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The big picture: Think portfolio diversification
Financial stress and cautious investing amid global uncertainty
Horizons responds to volatile market with covered call ETFs
Hazelview Investments’ Four Quadrant Fund demonstrates power of real estate as hedge to inflation
Equiton’s straightforward incomeproducing real estate philosphy, lack of competitors, and housing shortage all contribute to its growth
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As a successful wealth manager, Brian Kadey is well informed – and so are his clients
Investors have been on tenterhooks throughout 2022. They question whether the Bank of Canada can succeed in taming the spectre of record-high inflation.
To achieve price stability, policymakers are wielding a blunt weapon – interest rate hikes – that’s liable to cause collateral damage to indebted households and busi ness owners if applied too carelessly. It’s already impacted household wealth: Statistics Canada reported that the net worth of Canadian households fell by almost $1 trillion in the second quarter, partly due to an interest-rate-driven plunge in the value of real estate.
The rest of that decline stemmed from stock markets tanking from April to June. Since then, investors have taken a more cautious tack, with many seeking the relative safety of cash. For this year until August, inflows into cash alternative ETFs exceeded $3 billion, according to data from National Bank Financial.
The BoC will likely get inflation within its target range late next year or early 2024. And if inflation becomes a more ingrained problem than feared due to deglobalization and other structural forces, the traditional balanced portfolio is likely not going to fetch the same returns as it has in the past.
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It’s a bitter pill for investors to swallow. But with a full-fledged wealth professional in their corner, many clients still have an opportunity for growth and diversification by venturing outside the world of fixed income and stocks.
“From a portfolio management perspective, we place great emphasis on enhanced diversification through the use of alternative investments. This may include private assets, arbitrage, or hedged strategies,” said Darcie Crowe, senior wealth advisor & senior portfolio manager at the Crowe Private Wealth Group. “Expanding the horizon from traditional investments to those strategies typically available to institutional investors can offer greater opportunity and protection through periods of volatility.”
Even outside the world of investments, it’s possible to reap financial benefits through tax optimization, estate planning, and other strategies. The key, however, is to assess the risks and opportunities to align with a client’s particular profile, finan cial situation, and values. According to Joseph Bakish, wealth advisor and portfolio manager at Bakish Wealth:
“We’re firm believers that you have to look at the whole picture. A doctor doesn’t just look at one health issue. They assess your overall health and then they determine whether there’s a secondary illness accordingly. It’s very similar in our profession; as advisors and planners, we need to do a general assessment, get to know our clients and their history, and then zero in on what needs to be done.”
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invasion of Ukraine has sent shock waves across the global economy, causing a slowdown in economic growth. While there’s still significant uncertainty, the OECD’s interim economic outlook projects a broad deceleration in
growth across the world until next year.
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A survey by FP Canada earlier this year found that the difficulties of 2022 are feeding into financial stress. The rising cost of everything from groceries to gasoline is weighing heavily on Canadians’ minds.
With inflation, rising rates, and recession fears roiling markets, investors are growing increasingly cautious. ETF flows in Canada have shown a growing bias toward safety; cash alternative ETFs have experienced positive inflows every month this year, setting a new monthly record in September.
During the first half of 2022, actively managed funds in Canada have navigated the market’s challenges relatively well. Compared to three- and five-year periods, Canadian equity funds, Canadian focused equity funds, and US equity funds have all shown decreased underperformance relative to their benchmarks.
HORIZONS ETFS, one of Canada’s largest ETF providers, has recently relaunched its covered call ETF suite after making changes they believe will help enhance their ETFs’ ability to offer competitive yields and generate attractive income in today’s volatile marketplace.
With bonds underperforming and equity markets even more precarious lately, covered call ETFs can potentially offer investors some downside protection on their equity holdings by generating income through options writing.
To find out more about how these products could be the right option for investors today, Wealth Professional spoke to Nick Piquard, vice president, portfolio manager, and options strategist with Horizons ETFs.
