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2018
YOUNG GUNS These 20 young advisors are rewriting the future of wealth management in Canada
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CONTENTS
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UPFRONT 02 Editorial
A new way to gauge advisors’ value
04 Head to head
FEATURES
Advisors respond to ESG demand
22
06 Statistics
Where is wealth management headed in the next decade?
08 News analysis
A NEW FRONTIER
26 24 SPECIAL REPORT
YOUNG GUNS 2018
Meet 20 young advisors – all under the age of 35 – who have beat the odds to persevere in an industry that can often be unforgiving to new entrants
How the trend toward consolidation is reshaping the industry
Horizons ETFs head Steve Hawkins discusses his firm’s forays into hot new investment sectors like cannabis and artificial intelligence
10 Intelligence
This month’s big movers and shakers
12 ETF update
A new firm enters the ETF space with a mandate to find growing dividends
14 Alternative investment update
42
Hedge funds are feeling the pressure
PROVIDING THE RIGHT TOOLS
38 Answering the call for investors
16 Opinion
Why energy stocks deserve your focus
FEATURES
FEATURES
PEOPLE
INDUSTRY ICON
These five industry service providers have made it their mission to make advisors’ jobs easier
48 The changing face of advice
A father-and-son advisory team offer their perspective on an evolving industry
Franklin Bissett CIO Garey Aitken discusses the current bull market and how it’s shaping his investment strategy
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Analyst Larry Berman outlines BMO GAM’s strategy to manage volatility
PEOPLE BROUGHT TO YOU BY
40 Advisor profile
50
Former Young Gun Victor Kuntsevitsky has turned his attention abroad
63 Career path
Darius Muica’s childhood in communist Romania cemented his drive to succeed
FEATURES
64 Other life
WP AWARDS FINALISTS
WEALTHPROFESSIONAL.CA
WPC reveals all the individuals and companies who are up for awards on the industry’s biggest night
Mike Taylor feels the need for speed
CHECK IT OUT ONLINE www.wealthprofessional.ca
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UPFRONT
EDITORIAL
Rating high in the digital age
T
ransparency is something of a buzzword in wealth management right now as advisors and their clients seek greater alignment with each another. We live in the information age, and it has never been easier for investors to keep track of their portfolio’s performance. Advisors must therefore consistently prove their worth, especially in light of the myriad digital offerings out there that might tempt investors to go with a DIY approach. In January, US entrepreneur Jason Aronson gave advisors a new way to demonstrate their value to clients by launching StackUp, which he says is the world’s first data-driven advisor ratings platform. “As a financial advisor myself, I often faced clients who wondered how to assess my performance,” Aronson
“While I knew I was doing a good job, there was no way to objectively prove that, which was frustrating” said, “and I realized that while I knew I was doing a good job, there was no way to objectively prove that, which was frustrating.” His answer to this problem is a digital platform that provides users with the data they need to accurately judge an advisor’s performance, including investment returns, advisor compensation, trading costs and fund fees. Similar to the many other price comparison sites that have become commonplace in other industries, StackUp allows consumers to then contrast their advisor’s metrics against their competitors, both human and digital. The relationship between advisors and their robo equivalents was also the topic of discussion in a recent dialogue on BNN between Wealthsimple CEO Michael Katchen and Investment Industry Association of Canada [IIAC] CEO Ian Russell. The two debated Canada’s evolving advisory space; Katchen posited that technology will help deliver more consistent advice for clients, as it automates administration and compliance responsibilities, thus allowing advisors more time for the most important parts of the job – holistic planning and investment guidance. Now that platforms like StackUp are a reality, that focus needs to remain advisors’ top priority. The team at Wealth Professional Canada
wealthprofessional.ca ISSUE 6.04 EDITORIAL
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UPFRONT
HEAD TO HEAD
Are you using ESG criteria in portfolio construction? Investors are placing more importance than ever on ESG factors – but does doing good mean doing well?
Chris Poole
Darius Muica
Chris Wain-Lowe
Financial advisor CWP Financial Services/Sun Life Financial
Investment advisor Manulife Securities
Chief investment officer, executive vice-president and portfolio manager Portland Investment Counsel
“When building portfolios, we offer a client-centric investment experience; as we learn about their experiences and existing social responsibilities, we also listen for prompts that might help us introduce ESG criteria into their portfolio construction. In recent years, we have kept a close eye on a number of funds in the ESG space and continue to vet these funds and stay in tune with the fund managers and their strategies. For those clients we have helped walk down the ESG portfolio construction path, they have been able to align their money with socially responsible investment decisions while still enjoying solid returns.”
“Responsible investing has become an important new chapter of investment and risk management, and its main factors are driven by ESG data. Whether a client is socially inclined or not, capitalizing on available ESG data can offer insights into the intangible assets of a company. Awareness of ESG risks can help avoid losses in the portfolio – the Valeant, United Airlines and Volkswagen scandals are all incidents that underline the need for ESG analysis. Millennials are demanding valuesbased investing, and considering that US$60 trillion will be changing hands globally in the next two decades, RI and ESG should not be ignored.”
“The United Nations Sustainable Development Goals are the UN’s universal call to action to end poverty, protect the planet and ensure that all people enjoy peace and prosperity. At Portland, we are embracing SDGs within our ESG criteria in certain portfolio constructs. As investment managers, we believe that doing good is an important element of the social contract that we have with each other as members of society. We invest in and continue to look for opportunities aimed at solving social and environmental problems, where capital is directed to underserved individuals and communities.”
NICHE NO MORE Responsible investing has evolved from niche investment strategy to mainstream concept – the majority of corporate names are now working toward improving their ESG rating. In 2016, more than a quarter of professionally managed assets had elements of ESG as part of their strategy, according to a recent report published by Global Sustain Group. That translates to $US22.89 trillion in assets that are professionally managed under responsible investment strategies, a growth rate of 25% since 2014.
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UPFRONT
STATISTICS
Growth drivers in investment
North America 2016: $46.9 trillion 2020: $58.6 trillion 2025: $71.2 trillion
A multitude of factors will move wealth management in new directions over the next decade GLOBAL ASSET growth will more than double over the next seven years, bar any repeat of the 2008 financial crisis. That’s the forecast laid out in PwC’s recent study, “Asset & Wealth Management Revolution,” which predicts a 71% increase in global AUM between 2016 and 2025. During that time, the evolution of asset management will be characterized by a number of key factors, including lower fees, the continued shift toward digital platforms, asset managers’
$87.6 trillion Forecast for global assets under active management by 2025
42.1%
Asset management’s penetration rate (managed assets as a proportion of total assets) by 2025
increasing role in pensions and greater demand among investors for a wider range of products. These factors mean that the coming decade will be a buyer’s market for investment products – something asset managers and advisors need to keep in mind when it comes to both product development and fees. Another key factor to take on board is the fact that the increased regulatory requirements brought on by the financial crisis are here to stay.
$6.8 trillion Total assets in indexbased passive ETFs and mutual funds in 2017
$48 billion Net outflow from actively managed mutual funds and ETFs in 2017
AUM TO BOOM WORLDWIDE Assets under management will continue to grow rapidly in the coming decade. PwC estimates that by 2025, global AUM will have almost doubled, rising from US$84.9 trillion in 2016 to US$145.4 trillion in 2025. Emerging markets will fuel this expansion: PwC predicts that AUM in Asia Pacific will grow by 8.7% between 2016 and 2020, and 11.8% between 2020 and 2025, while Latin American AUM will rise 7.5% and 10.4% during the same periods.
Source: Asset & Wealth Management Revolution, PwC; Bloomberg
DRIVING TRENDS
HIGH-NET-WORTH SEGMENT DOMINATES
PwC identified four trends that will shape the future of wealth and asset management over the next decade.
High-net-worth investors will continue to make up the largest proportion of assets under management, exceeding the mass affluent segment by more than US$17 trillion by 2025. GLOBAL CLIENT ASSETS UNDER MANAGEMENT
BUYERS’ MARKET The ongoing focus on fees and cost efficiencies will force firms to either consolidate or find new ways to collaborate.
1
Pension funds
Insurance companies
DIGITAL TECHNOLOGIES 2 Asset and wealth managers will need to continue to embrace technological innovations in order to prosper.
Source: Asset & Wealth Management Revolution, PwC
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$53.1 trillion
$64.6 trillion
2016 2020 2025
$29.4 trillion $38.4 trillion $44.7 trillion
Sovereign wealth funds
$7.4 trillion $10 trillion $13.6 trillion
FUNDING THE FUTURE 3 Advisors will continue to play an integral role in niche developments such as trade finance and peer-to-peer lending, and in helping people plan for retirement. OUTCOMES MATTER 4 Asset managers will either need to offer outcome-driven solutions or specialize in the building blocks that allow others to design those solutions.
$38.3 trillion
High-net-worth investors
$72.3 trillion
Mass affluent investors
0
20
$67.2 trillion
40
60
80
$93.4 trillion
$84.4 trillion
$119.9 trillion
$102.2 trillion
100
120
Source: Asset & Wealth Management Revolution, PwC; all figures in US$
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Europe 2016: $21.9 trillion 2020: $30.2 trillion 2025: $35.7 trillion Asia Pacific 2016: $12.1 trillion 2020: $16.9 trillion 2025: $29.6 trillion
Middle East and Africa 2016: $700 billion 2020: $1 trillion 2025: $1.6 trillion
USLatin America
2016: $3.3 trillion 2020: $4.4 trillion 2025: $7.3 trillion
Source: Asset & Wealth Management Revolution, PwC; all figures in US$
ACTIVE MANAGEMENT CLAIMS THE LION’S SHARE
AN ALTERNATIVE ROUTE
Although passive management through ETFs has exploded in popularity over the last decade, active management remains the most common investment strategy worldwide. However, passive and alternative investment strategies will continue to gain ground over the next decade.
In the increasingly popular alternative space, the private equity sector dominates, and it will retain that status over the next decade.
GLOBAL AUM BY INVESTMENT STRATEGY
GLOBAL ALTERNATIVE AUM (US$ TRILLIONS)
2016 2020 2025
12 10
2016
2020
2025
10.2
8 6
6.4
4 Passive 17% Alternative 12% Active 71%
Passive 21% Alternative 13% Active 66%
Passive 25% Alternative 15% Active 60% Source: Asset & Wealth Management Revolution, PwC
2 0
3.3
4
4.7
4.8 3.4 1.7 .6
Hedge funds
Infrastructure
1.2 1.5
2.2
Real estate
0.2 0.3 0.5 Commodities
Private equity
Source: Asset & Wealth Management Revolution, PwC
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UPFRONT
NEWS ANALYSIS
Anatomy of an acquisition Scotia’s purchase of Jarislowsky Fraser is the latest deal in a fertile period for mergers and acquisitions in Canadian asset management
IT WASN’T long into 2018 before the year’s first major acquisition in the wealth management space was announced. In early February, Scotiabank revealed its plans to purchase investment management firm Jarislowsky Fraser for $950 million. M&A activity has been especially pronounced over the past year as the industry’s consolidation continues to gather pace. The marriage of Scotia and Jarislowsky Fraser will create the country’s third largest active asset manager, with assets under management of approximately $166 billion. Those kind of numbers go a long way toward explaining why the deal was made, says Glen Gowland, Scotiabank’s senior vice-president
was not done for cost consolidation; it was not done for scale,” Gowland says. “If you look at our [wealth] business of over $120 billion, very little of that is institutional. We didn’t have any big legacy institutional business, so this fits right in.” The Jarislowsky Fraser name will remain after the deal closes, as will the executive team and, perhaps most important, the firm’s investment autonomy. “If you look at it from a pure asset management standpoint, they have a very disciplined investment process, a very team-oriented approach with a high-calibre investment team,” Gowland says. “All of those things we want to make sure are kept
“You do need scale, but I would argue that scale for scale’s sake is not necessarily going to win the day” Glen Gowland, Scotiabank of asset management, but they don’t represent the full picture. Jarislowsky Fraser specializes in institutional and high-net-worth investors, a lucrative side of the market that Scotia is keen to have a larger piece of. “Unlike the majority of transactions that occur in the asset management business, this
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completely intact.” That will come as welcome news to those concerned about the ongoing consolidation of the industry. Last year saw CI Financial acquire Sentry, Sun Life purchase Excel Funds, and iA Financial assume control of HollisWealth. It means fewer independent
firms, and ultimately, less choice for consumers and advisors. But as asset and wealth managers face escalating costs in doing business, it’s a trend that only looks set to continue. “There are a number of things that lead to consolidation,” Gowland says. “The fact is, costs count – we had a significant cost reduction across our retail footprint last year. You do need scale, but I would argue that scale for scale’s sake is not necessarily going to win the day.” Scotia’s cost-cutting measures included reducing its advisory staff by 7% in 2016, which is another trend sure to cause some furrowed brows in the industry. The shift toward digital offerings is already driving job losses across a host of financial services, and a lot more are likely on the horizon. And now that many independent firms are being swallowed up by the industry’s giants, advisors
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SCOTIABANK MEETS JARISLOWSKY FRASER
SCOTIABANK Markets itself as Canada’s international bank; maintains operations in North America, Latin America, the Caribbean and Central America, and Asia Pacific Has assets under management of $915 billion and provides financial services for over 24 million customers
JARISLOWSKY FRASER Founded in 1955 by Stephen Jarislowsky, Jarislowsky Fraser started life as a research firm Based in Montreal, it is one of Canada’s most renowned investment managers in the institutional space, with $40 billion in assets under management
have fewer places to work. Greg Pollock is president and CEO of Advocis, Canada’s largest voluntary association for advisors with a membership of more than 13,000. In his view, M&As and
requirements are expensive undertakings that continue to build.” Those costs mean there are now fewer asset managers and advisory firms in Canada, but those that do remain have found a
“We are paying close attention to this. We want to ensure there continue to be choices out there for investors” Greg Pollock, Advocis consolidation are a natural part of business, but something to keep a close eye on. “We do believe that healthy competition is a good thing for investors and the broader marketplace,” Pollock says. “On the other hand, there are a lot of regulatory and compliance demands, and those back-office
business model that works, which should ensure better service for consumers in the long run. “One has to find a balance between dealing with those issues and providing cost-effective services to customers,” Pollock says. “Are we alarmed? I would say no, but
we are paying close attention to this. We want to ensure there continue to be opportunities and choices out there for investors.” In the case of Scotia and Jarislowsky Fraser, Gowland says the acquisition wasn’t a case of one firm buying its competition or an acquired party needing a buyout to survive. Rather, it’s a case of two successful businesses coming together and ultimately becoming stronger as a unit. Being part of Canada’s Big Six banks, and the global reach that entails, is an obvious benefit for Jarislowsky Fraser, while Scotia can now add institutional capabilities to its long list of services. “Firms like Jarislowsky Fraser are very rare in Canada – it takes years to build that institutional know-how and capability,” Gowland says. “The choice is to spend 30 or 40 years to build that up, or in our case, working with Jarislowsky Fraser, which is a huge win for us and our clients.”
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UPFRONT
INTELLIGENCE CORPORATE ACQUIRER
TARGET
PRODUCTS COMMENTS
Canaccord Genuity
MLD Wealth Management Group
Canaccord will significantly boost its total AUM with the addition of MLD, which provides bespoke service for high-net-worth clients
iA Financial Group
PPI Management
The acquisition of PPI will make iA the leader in insurance brokerage distribution
Purpose Financial
Thinking Capital
The $200 million acquisition will combine Purpose Financial's asset management with Thinking Capital's fintech-based small-business lending capabilities
PARTNER ONE
PARTNER TWO
COMMENTS
Brookfield Asset Management
LCM Partners
Brookfield’s partnership with the London-based investment manager will help foster the global growth of LCM’s asset management and credit servicing business
LOGiQ Asset Management
Grenville Strategic Royalty
The merger of the two companies will allow LOGiQ to expand into British Columbia
Private Capital Markets Association
National Exempt Market Association
Retaining the PCMA name, the newly combined organization will serve as Canada’s largest private capital markets association
Counsel merges two of its managed portfolios
Counsel Portfolio Services has merged its Counsel Income Managed Portfolio into the Counsel Monthly Income Portfolio, which seeks consistent monthly income and modest long-term capital growth from Canadian fixed-income securities, convertible securities, money market instruments, and US and international securities. The firm has also merged the Counsel World Managed Portfolio into the Counsel Balanced Portfolio, which offers a balance between income and capital growth via Canadian, US, and international equity and fixed-income mutual funds.
Purpose Financial acquires Thinking Capital
Purpose Financial has acquired Montreal-based Thinking Capital Financial Corporation, a lender that provides financing to small- to medium-sized fintech companies, for a reported $200 million. “This acquisition brings together leading origination, asset management and technology platforms as a unified entity, and enables us to bolster our product capabilities and optimize the technology, distribution and funding model of our combined business,” said Purpose Financial CEO Som Seif. Support from Purpose Financial’s balance sheet and diversified funding is expected to fuel Thinking Capital’s originations growth. By combining direct originations with asset management, the combined entity will also have the potential to create unique investment products. “As an early innovator in this market, we have spent the last decade evolving the language of small business credit,” said Thinking Capital co-founder and CEO Jeff Mitelman. “Under the Purpose Financial umbrella, our time to market on product innovation and funding capacity will be greatly amplified.”
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RBC adds Forstrong portfolios to its platform
RBC has added Forstrong Global Asset Management’s portfolio strategies to its RBC Dominion Securities A+ platform, the investment platform for RBC advisors. The platform now is home to Forstrong’s core portfolio solutions, as well as its globally oriented completion strategies, which have a low downside track record. Aiming to complement benchmark-centric or domestically biased portfolios, the strategies follow a structured, macro thematic style that’s exposed to developed, emerging and frontier markets, as well as commodities and currencies.
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PEOPLE Mackenzie unveils simplified pricing structure
Mackenzie Investments has announced a more accessible pricing structure that will result in fee reductions for some investors. The firm is eliminating its Private Wealth series for fee-based funds; at the same time, it is reducing fees so that the same management and administration fee will be offered for all account sizes. As for series with embedded dealer compensation, Mackenzie is simplifying Private Wealth series pricing to eliminate rebating. In addition, Mackenzie will lower the minimum eligibility requirement for Private Wealth Series from $250,000 to $100,000 per household.
