifelong partner to learners – from university students looking to find their first job to professionals seeking industry credibility and career advancement,” says Evan Burton, director of finance and professional learning at Wiley Efficient Learning. “Wiley supports aspiring students and professionals to advance in their field.”

One of Wiley’s best-known products is its ‘For Dummies’ series, which guides beginners through such diverse topics as parenting, pets or programming – in fact, the publisher is currently working on a ‘For Dummies’ title for those preparing for the CFA. The exam has a notoriously high failure rate, so being properly prepared is paramount. Burton outlines how Wiley Efficient Learning can help. “In the case of the CFA, which is really our flagship finance product, there are a number of subject-matter experts on permanent retainer with Wiley,” he says. “They develop all the material, and then it goes through a rigorous evaluation process. It helps us develop something that is really oriented toward helping students learn the material and pass the exam.” In addition to the CFA, Wiley also publishes study aids for the CIM, CFP, CMA and a host of other financial planning certifications. This is quite the challenge, especially considering how frequently the material needs to be updated. Wiley reviews its content either biannually or annually, ensuring that professionals will not be left in the dark over the latest regulatory change or major product development. “Every exam has its own curriculum release calendar, and each product has a lead director of curriculum development,” Burton says. “Under that is a team of subject matter experts, so when a new curriculum is released, we will review the changes, and then we develop the new readings.” When it comes to certifications such as the CFA or CFP, a large percentage of those taking the exams must juggle high-pressure work and study commitments. Long hours go handin-hand with a job in finance, so how does one make the time to adequately prepare? “Working professionals and students alike have enormous constraints on their time,” Burton says. “Our exam planner allows you to customize a study schedule based on those constraints and then automates the work of assigning topics and tracking progress.”

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PEOPLE

CAREER PATH

BLAZING HIS OWN TRAIL Doug Macdonald has spent a lifetime doing the things he was told he couldn’t do

As a student, Macdonald, who had structured his schedule so that Monday was class-free and the weekend started at noon on Friday, signed up for economics at the suggestion of a friend “In those days, the only economics I knew about were home economics. I thought he had signed us up for a cooking class – I thought it would be an eight-to-one ratio of girls to guys. I loved economics, so I transferred out of science and focused on economics”

1967

1973

1992

WINS CAFP AWARD At its National Conference, the CAFP awarded Macdonald the Member of the Year Award, an honour given to “the member who has shown exemplary leadership and has made an outstanding contribution to the profession” “I worked very long and hard for that; it was very important to me. It reflected on the company – the company allowed me to do all that. We believed so much in financial advisors actually becoming professional”

2013

PASSES THE TORCH In 2013, Macdonald saw the completion of the succession plan that was put in place in the late ’90s, in which he passed the torch to six younger advisors and retired two years later “I’ve made a difference in people’s lives, and that gives me goosebumps. What’s more important than the awards is clients saying to me, ‘Doug, you made a difference in our lives.’ That’s the most important, especially to an idealistic person like me”

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STARTS HIS OWN COMPANY Macdonald sought to offer comprehensive personal financial advice on a fee-for-service basis – a business model at odds with the orthodoxy of the day. But he persisted, founding Macdonald Shymko & Company

DISCOVERS ECONOMICS

EMBRACES TECHNOLOGY In the early days of the company, Macdonald and his partners spent the eye-watering sum of $4,000 on four HP-80 calculators, marking a commitment to technology that endures to this day “Calculations involved looking up tables; with the HP-80, it was all programmed. It was close to a mini-computer. We used to do a financial independence model that took three hours [because of the HP-80] rather than three days”

1972

“We set up a business, in spite of everyone telling us it was an idea that would never work. But we were convinced there was a need for comprehensive personal financial advice on a fee-forservice basis, with no commission. And we were 22 and idealistic” 1984

GETS INVOLVED WITH PROFESSIONAL BODIES Well into his career, Macdonald joined the Canadian Association of Financial Planners, eventually becoming national president and chair of the board of regents before continuing with the Institute of Advanced Financial Planners “Up to that time, we knew nobody who was doing what we were doing; through [the association], we met people across the country. It was significant because it introduced us to like-minded people. It meant we weren’t just four crazy guys with this idea, not knowing anybody doing the same thing”

2005

WINS AWARD FOR CAREER ACHIEVEMENT Winning the Career Achievement Award for Advisor of the Year from Advisor’s Edge holds a special place in Macdonald’s heart due to the fact that it was awarded by his peers “I know a lot of the people on the board that I respect and admire who made that decision. They referred to me as the ‘godfather of financial advisors.’ One of my colleagues, when he congratulated me, said, “You’ve been a consistent beacon; you haven’t wavered”

PEOPLE

OTHER LIFE

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

TEEING OFF Hitting the links is a family tradition for third-generation golfer Steve Tate FINANCIAL PLANNER Steve Tate doesn’t remember a time when golf wasn’t part of his life; in fact, the picture of his younger sister being brought home from the hospital, taken when Tate was 4, includes the golf bag he was given as a big brother present. That’s hardly surprising, given how steeped in the sport his family history is – his father, grandfather and two great-uncles were all golf pros at one time, and his sister went to college in the US on a golf scholarship. Tate himself spent some time as a golf pro, too, qualifying in the summer between his first and second year at university and pursuing it initially during his summers off, and then for his first job after graduating. These days, the father of young children says he gets out on the green too infrequently. The family tradition continues, however: His 3-year-old daughter has her own set of clubs, which she uses to practice with Tate in the backyard – and even the 1-year-old has a plastic set. “It’s part of who I am, of my experience growing up,” Tate says. “For me and my family, it’s golf.”