NAME
LEAVING
JOINING
NEW POSITION
Brian Bacal
Moelis & Company
Canaccord Genuity
Managing director and head of Canadian restructuring
Dennis Mitchell
Sprott Asset Management
Starlight Capital
CEO and chief investment officer
Nathalie Palladitcheff
N/A
Ivanhoé Cambridge
President
Larry Pollock
N/A
Crown Capital Partners
Board member
Claire Van Wyk-Allan
RBC Global Asset Management
Alternative Investment Management Association
Head of Canada
AIMA welcomes new Canadian head
Quadrus announces fee reductions on several funds
In response to market trends and internal efforts to find efficiencies for clients, Mackenzie Investments and Quadrus Investment Services have announced fee reductions ranging from 0.05% to 0.3% for several funds. The Diversified Fixed Income Folio Fund, Aggressive Folio Fund and Mackenzie Strategic Income Fund saw reductions in their N series, while the Mackenzie Floating Rate Income Fund, US Value Fund (Putnam) and Mackenzie Global Growth Class saw lower fees across multiple series, including Q, QF, D and H.
The Alternative Investment Management Association has selected Claire Van Wyk-Allan as its new head of Canada. A decade-long member of AIMA, Van Wyk-Allan replaces James Burron, who left the association in January. Prior to taking up this role, Van Wyk-Allan served as the business development manager for advisor channel sales at RBC Global Asset Management. She also previously worked at Arrow Capital Management, where she spent almost four years overseeing advisors across Ontario. “Claire brings with her not just a strong knowledge of AIMA Canada, but also asset management sales and retail investor distribution experience,” said AIMA Canada chair Michael Burns. “She will have the full support of AIMA’s team in New York, London and Asia Pacific to ensure that the priorities of our Canadian members are reflected in our local and global agenda.”
Starlight appoints CEO for new platform
Sun Life and Excel propose fund mergers
Sun Life Global Investments and Excel Funds Management have announced proposed changes to select mutual funds. Pending unitholder and regulatory approval, the Excel Money Market Fund will be merged into the Sun Life Money Market Fund, while the Excel Emerging Markets Fund and Excel Chindia Fund will become part of the Sun Life Schroder Emerging Markets Fund. The proposed merger also includes rolling the Sun Life MFS Canadian Equity Fund and the Sun Life MFS Canadian Equity Value Fund into the Sun Life MFS Canadian Equity Growth Fund. A unitholder vote on the mergers is scheduled for May 25.
Starlight Investments has selected investment industry veteran Dennis Mitchell as the CEO and chief investment officer of Starlight Capital, its new real estate securities investment platform. Mitchell has managed investment capital of more than $3 billion over his 15-year career. He was most recently with Sprott Asset Management, where he was senior vice-president and senior portfolio manager for several funds. He has also served as executive vicepresident and chief investment officer at Sentry Investments. The new Starlight Capital platform will actively invest in global real estate securities and offer a range of public and private real estate investment products and portfolio management services. It will also offer investment solutions that combine its expertise with Starlight Investments’ existing North American real estate asset management platform.
www.wealthprofessional.ca
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UPFRONT
ETF UPDATE NEWS BRIEFS BMO Global Asset Management debuts new fixedincome ETFs BMO Global Asset Management has launched three fixed-income ETFs on the TSX and has updated two of its covered call ETFs. The BMO Short-Term Bond Index ETF (ZSB) offers exposure to one- to five-year investment-grade Canadian bonds, the BMO Corporate Bond Index ETF (ZCB) holds investmentgrade corporate bonds, and the BMO Government Bond Index ETF (ZGB) is exposed to federal, provincial and municipal bonds. BMO GAM has also expanded the BMO Europe High Dividend Covered Call ETF (ZWP) and the BMO US High Dividend Covered Call Hedged to CAD ETF (CWS) to include hedged and unhedged options.
Harvest Portfolios Group unveils European Leaders Income ETF Harvest Portfolios Group has launched class A units of its Harvest European Leaders Income ETF (HEUR) on the TSX. The equity-focused ETF targets around 20 to 30 European companies that have a minimum market capitalization of $10 billion and pay a dividend at the time of investment. Its aim is to provide unitholders with monthly cash distributions and the opportunity for capital appreciation. In addition, the fund aims for lower volatility by writing covered call options on up to 33% of its portfolio securities.
Horizons ETFs remains bullish on cannabisbased funds The recently launched Horizons Emerging Marijuana Growers Index ETF (HMJR) experienced a setback after the government admitted it might not
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be able to meet its previously set July 1 deadline for marijuana legalization. But according to the firm’s president and coCEO, Steve Hawkins, HMJR has received positive feedback with respect to how it’s structured. He also cited positive developments in the space, including consolidation and prospects from related industries like pharma, tobacco and alcohol.
Invesco reveals plans to shutter PowerShares brand Invesco is planning to shelve its PowerShares, Trimark and UK-based Perpetual brands. To reduce confusion among its investors, the asset manager will be shifting to a single global brand during the remainder of 2018. PowerShares ETFs will be rebranded as Invesco ETFs, and a similar change will be applied to the PowerShares mutual fund line. The investment objectives, management and fees of the funds will not be affected by the name changes, which will be reported to investors once approved.
RBC’s newly launched women’s leadership ETF wins big In the week following its March 8 launch on the NEO Exchange, the RBC Vision Women’s Leadership MSCI Canada Index ETF (RLDR) raked in $US77.4 million from investors, according to Bloomberg. Aside from the fund’s uniquely domestic focus (other Canadian gender diversity ETFs currently available have international exposure), a $100 million early invest ment from OMERS seems to have bolstered its credibility, as have studies showing that a commitment to gender diversity can have a positive impact on investment outcomes.
Beating the benchmark through ETFs A new firm’s entry into the ETF space is backed by a well developed strategy of identifying consistent dividend growers The Bristol Gate Concentrated US Equity ETF (BGU) and the Bristol Gate Concentrated Canadian Equity ETF (BGC) made their debut on the TSX recently, but their data-centric investment philosophy – which posits that a portfolio composed of the top dividend growers for the coming year will produce benchmark-beating returns with reduced risk – has been in place for more than a decade. “Data science has been ingrained into our DNA since we started in 2006,” says Richard Hamm, co-founder of Bristol Gate Capital Partners. As a small startup, the firm used an Excel-based model to predict dividend growth. In time, they were eventually able to incorporate machine learning into the model. In its current form, the model provides an unbiased list of the best dividend growers within a given investment universe. Bristol Gate has been running this strategy in Canada for close to five years and in the US for around nine. The Canadian strategy has delivered 14% in returns compared to the S&P/TSX’s 9.9% since its inception, while the US strategy has returned 18.1% in contrast to the S&P 500’s 15.9% since inception. The investment process for both ETFs essentially involves successive elimination. Starting with the full universe of Canadian
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Q&A
or US stocks, the firm filters out companies based on a lack of dividend-paying history and other criteria. The list of remaining companies is fed into the firm’s machinelearning model, which is able to rank them based on their predicted dividend growth
“Our fundamental analysis ensures that we are comfortable with the risks we’d be taking on” over the next 12 months. The top companies are then subjected to Productive Capital Analysis, Bristol Gate’s version of fundamental analysis. “Our fundamental analysis ensures that we are comfortable with the risks we’d be taking on,” Hamm says. The decision to sell stocks from a portfolio is also designed to be evidence-based and bias-free. A dividend growth hurdle rate is set annually based on the lowest predicted dividend growth rate in the portfolio; a stock is sold if its growth rate falls below that hurdle at any point in the year. Bristol Gate’s ETFs aren’t the only ones on the market that rely on technology for their investment processes, but Hamm argues that his firm’s ability to combine unbiased machine learning with sound human judgment gives its funds an edge.
Elliot Johnson Chief operating officer EVOLVE ETFS
Years in the industry 14 Fast fact Evolve ETFs recently launched the Evolve Blockchain ETF (LINK), an active fund investing in equity issuers that research, develop, use or supply blockchain-based technologies and applications
Going active in blockchain What positive developments are you seeing that would contribute to the growth of blockchain technology? The main driver is the more widespread understanding of blockchain’s potential for mainstream business application across different industries. In finance, the movement is focused on payments and contracts, which is helped by cryptocurrencies. A lot of work is being done around identity, like tamper-proof identity validation and digital authentication. Supply-chain logistics is also a tremendous area of research. In August last year, 10 of the world’s largest consumer goods and food companies – together representing more than US$500 billion in annual global sales – partnered with IBM to integrate blockchain into their supply chains. We’ve identified some very recognizable names like Thomson Reuters, Microsoft, Visa, Mastercard, SAP and Walmart with significant blockchain products and services.
How can Canadian investors benefit from active management as opposed to index-based strategies in the blockchain space? It’s important to exclude companies that don’t offer legitimate blockchain-related products and services, and the algorithms behind index-based products don’t go deep enough to do that. For example, it’s come to light that Riot Blockchain, a Canadian company, was simply renamed by management that misrepresented themselves as crypto and blockchain experts. Riot is facing legal action, and its stock has declined by at least 20% over that. Index-based funds that buy stock in such a company wouldn’t be able to sell it off until their next portfolio rebalancing date. Active funds might make the same mistake, but they would be able to sell off immediately and mitigate the portfolio impact.
Can you talk about the process you’ll follow in managing LINK’s portfolio? Generally, we first define the universe of companies and work to understand the blockchain industry. Then we look for candidates with strong financial positions, credible products and management, and sound go-to-market strategies, as well as favourable market positions relative to their competitors. Finally, we decide how much weight each promising prospect should have in the portfolio and how often we might want to rebalance away from them toward a certain target portfolio. Moving forward, we’re also watching out for new applications and other developments that could have an impact, like regulation, tax changes and so on. Right now, there are no easy classifications for companies using blockchain, which fall into different investable industries. There’s also a lack of good-quality third-party research to sift through, so we’re piecing together a lot of information from investment banks and analysts who are just starting to cover the space. It’s challenging, but investors need true exposure, and there’s simply no substitute for hard work.
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UPFRONT
ALTERNATIVE INVESTMENT UPDATE
Expectations rise for hedge funds Hedge funds will continue to draw investors, but they’re also facing greater demands
among family offices, endowments and foundations, and funds of hedge funds. Notably, pension funds also favoured systematic global macro and CTAs/managed futures strategies in addition to equities-based ones, which could have been driven by an increased need to diversify their hedge-fund portfolios. Along with the strong appetite for equities was an increased inclination toward risk management, which has displaced outperformance to become the top-ranked consider-
“Investors correctly forecasted the return of volatility to equity markets”
While hedge funds can expect persistent strong interest from investors this year, they are also facing increased risks and stricter demands. That’s the conclusion from Credit Suisse’s latest global hedge fund survey, which polled 345 institutional investors. “Investors forecast sustained, steady growth for the hedge fund industry in 2018, on average about 5.4%,” the report said. With that in mind, 92% of investors said they intend to maintain or increase their notional exposure in 2018, representing a 5% year-over-year increase.
NEWS BRIEFS
Asked about the returns from their 2017 hedge-fund allocations, 74% of investors said their expectations were met or exceeded. Investors’ expectations for returns have risen slowly in the years since the financial crisis, hitting a six-year high of 8.53% this year. The most preferred strategies for 2018 were equity-based. “Lower correlations, increased dispersion, strong earnings and synchronized global growth are likely some of the catalysts driving continued demand,” the report said. That same equity preference was seen
Bridging Finance launches real estate lending fund
Bridging Finance has launched the Bridging Real Estate Lending Fund LP. Available on IIROC’s Fundserv channel and to institutional investors, the fund will actively invest in first- and second-ranked mortgage loans secured with real commercial property in Canada. MarshallZehr Group, a licensed mortgage brokerage and administrator, has agreed to serve as the administrator of the mortgages. The fund will initially target the Ontario market but plans to eventually expand to the rest of the country.
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ation when investing in hedge funds. “Investors correctly forecasted the return of volatility to equity markets,” the report said. Crowded trades, herd behaviour, inflated asset prices and central bank actions were also identified as sources of potential risk. In terms of geographic diversification, the top three preferred geographies for 2018 are Asia Pacific, emerging markets and developed Europe, all of which experienced the largest year-over-year swings in net demand. While each region was lifted by largely unique tailwinds, such as elections in emerging markets and increasing prospects for Brexit clarity in Europe, all three are reportedly benefiting from stronger earnings growth and attractive valuations.
Ninepoint LP completes second closing
Ninepoint Partners has announced that its Ninepoint 2018 FlowThrough Limited Partnership has completed its second closing. The sale of an additional 616,116 units has allowed the partnership to raise just over $15.4 million for aggregate gross proceeds of nearly $50 million. Limited partners are expected to see liquidity via a rollover to the Sprott Resource Class prior to February 28, 2020. In addition, Ninepoint anticipates that participating investors will be eligible for a tax deduction approximately equal to 100% of the amount invested.
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Q&A
The tech tipping point Maria Pacella SVP of private equity and portfolio manager PENDERFUND CAPITAL MANAGEMENT
Years in the industry 17 Fast fact The new Pender Technology Inflection Fund I Limited Partnership invests in private and public inflection-stage technology companies
What challenges do you expect to face in finding inflection-stage companies to invest in for the Pender Technology Inflection Fund?
aside from being investors, can help generate deal flow or develop companies we’ve invested in.
We define inflection-point companies as those that have just reached commercialization and have some early customer revenue and traction. Finding that true inflection point is the main challenge. Investing too early would lead to the fund taking on too much technical risk or getting into a market that’s not ready – or possibly not even real. But if we come in too late, the prospect company might not need funding from us anymore, or would require an investment outside the price we’re comfortable with. Numbers will tell you some things, but ... we have to dig and look for quality. Are they getting business from a targeted group or a wide random population? Can you apply a consistent sales model and expect replicable revenue from that customer set? And as with all earlystage or private-company investment, you’re looking for the right team to execute on the opportunities, even if it’s just a core group that needs further development.
Where are Canadian and US tech companies making an impact in terms of enterprise disruption and health technology?
How is Pender’s management team equipped to address these challenges? Aside from my own experience investing in companies as early as the seed stage, my co-manager on the fund, Dave Barr, has also had plenty of public investing experience in the tech sphere. We’re supported by a team with diverse backgrounds: a former consultant, an engineer and a former professional athlete. We’ve also got an external network of venture partners that includes former company founders and C-level employees who,
Private equity success amplifies challenges
According to a recent report from private equity investment advisors Bain & Company, PE buyout values rose 27% year-over-year to reach US$301 billion in 2017. However, the US$701 billion in capital inflows has amplified competition for deals. “Investor enthusiasm for private equity endures, leaving the industry awash with cash. This is both a blessing and a curse,” said Hugh MacArthur, global head of Bain & Company’s private equity practice. “Funds have ample money to spend, but the competition for deals is fierce.”
Technology today is going beyond creating efficiencies in an enterprise. It could help manufacturers transform entire product lines or supply chains. 3-D printing could be used to prototype products, which could be assembled through AI and computer-aided vision. Blockchain-based transactions with suppliers is another development we see for the future. And there’s been an explosion of health data generated from wearables, genetic tests and imaging. The ability to capture, store, search through, analyze and share it can enable faster and better health decisions. Image-capture devices are becoming smaller and more precise, and having additional technology to analyze images could expand the potential pool of end users beyond specialists. For instance, software to interpret CT scans of stroke patients could be used to identify salvageable brain tissue, helping physicians make more informed decisions on how to treat the condition.
What kinds of returns are you targeting? We’re not investing in startups, but they’re still very earlystage ventures, so it will take time for them to develop and go public, get sold or pursue other exit strategies. Like a lot of traditional funds, we’re targeting a time horizon of 10 years. But we’re taking above-market risks, which means we are aiming for above-market returns.
CDPQ makes moves to cut out private equity middlemen
Institutional investor Caisse de dépôt et placement du Québec is building its own investing team to decrease its reliance on buyout firms for leveraged corporate buyouts. The pension fund said it hopes the move will attract companies hoping for longer-term backing from an institutional investor. “These are interesting [opportunities] because typically these entrepreneurs or corporates didn’t want to partner with standard private equity firms,” said Stephane Etroy, CDPQ’s head of private equity.
CSA contemplates tougher syndicated mortgage rules
The CSA is inviting comments on proposed changes to tighten regulation on syndicated mortgages in Canada. The amendments would remove prospectus and registration exemptions for syndicated mortgages in certain jurisdictions. Issuers would be required to deliver property appraisals from an independent, qualified party, and would also need to register with securities regulators to sell their products to retail investors. New prospectus exemption provisions would also come with stricter reporting obligations.
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UPFRONT
OPINION
GOT AN OPINION THAT COUNTS? Email wealthprofessional@kmimedia.ca
Where’s the love for energy stocks? By turning their backs on the energy sector, investors are missing out one of the most lucrative investment opportunities in decades, writes Eric Nuttall MONTH AFTER month, energy stocks have continued to languish while the market’s focus stubbornly remains on other areas like Bitcoin, marijuana stocks and the general tech space. Every morning on CNBC and BNN, significantly more airtime is given to discussing in-vogue names like Amazon or Canopy Growth rather than the $2.3 trillion oil market or the energy stocks that have dislocated from the price of oil by the greatest extent in history while oil trades at multiyear highs.
OPEC and Russia have pledged that their cut of 1.2 million barrels per day will continue throughout 2018, and their compliance to the cut has been impressively strong, consistently exceeding 100%. Even if they are lying and all of the shut-in production were to come online today, the market would be back to an undersupplied scenario by the end of 2018. Meanwhile, oil demand remains strong. In 2017, demand was up around 1.7 million barrels per day, and 2018 is looking to be
“What makes this lack of interest – and commensurate lack of investment flow – so frustrating is that the current macro backdrop for oil is overwhelmingly positive” What makes this lack of interest – and commensurate lack of investment flow – so frustrating is that the current macro backdrop for oil is overwhelmingly positive. In addition, I believe that oil is in a multi-year bull market with few things capable of interrupting this reality. According to Bloomberg, oil is trading at a near four-year high. The ‘oil glut’ (i.e. OECD surplus oil inventories to the rolling five-year average) has fallen from 334 million barrels in January 2017 to around a 26-million-barrel deficit. Ninepoint Partners predicts that this number could swell to a deficit of more than 300 million barrels by the end of 2018.