2½

The age when Tate guesses he began playing golf

The age at which he became a golf pro

Number of holes-in-one in the family (shot by Tate’s mom)

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LIFE | HEALTH PROFESSIONAL LIFEHEALTHPRO.CA ISSUE 2.03

CANADA’S LEADING LIFE & HEALTH

MGAs AND WHOLESALERS WHOLESALERS A guide to the advisor’s most important industry partners

THE INNOVATION GAME Behind the scenes at Sun Life’s new startup partnership

PROTECTING EMPLOYEES ABROAD What employers need to do to insure their workers against kidnapping

WOMAN OF INFLUENCE Munich Re’s Mary Forrest talks industry trends

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CONTENTS

MARKET WRAP

59 Market wrap

The latest news from the life and health insurance marketplace

Q&A

Sun Life ready to play with startups Fred Tavan, global head of reinsurance and insurance risk, Sun Life Financial 62 In depth

Recent cases of kidnapping have highlighted the need for companies to protect their employees with specialized insurance policies

Years in the industry: 11 Fast fact: Sun Life Financial recently became the first Canadian insurance company to partner with the Plug and Play Tech Center, a US-based global technology accelerator that connects top startups from around the world to corporations and investors

64 Spotlight

Mary Forrest, the head of Munich Re in North America and the first female chair of the CLHIA, discusses the state of the life insurance industry

CANADA’S LEADING LIFE & HEALTH

MGAs AND WHOLESALERS WHOLESALERS 66 Cover story: Canada’s leading life & health MGAs and wholesalers

Life Health Professional highlights the top names from the sales side of the industry

What does your new partnership with Plug and Play mean for Sun Life? It ties back to our desire to accelerate innovation within the company, as well as our digital strategy and client-for-life strategy. It’s recognition that as the ecosystem is evolving, we have to be connected. Not all ideas are going to be generated from within Sun Life. Things are moving very rapidly globally, with ideas coming from both the East and the West. Working with an organization like Plug and Play will allow us to have our ear to the ground in terms of being involved with this new ecosystem. What expertise does Plug and Play bring to the table for you to choose them for this tie-in? They are extremely good at scanning the world for new startups. They review about 4,000 new startup ideas every year. They have a 12-week program where they work with corporate partners such as ourselves and filter those 4,000 ideas down to 25 to 30 that actually participate in the program. They have different verticals, but obviously we are interested in the insurance vertical. So what does the program involve, and how can Sun Life benefit from being present? The corporate partners and the Plug and Play staff basically incubate these startup

ideas. They provide coaching and mentoring and take ideas that often come from research papers and the academic community and turn them into commercial applications. We will be integrated into that, and at the end of the 12 weeks, those startups make pitches to investors. What kinds of startups are typical to the program? The good thing about Plug and Play is that they are not just targeting young startups. They have a wide range of startups throughout their life cycle. They have an expo every six months where they bring back startups that have already raised a $1 million, $5 million, and they are coming back for more. Is seeking partnerships with smaller companies a new strategy for Sun Life? The world is changing, and we can’t just rely on our own ideas. There is a lot of innovation coming from different places, and certainly startups are a big part of that. Their entire being comes from coming up with something new and then commercializing those new ideas. This partnership with Plug and Play is Sun Life’s recognition that the world will continue to evolve rapidly. They are so nimble, and it would be hard for us to replicate, so we have decided to partner with them instead.

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MARKET WRAP

NEWS BRIEFS - HEALTH Healthcare is far from free in Canada The average Canadian family pays more than $11,000 per year for healthcare, according to a study by the Fraser Institute. The study found that a Canadian family of four will pay an average of $11,494 for public health insurance in 2016. “Contrary to what many believe, healthcare in Canada isn’t free,” said co-author Bacchus Barua, senior economist for the Fraser Institute’s Centre for Health Policy Studies. “While Canadians may not pay directly for medical services, they pay a substantial amount of money for healthcare through their taxes.”

Saskatoon Health plans to cut staff Coming off a $35.7 million deficit in 2015, the Saskatoon Health Region says it plans to cut support staff and impose a temporary hiring freeze in the hopes of saving $34 million in order to balance its budget. The region’s president and CEO, Dan Florizone, acknowledged that balancing the budget will not be easy; he said the region hopes to minimize layoffs, but added that salaries and benefits comprise 78% its expenses. The region’s plan to balance the budget also includes measures to improve efficiency and management practices.

Bupa announces new CEO and CFO International health insurance giant Bupa has announced the appointments of two London-based executives. The insurer has officially named Evelyn Bourke as its new chief executive, while Joy Linton has been promoted to the role of chief financial officer. Bourke initially became the acting CEO on April 4 after her predecessor, Stuart Fletcher, stepped down from the top post; Linton has been acting CFO since May 1. “I am committed to ensuring we put our customers and our people at the centre of everything we do,” Bourke said of her new role.

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Garmin joins Manulife Vitality program The insurer taps Garmin to provide wearable activity trackers for members US-based tech firm Garmin will be joining the Manulife Vitality program in Canada as a rewards provider. The program, which rewards members for making healthy choices, is scheduled to be launched later this year. In order to attract participants, the insurance giant will offer program members a free Garmin Vivofit 3 wearable device when they register for the program. The Vivofit 3 is a daily activity tracker with the capability of capturing data from a broad range of activities such as walking, running, biking, swimming and elliptical training. “We are extremely excited to be selected as the wearable technology provider to Manulife Vitality members,” said Cliff Pemble, Garmin president and CEO. “Manulife’s innovative new insurance program recognizes the important

role that wearable technology can play to encourage healthier, more active lifestyles.” Members of the Vitality program earn points when they complete healthy living activities like health education courses, exercising, going for an annual health screening or even getting a flu shot. “The Garmin wearable technology fits in nicely with the Manulife Vitality program in Canada,” said Marianne Harrison, president and CEO of Manulife Canada. “The wearable device helps members keep track of their progress and motivates them to achieve their health and wellness goals. Through a seamless connection with Manulife Vitality, a member can automatically be recognized for meeting daily fitness goals, which is exactly what this program is all about.”

“A member can be automatically recognized for meeting daily fitness goals” Ivari takes flak for Trump’s hair Detractors of US presidential candidate Donald Trump ganged up on a Canadian insurance company after mistaking it as the businessman’s hair care provider. Ivari, a Canadian life insurance company specializing in universal, term and critical illness insurance, was recently called out on Twitter by Trump critics. According to the insurer, the online attacks started when a popular American celebrity culture blog published an article claiming that Ivari International – a separate company – was responsible for Trump’s hair.

Pharmacists under fire for benefits The Canada Revenue Agency has concluded a four-year investigation in which it discovered that more than 1,000 pharmacists received unreported benefits from generic drug companies. The companies gave pharmacists the benefits – such as gift cards and travel vouchers – to influence them to substitute the generic product for the name brand when filling prescriptions, according to a Lexology report. Ultimately, the CRA said there was more than $58 million in unreported income. No criminal charges have been filed, but financial penalties were assessed.

Canada makes top 10 for retirement security The country jumped from 12th to 10th place in a recent report on the best places to retire The recently published 2016 Global Retirement Index commissioned by Natixis put Canada among the world’s best when it comes to retirement security. Placing 10th, it came ahead of the US (14) but was some way off numberone nation Norway. Other countries in the top 10 included Switzerland, Iceland, New Zealand, Sweden, Australia, Germany, the Netherlands and Austria. Of the 43 countries surveyed, India placed last, with Greece, Brazil, Russia, Turkey, China, Spain, Cyprus, Mexico and Portugal making up the bottom 10. Healthcare spending and a high per-capita income were clear contributors to Canada’s high ranking. However, this is offset by the nation’s high level of government debt, which means that many people approaching retirement age are anxious about how financing for social programs can be maintained. As the Trudeau government meets with provincial leaders to hash out details for reforming the CPP, one notable feature of the list is that the

Final expense sales up 5% last year Final expense life insurance sales were up 5%, and policy count was up 4% in 2015, according to a survey by the Life Insurers Council, CSG Actuarial and Competiscan. The data showed that 60% of policies were sold to women and 40% to men. The average age of purchase was 63, and average issue age was 66.8. “While some carriers have been very successful selling final expense life insurance directly to consumers, more than 80% of policies were sold through independent agents or independent marketing organizations,” said Jeffrey Shaw, executive director of the Life Insurers Council.

“We can point to some things that are clearly working and some things on the horizon that it would be good to address now” majority of the highest-ranked countries had a compulsory workplace savings program. Ed Farrington, executive vice-president for retirement at Natixis, explained how Canada’s improved ranking this year pointed to progress – but he adds that there’s more work to do. “When you look at what is driving these results for Canada,” he said, “we can point to some things that are clearly working and some things on the horizon that it would be good to address now.”

Jonas and Sun Life team up Sun Life Financial has announced that it is partnering with Beyond Type 1, a nonprofit focused on diabetes, to give members of the Canadian Diabetes Association and JDRF Quebec who are living with diabetes the chance to meet singer/songwriter Nick Jonas. Sun Life, the CDA and JDRF Quebec are joining Jonas for the Canadian leg of his tour this summer. “I’m thrilled to join forces with Sun Life Financial in the fight against diabetes and encourage people living with this disease to follow their dreams and live beyond their diagnosis,” said Jonas, who co-founded Beyond Type 1.