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an even stronger year – firms like Goldman Sachs are calling for growth to exceed 2 million barrels per day. Then there’s the big boogeyman in the room: US shale. But it will not grow as quickly as people believe and will be limited to around 1.2 million barrels per day. This is due to an incredibly important and yet still underappreciated shift in management mindset toward generating acceptable economic rates of return versus absolute production growth (aka ‘growth for growth’s sake’). Around 60% to 70% of companies have adopted returns-based incentive plans in 2018, up from 10% in 2015. In addition, infrastructure, labour and equipment short-
ages all are acting as further anchors to growth potential in this segment. Putting this all together, the oil market in 2017 was undersupplied by 700,000 barrels per day (as evidenced by inventory drawdowns at the fastest pace in history). When combined with demand growth of 1.8 million barrels per day, this means supply would have to grow by 2.5 million barrels per day in 2018 to reach balance, which is highly unlikely; hence, the market will remain undersupplied. The last time OECD inventories reached this level, the price of oil was above $70 a barrel (versus around $62 at press time). Given all of the above, it should be obvious that the current backdrop for oil is universally positive. This isn’t just a shortterm bullish call, but rather one that extends over the next four to five years. The combination of limited US and OPEC supply, growing demand and, most importantly, a multi-year decline in non-OPEC/US production projected to start in 2019 all point to a market that will remain undersupplied. Even if demand growth rates taper, US supply grows, and OPEC brings back online all 1.2 million barrels of shut-in volumes, the market should remain undersupplied for at least the next several years. Eric Nuttall is a partner and senior portfolio manager at Toronto-based Ninepoint Partners, where he oversees the firm’s energy investment strategies, including managing the Sprott Energy Fund and the Sprott Small Cap Equity Fund.
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PEOPLE
INDUSTRY ICON
BULLS, BEARS AND MANAGING BEST Garey Aitken, CIO of Franklin Bissett Investment Management, explains how the market cycle informs his approach to fund construction
HAVING JUST celebrated his 20th anniversary with Franklin Bissett Investment Management, Garey Aitken is cautiously optimistic about the equity markets. Named chief investment officer last year, he oversees operations for the firm in Canada, Australia and the UK. Each jurisdiction presents unique challenges, but they also have many similarities. “Some of the trends that we see in Canada are clearly in place in the UK and Australia, too,” Aitken says. “We are in a bull market for equities, but I think things have definitely matured, and there is price pressure there with more focus on passives and ETFs.” Another characteristic of a bull market getting a little long in the tooth is that many investors forget what a bear market actually looks like and start to take on more risk. Aitken has noticed that behaviour becoming more pronounced lately. “What inevitably happens as bull markets mature is that some people probably let their guard down as they reach for returns,” he says. “They might move away from time-tested business models, and new concepts start to gain appeal. In Canada, we can see that with the cannabis industry and with blockchain.”
Cautious optimism Formerly with CIBC and Poco Petroleums, Aitken joined Bissett Investment Manage-
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ment in 1998, two years before its acquisition by Franklin Templeton. Since then, he has emerged as one of the firm’s most respected portfolio managers, a role he performs to this day with a number of funds, including the Franklin Bissett Canadian Equity Program, Franklin Bissett Energy Corporate Class and Franklin ActiveQuant Canadian Fund.
dramatic, to say the least,” he says. “I think the return potential is less over the next 10 years than we have had over the last 10 years, but I certainly wouldn’t be in the bear camp.” Instead, he looks at market volatility as reason to proceed with caution, rather than switching to full-on defensive mode. The risk-reward paradigm will always be there,
“The degree to which these markets have moved in this bull market phase has been dramatic, to say the least. I think the return potential is less over the next 10 years than we have had over the last 10 years, but I certainly wouldn’t be in the bear camp” While no fund manager can predict the future, the best ones prepare for all eventualities. The market slump at the beginning of February was a stark reminder that all bull markets eventually end, but in Aitken’s opinion, the fundamentals suggest strong stock performance heading forward. “The degree to which these markets have moved in this bull market phase has been
and currently, Aitken doesn’t see any reason to change his investment strategy. “I still come back to the interest-rate environment and the inflation situation we have,” he says. “Rates are higher than they were last summer, but they are still very supportive of equity markets. Our investment time horizon tends to be at least four or five years, and we expect pretty respectable
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PROFILE Name: Garey Aitken Title: Chief investment officer, Developed Markets Equity, Franklin Local Asset Management Company: Franklin Bissett Investment Management Based in: Calgary Years in the industry: 28 Fast fact: Prior to joining Franklin Bissett, Aitken worked in the banking and energy sectors
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PEOPLE
INDUSTRY ICON
returns over that time period.” Central bank policy aside, the combination of high corporate earnings and global economic growth means there are plenty of good investment opportunities out there, regardless of how long the bull market has lasted. But the equity markets offer no guarantees, which is why Aitken researches each stock extensively before selecting it for one of his funds. “As any good active manager will say, one has to be selective – some parts of the market have been better than others, and there have been some excesses built up,” he says. “I would
Far from simply being a moral crusade, this trend is the right way to go on all levels, Aitken believes. “As true long-term investors, we are constantly focused on valuations,” he says, “so we have to bring into our investment thesis all germane issues affecting the business – so certainly corporate governance, social and environmental issues. Frankly, good practice on those issues makes business sense.” In recent years, the term ESG has largely replaced SRI (socially responsible investing) among asset managers, and although the two sound similar, there are important differences when it comes to security selection.
“As true long-term investors ... we have to bring into our investment thesis all germane issues affecting the business – so certainly corporate governance, social and environmental issues. Frankly, good practice on those issues makes business sense” probably say that every year, but particularly this year. Overall we think the market looks pretty good, but you have to be careful because it’s more dangerous than it has been in a while.”
ESG enthusiasm In terms of portfolio construction, many different factors go into building a fund. One investment strategy that’s increasingly gaining traction is selecting companies with high environmental, social and governance [ESG] ratings. Aitken uses ESG in all of his funds, and although that acronym is relatively new in investment circles, it’s a long-standing part of Franklin Bissett’s investment ethos. “ESG is a key element of our fundamental approach and always has been,” Aitken says. “There certainly is more of a focus on isolating those three elements in recent years. We tend to talk more about it now then we have in the past, but it is business as usual for us.”
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“The socially responsible investing approach is based on views or certain expectations on behaviours,” Aitken says. “For us, it comes down to what is good business and what is the best way for us to earn long-term risk-adjusted returns, and clearly that needs to include ESG considerations.” Applying ESG criteria comes more naturally for certain funds than others, but that doesn’t mean it is ever ignored. Aitken points to the Franklin Bissett Energy Corporate Class Fund as an example. “There is no getting around the big ‘E’ issue within the energy sector,” he says. “On balance, as a jurisdiction with globally competitive regulations and laws, and companies that go above and beyond that, we know where companies stand on this issue, and we know where leading third-party entities like MSCI stand in terms of ESG ratings for these issuers.”
GAREY AITKEN’S KEY FUNDS In addition to his duties as CIO, Aitken serves as co-lead portfolio manager for a number of Franklin Bissett’s top funds, including:
Franklin Bissett Canadian Equity Program Launched in 2000, this fund currently has AUM of $3.2 billion and a focus on dividend-paying companies
Franklin Bissett Monthly Income and Growth Fund Launched in 2015, this fund is a mixture of Canadian, US and global fixed income and equities and has AUM of $141 million
Franklin Bissett Energy Corporate Class Launched in 2007, this fund is made up of Canadian names in the energy space and has AUM of $30 million
Franklin ActiveQuant Canadian Fund Launched in 2004, this fund is made up primarily of Canadian equities and has AUM of $419 million Source: Franklin Bissett; data as of 02/28/2018
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SPECIAL PROMOTIONAL FEATURE
EXPERT ADVICE
A new frontier in passive investing From cannabis to artificial intelligence, Horizons ETFs head Steve Hawkins outlines how his firm is keeping up with the relentless pace of change in today’s world
LAST APRIL, Horizons ETFs made history when it launched the world’s first cannabisbased ETF. Although the Horizons Marijuana Life Sciences Index ETF (HMMJ) had been in the works for some time, the timing was ideal, as Canada’s burgeoning cannabis industry made huge strides forward in 2017. Aphria and Canopy Growth delivered the
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best returns (271% and 255%, respectively) of any company on the TSX over the course of the year, and a host of new producers joined the public markets. With the legalization of recreational use looming, Horizons ETFs saw fit to add a second cannabis-based ETF to its suite this February. The Horizons Emerging Marijuana
Growers Index ETF (HMJR) has both Canadian and US constituents, but bringing such a product to market is complicated. Cannabis remains illegal in most of the world, and its cultivation and possession is still a federal crime in the United States. That legal disparity has created a gap in the market, however, and it’s one Horizons ETFs is seeking to fill with its latest offering. “A lot of the US companies that have stateapproved marijuana operations are coming to Canada for their securities listings because they can’t get a listing in the US,” says Steve Hawkins, president and co-CEO of Horizons ETFs. “The Canadian Securities Administrators issued guidance last year that basically said, ‘We will continue to allow Canadians to invest in cannabis companies with US operations with the proper risk disclosure.’” In this case, ‘risk’ is the threat of enforcement of cannabis prohibition under the US Controlled Substances Act of 1970, which could result in, for instance, asset seizure by the federal government. This risk hangs over all cannabis producers that have operations in the US. Although eight states have legalized the drug, the current administration in Washington is staunchly opposed to following suit at the federal level. For that
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reason, investing in cannabis stocks remains a delicate process. “For us in Canada, the Toronto Stock Exchange also issued guidelines that essentially said, ‘We don’t want any of our exchangelisted companies to have any US operating risk, and we will take action if you do.’ So you have seen companies like Aphria, which is listed on the TSX and is part of the S&P/TSX Composite Index, recently sell their US operations to maintain their listing on the TSX.” Fortunately for Horizons ETFs and investors who want exposure to the US cannabis industry, the TSX isn’t the only game
sector will be in a year’s time, but the potential for growth is massive. “A year ago, there were only around 40 licensed producers in Canada, and now there are over 90,” he says. “We have seen a huge increase in the number of producers and a huge increase in the number of public companies in this space.” While the impressive returns generated by the likes of Aphria and Canopy Growth have converted plenty of skeptics into believers, Hawkins still advises caution when it comes to this sector. As with any new industry, it’s difficult to judge company fundamentals
“There is so much stock market data in the world right now, and that amount is growing every single day. One individual, or even a group of individuals working together, can’t possibly look at all that information, digest it and make an informed decision – but AI can” Steve Hawkins, Horizons ETFs in town, so the firm approached another exchange to list HMJR. “It is on the NEO Exchange, which has taken a broader view on investing in companies with US exposure,” Hawkins says. “As long as you are identifying the risks involved with those potential investments in compliance with the CSA guidance, then you can list your marijuana ETF on that exchange.” Its predecessor, the Horizons Marijuana Life Sciences Index ETF (HMMJ), is listed on the TSX and has performed solidly since its inception. Originally, Horizons ETFs intended for HMMJ to focus on the medicinal market, but Canada’s proposed recreational legalization required shifting those parameters considerably. In Hawkins’ opinion, it’s hard to predict just where this
right now, although that won’t be the case for much longer. “A lot of that potential growth is probably priced into the market right now because we are sitting on pretty huge price-to-earnings ratios,” Hawkins says. “A lot of the companies don’t actually have earnings, nor are they profitable, so nobody really knows what is going to happen to sales when the recreational marketplace becomes live. We have to look at states like Colorado, Oregon and now California to give us some sort of direction. Looking at those numbers, there are significant growth prospects for the cannabis market and Canadian producers.” Another area where Horizons ETFs has demonstrated its commitment to innovation is in the tech space. Last October, the firm
launched the Horizons Active AI Global Equity ETF (MIND), the first global equity-focused ETF to use artificial intelligence for security selections. The investment industry has woken up to the possibilities of AI in recent years, but it remains largely an untapped resource. Horizons ETFs has sought to address that with MIND, and Hawkins is excited for what the product might mean for investors. “It uses AI as the actual portfolio manager,” he says. “It doesn’t select individual companies. Working with the AI developer, who already developed algorithms to do stock analysis and selection on a quantitative basis, we took those algorithms one step further and had AI become a global equity asset allocator.” The reason for that is simple – when it comes to analyzing data, the human brain simply can’t compete with a specially designed computer program. And for an index-tracking fund like MIND, AI appears to be a perfect fit. “There is so much stock market data in the world right now, and that amount is growing every single day,” Hawkins says. “One individual, or even a group of individuals working together, can’t possibly look at all that information, digest it and make an informed decision – but AI can. It is working 24/7, 365 days a year, looking at that information and making decisions based on that information.” MIND uses the risk/return profile of a world equity index as a starting point, so investors using the fund will gain exposure to companies not just in North America, but worldwide. It’s the next evolution of quasi-passive investing, Hawkins believes. “We have given the AI system the standard deviation of returns on the index and its risk profile,” he says, “and have asked it to lower the overall risk to investors and to outperform. For MIND, it has created an asset allocation model to various countries’ equity markets and determines what the various exposures to those countries are.”
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SPECIAL REPORT
YOUNG GUNS 2018
YOUNG GUNS 2018
WPC spotlights 20 up-and-coming young advisors who are poised to lead Canada’s wealth management industry into the future
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EACH YEAR, Wealth Professional Canada speaks to the young advisors who will shape the future of wealth management. The faces change each year, but their hopes and frustrations often remain the same. It’s a common theme in this publication, but one worth repeating: The advisory business is struggling to attract new blood to its ranks. Quite simply, those retiring are not being replaced by enough recent graduates, leaving a greying industry that soon won’t adequately reflect Canada’s demographic shift. In 2018, the majority of Canada’s wealth is in the hands of baby boomers, but that’s quickly changing, and the wealth management industry needs to be prepared as millennials and gen x-ers assume a greater share of the country’s assets. The common consensus is that pressure to generate almost immediate results weighs heavily on young advisors, causing many to leave the profession, and more still to disregard joining in the first place. That’s not the case with every firm, however: Certain
advisory firms have decided to prioritize the long-term development of their new advisors over meeting short-term revenue targets. Indeed, this year’s Young Guns spoke in glowing terms about the assistance they have
YOUNG GUNS 2018 INDEX NAME
COMPANY
PAGE
Bacchus, Joshua
Cafin Financial Group
37
Cattelan, Devin
HollisWealth
26
Dawes, Grant
Northland Wealth Management
30
Hingorani, Richa
RBC
33
Irwin, Tom
Raymond James
25
Karmelic, Mia
Investors Group
28
Kirkland, Andrew
Just Wealth
36
Krueger, Katelyn
BMO Nesbitt Burns
26
Letchford, Jeff
Mandeville Private Client
32
Migie, Aaron
Assante Wealth Management
29
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received in their early years, and they believe that approach should become the industry standard, thus ensuring that financial advice as a profession continues to prosper in the years to come.
NAME
COMPANY
PAGE
Muica, Darius
Nour Private Wealth
32
Neal, Adam
TPC Financial
31
Nour, Ralph
Manulife Securities
34
Pacha, Farialle
Richardson GMP
36
Pal, Kate
Pal Insurance
33
Rathwell, Brianna
HollisWealth
34
Spierenburg, Danielle
Richardson GMP
35
Steele, Morgan
Richardson GMP
27
Wolpert, Zoe
Richardson GMP
30
Zhao, Snow
Scotia Wealth Management
28
TOM IRWIN Wealth manager RAYMOND JAMES Age: 31 Years as a financial advisor: 2 Certifications: CIM, FPSC Level 1
Like a number of this year’s Young Guns, Tom Irwin is a second-generation financial advisor. Having followed his father into the business, Irwin now regards him as his greatest influence. Such mentorship is vitally important for younger advisors, but not everyone can call on the expertise of a parent, so Irwin would like to see a greater commitment to professional development among his peers. “The CSI and the FPSC do provide excellent material to help push advisors to the next level,” he says, “but I would like to see at least the Level 1 FPSC designation become mandatory for advisors.” It’s no secret that there’s a shortage of younger financial planners in Canada,
which threatens the long-term viability of the industry. In Irwin’s opinion, a greater focus on financial education, both in elementary and high school, could go a long way in improving the financial literacy of the general population, and in turn, convince more people to consider a career in wealth management. It’s a calling Irwin has found to be greatly rewarding. “I love teaching people about retirement savings, and it makes me proud to have an impact on their futures,” he says. That’s not to say the job doesn’t frustrate him at times; in particular, he believes the pressure to provide high-quality service for an unrealistic fee is a real downside. As DIY investing grows in popularity, advisors have to consistently display their value, and often this can come down to good conversation. “Effective and impactful communication with clients is more important than ever before,” Irwin says. “Advisors have to provide a better level of service or risk losing clients to cheaper options.”