NEWS BRIEFS - LIFE IIAC says CPP reform is a half measure Recent changes to the Canada Pension Plan aren’t enough to ensure retirees will be financially sound after leaving the workforce – or to counter the growing reality of seniors outliving their savings. An overhaul of the existing RRSP system is needed, says the Investment Industry Association of Canada [IIAC], adding that retirees should be able to enjoy tax deferral on their savings beyond the age of 71. The IIAC’s comments are part of its guidance to the House of Commons Standing Committee on Finance as it prepares the 2017 federal budget.

Sun Life expands presence in Asia Sun Life Financial emphasized its global ambitions with the announcement that its Hong Kong subsidiary is acquiring the pension business of FWD Life Insurance Company. The deal is the latest move for Canada’s third-largest insurer as it continues to expand its presence in Asia. Shifting demographics in the region, including an aging society and a growing middle class, mean Sun Life Hong Kong has been searching for ways to grow its business. The acquisition will give Sun Life control of FWD’s Mandatory Provident Fund and Occupational Retirement Schemes Ordinance businesses.

Great-West subsidiary completes acquisition Great-West Lifeco’s Irish subsidiary, Irish Life Group, has closed its previously announced acquisition of Aviva Health Insurance Ireland and GloHealth Financial Services. Financing for the acquisitions was provided internally. As of March 31, GreatWest Lifeco and its companies have approximately $1.2 trillion in consolidated assets under administration. “Aviva and GloHealth will combine to create Irish Life Health – a new force in the Irish health insurance market – and grow their existing customer base of 420,000 customers,” said Great-West Lifeco president and CEO Paul Mahon.

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IN DEPTH

Insuring the unthinkable As cases of kidnapping and ransom increase globally, more and more Canadians are seeking dedicated coverage to protect themselves, their children and their employees THE TRAGIC killing of Canadians Robert Hall and John Ridsdel by Islamic extremists in the Philippines was shocking in its brutality. Both men were kidnapped and held for ransom by the Abu Sayyaf group before ultimately being beheaded when their demands were not met. After Hall’s body was recovered, Prime Minister Justin Trudeau called on other nations not to pay ransoms if their citizens are abducted in order to discourage militants from carrying out more ransom kidnappings. It’s a real concern for the many Canadian companies that have employees working in countries where the threat of kidnapping is ever present. Oil-producing Libya accounts for more kidnappings of foreign citizens than all other nations combined, but Iraq, Nigeria, Somalia, Mexico and the Philippines present similar dangers. Any company that does business in these countries should be prepared for all eventualities. That means being properly covered by insurance; accordingly, kidnap & ransom policies are growing in popularity. A recent conference held by Hunter McCorquodale and security firm The Olive Group in Toronto highlighted the importance of such coverage. Sophie Strezos-Egnatis, vice-president of business development at Hunter McCorquodale, outlined the background of kidnap & ransom policies.

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“The first kidnap policy was written by Lloyd’s in 1932 following the highly publicized kidnapping and murder of Charles Lindbergh’s infant son,” she says. “Back then, it was considered a luxury product, but there were more incidents in the ’60s and ’70s, particularly in Italy with some banking executives’ wives. It spiked again in popularity during the Somali pirate crisis in 2008.” The tragic cases of Hall and Ridsdel show that the threat of kidnapping is as strong as ever, so companies clearly have a duty of care for their employees. In fact, it is enshrined in law: Bill C-45, better known as the Westray Bill, came into effect after the 1992 Westray coal mining disaster in Nova Scotia, when lax safety

as kidnap & ransom insurance, in 2011, but Strezos-Egnatis has been supplying this type of product to insurance advisors since 1993. “In the early years, buyers were predominantly corporate entities with international travel exposure or with expatriate employees in high-risk countries,” she says. “Today, the range of buyers is much broader.”

“The real value of insured coverage is knowing how to deal with various perpetrators even when ransoms cannot be paid due to terrorism legislation” Sophie Strezos-Egnatis, Hunter McCorquodale measures led to a methane gas explosion that killed 26 miners. The law requires companies to put their employees’ safety first, whether they are working in Canada or abroad. Hunter McCorquodale began offering special contingency insurance, more commonly known

Reflecting a more globalized world, those seeking protection today aren’t just limited to large conglomerates with huge budgets. Canadians, and particularly younger Canadians, are known for their love of travel, and this is reflected by a growing segment of Hunter

MOST DANGEROUS COUNTRIES FOR KIPNAPPING Libya: With 51% of the world’s total kidnapping incidents, Libya is far and away the most dangerous country for foreign citizens. The rise of ISIS in the country has led to a spike in kidnappings; primary targets are diplomats and expatriate workers. Militant groups continue to use kidnapping as a means of raising funds and obtaining political concessions. Iraq: The war-torn nation has 5% of the global kidnapping total. The threat remains high as Iraqi security personnel were redeployed to fight anti-government forces. This has led to an increase in criminality in the country’s large cities. Nigeria: Africa’s largest oil producer accounts for 5% of the world’s total kidnappings. It is believed that plunging oil prices have led to a tactical shift by pirates in the nation as they replace oil theft with kidnapping foreign nationals to hold for ransom. Somalia: Due to a raft of highly publicized cases, Somalia has a bad reputation for kidnapping. However, efforts by international security forces to combat the threat have brought about significant decreases in piracy since the highs of the previous decade. Source: The Olive Group Kidnap & Ransom Insight Report, April 2016