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SPECIAL REPORT
YOUNG GUNS 2018
DEVIN CATTELAN Associate investment advisor HOLLISWEALTH Age: 25 Years as a financial advisor: 4 Certifications: Passed all three levels of the CFA program and may be awarded the charter upon completion of the required work experience
KATELYN KRUEGER Associate investment advisor BMO NESBITT BURNS Age: 27 Years as a financial advisor: 1
Another Young Gun who recently completed her first year as a financial advisor, Katelyn Krueger is aware that her competition isn’t just coming from older advisors anymore. Investors now have the option of investing via an online platform, so it’s important that human advisors distinguish themselves – and Krueger has some ideas about how they can do so. “It is developing a keen ability to not only foresee change, but to strategically innovate in the face of it,” she says, “while navigating quicker than the next star advisor or piece of software meant to replace human involvement.” Working with Nesbitt Burns, one of Canada’s best known advisory firms, Krueger has developed a strong sense of what is expected of her and the
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One of the youngest of this year’s Young Guns, Devin Cattelan made his start as a financial advisor at the ripe old age of 21. Four years down the line, he has learned a number of important lessons. “When I first started my career, I put too much emphasis on the investment portion of the job and underestimated the importance of holistic wealth management,” Cattelan says. “I believe that an effective advisor will always start by identifying a client’s needs, goals and aspirations. True value is added during the financial planning process by going beyond asset management and into tax, estate and insurance planning.” Holistic wealth management – far more than simply picking stocks or selling a life insurance policy – is what being a financial advisor is all about in 2018. Unfortunately, the reputation of the industry has suffered, which is a real source of frustration for advisors like Cattelan who hold the job in
high regard. “I still find that advisors get a bad rep,” he says. “It’s not uncommon that I get a rude remark when introducing myself as an investment advisor. It’s unfortunate, as most advisors that I have met care a lot about their clients and want to do what’s in their best interest. I think a few bad eggs have spoiled the lot.” That said, the majority of financial planners do hold high ethical standards, and Cattelan believes those with decades of experience have a lot to offer the younger generation. “I’d like to see more aging advisors take on younger advisors in a mentorship capacity,” he says. “I think this type of relationship can benefit both parties. The younger advisor can benefit from the experiences of the older advisor, whereas the older advisor can draw on new ideas and energy from the younger advisor. This also helps with succession planning.”
profession in general. “Developing a meaningful relationship allows you to understand the needs and goals of each client, which ultimately allows us to employ the appropriate wealth management and accumulation tools each client needs to reach his or her financial objective,” she says. Those relationships take time to develop, and clients don’t always act in their best interests. It is the advisor’s job, therefore, to apply cool-headed judgment when it comes to financial planning. “Investors as a whole can be emotional and tend to follow the crowd; when volatility spikes and markets dip, many investors react in fear,” Krueger says. “One of the most important, and at times the most challenging, aspects of the job is to remind clients of the long-term view and their objectives during periods of market volatility.” If a young advisor can provide such service, they will have every chance to succeed in this industry. And, as Krueger explains, advisory firms have an important role to play in ensuring the talent well
doesn’t run dry. “Wealth management is an industry that is consolidating,” she says. “Firms need to understand that young and old opinions are equally important to clients. I think wealth management teams need to consider the importance of renewed talent and continue hiring young advisors.”
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MORGAN STEELE Portfolio manager RICHARDSON GMP Age: 29 Years as a financial advisor: 3 Certifications: CFA
While it’s not uncommon to see people follow their parents into this industry, Morgan Steele was wary of making that step right away. Although Steele had the option to join his father, Clarke, in the family business, he initially decided to go another route. “I always thought I would join the business at some point,” he says. “But there is a stigma there – people just assume you’re there for the free ride. I wanted to go out and work independently for other firms and learn as much as I could from other people.” That decision brought him to New York, where he worked for a hedge fund, pricing analysis on distressed bonds and creating summary sheets on new loan deals. Success there led to a position as an equity research associate with Radin Capital Partners, and eventually a move to IA Clarington Investments, where he served as an analyst for the IA Clarington Strategic Corporate Bond Fund. It was a steep learning curve, but one that served him well when Steele eventually decided to join his father’s team at Richardson GMP in 2014. Today, he applies his expertise to advise clients on alternative assets, credit and equities; in January, he became a portfolio manager. “My background is paramount to what I do today, in terms of valuating different alternative investments and different managers, especially in the bond world,” Steele says. “If you aren’t going to invest in a company’s bond, then there’s no way you will touch their equity. Having a background as a bond analyst goes a long way when you are evaluating equities for clients.”
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SPECIAL REPORT
YOUNG GUNS 2018
SNOW ZHAO Wealth advisor SCOTIA WEALTH MANAGEMENT Age: 25 Years as a financial advisor: 1 Certifications: RR licence, insurance licence, CIM
MIA KARMELIC Division director and senior financial consultant INVESTORS GROUP Age: 32 Years as a financial advisor: 6 Certifications: CFA, CFP
While it’s a common consensus that younger advisors have it tough in today’s business, there are ways to navigate the various minefields out there. Proper preparation is one of them, and it’s a strategy Mia Karmelic extols. Now a division director with Investors Group, Karmelic has a few words of guidance for new entrants to the business. “With the constant regulatory changes that are occurring in the industry, it becomes vital for young advisors to invest in systems as well as support staff to run a successful and compliant practice,” she says. This requires an upfront investment, which might be difficult for a young advisor, but Karmelic believes such an approach usually pays off in the long run. The support provided by an advisor’s
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Snow Zhao is marking her first year as a financial advisor with her first appearance on WPC’s Young Guns list. Like many of her peers, Zhao set obtaining her Certified Financial Planner designation as an early goal, and she recently completed her CFP exams. Many more challenges now await as she attempts to build a career in what can be a pretty unforgiving business. “For young advisors, just like all entrepreneurs, the biggest challenge is the need to build up a client base in a short period of time without much support,” she says. Zhao’s path to becoming an advisor included two years in Scotia’s Wealth Management Associate Program. It was a valuable learning experience, as she was able to assist advisors with their day-to-day responsibilities. By doing so, she was able to learn the nuances of the
profession – in particular, the obligation to always work in a client’s best interests. “Advisors should genuinely care about their clients while being transparent and competent,” Zhao says. “My goal has always been to help my clients achieve peace of mind by providing trusted advice and personalized solutions to meet their financial goals.” On occasion, the guidance provided by an advisor can go much deeper than investment counsel, which Zhao found out very early in her career. “When one of my clients went through a very difficult personal situation, I was there for her and walked her successfully through this difficult time,” she says. “It is not just providing financial security, but also emotional support. She was able to recover quickly because of it, and we have not only built trust, but also a lifelong friendship.”
firm is also crucial, and Karmelic says she couldn’t have asked for more in that regard. “In my opinion, Investors Group provides some of the best-in-class, as well as hands-on, training in the industry,” she says. “There is a vast focus and corporate support in attaining the CFP designation from the get-go, and we have the largest amount of CFP advisors in the industry at this time.” Now in her sixth year as an advisor, Karmelic believes ambitious advisors should never stop learning. Managing a person’s financial future is quite a responsibility, and a commitment to better oneself is what separates those at the top of the profession from the rest. “Not only do certifications enhance our skills as advisors and allow us to provide enhanced solutions to our clients,” she says, “but they also give us the confidence to continue moving up-market and deal within the high-net-worth space.” This commitment to improving individual standards will help bolster the industry’s reputation as whole, Karmelic explains.
“Although I understand that many clients haven’t been exposed to the value of financial planners, I’m excited to see how the FPSC continues to push the value of our profession to the public,” she says.
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AARON MIGIE Financial planning advisor ASSANTE WEALTH MANAGEMENT Age: 35 Years as a financial advisor: 12 Certifications: CFP, FMA
In Aaron Migie’s view, being a successful advisor comes down to eliminating headaches for your clients. “Clients are looking to be led by someone who can provide a philosophy, a plan and a good experience,” he says. “Clients want us to show them how they can achieve their unique goals while also simplifying the complexities of personal finance.” Performing that task can be stressful, and there are certain aspects of the job that frustrate Migie daily. “The amount of
time that’s taken up by administration takes away from precious time spent discussing clients’ goals, money habits and their family’s wealth plan.” That said, Migie would like to a see similar level of rigorousness applied to the certification process. There are a host of designations available to those wishing to become a financial advisor in 2018, but that isn’t necessarily a good thing, he explains. “I believe Canadians would benefit if we had a uniform designation that was required to provide financial advice – CFP is one designation that comes to mind.” Migie would also welcome a greater drive in the industry to attract new talent, which he believes could be addressed through better marketing. “I think that a stronger recruiting
Your clients need a financially strong strategy
program, coupled with longer paid training, would go a long way to attract quality candidates to this industry,” he says. “This is a fabulous industry to be a part of and is rewarding in so many ways. We need to do a better job of getting the word out.”
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SPECIAL REPORT
YOUNG GUNS 2018
GRANT DAWES Associate advising representative NORTHLAND WEALTH MANAGEMENT Age: 32 Years as a financial advisor: 7 Certifications: CIM, CFP, PFP
ZOE WOLPERT Associate investment advisor RICHARDSON GMP Age: 27 Years as a financial advisor: 1 Certifications: Registered representative (CSC, CPH, WME)
Part of the difficulty young advisors experience in building a book of business is the fact that in your early years, your target clients usually aren’t in your own demographic. The vast majority of wealth in Canada today is in the hands of baby boomers, who, like most generations, tend to favour advisors their own age. In addition, it can also be a real battle to convince younger people that financial planning is something they need to do, as Zoe Wolpert explains. “My biggest challenge as a young advisor is that many of my peers working in other industries don’t see investing as something they can take part in,” she says. “Investing, in their eyes, is for when you are wealthy, not when you’re trying to grow.” A millennial herself, albeit one who is
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Grant Dawes has spent almost his entire career offering investment advice during a period of record low interest rates. That all started to change last year, and central bank policy is something young advisors certainly need to keep on top of for their clients. “All of us started our careers after the global financial crisis in 2008 and have only experienced unprecedentedly low and or falling rates,” Dawes says. “The period we’re entering now is going to be completely new and will have a significant impact in all areas of expertise, from investment management to financial planning.” That’s just one of the many outside forces advisors must consider. The investment landscape looks particularly volatile right now, and as technology continues to push the boundaries of what services advisors can provide, clients will expect them to be on top of new developments.
“The rise in popularity of crypto currencies will be at the forefront of client conversations,” Dawes predicts. “We are finding that friends, family and clients are turning to younger advisors for their advice in this space, and the challenge will be how we respond to the demand in a thoughtful and responsible way.” That’s a positive development, especially in an industry where the youngest practitioners have an uphill battle on their hands. Dawes doesn’t necessarily see it that way, especially for those who can keep enhancing their value proposition. “When I first started out, I was a bit naive in my belief that having superior knowledge or the ‘best ideas’ would make me an effective advisor,” he says. “I quickly realized that one of the most important tools is the ability to listen carefully and communicate well with clients.”
now in the position of providing financial advice, Wolpert knows that isn’t the case. While there are different levels of investing, there really are options for everyone, regardless of their asset level. “I actively educate on the positive impact that investing early can have on one’s long-term earning potential,” she says. “I’ve found that even though an abundance of information can be found online, having someone explain investing in person is extremely valuable.” That’s part of the reason why Wolpert decided to become an advisor herself a little over a year ago. A member of the Richardson GMP group, her early development came via the Horwood Team, then Nicol Sanchez Wealth, where she remains to this day. The training she received at Richardson GMP really sets it apart from its competitors, she believes. “Both the firm and the advisors I work with have been very active in my progress as a professional,” she says. “Through education, networking and coaching, it is made known that supporting young careers is a priority. I think that’s unique in this industry and integral to our success.”
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ADAM NEAL Financial advisor TPC FINANCIAL GROUP Age: 30 Years as a financial advisor: 7 Certifications: CFP, CLU, CEA
Despite being just 30 years old, Adam Neal has seven years as a financial advisor under his belt, which makes him well placed to comment on change in the industry. In particular, he’s witnessed a shifting environment in terms of compensation. “When I began my career, the industry seemed to be entirely sales-based,” he says. “With the introduction of CRM2 and a rising demand for transparency and
education by the Canadian population, I think advisors are being tasked with adding value-added services to stay relevant. If the client completely understands the recommendations I make and the rationale behind each strategy, the relationship continues to grow, and the level of trust continues to grow as well.” Part of that value-add is providing digital offerings for clients. This is especially important among the millennial demographic and is an area where younger advisors can excel. “I think younger advisors may be more in tune with the use of technology and how our role as advisors is changing,” Neal says. “The challenges are often in convincing colleagues or existing clients on how
technology can complement the services we can provide, as opposed to detracting from our services.” The value financial advisors can provide is something that needs to be emphasized, Neal believes. This in turn would make the profession more attractive to new entrants, which is an ongoing concern. “Young advisors could be brought on without any obligation to sell, but rather an obligation to educate themselves and understand their role in the greater financial picture,” he says. “I believe this would result in young advisors with an expanded knowledge base, resulting in increased confidence and ultimately a better value proposition for clients.”
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SPECIAL REPORT
YOUNG GUNS 2018 JEFF LETCHFORD Investment advisor MANDEVILLE PRIVATE CLIENT Age: 28 Years as a financial advisor: 2 Certifications: CFA, CSC, LLQP
Many young advisors find themselves diving head-first into the deep end, but that wasn’t the case in Jeff Letchford’s early days at Mandeville Private Client. “I am fortunate to work with a company that offers an excellent advisor training program, the Mandeville Professional Development Program,” he says. “The program covers the principles of wealth creation, the framework for investment success, and public speaking and presentation skills. The experience included coaching from Michael Lee-Chin, which was a tremendous opportunity and confidence-builder.” In terms of learning the nuts and bolts of financial advice, Letchford credits his
DARIUS MUICA Investment advisor NOUR PRIVATE WEALTH/ MANULIFE SECURITIES Age: 34 Years as a financial advisor: 5 Certifications: MBA
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stint as an associate to Guido Camaiani, whom he works alongside to this day. Now managing his own book of business, Letchford has come a long way in his two years as an advisor. “Much of my growth professionally and personally over the past couple of years is attributable to the guidance of Guido,” he says. “His 15 years of advisory experience helped to accelerate my growth. In addition, I’m fortunate to have learned from many other advisors located at Mandeville’s head office. As the only advisor at the branch who is under 40, I am grateful that my colleagues have been so willing to teach a younger advisor. Everyone has a unique way of advising, so I have taken bits and pieces from each mentor and formulated my own recipe.” That’s not to say Letchford’s training is finished – quite the opposite, in fact. Mandeville puts a lot of stock in continued education, holding regular practice management sessions and hosting guest
speakers who discuss relevant topics in the advisory world, including portfolio management, marketing, social media, compliance and legal requirements.
Part of Elie Nour’s team at Manulife Securities, Darius Muica likens the early years as a financial advisor to starting your own business. Both are high-pressure situations where success can be hard to come by, but the allure remains. “The difference is that when you start your own business, you need capital for an initial investment, and as a financial advisor, the initial investment is your time,” Muica says. “I believe that somebody who is young has the energy and drive to put in the extra hours that are needed in this business to even have a shot at being successful. Somebody who is considering a career change will have a much harder time because he or she already has a certain lifestyle and responsibilities in place.” It’s a profession with a steep learning curve, but in Muica’s case, the team at Nour Private Wealth made his ascent more manageable. “The training and support I received when I started was instrumental to my success,” he says. “When starting, you need
to figure out how to bring in new clients, all the regulatory and compliance policies, how to add value either on the investment or tax side, how to manage the portfolios, how to service the clients, etc. At Nour Private Wealth, I had the opportunity to be trained by some of the top advisors in the country and learn their process.” In Muica’s view, this is a system that should be replicated in advisory teams across the country. Young people are an essential part of the wealth management industry, and recruitment needs to be a priority in the years ahead. “I am involved in training new advisors in our branch, and I am often amazed at their diligence and hard work,” he says. “To attract young advisors, it is important to understand that they don’t have a large book of business for income generation. They depend on every client they sign, and they need to be compensated for it. Eliminating some of the fee structures that allow this type of upfront compensation significantly reduces their chance of success.”
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KATE PAL Principal PAL INSURANCE Age: 34 Years as a financial advisor: 8 Certifications: CLU, FEA, CFP
RICHA HINGORANI Senior director, digital strategy RBC WEALTH MANAGEMENT Age: 35 Years in wealth management: 14
Now a senior director of digital strategy at Canada’s biggest bank, Richa Hingorani started her career with another of the Big Six. After working as a financial planner with CIBC Imperial Services, Hingorani made the move to RBC Wealth Management in 2010, and her abilities ultimately led RBC to choose her to lead digital innovation for the firm. Not surprisingly, Hingorani believes her background as an advisor gave her the platform to succeed in her current role. “The years of experience working with clients and advisors at various levels really helped me to plan our client journeys digitally,” she says. “Our work with fintech experts in Silicon Valley to develop a new innovative platform called MyAdvisor will be the way of delivering advice for RBC in the future.”
Although she now works for her family’s business, Kate Pal’s career in financial services began much farther afield. Soon after graduating from Queen’s University in Kingston, she took a job as an analyst in The Hague with Dutch development bank FMO, which supports private companies in developing markets. Pal’s next position would continue in that vein, but at a much closer proximity – she spent the next year in Sierra Leone with private equity firm Manocap. In 2010, she left West Africa and returned home to Pal Insurance, the Toronto-based firm her father, Joe Pal, founded in 1976. The company provides financial and estate planning, and Pal found a natural teacher in her father. Since joining the firm, she has added CLU, FEA and CFP designations to her title and is now fully committed to the advisory profession. “In my view, an effective advisor must
be able to both educate and motivate his or her client to action,” Pal says. “An effective advisor will also use technology to enhance the service offering that is provided to the client.” Having the skills to use technology effectively is a real asset for an advisor in 2018, but technology isn’t always welcomed by clients. When speaking about the parts of the job that frustrate her, Pal is unequivocal: “Clients who are not open to new ideas or who have trouble making decisions.” Specializing in life insurance and estate planning, Pal believes advisors should commit to educating themselves on some of financial planning’s more complex areas. “I think the certification program creates a solid baseline foundation for advisors in terms of knowledge and professionalism,” she says. “The higher the standard we hold ourselves to, the more reputable our industry will be.”
Now in a management role, Hingorani believes the industry can do more to make itself a more attractive proposition for young advisors. “The time to take courses and become proficient with accreditations is two to three years and typically after university, which might be a barrier for some,” she says. “It would be easier to have parallel paths while in university that may shorten the time to proficiency.” Now that she has moved on from the day-to-day task of providing financial advice, focusing instead on leading that advice on an institutional level, Hingorani has seen the industry shift in a number of significant ways. “It has tremendously changed as emotional intelligence has become key, in addition to the technical skills of providing tax, retirement or investment advice,” she says. “Client preferences of connecting with advisors and the amount of information that is now available to clients have also led to a need for higher capability of advisors. Robo-advisors have also put some positive pressure on financial advisors, as now they have to ensure they
prove the power of human advice – that is, in connecting the different goals, life events and complex financial situations for a client, which is harder to accomplish through algorithms and robots.”
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SPECIAL REPORT
YOUNG GUNS 2018
Joining his older brothers in the advisory business, it didn’t take Ralph Nour long to realize some of the main difficulties young advisors face. “The first challenge is the increase in self-directed investors due to their lack of trust in advisors’ capabilities to bring value over and above what a passive investment vehicle can do,” he says. “The second challenge is the changes in fee structures. For newcomers, that lump-sum commission can play a big role in helping them survive in their first few years.” Nour has had the advantage of making his start with Nour Private Wealth alongside a number of well established financial
planners, including Elie Nour, a regular presence on Wealth Professional Canada’s Top 50 Advisors list. “Most of the support came from my family and the team of advisors at the branch,” Nour says. “I am lucky that I have two older brothers who are successful in this business. They taught me the ins and outs of the industry, and I’m grateful that I got the opportunity to learn from their mistakes and experiences.” While still in the formative stages of his advisory career, Nour has quickly learned that clients aren’t always receptive to guidance, which can be frustrating for those providing it. “I think it’s the fact that people sometimes do not give themselves the chance to really understand their finances the way they should,” he says. “They get carried away with their day-to-day lives and tend to procrastinate in taking care of their finances. This creates a lot of lost opportunities for clients.”
in the industry and the more people you meet, the more you realize our business is just as much about the personal and emotional relationships that you build with clients as it is about the numbers and returns.” Something that unites advisors, young and old, is frustration with regulatory creep in the industry. That extends far past the reporting requirements of CRM2, Rathwell says. “As a young advisor, it is evident in my day-to-day life how much my generation uses and relies on social media,” she says. “It is the new word-of-mouth advertising. But we are so limited in what and where we can post on social media that it puts us at a disadvantage to other professions.” Rathwell would also like to see greater collaboration between different generations of advisors, much the same as she has benefited from in her career. “There needs to be more of a connection made between the established advisors who are nearing retirement and
the new advisors coming into the industry,” she says. “Something comparable to a practicum or mentor program would be largely beneficial.”
RALPH NOUR Investment advisor NOUR PRIVATE WEALTH/ MANULIFE SECURITIES Age: 25 Years as a financial advisor: 1 Certifications: CSC, CPH, WME
BRIANNA RATHWELL Associate advisor HOLLISWEALTH, INDUSTRIAL ALLIANCE SECURITIES Age: 24 Years as a financial advisor: 4 Certifications: RRC, life and A&S advisor
Hot on the heels of her father, John, being named one of Wealth Professional Canada’s Top 50 Advisors, Brianna Rathwell finds herself among WPC’s 2018 Young Guns. Financial advice is a family business for the Rathwells; her brother, Jonathan, is also part of the firm. Now in her fourth year as an advisor, Rathwell is preparing to add her second book of business, but that success hasn’t come easy. “Age itself is the biggest challenge – it is much harder for a young advisor to bring in new clients and have their trust and respect than it is for someone coming into the industry at an older age,” she says. “The longer you work
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DANIELLE SPIERENBURG Associate investment advisor RICHARDSON GMP Age: 31 Years as a financial advisor: 1 Certifications: CSC, CPH
Danielle Spierenburg believes there are both positives and negatives to starting a career as a financial advisor today. “The shift in demographics alone requires us to compete with the future – robo-advisory and online discount brokerages – while simultaneously servicing the needs of a past generation of aging baby boomers,” she says. It’s a challenge for sure, but one that can be met by collaboration between advisors of all ages. Spierenburg’s own experience at Richardson GMP provides an example of how this can be achieved. “We can foster organic growth by establishing mentorship programs, hosting networking events with business schools, and defining career paths of students and young employees who are already engaged and driven to succeed,” she says. A newcomer to the advisory space, Spierenburg’s opinion of what makes a successful financial advisor has evolved since she became one herself. “We have open dialogue about everything from career aspirations, marriage and children to more difficult topics like wills, estates, critical illness and the potential for job loss,” she says. “An effective advisor considers how to improve a client’s life, not just increase their net worth.” In terms of demographics, the lack of young advisors isn’t the only concern in wealth management. The male dominance in the profession is perhaps even more glaring. Progress is being made, albeit slowly, and Spierenburg believes the next generation can have an impact in this area. “Being a young woman in a male-dominated industry presents unique challenges,” she says. “As I advance in my career, I will continue to be an advocate for gender equality in finance. I believe in championing initiatives for change, and I will support and encourage women to be future investment advisors, portfolio managers and board members.”
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SPECIAL REPORT
YOUNG GUNS 2018 ANDREW KIRKLAND President and co-founder JUSTWEALTH FINANCIAL Age: 35 Years in wealth management: 12 Certifications: CFP, CIM
Andrew Kirkland is not just a Young Gun, but part of the new breed of Canadian entrepreneurs changing the investment landscape nationwide. Having founded online portfolio management platform Justwealth in 2015, Kirkland has a unique perspective on how financial advisors can adapt in the age of robo-advisors. Disruptors may have some people worried, but not those with a forwardthinking ethos, he believes. “The financial industry is undergoing a massive transformation, and it is critical for leaders to be at the forefront of this change,” he says. “As Canadians embrace new mediums to receive and share information, we must evolve with them,
significantly overhauling how financial advice is delivered over the next several decades.” Contrary to some of the dire predictions out there for the advisory business, Kirkland doesn’t foresee the advisor’s role becoming obsolete. Instead, the job will evolve like any other, with those unwilling to change falling by the wayside. “I believe the value of having a steady hand and an informed steward will be of paramount importance to Canadian investors going forward,” he says. “It will be crucial for young advisors to remain informed, enabling meaningful conversation with clients.” That may sound simple, but the speed with which the investment landscape is changing makes it quite the challenge. Investors have never had more access to information, and that increases the need for advisors to have the right answers, whether that’s on Bitcoin, cannabis stocks or whatever else the latest investment trend might be.
FARIALLE PACHA Associate investment advisor RICHARDSON GMP Age: 26 Years as a financial advisor: 1 Certifications: CSC, CPH, WME
It’s no secret that Canada’s advisory business is demographically skewed. Among the Young Guns featured here, most agree that the industry needs to do more to attract new talent. That isn’t the only issue, however – advisors are also predominantly male. With women set to control 50% of assets in Canada, the imbalance among those who manage those assets needs to be addressed. Farialle Pacha is an example of the new generation of female advisors, but she believes more needs to be done to achieve greater gender diversity in wealth management. “Although this is a more systemic problem within the entire industry rather than specific to the job itself, I cannot tell you how tiresome it is to walk into a room
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“We must remember that any challenge can be repositioned as an opportunity,” Kirkland says. “As younger advisors look to face these challenges head-on, the key to unlocking success lies in the technology they leverage to deliver a superior overall investment experience to Canadian investors.”
and be one of a handful of women,” Pacha says. “I am very thankful for the strong and ambitious women before me who paved the way for me to be able to pursue a career as a financial advisor. We still have a fair way to go to continue pushing for equal representation and diversity, especially within the C-suite. It’s about time we stop debating the importance of diversity, as I imagine most of us already know the value it brings – what frustrates me is the stagnation phase we seem to be in.” Now serving high-net-worth clients, Pacha’s opinion of what makes a good financial advisor has changed over the years. As she outlines, it involves a lot more than selling investment products. “Truly effective and successful advisors don’t just build portfolios designed for a particular client’s investment objectives and risk tolerances,” she says. “They must act in the best interests of all the clients they engage with. They become the stewards of that wealth and ultimately the designated individual who ensures goals are being met.”
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JOSHUA BACCHUS Financial planner CANFIN FINANCIAL GROUP Age: 32 Years as a financial advisor: 10 Certifications: CPA, CGA, CFP, RRC
One of the more experienced Young Guns on this year’s list, Joshua Bacchus has a decade in the advisory business to his name. He has observed a great deal of change over that period, not all of it positive. Specifically, he believes the shift toward fee-based practices hasn’t done younger advisors any favours, which is why many struggle to make their mark and choose to leave the profession.
“Prior to the changes with DSCs, an advisor could help a smaller client grow over the years while the advisor grew as well,” he says. “But as DSCs fade away, it makes it tougher for a younger advisor to be successful without having a substantial book of business.” Unless you have the resources to buy a book of business from another advisor, building a book takes time and a lot of effort, which creates a high barrier of entry for those starting out. Bacchus has been able to overcome some of these challenges through the dedicated support structure at his firm, which was essential to his early
development as a financial planner. “Canfin Financial Group provided detailed workshops, presentations and one-on-one consulting with experts in the industry,” he says. “That showed me everything I have implemented in my practice today.” Now Bacchus is the one providing the guidance to young advisors. Working in the advisor care department at Canfin, he trains new advisors on various aspects of financial planning, including taxes, budgeting and investment strategy, either one-on-one or through workshops where he presents to more than 150 advisors at a time.
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SPECIAL PROMOTIONAL FEATURE
INVESTMENT STRATEGY
Answering the call for investors Larry Berman outlines how BMO Global Asset Management’s investment strategy can help investors sleep at night, even as volatility returns to the markets AS THE HOST of Berman’s Call on BNN, Larry Berman has the perfect vehicle to gauge investor sentiment across Canada. Considered one of the most highly regarded analysts in the country, his outlook for the domestic market isn’t so positive right now – and for good reason. “The TSX is a lousy diversified market because there is so much concentration in so few sectors,” he says. “The Big Six banks make up almost 25% of the entire index; the energy companies make up about 20%. There is nowhere else in the world you see concentration like that. The banks are very interest-rate sensitive, and the housing market in Canada is probably close to its peak and consolidation, so the best of the growth in bank earnings may be behind us.” Although the price of oil has risen sharply in recent months, Berman is still highly cautious about investing in the energy sector. As he points out, market forces are not the only consideration for Canada’s producers right now. “I think peak demand for oil is going to come a lot sooner than the market expects,” he says. “I think the policies of the Trudeau government and some of the problems we are having with Alberta and BC in terms of pipelines are going to keep Canadian oil prices at a significant discount to world prices.” With his outlook for those two sectors pretty bearish right now, he will naturally approach investing as a whole in a similar manner.
Berman’s abilities to analyze market trends, as well as his expertise in exchange-traded funds, made him a natural choice to manage three of BMO’s ETF-based mutual funds. The BMO Tactical Dividend ETF Fund, BMO Tactical Global Growth ETF Fund and BMO Tactical Balanced ETF Fund provide investors the benefits of ETFs, but with an active management overlay. That management comes from Berman himself, who outlines his current strategy for the funds. “Normally when you are very late in an investment cycle like we are now, the highest risk areas for Canadians tend to be international markets – not necessarily the US, but emerging markets and international developed markets. You have currency risk there, and historically those markets have been more volatile.” That means the BMO Tactical Global Growth ETF Fund is underweight on emerging markets right now, as the potential upside
doesn’t justify the various risk factors. With the BMO Tactical Dividend ETF Fund, Berman looks to the type of companies – utilities, pipelines, telecom – that traditionally have provided the kind of dividends investors look for. “BMO has some great, speciality-type ETFs with a quality selection of all the best dividend payers, whether it is Canada, the US or internationally,” he says. “We have added a covered call strategy overlay to those ETFs to generate even more yield. When I’m playing defence in the portfolio, I want to generate the highest yield I can possibly get, and a covered call strategy helps us do that.” Fixed income is a particular area of expertise for Berman, and in overseeing the BMO Tactical Balanced ETF Fund, he has shifted his approach to reflect changing central bank policy. “I have been very cautious with my interestrate exposure, and that has paid off well over the past year,” he says. “At the moment, I am in
BMO TACTICAL ETF FUND RETURNS Fund
YTD
1 year
2 years
BMO Tactical Balanced ETF Fund – Advisor Series
1.5%
2.6%
4.9%
BMO Tactical Dividend ETF Fund – Advisor Series
-1.8%
3.1%
9.4%
BMO Tactical Global Growth ETF Fund – Advisor Series
-1.2%
3.8%
3 years
Since inception 2.7%
4.2%
6.5% 10.0%
Source: BMO Asset Management; annual compound returns as of February 28, 2018
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FACT FILE: LARRY BERMAN Position: Co-founder and chief investment officer of ETF Capital Management, the subadvisor to BMO Global Asset Management’s BMO Tactical Dividend ETF Fund, BMO Tactical Global Growth ETF Fund and BMO Tactical Balanced ETF Fund Background: Started his career as an investment advisor in 1989 and later completed a technical internship in New York with the Market Technicians Association, where he studied the techniques of Wall Street technicians
short-term corporate bonds in Canada; I also have a lot of cash, some floating-rate notes and some real-return bonds, which are much more suited to the late cycle we are in.” In the equities space, investors had something of a wake-up call in early February when the markets took a nosedive. This wasn’t too surprising to Berman, who believes the shock was a restoration of the natural order of things after a freakish 2017. “I think 2017 was the anomaly – the VIX Index measuring volatility in the S&P 500 was at its lowest level in about three decades,” he says. “What we are seeing now, with volatility in the 15% to 20% range, is more normal. What happened in February, the initial trigger for the move might have been geopolitical or interest rate concerns, but that in turn caused a lot of leverage in the volatility market itself.” The downturn was particularly painful for those investors who had been shorting volatility
ABOUT BMO GAM »» BMO Global Asset Management has nine of the top 10 ETF-based funds in Canada (based on AUM, as of December 31, 2017) »» It manages more than 20 ETF-based mutual funds »» BMO ETF Portfolios are six risk-differentiated, ETFbased managed solutions, an investment vehicle BMO GAM pioneered
throughout 2017 and made a lot of money doing so. It was a stark reminder of what can happen when complacency sets in, but Berman doesn’t foresee similar plunges anytime soon. There are a number of headwinds out there, however, which is something investors always need to keep in mind. “With the new chairman of the Federal Reserve, we have to see to what extent the new board will increase interest rates,” he says. “There are a lot of things coming together right now, and I expect this will mean more normal type of volatility, where the VIX Index is in the 15% to 20% range, with spikes higher through most of this year.” Berman is one of Canada’s most well known advocates for ETFs as a way to both generate alpha and protect a portfolio against increasing volatility. It’s why he founded ETF Capital Management in 2006 and why he now manages three of BMO’s ETF-based mutual funds. This side of the market has experienced explosive growth in Canada in recent years, and investors can now gain access through a mutual fund wrapper. “It makes sense to get a low-cost exposure to the index and make a decision about asset allocation, not securities selection,” Berman says. “That’s why I think ETFs are going to thrive in the coming decades. Asset allocation is the way to generate alpha in portfolios and lower volatility, compared to security selection.”
Education: Holds a bachelor’s degree in economics from York University, as well as the Chartered Market Technician [CMT], Chartered Financial Analyst [CFA] and US-registered Commodity Trading Advisor [CTA] designations Management: Prior to launching ETF Capital Management, Berman served as chief technical strategist and managing director for CIBC World Markets for nine years In demand: Berman lectures on behavioural finance and technical analysis around the world and is the host of Berman’s Call, the long-running call-in show for investors, on BNN The viewpoints expressed by the portfolio manager represents their assessment of the markets at the time of publication. Those views are subject to change without notice as markets change over time. Any statement that necessarily depends on future events may be a forward-looking statement. Forward-looking statements are not guarantees of performance. They involve risks, uncertainties and assumptions. Although such statements are based on assumptions that are believed to be reasonable, there can be no assurance that actual results will not differ materially from expectations. Investors are cautioned not to rely unduly on any forward-looking statements. In connection with any forward-looking statements, investors should carefully consider the areas of risk described in the most recent simplified prospectus. This article is for information purposes. The information contained herein is not, and should not be construed as, investment advice to any party. Investments should be evaluated relative to the individual’s investment objectives and professional advice should be obtained with respect to any circumstance. BMO Global Asset Management is a brand name that comprises BMO Asset Management Inc., BMO Investments Inc., BMO Asset Management Corp. and BMO’s specialized investment management firms. BMO Mutual Funds are offered by BMO Investments Inc., a financial services firm and separate legal entity from Bank of Montreal. Commissions, trailing commissions, management fees and expenses may be associated with mutual fund investments. Please read the fund facts or prospectus before investing. The indicated rates of return are the historical annual compounded total returns for the period indicated including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by any unitholder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. “BMO (M-bar roundel symbol)” is a registered trademark of Bank of Montreal, used under licence.
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6/04/2018 2:36:21 AM
PEOPLE
ADVISOR PROFILE
Emerging opportunities Victor Kuntzevitsky of Northland Wealth Management discusses how his search for returns has taken him beyond Canada’s borders
NAMED ONE of WPC’s Young Guns in 2016, Victor Kuntzevitsky has made great strides as an advisor since then. He joined Northland Wealth Management as an associate in 2012, and he has since been named vice-president of investment and portfolio strategy for the firm. “Since I was featured in Wealth Professional Canada, I obtained the CFA designation, which allowed me to invest on behalf of clients on a discretionary basis,” Kuntzevitsky says. “Once I know what their needs and objectives are, I can invest without asking every time, and that has enabled me to take on more responsibility and power at Northland.” Kuntzevitsky’s clients are mainly entrepreneurs, which meant he was especially busy in the lead-up to the recent federal budget. The government’s changes to passive investment income, in conjunction with a new tax regime south of the border, have led many businesses to seriously consider making a move to the US. According to Kuntzevitsky, Northland Wealth Management is among them – the firm is currently seeking the guidance of tax and legal experts to assess the feasibility of relocating. “The United States is a much more favourable jurisdiction to be based in,” he says. “Look at Florida, where if you are a business owner and the company pays you income, you don’t pay taxes on an individual basis. The corporate tax rate is only 21%, compared to
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as high as 30% in some provinces in Canada.” Relocating a business to a different country is not a decision to be taken lightly, but there are a number of precedents, Kuntzevitsky explains. “There was a big push a couple of years back when some of the pharmaceutical companies relocated to Ireland,” he says. “They were doing reverse takeovers – taking over small companies and using them as their head office for Ireland’s low corporate tax rate. The same thing is happening now with Canadian companies and the United States.” While tax planning is an important part of Northland’s service, it is in portfolio construction that Kuntzevitsky has really earned his spurs. Using public and private equity alongside alternative strategies, he adopts a longterm approach designed to safeguard his clients’ assets. Providing consistent returns is also vital, and increasingly, he’s been looking
outside of Canada to achieve that goal. “We are very much allocated to emerging markets; using a 10- to 50-year outlook, we believe the future of our world is in Asia – it is in China and in India,” he says. “That’s where we have significant allocations in our portfolios.” With a GDP of $11.8 trillion, China is expected to soon overtake the US as the world’s largest economy in terms of purchasingpower parity. Its transformation from agrarian nation to economic superpower is now being replicated in India, currently the sixth largest economy in the world. Growth in both countries is being facilitated by a burgeoning middle class, and given that each country has a population exceeding a billion people, they represent considerable investment potential in the coming decades. “We see huge opportunities through the public markets, buying ETFs and gaining
ADVICE COMES FIRST On its website, Northland Wealth Management doesn’t pull any punches when it comes to its competitors in the advisory space. The firm calls out banks and trust companies, saying “the institutions themselves [have] grown into a hub for the distribution of financial and investment products sold under the guise of advice.” Northland, in contrast, prides itself on providing genuine advice rather than a sales pitch. It’s what attracted Victor Kuntzevitsky to the firm in 2012 and why he remains there to this day.