McCorquodale’s client base. “Beginning on the low end, we have many middle-income families purchasing short-term coverage for young adult children who travelled internationally upon completing their education or accepted employment in foreign countries,” Strezos-Egnatis says. “We’ve insured a young woman teaching English in Asia, a young man trekking in Central America and a pop-culture blogger who embedded himself in a small town in Mexico. The parents were concerned about their safety and purchased coverage, including specialized endorsements such as mysterious disappearance, hostage crisis, threat response and express kidnapping.” However, the main target market remains the larger companies that regularly do business in high-risk countries. “At the other end of the spectrum are multi-national organizations with employees and operations worldwide, many in the energy and resources segment,” StrezosEgnatis says. “In between this range lies high-net-worth families with international travel exposure or SMEs and NGOs sending employees or volunteers into high-risk areas.” Central to these policies is partnership with the right people who can act swiftly if and when a crisis occurs, such as The Olive Group. “The most important feature of an insured plan is priority access to a dedicated crisis management team,” Strezos-Egnatis says. “Such teams provide an immediate ‘handholder’ at an incident site, then deploy a trained crisis manager within 24 hours to assemble and train a negotiation team and provide in-depth analysis and assessments to support critical decision-making.” While the use of such specialists certainly doesn’t come cheap, their worth is clear, Strezos-Egnatis points out. “Evidence suggests that in situations where the advice of a professional crisis management specialist was available, the hostage was released safely in 90% or more of cases,” she says. “This is the real value of insured coverage – knowing how to deal with various perpetrators even when ransoms cannot be paid due to terrorism legislation.”

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SPOTLIGHT

The North American challenge As Munich Re’s head of life insurance for North America and the CLHIA’s first female chair, Mary Forrest is a commanding presence in the life insurance space AS HEAD of Munich Re North America (Life), Mary Forrest has a diverse geographical area to oversee for the reinsurance giant: the US, of course, but also Canada and the Caribbean. Differing culture, geography and regulatory concerns all add complexity to the job, but Forrest has excelled in the role since taking it on in 2008. “In the US, the challenge is dealing with a very strong, robust market while also dealing with pockets of underperformance in the back book of the business,” she explains. “The market is similar to the Canadian market in terms of client needs, but much more geographically spread out and diverse in terms of product design, underwriting approaches and market sub-segments.” The Great White North, while similarly huge in scale, is an entirely different proposition than the US in terms of population, but that’s far from the only difference for Munich Re. “Canada has been a solid book of business for us,” Forrest says. “We have done more financial reinsurance transactions in Canada than any other reinsurer. We have also set up a team for innovation that is trying to connect with our clients, but not for their typical insurance needs – rather, looking at other ways we can help them. Through that, we can look for diversified sources of revenue.” Another characteristic of the Canadian life insurance market is the pre-eminence of the industry’s top names; Forrest says regulatory conditions have helped cultivate this environment.

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“There’s no question that the largest companies have a dominant share of the market,” she says. “One of the things about Canada is that it has one of the highest capital requirements. The Canadian regulator has a disciplined approach, and when business is ceded, total capital is maintained in the system. “One of the biggest challenges companies have in Canada are low returns, so they have ceded quite a bit of the mortality risk. Munich Re has more mortality risk than any other company.”

in the insurance industry have committed to making changes to ensure we have a robust, world-class environment for insurance customers in Canada.” Forrest also has some clear ideas about where Munich Re can boost its presence in North America. “For underwriting, firms are looking at ways of innovating,” she says. “That could be using alternative sources of information, or even getting the same information that traditional underwriting requirements provide, but much

“We’re pleased to see that many of the major players in the insurance industry have committed to making changes to ensure we have a robust, world-class environment for insurance customers in Canada” Forrest has not only clocked a quarter of a century with Munich Re, she’s also been a key member of the Canadian Life and Health Insurance Association for many years, so it wasn’t surprising that the CLHIA selected her as its first-ever female chair last year. She recently finished her one-year term, during which she dealt with some big issues. “At the beginning of this year, the CLHIA reviewed practices surrounding the distribution of individual insurance from the perspective of the consumer,” she says. “We’re pleased to see that many of the major players

faster and not as cumbersome. So, being less evasive will improve the customer experience and increase the number of sales.” While technology offers the chance for insurance companies to grow their business, Forrest points out that using it efficiently is easier said than done. “Companies are nervous about being the last one in, so they are investing large sums of money in these areas. Every company wants to be first in the pack, so we need to stay on top of all the research being done out there. That’s actually quite a big challenge.”

FACTFILE Name: Mary Forrest Company: Munich Re North America (Life) Title: President and CEO Years in the industry: 25 Career highlights: Becoming a Fellow of the Society of Actuaries and the Canadian Institute of Actuaries in 1992, being named head of North American operations for Munich Re in 2008, and being selected as the first-ever female chair of the CLHIA board in 2015

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65â&#x20AC;&#x201A;â&#x20AC;&#x201A;

COVER STORY

CANADA’S LEADING LIFE & HEALTH

MGAs AND WHOLESALERS WHOLESALERS Life Health Professional spotlights the top managing general agents and wholesalers in Canada’s life insurance industry as they try to navigate a world of changing consumer preferences, emerging technology and shifting demographics MGAS AND WHOLESALERS represent a vital link in the life and health insurance supply chain in terms of bringing products to the market. The relationship between insurance advisors and MGAs/wholesalers is a crucial one, and our readers have made it clear that education and product knowledge were the most important factors when choosing an MGA or wholesaler to partner with. As such, the people featured here ones who excel most in this respect. Knowledge is power, after all, and that’s certainly true when it comes to bringing complex insurance products to a hugely competitive marketplace.

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SCOTT MORROW Director of sales, insurance distribution and wholesale channel Sun Life Financial

Life for six and a half years.

products to be sexy and flexible, but a lot of them just don’t have a long shelf life. The products that have longevity are the ones that have always been there.

LHP: Have you always been on the sales side of the business? SM: Yes, either as an advisor, a consultant or a wholesaler.

LHP: So is that a priority for Sun Life? SM: We have had a lot of success in the past six years with record

LHP: How long have you been in insurance wholesaling? Scott Morrow: I’ve been in the business since 1994 and with Sun

LHP: What are the main differences between those roles? SM: I started as an advisor, like many people do in this business,

and that is mostly face-to-face with clients. From there, I eventually went into management in the mid- to late ’90s when we were a career agency. At that time, a lot of carriers left the career agency side and went to a MGA distribution model. LHP: Has the job changed much since then? SM: I have seen the role of a wholesaler change drastically, and

especially since I joined Sun Life. LHP: In what way? SM: A lot of wholesalers are product pushers, so they are out

promoting products – doing product training sessions. At Sun Life, the clientele we have been working with on our third-party distribution side is more higher-end advisors who deal with the high-net-worth market. The role of the wholesaler has changed in a way where we have become almost like business partners. A lot of our wholesalers now work with a finite number of advisors, maybe 15 to 20. LHP: Have the products you’re selling changed a lot over that period as well? SM: Products have changed a lot over the last 20 years, but the

products that are being utilized for the most benefit for the client have probably been around for 150 years. A lot of carriers design

amounts of business coming in. That’s because we are not pushing products; we are really trying to identify where the client is lacking in their insurance needs, and then finding a product to fit that. LHP: Where are Canadians lacking in that respect? SM: A lot of insurance advisors are looking at protecting the

human capital of a client. For example, a couple that is 40 years old with a mortgage and a couple of kids – they might have a couple of hundred thousand dollars of income, but a $700,000 mortgage, so they don’t have a lot of discretionary income. So if one passed away, you are insuring that human capital. Today the demographics in Canada mean we work with a lot of older clients. The Baby Boomers have a ton of money, so we are seeing a switch where clients are looking more at insuring their financial capital. They want to protect their money from leakage. LHP: How are companies like Sun Life preparing for the transfer of wealth from the Baby Boomers to the next generation? SM: A lot of the clients we work with are using insurance where it is

appropriate to try and protect what is being passed on against taxation. Life insurance is being used as a safe-money asset class. The yields aren’t great on corporate bonds or government bonds, so in a properly structured insurance plan, clients can get bond-like yield in a tax-favoured environment, as well as liquidity guarantees – and if someone dies, a multiple will go to their families.

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COVER STORY

CHARLIE BURNS President PPI Solutions (Winnipeg)

LHP: You’re the president and founder of PPI Solutions (Winnipeg). What is the main focus of your business? Charlie Burns: As an MGA, we represent about 17 different

insurance companies to our brokers, trying to get their products out there. LHP: Do you deal primarily with large firms or the smaller operators? CB: We deal with both – the very big companies like Manulife,

Sun Life, Canada Life. We also work with a lot of the smaller companies as well. There are a lot of niche players in the industry that provide products that the larger companies don’t offer. LHP: Have you always been involved with the insurance industry? CB: Yes, although I took a hiatus to teach a national sailing team

for a number of years on Lake Winnipeg. We have actually produced some Olympic sailors in Manitoba. LHP: As a veteran of the business, what are the main changes you’ve seen with regard to the products you offer? CB: The biggest change has been with the long-term guarantees

that insurance companies have been famous for. They have been more and more difficult to provide in the current regulatory, accounting and interest-rate market. LHP: How has that affected how you do your job? CB: What it means is that the expense of products with long-term

guarantees is going up. With segregated funds, MERs are going up, and the amount of reserving has increased – they are huge changes to our business. Regulation has changed dramatically, and it is making it more and more difficult to do business. LHP: Has Canada’s aging demographic been a factor for you? CB: Absolutely. We had been selling a lot of universal life plans, but

today we are selling a lot more products with a whole life configuration. They fit the regulatory mold, and people are really appreciating the cash values in the policies. That has been a big change in the last five years. I think whole life has gone from 20% of sales up to 50%.