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AN ALTERNATIVE STRATEGY FOR RETIREMENT SAVINGS The government’s move to restrict the earnings potential of passive income through corporations has sent investors scrambling for other avenues to save for retirement. In its recent newsletter, Northland Wealth Management highlighted individual pension plans as one such option.
With an IPP, contribution room increases with age, so the older you are, the greater contribution room you have
“Using a 10- to 50-year outlook, we believe the future of our world is in Asia – it is in China and in India. That’s where we have significant allocations in our portfolios” access to China, and the same for India,” Kuntzevitsky says. “The MSCI Index doesn’t track local shares in China, so we have exposed ourselves to those A-shares, trying to take advantage of the slow-moving train that is MSCI and FTSE indexing.” That opportunity extends to the private markets, too, especially in those sectors that correlate most with an expansion of the middle class, such as consumer discretionary and financials.
While the growth potential in China and India is no secret, Kuntzevitsky is spreading his net wider in the search for attractive returns. Most recently, that search brought him to the relatively underdeveloped economies of Indonesia, Malaysia and Thailand. “I think the middle class in all of Asia will do exceptionally well,” he says. “We really like Indonesia, Malaysia and Thailand due to their young population and access to information as the playing field evens out.”
In contrast, contribution room in RRSPs is held at a constant percentage of income (18%). The maximum amount one can contribute in a year, regardless of their income, is $26,010
To maximize the benefit of an IPP, a person should typically be in their 40s or 50s to ensure the contribution limits on the IPP exceed what they could save through an RRSP
A person should also have a high annual income to ensure they exceed their RRSP threshold; typically, annual income should be somewhere between $120,000 and $150,000
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FEATURES
SECTOR FOCUS: SERVICE PROVIDERS
Providing the right tools Some of the leading service providers in wealth management discuss how they’re responding to a constantly evolving industry BEING A financial advisor is an increasingly difficult proposition. Between regulatory creep, the rise of robo-advisors and the constant challenge of navigating market volatility, it’s a job that comes with its fair share of stress. That said, there are a lot of advantages to being an advisor in 2018 rather than 1988. While commissions might have been higher in those days, the tools available to an advisor right now would have seemed like science
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fiction 30 years ago. Technology has changed the industry insurmountably over the past two decades, and the pace of change shows no sign of slowing down – developments like AI and blockchain are set to further revolutionize the industry in the years ahead. Despite the various frustrations that go into being a financial advisor nowadays, it’s a very exciting time to be part of this profession. And while client expectations
may have risen, there is help out there to manage the workload. Canada is not short of highly capable service providers in the wealth management space. Of the companies featured here, some are pioneers, while others are trying to establish a foothold in the industry through hard work and innovation. They differ in scale, but all find common ground in making the life of advisors a little bit easier.
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CROESUS Established: 1987 Employees: 180 CEO: Remy Therrien Headquarters: Montreal Target market: Wealth management firms (brokerage, discount brokers, full-service brokers, financial planners, asset managers), financial services professionals (advisors, portfolio managers, executives, developers)
THERE ARE few service providers in the wealth management space with the lineage of Croesus. The company’s origin dates back to 1987, when engineering student Remy Therrien joined forces with an investment advisor to build software specifically for the purpose of portfolio management. The ambitious duo released the first DOS-based version of Croesus Advisor that same year; nine major releases have followed in the 31 years since. In that period, the platform has become the software of choice for some of Canada’s largest wealth management firms, including CIBC, TD Bank, National Bank, Richardson GMP, iA Financial and Desjardins. Clients of that calibre tend to have high expectations, so a commitment to innovation is deeply ingrained within the firm. For financial advisors in particular, the Croesus Advisor platform has evolved over the years to meet the needs of a profession that is constantly in a state of flux. One of those needs involves handling the increased burden of compliance, and David Mastroberardino, product director with Croesus, believes his firm is leading the industry in that respect. “We have always positioned ourselves as a portfolio management tool, and we integrate complementary features into that,” he says. “On a day-to-day basis, we focus on what the needs of the advisor are.” The back-office work that goes into being
“We have always positioned ourselves as a portfolio management tool, and we integrate complementary features into that. On a dayto-day basis, we focus on what the needs of the advisor are” David Mastroberardino, Croesus a financial planner is substantial, but it’s not the primary focus of the job. Advisors must justify and clearly explain their investment decisions to clients, which is where a product like Croesus Advisor can really prove its worth. “We bring in all the aspects of portfolio management, and that includes reporting to clients,” Mastroberardino says. “Rebalancing has become more and more of a requirement because firms are asking their advisors to do more with less. It’s in line with how the market has been moving to more
discretionary business, and less and less on the commission side.” The Croesus Advisor platform allows users to quickly calculate performance metrics for a portfolio in a way clients can easily understand. “It gives advisors a good idea of what is happening in the portfolios so they can understand and communicate to their clients,” Mastroberardino says. “There are different tools like performance at the position level, which shows why a particular position has had higher growth over a certain period. We also have features that compare
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FEATURES
SECTOR FOCUS: SERVICE PROVIDERS
Croesus’ reporting module offers more than 40 different customizable reports
the portfolio over two dates.” In providing platforms for financial advisors and huge financial institutions, Croesus is dealing with some pretty sensitive information, and safeguarding that information is central to its business proposition. Data security is currently a big issue across most industries, and that’s certainly the case in wealth management. “When I started 11 years ago, a lot of firms didn’t want their data on the cloud, whereas we have been using cloud before it was even a term,” Mastroberardino says. “It was in 2000 that we made the decision to go fully software as a service [SaaS].” A lot has changed over the past decade where technology is concerned, and the cloud has become the industry standard. While Croesus was a trailblazer in that respect, the challenge to remain one step ahead of hackers is always there.
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“All our clients are now on our servers, and definitely the security aspect has increased more and more over the years to the point where we now have a full-time chief security officer,” Mastroberardino says. “We are verified by Deloitte annually for different security aspects, and it’s not just the security of the database – it is procedures, to the point that they verify to see if we keep logs on people who come and visit us at our front desk. It is that level of granularity.” Such attention to detail is usually a prerequisite for being an industry leader. Another requirement is ensuring that your products aren’t just up-to-date, but consistently ahead of the curve. Remy Therrien knew that back in 1987 when he started the company, and it remains a key priority for Croesus today. Mastroberardino believes innovation in the industry will have a number of key drivers. “It is going to be along the lines of
artificial intelligence – it could be using natural language processing, deep learning and machine learning. Blockchain we are starting to see in our industry as well.” Blockchain is already revolutionizing data transfer, but its full capabilities are yet to be realized. It’s a challenging time to be releasing new products, but Croesus is committed to doing just that. Last November it launched Croesus Data Analytics, which will have two versions: one for executives and another for advisors. The advisor version is coming later this year and will allow users to “understand what their book is and what is driving it – and also how they compare to their peers,” Mastroberardino says. It’s a useful addition to the more operational Croesus Advisor tool, and one that should ensure the company maintains its position as service provider of choice for many of Canada’s top advisory firms.
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WEALTHBAR Established: 2014 Employees: 28 CEO: Tea Nicola Headquarters: Vancouver Target market: Canadian investors WHEN ROBO-ADVISORS first started to gain traction in the marketplace, many predicted a doomsday scenario for the advisory business. Since then, several of the main robo-advisors have expanded their scope, and advisors are now their potential customers rather than competitors. Wealthbar, the brainchild of Tea Nicola, is an example of the new breed of digital advisory firm that has much grander ambitions than simply disrupting the status quo. “We offer the WealthBar robo-advisor platform as a white-label service for independent financial advisors and advisors from related industries like insurance,” Nicola says. “This allows those third-party advisory firms to provide the added online convenience of online investing, with access to unlimited financial advice and portfolios with lower fees, lower risk and an income stream in retirement.” The rise of the robo-advisor is inextricably linked to the push for lower fees across wealth management. Many consumers now expect not only to receive great service for less money, but also for that service to be much faster and more convenient. As Nicola explains, that’s where a company like WealthBar comes in. “Advisors are under increasing pressure to be able to offer convenient online service,” she says. “They need to be able to offer that without reducing the perceived value of their own service. That’s why we see our role as a partner to accentuate their value.” Those words should offer solace to any advisor worried that the introduction of digital advice will ultimately negate the need
“Advisors are under increasing pressure to be able to offer convenient online service. They need to be able to offer that without reducing the perceived value of their own service” Tea Nicola, WealthBar for human advisors. It’s a common misconception about this burgeoning sub-section of wealth management, Nicola explains. “There is some confusion in the marketplace as to the definition of a roboadvisor,” she says. “This confusion is understandable, but it is a challenge to overcome. The robo-advisor sector is far bigger in the US, and it is there that it is most associated with automation, AI and portfolios that may have minimal management by actual humans. But our model is different. “WealthBar was a pioneer in the Canadian robo-advisor space,” she continues. “In our case, the ‘robo’ in robo-advisor simply refers to our use of technology and software. We use it to improve the online experience and offer access to high-quality portfolios while charging lower fees.” In addition, the firm uses CFAs and portfolio managers who provide unlimited, no-commission financial advice – a far cry
from the perception of robo-advisors as a fully automated, computer-controlled service.
MAXIMIZER Established: 1987 Employees: 100 CEO: Vivek Thomas Headquarters: Vancouver Target market: Financial advisors, wealth managers, insurance advisors, benefits administrators ALSO MARKING its 31st year in business, Vancouver-based Maximizer credits its longevity to its ability to collaborate. In creating and updating its CRM for Financial Advisors product, the firm maintains regular contact with its target market.
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FEATURES
SECTOR FOCUS: SERVICE PROVIDERS
FUNDSERV Established: 1993 Employees: 100 CEO: Karen Adams Headquarters: Toronto Target market: Asset managers and distributors of investment funds in Canada
“Our CRM has been developed in partnership with a board of advisors from across Canada,” says Jan Carter, Maximizer’s head of product and development. “Their input has been instrumental in ensuring our solution’s capabilities and functionalities are tailored to handle the everyday business processes of advisors and their support teams.” Just as an advisor’s job is constantly evolving, so too must the programs they use. In this respect, Maximizer is proud of its ability to move with the times. “With automatic updates to our cloud solution throughout the year, customers don’t have to work to access new features,” Carter says. “This enables us to adjust seamlessly to the accelerating changes within the financial advice industry.” Advisors’ jobs are far from easy in 2018, and the role comes with plenty of frustrations. It’s a major part of Carter’s job to understand those frustrations and develop tools to address them. “Whether they’re seeking information about a client they’re meeting that afternoon or planning who they need to engage next month, advisors want all their information in one place,” he says. “Efficiency is absolutely critical, and data silos and disjointed solutions frustrate that efficiency.”
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Providing financial advice is becoming more challenging, and supplying software programs to the industry has become a difficult proposition, too. Information has never been more readily available to investors, but that’s both a positive and a negative. “Businesses require clean, centralized intelligence before they can adapt a more proactive, less reactive approach,” Carter says. “To that end, we’re constantly striving to help customers with process efficiency for data collection and data management.” That requires a lot of trust from the firms in question, he adds. “Access to back-office systems remains challenging. Companies run a diverse range of programs with varied levels of access permitted by their IT department.” After more than three decades in business, Maximizer has established itself as a service provider with staying power. In an industry where inertia isn’t tolerated, it’s Carter’s responsibility to make sure the company remains innovative. “Artificial intelligence promises to transform many industries, including financial services,” he says. “Every aspect of an advisor’s operations, from client management through to financial planning, will benefit from deepened client insight and notifications on who needs to be engaged next.”
WHILE FUNDSERV’S primary clients are some the country’s largest asset managers, advisors are another important market for the platform, which allows manufacturers, distributors and intermediaries to buy, sell and transfer investment funds. “[Advisors] are able to place orders on their distributor back-office system, and we route them to the appropriate manufacturer,” says Genevieve Groat, chief relationship officer at Fundserv. “We also have a system called Myserv that enables advisors and their assistants to look up client transaction history, request duplicate tax receipts, find
“We hear from advisors that they would like better technology solutions to help them deliver fast and effective service. This includes electronic signatures, more automated processes, less paper” Genevieve Groat, Fundserv
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adjusted cost bases, track PACs and SWPs, and more.” Advisors need to ensure all their ducks are in a row regarding record-keeping. Companies like Fundserv ensure that any transaction on a mutual fund or ETF has a paper trail and is easily accessible for any interested party. “We refreshed Myserv three and a half years ago after holding focus groups with advisors and assistants,” Groat says. “This resulted in new features they say they can’t live without. We also meet regularly with the industry to discuss potential enhancements to our entire product offering to ensure we offer the best solutions for our members.” New innovations can become out-of-date very quickly, so it’s imperative that forwardthinking companies remain at the cutting edge of the industry. That means maintaining frequent contact not just with clients, but also other companies in the space. “We hear from advisors that they would like better technology solutions to help them deliver fast and effective service,” Groat says. “This includes electronic signatures, more automated processes, less paper. Part of Fundserv’s role is to collaborate with other service providers to make it easier for advisors to serve Canadians.” Celebrating its 25th year in business in 2018, Fundserv continues to record impressive growth. Last year it set a record for assets under management and transaction volume, and Groat is confident the firm can continue in that vein. “Our biggest opportunity for success is through communication,” she says. “Most problems can be solved or avoided with more and better communication.” Fundserv also remains committed to enhancing its suite of product offerings. “We are continually working with our partners to expand the functionality of Fundserv’s existing products and services,” Groat says. “We are always looking for ways to collaborate with other service providers, and with everyone in the fund industry, in order to ultimately improve the experience for advisors.”
STICKY ADVISOR Established: 2010 Employees: 3 CEO: Justin Giesbrecht Headquarters: Kelowna, BC Target market: Small-office advisors, advisors just starting out and seasoned advisors
TO BE A successful financial advisor, accuracy is essential. When dealing with a person’s finances, errors are rarely tolerated. No human is infallible, however, and that goes for financial advisors, too. Fortunately, there are tools out there that make the likelihood of making mistakes much less of
advisors and financial planners to focus on their own business, safe in the knowledge that their clients’ records are in good hands. Sticky Advisor provides a resource library, along with fillable PDF forms that are automatically populated with client data when opened. “We believe one of the biggest frustrations with advisors when coming to a new CRM is trying to figure out a new product and how it will enhance their day’s work,” Giesbrecht says. “There are so many working pieces.” To develop a CRM system that advisors value, Giesbrecht stays on top of major developments in the industry. The emergence of fintech over the past decade is one such change, and he believes this trend will only accelerate in the years ahead. “I believe [fintech firms] are trying to expand their product offerings to try to
“We take some of the guesswork out of who needs to be contacted next with our ‘one-click follow-up’ system. This is just one of the ways we help speed up the workflow of advisors’ daily activities” Justin Giesbrecht, Sticky Advisor a factor. Sticky Advisor, the brainchild of Justin Giesbrecht, is one such tool. This online assistant takes on much of the tedious form-filling that is necessary with this profession, allowing the advisor more time to focus on clients. “We provide an online customer relationship management platform,” Giesbrecht says. “We take some of the guesswork out of who needs to be contacted next with our ‘one-click follow-up’ system. This is just one of the ways we help speed up the workflow of advisors’ daily activities.” The firm’s managed solutions enable
capture more of the market,” he says. “It might not be a direct development, but it might be a purchase of another company to help them expand their territory.” Giesbrecht, however, believes it’s better to grow a business organically. Now celebrating its eighth anniversary, Sticky Advisor is a perfect example of this. “It’s not essential to always provide new products, but it’s essential that each feature you provide is to the best of your ability,” he says. “We are always tweaking the platform. They might not be brand-new features, but they help speed up workflows.”
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SPECIAL PROMOTIONAL FEATURE
INDUSTRY OUTLOOK
The changing face of advice Steele Investment Management’s father-son advisor team, Clarke and Morgan Steele, discuss how investment management has evolved in recent years IT’S NOT uncommon to see people follow their parents into the advisory business. The right mentorship is crucial for a young advisor’s development, but that isn’t always so easy to come by. Joining the family business reduces the pressure to build a book of business right away, thus allowing an advisor the chance to really learn their trade. One of Wealth Professional Canada’s 2018 Young Guns, Morgan Steele joined his father, Clarke, at Steele Investment Management Group in 2014. In doing so, he had immediate access to a wealth of experience. Clarke Steele started his career 38 years ago with Moss Lawson, in what was a very different time for the advisory business. “It was transactional and a lot of coldcalling,” he says. “The way the business has evolved in terms of a whole financial plan and holistic solutions – that’s a big difference. I was early to fee-based; I started switching my business in 2000, and by 2001 I was 99% fee-based.” The shift away from embedded commissions continues to be a hot-button issue in the advisory space. The fee-based model is often criticized as being particularly unforgiving to those starting out. Clarke Steele was already well established in his practice when he decided to change his compensation model, having joined Richardson Greenshields from Dean Witter Canada in 1991. For him, a fee-based model made conversations with clients much easier.