“We had been selling a lot of universal life plans, but today we are selling a lot more products with a whole life configuration. They fit the regulatory mold, and people are really appreciating the cash values in the policies”

KEVIN MILLER President and CEO ABEX Brokerage

Originally from Saskatchewan but now based in Calgary, Kevin Miller oversees the smooth operation of his firm, ABEX Brokerage Services. Given his decades of experience in sales, it wasn’t surprising when Miller was named president of ABEX in 2007. Since then, he has continued to drive the firm forward, guided by a belief that expert knowledge in one’s products is what often separates one MGA from another. That, combined with the relationships he’s built on all sides of the business, has ensured ABEX continues to thrive. Miller’s ability has not gone unnoticed by his peers, either – the Premier Association of Financial Professionals has recognized his achievements for the past eight years.

BRAD HYDE Senior director, individual insurance sales, Northern Alberta Manulife Financial

In the insurance business since 1992, Brad Hyde built his name as an expert in estate planning at Sun Life. He enhanced that reputation over the next 16 years with the firm before moving to Manulife. There, he was named director of individual sales, which led into him becoming senior director of individual insurance sales for Northern Alberta. In that role, Hyde has distinguished himself with his vast knowledge of the insurance market and the products Manulife brings to the table. This has made him popular with advisors, who identify him as a wholesaler who always takes to time to properly explain and offer training on his products.

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GURBINDER AMAR Director of sales, Western Canada Foresters Financial

LHP: Tell us a little about your role with Foresters. Gurbinder Amar: I’m in charge of the sales across Western

deal of change in product offerings. GA: I have noticed people jumping from whole life to universal life

Canada, from Vancouver Island to Manitoba. I’m responsible for advisor-MGA relations and making sure we are getting the production we need. So I’m out there presenting, teaching and training on our products.

and now back to whole life again. That’s not only because of product suitability, but also products have changed because of their profitability for carriers. Products have adapted to that, and now with the exempt test changes, you will see a lot more variabletype products.

LHP: How long have you been with Foresters? GA: I started with Foresters in November last year, but I have been

in the industry for 16 years. Beforehand I was working with PPI Solutions as their sales manager for British Columbia. I love being back on the wholesaling side. It was something that I missed. Being a sales manager is one thing, but being a wholesaler has a completely different feel. LHP: What do you prefer about being a wholesaler? GA: I love the variety – all the different advisors and personalities

you get to meet. In my previous role, you would only meet with your MGA’s advisors. Now I can meet with every MGA and every advisor out there. I have done almost every position in the industry – I have been an advisor, an inside wholesaler, a hybrid wholesaler, a sales manager for an MGA and now director of sales. LHP: Moving around like that, you must have noticed a great

LHP: To what extent has the shift into the digital age changed your job? GA: Technology is a big motivator in the industry – you can see

that right now with electronic applications. Nobody has time to meet in person anymore, it seems – everyone wants to work off their smartphones or their tablets. Carriers are getting there, but it’s a slow process. LHP: What would you say are the main challenges facing the industry? GA: A major challenge for me is dealing with younger advisors.

With them, it’s no longer a handshake promise. Now there’s no commitment to anything, so the relationships have changed. Product development and trying to find ones that fit the times is another big challenge. It’s an industry-wide issue we are all trying to deal with now.

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COVER STORY

JIM KENNEDY Account executive, national relationships Empire Life

LHP: How long have you been in the insurance business? Jim Kennedy: I just celebrated my 40th year. I was with North

American Life for 19 years – I started as an advisor, and then I went into sales management. LHP: Why did you make that switch? JK: Well, I always compare it to sports. You have people who

are better players and some who are better coaches. I always thought I was a better coach, so I moved into management. I think wholesaling is like that, too, with the work you do with advisors – I find it has that coaching/counselling side. LHP: Can you explain a little about how you bring products to advisors? JK: We deal exclusively with MGAs. In my territory, I work a

lot with the management team at the MGAs, and they help me identify key advisors I should be talking to. With advisors, they will usually have their top 100 clients, and I work that way, too. Then it’s building relationships with them – that’s key. All companies have good products, so it comes down to providing a good service to these advisors. LHP: Has Empire released any major products this year? JK: We don’t sell disability or long-term care, but apart from

that, we have a whole lineup of products. We are very strong in the term insurance right now. Also, like the growth within the industry, we are very strong in the permanent insurance market, especially whole life. Things will be changing in 2017 with the taxation rules and how health products have to be designed. It will be a new era on the life side.

“The government is trying to get back to insurance being insurance and investments being investments. 2017 will be an interesting year. I think it will level the playing field a bit” LHP: What kind of impact do you think the new rules will have? JK: The way we will have to structure products means the

government is trying to get back to insurance being insurance and investments being investments. Some of the rules will limit how much cash you put into an insurance policy. 2017 will be an interesting year. I think it will level the playing field a bit.