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“We didn’t want anyone thinking we were trading just to have the commission, so we decided to have a fee, which was tax-deductible in a regular account,” he says. “It eliminates conflicts of interest and makes sure our advice is looked at for what it is, which is good advice.”
boomers, who have most of the money, and then there are the millennials, who haven’t really been saving. When you are 30 years old trying to get a new client, it’s tough to find someone your own age with money to invest. So you’re going after guys who are 55 or 60, but there’s a stigma about giving money to a
“When you are 30 years old trying to get a new client, it’s tough to find someone your own age with money to invest. So you’re going after guys who are 55 or 60, but there’s a stigma about giving money to a younger advisor” Morgan Steele, Richardson GMP Although Morgan would ultimately join his father’s firm, he didn’t do so right away. A commerce graduate of Dalhousie University, he wanted to learn other aspects of the investment industry before putting down roots. He worked with both Radin Capital Partners and IA Clarington Investments before arriving at Richardson GMP four years ago. Despite having an impressive resume, Morgan recognizes the difficulties young advisors face in trying to establish themselves. “There is a big gap between the savers in the economy,” he says. “You have the baby
younger advisor.” It’s a stigma Morgan is doing his best to overcome. A CFA charterholder, he became a portfolio manager this year. Responsible for asset allocation at Steele Investment Management, he also oversees due diligence on alternative assets, credit and equities, as well as option strategies. Alternative products are an important part of Morgan’s investment strategy, and depending on the client, he likes to use a number of different products, including international equity hedge funds, life insurance
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settlements, specialized mortgage lending and real estate. His investment strategy is always evolving, as he believes the old way of doing things is becoming obsolete. “A lot of clients are stuck to that 60-40 aspect, and that was great when we had 30 years of declining interest rates,” Morgan says. “If you look at the CPP, it had 73% in bonds in 2001, and that’s about 16% today. There is no way you can have 40% in bonds, especially when a client is asking for low volatility. In a rising-rate environment, you are going to have huge swings in bond prices.” Those three decades of declining interest rates played a significant part in the growth of Steele Investment Management. After Black Friday in 1987, Clarke Steele decided to concentrate on fixed-income strategies, specifically Government of Canada bonds that proved highly tax-efficient for his clients. That strategy served him well in the ’90s and 2000s, but everything changed with the financial crisis. “What Markowitz and Sharpe found with the efficient frontier and modern portfolio
“There’s a lot of noise out there, so if you can find an advisor who can help cut out the noise and keep you focused on a clearer path, that’s where there is value in advice” Clarke Steele, Richardson GMP theory, all of a sudden some of those things weren’t working anymore,” Clarke says. “They looked at one standard deviation or maybe two, and then we had 2008-09 happen, which went further than they ever imagined.” That crash required advisors and investors to change tack. Achieving returns remains the central point of investing, but not at the cost of loading on risk. “It was a pretty scary time in terms of the financial system almost failing, and that hasn’t happened since the Depression,” Clarke says. “Out of that, the business is better and stronger, and there are a lot of good things that have
happened for clients, for advisors, for firms.” In early February, investors had a little taste of the dark days of 2008 as the markets took a dive. Equities have largely bounced back since then, but it was a useful reminder of the value of sound financial advice. “You see ads for Wealthsimple and roboadvice, but investing is not simple,” Clarke says. “The access to information is everywhere, so it can get confusing, especially if you turn up the volume. There’s a lot of noise out there, so if you can find an advisor who can help cut out the noise and keep you focused on a clearer path, that’s where there is value in advice.”
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WEALTH PROFESSIONAL AWARDS FINALISTS 2O18
BROUGHT TO YOU BY
Thursday, May 31 The Liberty Grand, Toronto Wealth Professional Canada is proud to present the finalists for the fourth annual Wealth Professional Awards, brought to you by Invesco Canada
A record number of nominations came in from across the nation to acknowledge the best and brightest companies, teams and individuals in wealth management. Together with our publisher, Key Media International, WPC would like to thank our community of readers and our event sponsors who continue to make this event a success year after year. Join us as we announce the winners and celebrate our industry’s successes at a glamorous black-tie awards gala hosted by TV celebrity Jessi Cruickshank on May 31, 2018, at The Liberty Grand in Toronto. To book a table today, contact events@keymedia.com.
OFFICIAL PUBLICATION
BROUGHT TO YOU BY
AWARD SPONSORS
First Trust
Portfolios Canada
®
50 www.wealthprofessional.ca
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THE CI INVESTMENTS AWARD FOR
THE FRANKLIN TEMPLETON INVESTMENTS AWARD FOR
THE AGF AWARD FOR
(FEWER THAN 10 STAFF)
TOP ADVISOR OFFICE (10 STAFF OR MORE)
ENGAGEMENT, LOYALTY AND CLIENT CARE
yy Caring For Clients
yy Harbourfront Wealth
yy Capitalium Advisors
TOP ADVISOR OFFICE
yy CWP Financial Services Sun Life Financial
yy Popowich Karmali Advisory Group CIBC Wood Gundy
yy Racine-Marcotte Advisory Group
RBC Dominion Securities
yy Summit Private Wealth Mandeville Private Client
yy The Latremoille Group Richardson GMP
yy Tina Tehranchian Team Assante Capital Management
yy WCBG Wealth
Management and Planning Consultants
yy White LeBlanc
Wealth Planners HollisWealth
Management
yy Lawton Partners yy Manulife Securities 4101 Yonge Branch
yy Nicola Wealth Management
yy Northland Wealth Management
yy Polson Bourbonierre Derby HollisWealth
yy PWM Private Wealth Counsel HollisWealth
yy RGF Integrated Wealth Management
yy DFS Private Wealth Mandeville Private Client
yy Kalamaras Wealth Management
Mandeville Private Client
yy Kaspardlov & Associates
Manulife Securities
yy Little Wealth
Management Group HollisWealth
yy Masterpiece Financial yy Nour Private Wealth
yy PWM Private
Wealth Counsel HollisWealth
yy T.E. Wealth
yy The McClelland
yy Wise Riddell Financial Group
yy White Hewson Wealth
iA Financial Group
THE INVESCO CANADA AWARD FOR
LIFETIME ACHIEVEMENT IN THE INDUSTRY This accolade will be awarded to an individual who has contributed profoundly to the Canadian wealth management and financial planning industry. The recipient will be a professional who has made impactful and enduring contributions to the industry throughout his or her career and who has a long, established history of distinguished service, leadership and inspiration to others.
Financial Group
Assante Capital Management
Advisory Group
National Bank Financial
The award recipient will be announced at the ceremony on May 31
yy Woodgate Financial IPC Securities Corporation
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WEALTH PROFESSIONAL AWARDS FINALISTS 2O18 THE MANDEVILLE PRIVATE CLIENT INC. AWARD FOR
ADVISOR OF THE YEAR yy Alexandra Horwood Richardson GMP
yy Chad Larson
MLD Wealth Management, Canaccord Genuity Wealth Management
yy Elie Nour
Nour Private Wealth
yy Joseph Balsamo
The Balsamo Financial Group, CIBC Wood Gundy
yy Kevin Hegedus
PWM Private Wealth Counsel
yy Kyle Richie
Richie Group, Investors Group
yy Michael Prittie
Capital Wealth Architects, Mandeville Private Client
yy Paula Ives
RBC Dominion Securities
yy Robert McClelland
The McClelland Financial Group
yy Robert Roby
Family Tree Wealth Management, IPC Securities Corporation
yy Wes Ashton
THE ISHARES BY BLACKROCK AWARD FOR
PORTFOLIO/ DISCRETIONARY MANAGER OF THE YEAR yy Arthur Salzer
Northland Wealth Management
yy Colin Ryan
BMO Nesbitt Burns
yy Francis Sabourin
Sabourin Deraspe Wealth Management, Richardson GMP
yy François Têtu
RBC Dominion Securities
yy Jay Nash
Nash Family Wealth Management, National Bank Financial
yy John Duke
RBC Dominion Securities
yy Michael Anderssen
TD Wealth Private Investment Advice
yy Olivia Woo
Mawer Investment Management
yy Paul Harris
Avenue Investment Management
yy Susyn Wagner CIBC Wood Gundy
yy William Vastis
RBC Dominion Securities
Harbourfront Wealth Management
THE FIRST TRUST AWARD FOR
YOUNG GUN OF THE YEAR
THE CI INVESTMENTS AWARD FOR
MULTI-SERVICE ADVISOR OF THE YEAR
yy Adam Schacter
yy Brad Jardine
yy Andrew Feindel
yy Catherine Hurlburt
CIC Financial Group
Mandeville Private Client Richie Group, Investors Group
yy Andrew Kirkland
Integrated Planning Group, Assante Capital Management
yy Charles Jiang
Justwealth Financial
Queen Financial Group
yy Andrew Lorriman
yy Christopher Rawles
Turner Lorriman Sturgeon Wealth Management Group, National Bank Financial
RT Mosaic Wealth Management
yy Duane Francis
yy Colin Reid
Mandeville Private Client
Aligned Capital Partners
yy Guido Camaiani
yy Eric Bennett
Skyview Private Wealth, Mandeville Private Client
ScotiaMcLeod
yy Grant White
yy Jason Pereira
yy Jason Melo
yy Jennifer Black
yy Sean Moir
yy Joseph Nguyen
yy Thomas Cook
yy P.J. Brooks
White Hewson Wealth Advisory Group, National Bank Financial
Woodgate Financial, IPC Securities Corporation DFS Private Wealth, Mandeville Private Client
Kruzel Wealth Counsel, Richardson GMP
CIBC Imperial Service
Mandeville Private Client Affinity Securities, Worldsource Securities/Affinity Financial Group
yy Victor Kuntzevitsky
Northland Wealth Management
Investors Group
yy Paul Manders
JMRD Wealth Management Team, National Bank Financial
yy Wolfgang Klein
Canaccord Genuity Wealth Management
AWARD SPONSOR
AWARD SPONSOR
AWARD SPONSOR
AWARD SPONSOR
First Trust
Portfolios Canada
®
52 www.wealthprofessional.ca
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THE NINEPOINT PARTNERS AWARD FOR
THE EXCEL FUNDS AWARD FOR
THE NEI INVESTMENTS AWARD FOR
BEST ADVISOR, ALTERNATIVE INVESTMENTS
OUTSTANDING GLOBAL ADVISOR OF THE YEAR
yy Arthur Salzer
yy David Esch
yy Aaron Ruston
yy George Halkidis
yy Francis Sabourin
yy Alicja Brown
Northland Wealth Management Richardson GMP
yy Jamie Suprun
Suprun Wealth Management, HollisWealth
yy Kevin Haakensen
PWM Private Wealth Counsel
yy Klint Rodgers
Pinnacle Wealth Brokers
yy Mark Samborski
Pinnacle Wealth Brokers
yy Mark Winson
Wise Riddell Financial Group
National Bank Financial Sabourin Deraspe Wealth Management, Richardson GMP
yy François Têtu
EXCELLENCE IN RESPONSIBLE INVESTMENT
Purposed Financial Corp. Remy Brown Investment Group, CIBC Wood Gundy
THE MACKENZIE INVESTMENTS AWARD FOR
FEMALE TRAILBLAZER OF THE YEAR yy Barbara Stewart
Cumberland Private Wealth Management
yy Carolyn Seaforth Pinnacle Wealth Brokers
yy Carol Smith
yy Diane Nash
yy Jonathan Hera
yy Laurie Bonten
yy Leslie G. Cliff
yy Laurie Stephenson
yy Leony deGraaf
yy Michael Kuzik
yy Michael Silicz
yy Nathalie Racine
yy Patti Dolan
yy Rona Birenbaum
yy Stephen Whipp
yy Shannon Straathof
yy Sterling Rempel
yy Susan Andrighetti
RBC Dominion Securities
yy Himalaya Jain
The Rosedale Group, Scotia Wealth Management Genus Capital Management RBC Dominion Securities
yy Nick Bakish Richardson GMP
Desjardins Financial Security Investments Marigold Capital
Starboard Wealth Planners
The Silicz Birdsall Advisory Group, National Bank Financial SAGE Connected Investing
yy Paul Tyers
Wealth Stewards
Leede Jones Gable
Future Values Estate & Financial Planning
Nash Family Wealth Management, National Bank Financial Wellington-Altus Private Wealth deGraaf Financial Strategies Racine-Marcotte Advisory Group, RBC Dominion Securities Caring for Clients; Viviplan HollisWealth
CIBC Wood Gundy
yy Susan Latremoille The Latremoille Group, Richardson GMP
yy Tina Tehranchian
The Tina Tehranchian Team, Assante Capital Management
yy Yasmin Gordon
The Gordon Group, Canaccord Genuity Wealth Management
AWARD SPONSOR
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WEALTH PROFESSIONAL AWARDS FINALISTS 2O18 THE NATIONAL BANK FINANCIAL AWARD FOR
OUTSTANDING PHILANTHROPY & COMMUNITY SERVICE yy Aaron Ruston
Purposed Financial Corp.
yy Brian Jones TD Wealth
yy Chad Larson
MLD Wealth Management, Canaccord Genuity Wealth Management
yy Colin Ryan
BMO Nesbitt Burns
yy Mark Winson
Wise Riddell Financial Group
yy Nicola Wealth Management yy PWM Private Wealth Counsel HollisWealth
yy Renee Rebelo
Life Coach Financial Strategies
THE RBC GLOBAL ASSET MANAGEMENT AWARD FOR
ETF CHAMPION OF THE YEAR yy Chad Larson
MLD Wealth Management, Canaccord Genuity Wealth Management
THE FUNDSERV AWARD FOR
ADVISOR NETWORK/ BROKERAGE OF THE YEAR
yy BlackRock
yy Canaccord Genuity Wealth Management
yy Canoe Financial
yy CIBC Wood Gundy
yy Ken MacNeal
yy HollisWealth, Industrial Alliance Securities
yy Nathalie Racine
yy Investment Planning Counsel
Richardson GMP
Racine-Marcotte Advisory Group, RBC Dominion Securities
yy Ray Dragunas
Ray Dragunas Investment Consulting
yy Shafik Hirani
Aligned Capital Partners
yy Wolfgang Klein
Canaccord Genuity Wealth Management
yy Dynamic Funds yy Fidelity Investments yy Franklin Templeton Investments yy iA Clarington Investments
yy Mandeville Private Client
yy Invesco Canada
yy National Bank Financial yy Odlum Brown yy RBC Dominion Securities yy TD Wealth
RBC Dominion Securities
yy CI Investments
yy Investors Group
yy ScotiaMcLeod
yy Sean Baylis
FUND PROVIDER OF THE YEAR
yy BMO Nesbitt Burns
yy Doug Rowat
Turner Investments, Raymond James
THE EQUISOFT AWARD FOR
yy Mackenzie Investments yy Manulife Financial yy NCM – Norrep Capital Management yy RBC Global Asset Management yy TD Asset Management
yy Stephen Booker
Milestone Asset Management, Canaccord Genuity Wealth Management
yy Tina Tehranchian
The Tina Tehranchian Team, Assante Capital Management
AWARD SPONSOR
AWARD SPONSOR
AWARD SPONSOR
AWARD SPONSOR
54 www.wealthprofessional.ca
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THE RADIUS FINANCIAL EDUCATION AWARD FOR
THE WPC MAGAZINE READERS’ CHOICE AWARD FOR
CEO OF THE YEAR
RISING STAR ADVISOR OF THE YEAR
yy AGF Investments
yy Angela Pecoraro
yy Chelsey Chartren
yy BMO Nesbitt Burns
yy Blake Goldring
Brand campaign
AGF Management
yy Canadian Securities Institute
yy Edward Jones
yy Daniel Daviau
yy Capco Canada
yy Franklin Templeton Investments
yy Darcy Hulston
yy Dian Chaaban
yy Duane Green
yy Farialle Pacha
BEST INDUSTRY SERVICE PROVIDER yy Advicent yy Advisor Websites yy Aequitas NEO Exchange
yy Croesus yy Equisoft yy Foran Financial Institute yy PriceMetrix yy Sticky Advisor yy Univeris
BEST ADVERTISING CAMPAIGN “Invested in Discipline”
“Know More”
Franklin LibertyShares/ “The Human Factor”
yy Horizons ETFs Management
ETF educational campaign
yy Mackenzie Investments “Confidence in a Changing World” 50th anniversary campaign
yy RBC Global Asset Management “Personally Invested”
yy TD Asset Management “Follow a Leader”
Advicent
Canaccord Genuity Group Canoe Financial
Franklin Templeton Investments
yy Greg Romundt
Centurion Asset Management
yy Karen Adams Fundserv
yy Peter Intraligi Invesco Canada
yy Som Seif
Purpose Investments
yy Steve Hawkins
Horizons ETFs Management
The McClelland Financial Group, Assante Capital Management
yy Danielle Spierenburg Kruzich Leonard Wealth Management Group, Richardson GMP
RBC Dominion Securities Kaufman Wealth Group, Richardson GMP
yy Jeff Gallant
CIBC Wood Gundy
yy Jeff Letchford
Skyview Private Wealth, Mandeville Private Client
yy Kyle MacDonald Gallant MacDonald, CIBC Wood Gundy
yy McKenzie Esposito Esposito Advisory Team, National Bank Financial
yy Ravi Nagraj
RBC Wealth Management
yy Trevor Theobald
CWP Financial Services, Sun Life Financial
yy Zena Amundsen
Astra Financial Services
AWARD SPONSOR
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C ANADA
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WEALTH PROFESSIONAL AWARDS FINALISTS 2O18
BDM/ WHOLESALER OF THE YEAR
DIGITAL INNOVATOR OF THE YEAR
yy Aleks Sui
yy Broadridge Financial Solutions
yy Charles Bendaly
yy Great-West Life
yy Christopher Matugas
yy Monarch Wealth Corporation
Invesco Canada Manulife Investments CI Investments
yy David Bear
Natixis Investment Managers
yy David R. Clarke
BMO Global Asset Management
yy Jeff McDaid NEI Investments
yy Jennifer Boros
Natixis Investment Managers
yy Nancy Bacon
yy RBC Global Asset Management/ MyAdvisor
The winners of the 2018 Wealth Professional Awards will be selected by our independent panel of judges:
GREG POLLOCK President and CEO Advocis
NANCY ALLAN Executive director Independent Financial Brokers of Canada
ERIC KIRZNER Professor of finance Rotman School of Management
APRIL RUDIN Founder and president The Rudin Group
yy Scotiabank/Scotia Wealth Management yy Viviplan yy WealthBar Financial Services/PPI Valet
Chase Alternatives
yy Philip Douglas
Horizons ETFs Management
yy Raffi Missakian
First Asset, CI Financial
yy Warren Miles-Pickup Sun Life Global Investments
yy Zachary A. Sikorski Sun Life Financial
Join the judges, finalists and top wealth professionals when we announce the winners live at the 2018 Wealth Professional Awards ceremony on Thursday, May 31, 2018 The Liberty Grand Toronto To reserve your place, visit wpawards.ca or email us at events@keymedia.com
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WPLT
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WHY ATTEND: Engage with other financial advisors through facilitated networking opportunities including our luncheon technology showcase Gain exclusive insights from international experts and Canadian industry leaders into latest developments and technological advances in Canadian wealth management Take your wealth management firm to the next level by effectively embracing technology and innovation Actively participate and exchange ideas with other financial advisors in a series of practice management and technology panel discussions
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wealthprofessionalsummit.ca WPLT Summit_FP 50-57_WPA18 Finalist AdAnnouncement for WPC 6.03.indd Spread-SUBBED.indd 48 57
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FEATURES
MANAGEMENT
Five signs your employees don’t care anymore From absenteeism to poor-quality work, leadership expert Karen Gately identifies the warning signs of employee disengagement and what you can do about them PUT SIMPLY, engagement is the extent to which people feel connected with and committed to their job, team and organization. Being connected is most clearly reflected in the emotional ownership people feel – in other words, how much they really care about achieving their own objectives as well as about the success of their team. The ultimate indication of disengagement is when it results in a decision to leave the job. While some people will stay in a role they’re not happy in, most will eventually choose to look for a new and better opportunity elsewhere. Of course, some people leave feeling satisfied with their employment experience, but the reality is that many don’t. Inspiring people to build a career rather than simply do a job is an important challenge for leaders. Most people move on because they are looking for something they don’t have or can’t get where they are. Whether that’s a more interesting or challenging job, more money, a greater work–life balance, or a healthier workplace culture, the reasons people choose to leave are many and varied.
How to spot disengagement The five most common signs of disengaged employees include:
and unplanned leave. Most people find it much harder to get out of bed and go to work when they are dreading what’s waiting for them when they get there. 2 Lack of discretionary effort
1 Absenteeism
Absenteeism involves high rates of frequent
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Discretionary effort is defined as what people do because they want to, not because they feel
obligated to. Disengaged people typically do only what they have to do to keep their job. Some deliberately limit their contributions in silent protest at their unhappiness. 3 Absence of teamwork
People who are disengaged will often fail to work well with other people. Those who
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are engaged will often find their disengaged colleagues frustrating and a roadblock to success. The potential for these frustrations to escalate into conflicts is very high. 4 Suboptimal productivity
Simply focusing on the task at hand, let alone driving to achieve optimal results, is a challenge for disengaged staff. While they struggle to find energy and focus, their job is not getting done. 5 Poor-quality work
Errors, overlooked priorities and missed deadlines are just a few examples of the impacts disengagement has on the standard of performance achieved.
Common challenges in small business Keeping people engaged in a small business environment can be especially difficult. Among the most common challenges leaders face include: Providing rewarding careers. Often small businesses are not in a position to offer the career advancement people are looking for. Looking for and providing opportunities for people to learn and grow with the business are critical challenges. Investing the time needed to help people feel valued and supported. Often leaders in small businesses have a heavy individual workload to manage. The demands of service delivery, business growth and financial management make spending time with staff challenging. Typically, this leads to inadequate focus on the essentials of people management: providing clarity, coaching and accountability.
a common mistake leaders make. Each person is unique, and to influence their commitment takes understanding of what makes them tick. As I share in my latest book, The People Manager’s Toolkit, the most important thing any leader can do to improve engagement is focus on the spirit of their team. Our spirit is the positive energy that we have in reserve and draw on to get our job done. People who are energized typically choose to behave in ways that enable success. Conversely, when people are drained, they become more likely to disengage and behave in ways that undermine not only their own success, but also that of their team. The
Identifying and accepting the fact that you have a staff engagement issue is the first step toward overcoming it. Choosing to do something about it is the next. The leaders I work with are typically frustrated by the demands on their time and energy of having to deal with performance issues, and all too often they fail to act. Overlooking or avoiding obvious signs of disengagement is
How people feel about what they and their organization contribute to the world matters. Doing a job that has an altruistic purpose energizes many people, while others derive purpose and meaning from the harmony between their values and those of the organization they work for. Still other people want to feel like they’re a part of something bigger than themselves or are contributing to their organization’s success. 4 Belief
The strength of our belief is reflected in how we feel about the future and our ability to influence that future. Examples of the types
Feeling valued, qualified, capable and successful are powerful energizers and drivers of engagement. Influence people to feel valued, and they are more likely to remain connected with their job and your business following are four common influencers of a person’s spirit and therefore engagement at work. 1 Sense of personal value
How we feel about ourselves, as well as how we believe others feel about us, energizes or drains our spirit. Feeling valued, qualified, capable and successful are powerful energizers and drivers of engagement. Influence people to feel valued, and they are more likely to remain connected with their job and your business. 2 Relationships
Driving engagement
3 Purpose and meaning
The quality of our relationships with our boss, colleagues, staff, clients, service providers, etc., influence the way we feel about being at work. When we trust and respect the people we work with, we are more likely to be engaged. Contemplate for a moment the people who inspire you to give your all. Equally, reflect on those who cause you to minimize your efforts and do no more than you have to.
of positive emotions we want people to feel include being hopeful, optimistic, confident and empowered. Make engagement matter. Hire and retain people who want to be there, understand your team and deliberately influence the things that energize their spirit, and you are well on your way to overcoming most causes of disengagement. As a leader, there is a lot you can do to influence the engagement of your team, but only so much. Expect people to also take ownership of their own spirit and level of engagement. As the age-old saying goes, you can lead a horse to water, but you can’t make it drink.
Karen Gately is a leadership and people management specialist and a founder of Ryan Gately. She works with leaders and HR teams to drive business results through the talent and energy of people. Gately is the author of The People Manager’s Toolkit: A Practical Guide to Getting the Best from People and The Corporate Dojo: Driving Extraordinary Results Through Spirited People.
www.wealthprofessional.ca
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FEATURES
VIRTUAL WORKFORCE
How to build a virtual workforce From cutting costs to freeing up advisors to meet clients, ditching the office has a lot to offer if you can get it right, explains virtual working expert Ruth MacKay THE TRADITIONAL boundaries of officebased work no longer apply in the modern business environment. Thanks to the proliferation of mobile technology, professionals can now work from home, on the road, in their favourite café or almost anywhere there is a good internet connection. Never before have workers had so much autonomy over when, where and how they work. This brings a long list of benefits to the forward-thinking companies that are using virtual workforces to maximize their competitive advantage, attract and retain the best talent, and become first-choice employers, all while cutting overhead costs and increasing productivity. However, running a successful virtual workforce requires a completely new management philosophy. Traditionally, the manager’s role was to supervise, direct and interact face-to-face with employees. For most managers, that was easy. With employees at their desks from nine to five, managers could stop by at any time and check in. Now they’re asking: “How can we maintain solid oversight while allowing our employees the freedom to work virtually?” That’s a good question, and one that can only be answered with solid planning, training and a top-down understanding of how to implement, integrate and manage a virtual workforce designed to address the
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challenges of doing business in the 21st century. Follow these four steps to build an effective virtual workforce that will take your business to the next level.
STEP 1 Evaluate Not every business is the same, so there is no one-size-fits-all virtual workforce that you can simply drag and drop into play. Some businesses will be more suited to a virtual workforce than others, as will certain business units within your company. Take some time to carefully evaluate your business for strategic fit by considering the following: How might a virtual workforce increase your competitive advantage? Consider how a mobile workforce might be able to outpace your competition by providing your clients with on-location service. How will a virtual workforce impact your market position? Without the overhead drain of maintaining a bricks-and-mortar office, you may be able to offer discounts to high-value clients or become a lowercost provider. Will a virtual workforce open entry into new markets? Having employees stationed around the country and even around the globe, operating in a range of time zones,
may open up new opportunities to expand your territory and enter new markets. What is your competition doing? If they have moved or are moving to a virtual workforce, you are definitely at risk of being left behind the eight ball.
STEP 2 Assess Virtual workforces offer a range of potential benefits, but they also require investment in key areas to ensure maximum effectiveness. As with every business decision, you must assess the benefits against the costs to determine if a virtual workforce is the right fit for your organization. Here’s some food for thought to get you started: POTENTIAL BENEFITS The reduction in employee commuting time increases flexibility and improves work–life balance. This leads to reductions in staff attrition and associated recruitment and training costs. Fewer in-office distractions can improve employee productivity and boost motivation and engagement. Cutting overhead costs may offer an opportunity to rethink your pricing structure and improve your competitive advantage.
www.wealthprofessional.ca
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Sales and IT have worked with all areas of management to identify the most effective management of software, hardware and support. Each business unit has clearly written policies that can be easily distributed to your virtual employees. During your pilot program, look for gaps that might require training, new technology or infrastructure. Also, recruit staff – either internally or externally – with the attributes required to work virtually. Plan out the scope, tasks, timing, resourcing, costs and acceptance criteria (use these as the basis for your ongoing management metrics) so that the transition is as seamless as possible. Be disciplined in completing the plan, and after a meaningful period (this should represent at least one complete business cycle), measure outcomes to goals. This will enable you to construct a new project plan that offers solutions to the gaps in the initial cycle. This may be improved by utilizing relevant outside expertise. Staff stationed in various locations offers the potential to improve client relationships via face-to-face visits.
STEP 3 Implement
Training and support will be needed to assist employees as they transition to the new technology and work philosophy.
Once your evaluation and assessment are complete, it’s time to enter the implementation stage. Running a pilot program provides a positive pathway to transitioning to a virtual workforce in one part of your business without impacting overall operations. Most important, you must have the various business units take full ownership of the transition to ensure they have clearly identified both the opportunities and the risks within a virtual workforce. Also, your managers will need to be trained and motivated so they are up to the challenge of effectively leading their virtual employees. To run a successful pilot project, ensure that:
Resources may be required to ensure buy-in up and down the management chain to prevent resistance.
Software and hardware selection and application are approved by all of the company’s units.
POTENTIAL COSTS Investment in new software and hardware technology to support the virtual model will be required. Initial management training will also be required to convert to virtual workforce management practices and techniques.
STEP 4 Launch Your pilot project will have lessened the overall risk while gaining much-needed support for the virtual model across your organization. With all your evaluations, assessments and planning in place, it’s now time to pick a specific date to launch – because the only way you can identify what will work and what will need improvement is by doing it.
Ruth MacKay is the founder and managing director of Ourtel Solutions, where she manages a 100% virtual workforce. She is passionate about helping businesses gain a competitive advantage, improve profits and retain top talent by leveraging proven virtual workforce models. MacKay is also the author of the new book The 21st Century Workforce. For more information, visit ourtelsolutions.com.
www.wealthprofessional.ca
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CANADA
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PEOPLE
CAREER PATH
DRIVEN TO SUCCEED
He’s walked a tough road to find success, but along the way, Darius Muica has learned that “confidence and excitement move people” The fall of communism in his native Romania prompted Muica’s parents to open a small business, which thrived. Although communism ended when Muica was just 7 years old, the memories cast a long shadow “The lights would turn off at 8 p.m.; people would start queueing at 5 a.m. Getting a car required a three-year wait. It changes you. My dad saw the opportunities [of capitalism] and started small. I was always involved”
1989 BEGINS A NEW LIFE
2007
COMES TO CANADA Muica’s plans to head overseas for his MBA took an unexpected turn when he met his future wife on vacation in Romania. He ultimately followed her to Canada, where he found the first years to be trying “She didn’t tell me about the Canadian winters; my first year in Montreal had the worst winter in 25 years. Early on, it was a struggle to be thrown in with those smart and experienced classmates. I would study 14 hours a day just to be average”
2009 BREAKS INTO FINANCE His relentless dedication to self-improvement catapulted Muica into the world of finance amidst the backdrop of the financial crisis, when a student in his French class recommended Muica for the job he was vacating as a derivatives analyst “Breaking into the industry was really tough then – when I left, I sorted through 300 resumes for my position”
2018 MASTERS THE GAME Named one of WPC’s Young Guns for 2018, Muica also turned in an impressive performance in the 90 Day Game training competition in late 2017. Competing against representatives of such marquee firms as JP Morgan and Credit Suisse, Muica came in second with assets of $13 million “I run a team of 10; I’ve trained people who have become successful. I have $50 million AUM. I’m reaping the benefits”
2002
STUDIES ECONOMICS The decision to pursue a degree in economics was a natural choice for Muica, who was skilled at doing mental math due to the lack of calculators available in communist Romania. The real driver, however, was his desire for a better life, coupled with an awareness of the power of entrepreneurism in the post-communist landscape “Having your own business is how you do well in Romania”
2008
DISTINGUISHES HIMSELF Muica’s first job was a humble position – temporary receptionist at an airplane parts manufacturer – that nonetheless afforded him the opportunity to distinguish himself almost immediately when he identified an opportunity for the company to save $50,000 annually
“I didn’t even know how to send a fax, but I had a drive. They sat me down and offered me a full-time position, but I declined – I had ambitions in finance” 2012
BECOMES AN ADVISOR Muica’s entrepreneurial spirit kicked in while working on Simplevest, a rudimentary robo-advisor startup, with a team of MBA classmates. His desire to better understand the business prompted him to look into becoming an advisor “My buddy told me about this guy who bought a Porsche – he was a financial advisor. I thought, ‘Why not work as a financial advisor to get experience?’ Elie Nour taught me everything I know. I drive a 911 now”
www.wealthprofessional.ca
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PEOPLE
OTHER LIFE
TELL US ABOUT YOUR OTHER LIFE Email wealthprofessional@kmimedia.ca
Client: Radius Financial Education Contact: Tony Sanfelice Phone: 416.407.1445 Email: sanfelice@radiusfinancialeducation.com Publication: Wealth Professional Ad Size: Full page 8.25” x 10.875” File due date: Wednesday, March 28, 2018 Issue date: April Art Director: Vic Finucci Phone: (416) 605-7729 Email: finucci@radiusfinancialeducation.com
“The racing school offers no guarantee of passing,” Taylor says. “If you mess up, you’re out.”
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Total laps Taylor drove over the three days of his course
200
Top speed, in kilometres per hour, Taylor reached on the track
4
The race car’s inches of clearance above the road
GETTING HIS PULSE RACING Mike Taylor has always loved driving, but he took it to another level when he enrolled in an internationally recognized racing school MIKE TAYLOR is a self-described “car freak” – the chief financial officer and managing partner of Nicola Wealth Management dates his fascination with automobiles to age 7, when his uncle would let him shift the gears and move the steering wheel of his VW Beetle. “I remember it like it was yesterday,” Taylor says. “That was the beginning of my infatuation with cars.” His desire to attend racing school was
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spurred not only by Taylor’s passion for cars, but also by the Porsche owner’s propensity to push himself. “I didn’t want to be a Porsche driver who pretends they know what they’re doing,” he says. “It’s not acceptable to me to be a poser.” The course Taylor took, which is only offered a few times a year, involves driving an open-wheeled, F2000 race car that resembles a mini Formula One vehicle at
Le Circuit Mont Tremblant in Quebec. Taylor says the experience was “like being bolted onto the chassis; you’re completely one with the car. I was cranked down so hard I had bruises from the belts.” Apart from the improvement to his driving, the course also brought Taylor some respite from his daily tension. “It takes intense concentration,” he says. “When you’re braking hard coming into a corner, you’re not thinking about work.”
www.wealthprofessional.ca
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BALANCED FOR BETTER OUTCOMES. M O R N I N G S TA R C A N A D A
Mackenzie Canadian Growth Balanced Fund Mackenzie Strategic Income Fund Mackenzie Global Strategic Income Fund Choose multi-asset solutions that simplify investing for you. Talk to your Mackenzie representative.
Morningstar Star Ratings reflect performance of Series F as of February 28, 2018 and are subject to change monthly. The ratings are an objective, quantitative measure of a fund’s historical risk-adjusted performance relative to other funds in its category. Only funds with at least a three-year track record are considered. The overall star rating for a fund is a weighted combination calculated from a fund’s 3, 5, and 10- year returns, as available, measured against the 91-day treasury bill and peer group returns. A fund can only be rated if there are a sufficient number of funds in its peer group to allow comparison for at least three years. If a fund scores in the top 10% of its fund category, it gets 5 stars; if it falls in the next 22.5%, it receives 4 stars; a place in the middle 35% earns a fund 3 stars; those in the next 22.5% receive 2 stars; and the lowest 10% receive 1 star. For more details on the calculation of Morningstar Star Ratings, see www.morningstar.ca. Quartile rankings and peers beaten are calculated by Mackenzie Investments based on the fund series-level data Morningstar provides. The CIFSC categories, Star Ratings, number of funds in each category, and annual compounded performance for the standard periods are: Mackenzie Canadian Growth Balanced Fund Series F, Canadian Equity Balanced category: 1 year - n/a stars 10.9%, 3 years - 5 stars (376 funds) 7.9%, 5 years - 5 stars (293 funds) 12.3%, 10 years - 5 stars (156 funds) 7.5%. Mackenzie Strategic Income Fund Series F, Canadian Neutral Balanced category: 1 year - n/a stars 5.7%, 3 years - 5 stars (478 funds) 5.2%, 5 years - 4 stars (378 funds) 7.0%, 10 years - 5 stars (157 funds) 7.3%. Mackenzie Global Strategic Income Fund Series F, Global Neutral Balanced category: 1 year - n/a stars 7.1%, 3 years – 5 stars (947 funds) 6.1%, 5 years - 5 stars (639 funds) 9.0%, 10 years - 5 stars (273 funds) 7.3%. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns as of February 28, 2018 including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution, or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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MANAGED ASSETS 2018-03-28 2:40 PM 6/04/2018 2:27:56 AM