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Products won’t have a huge differentiation, so we will need to get back to building relationships and offering good service. LHP: In the 40 years you’ve been in the insurance industry, what would you say have been the major changes? JK: It has gone in stages. It used to be all about products, then

we went through a phase when client planning became very important. Now what I am seeing is there are really two distinct groups of clients – the Boomers and the millennials that are coming up and have different needs. Empire has really put a push on electronic applications. We have a tagline: “Simple, fast and easy.” That’s for both clients and advisors. We have gone from complex products to making everything easy to understand and simple to buy. That will only increase in the future. LHP: Has Canada’s aging population changed the business a lot? JK: On the insurance side, a lot of it for Boomers is buying

insurance to retain their capital. For younger people, they are buying because they have heavy debt, so they are buying a lot of term insurance. One of the biggest challenges we will have is with advisors being a greying population. We have to find ways to bring younger people into the business to look after that demographic.

DAVID TALBOT Brokerage manager, Prairies Foresters Financial

LHP: Have you always been on the sales side of the industry? David Talbot: I’ve been in the industry for six years. Prior to

concerns they have? DT: I think mostly they want to know how to get the concept of

Foresters, I was an advisor.

the product across to the client in a simple way – not jargonfilled – so they can understand quickly. It’s the Facebook generation of limited time and a limited attention span. Sitting down for four hours to explain an insurance product is a real challenge.

LHP: Why did you make the switch? DT: I was spending a lot of my time as an advisor with RBC

Insurance coaching and helping other advisors, even at that early stage. I began to realize I preferred doing that, so it was a natural shift into my current role. LHP: Have you noticed much of a change in the insurance products since you came to Foresters three years ago? DT: I’m seeing faster development and more products coming

out in the quick-issue market. A lot of the companies are trying to beef up their product lines in that regard. LHP: When you meet with advisors, what are the main

LHP: Has technology changed your job a lot? DT: I wouldn’t say it has changed it a lot, but it is definitely

moving in that direction. Every insurance carrier is making strides towards modernizing our business. Insurance is not known for being particularly modern. It has that ‘old man’ mentality and image, but firms are making great strides in terms of engaging the millennial market in a language they understand. Technology is definitely moving us that way.

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COVER STORY

SHANE CORCORAN Client: Radius Financial Education Vice-president, Northern Alberta division PPI Solutions

Contact: Tony Sanfelice Phone: (416) 407-1445

LHP: Have you always been a wholesaler? Shane Corcoran: I started in the

industry about 28 years ago, and I’ve always been on the wholesale side. I was with Paul Revere, and that became Provident, which became Unum Provident Canada and is now RBC Life. LHP: There have obviously been a lot of changes in the industry over that time – what have been the main developments for you? SC: Technology has really become a big

part of the industry. I look at our offerings, and honestly, 10 years ago, I would not have dreamt the suite of technology we have now would have been available. LHP: Does that change how you market products? SC: It allows advisors to take what would

have otherwise been a very complex presentation to a client and do that very easily in a format that makes sense. LHP: You’re based in Alberta – has the economy there affected your business? SC: Not really. I’m sure there has been

some impact, but we are at about 20% growth on the risk side. The investment side is up also.

LHP: Have you seen a big change over Email: sanfelice@radiusfinancialeducation.com the years in life products and how they Publication: Wealth Professional are being used? Award Show Guide SC: One of our specialities at PPI is working with brokers who want to Ad Size: full page 8.25” x 10.875”

develop their practice as it relates to File due date: Wednesday, August 18, 2016 business owners. We do a tremendous Issue: September amount of training – at least 250 training sessions per year. At least a thirdArt Director: Vic Finucci of those are dedicated to working with Phone: (416) 605-7729 business owners. Email: finucci@canadianhedgewatch.com LHP: What do advisors most regularly ask you? SC: We are one of Canada’s biggest

MGAs, so they want to know what we have to offer. When we approach a new advisor, they will want to know what products are available to them. That’s very important in today’s marketplace where everything is so transparent. The suite of tools is also quite important to advisors. LHP: What tools do you mean? SC: It’s a proprietary tool we have

developed for advisors. Basically, it’s one stop on your computer where you can find everything insurance. You download this, and through it, you can run sales concepts, and as an advisor, you can put together a presentation in two minutes that 10 years ago would have taken two days.

“Ten years ago, I would not have dreamt the suite of technology we have now would have been available”

DWAYNE SNOW

JANA FRIZZELL-STATES

Regional VP Assante Wealth Management

Regional sales director, Atlantic region Sun Life Financial

In light of Canada’s aging society, estate planning has never been more important. Dwayne Snow is certainly aware of that fact, having built his career by specializing in that area. With previous stints at London Life, PPI Financial, Imperial Life, Industrial Life and TD Waterhouse Insurance (not to mention his CLU, CFP, ChFC and CEBS designations), Snow is a veteran of the business and an expert in his field. Today, he is a regional VP at Assante Wealth Management, where he offers his clients the best advice on how they can protect their assets and secure their estates through dedicated insurance products.

Currently the regional sales director of the Atlantic region for Sun Life, Jana Frizzell-States has had a steady climb to the top of her profession. She began her career in 1979 as a marketing specialist with Maritime Life, where she remained for 26 years. After that came much shorter stints with Manulife, TD Waterhouse and most recently Empire Life. Her success in these roles led her to her current position, where she oversees Sun Life’s wholesale division in the region. Greatly respected by the advisors she does business with, Frizzell-States’ product knowledge sets her apart from many of her competitors in the industry.

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