Piquard co-manages the firm’s global suite of covered call ETFs, which essentially fall into three categories. Firstly, broad-market offer ings – Horizons Nasdaq-100 Covered Call ETF (“QQCC”), Horizons Canadian Large Cap Equity Covered Call ETF (“CNCC”), and Horizons US Large Cap Equity Covered Call ETF (“USCC”) – which track the Nasdaq-100 and the large-cap market segments of the Canadian and US equity markets, respectively.
The second group focuses on specific sectors – Canadian banks through Horizons Equal Weight Canadian Bank Covered Call ETF (“BKCC”), Canadian energy via Horizons Canadian Oil and Gas Equity Covered Call ETF (“ENCC”), and also gold producers through Horizons Gold Producer Equity Covered Call ETF (“GLCC”).
Horizons ETFs also offers a physical gold covered call ETF, Horizons Gold Yield ETF (“HGY”) – which writes calls on securities and other instruments that provide expo sure to the price of gold bullion; Piquard believes this ETF is the only one of its kind in North America.
Although the firm has offered its covered call ETF suite for a decade – one of the first firms in Canada to do so – its recent changes to the underlying baskets of stocks as well as the new dynamic writing strategy for these
ETFs were undertaken to maximize yield and to target more income-focused investors.
Piquard says that there are two main reasons why covered call products might be right for the current marketplace. “Bonds just aren’t getting it done anymore. While yields are increasing on bonds, that just means bond prices are going down,” he said.
While traditionally investors would have looked at bonds for yield and felt confident
Could the perfect storm for markets be the perfect opportunity for covered call ETFs? Horizons ETFs has the answer
that their negative correlation to the equity markets would have balanced out a 60/40 portfolio, this isn’t happening now. In a very inflationary environment, equities are likely to outperform better than bonds, Piquard said.
“Covered calls replace existing stock expo sure that you might have with an asset which is highly correlated to stocks, but it can earn a very attractive yield in this high-volatility environment,” he explained.
He believes that volatility is likely to remain for some time, given tighter monetary policy conditions and lower liquidity, something the
Nasdaq-100 index, has a current indicated yield of 13.11% as at September 30, 2022, in a sector where dividends can be sparse.
It is worth noting that while distributions made on a monthly basis are generally comprised of the premium earned by the underlying options, on a full-year tax basis, there is a strong possibility that the income generated will be taxed as return on capital if the ETF has a higher annualized distribution than the capital return of the ETF.
Additional details about QQCC, including Product Facts and its performance and
See important product and disclaimer information in the web version of this article at https://www.wealth professional.ca/news/industry-news/ answering-advisors-call-for-income/370655
Commissions, management fees and expenses all may be associated with an invest ment in exchange traded products managed by Horizons ETFs Management (Canada) Inc. (the “Horizons Exchange Traded Products”). The Horizons Exchange Traded Products are not guaranteed, their values change frequently and past performance may not be repeated. The prospectus contains important detailed information about Horizons Exchange Traded Products. Please read the relevant prospectus before investing.
The investment objectives of the Horizons Canadian Large Cap Equity Covered Call ETF (“CNCC”) (formerly Horizons Enhanced Income Equity ETF (“HEX”)), Horizons Can adian Oil and Gas Equity Covered Call ETF (“ENCC”) (formerly Horizons Enhanced Income Energy ETF (“HEE”)), Horizons Equal Weight Canadian Bank Covered Call ETF (“BKCC”) (for merly Horizons Enhanced Income Financials ETF (“HEF”)), Horizons US Large Cap Equity Covered Call ETF (“USCC.U, USCC”) (formerly Horizons Enhanced Income US Equity (USD) ETF (“HEA.U, HEA”)), Horizons NASDAQ-100 Covered Call ETF (“QQCC”) (formerly Horizons Enhanced Income International Equity ETF (“HEJ”)), and the Horizons Gold Producer Equity Covered Call ETF (“GLCC”) (formerly Horizons Enhanced Income Gold Producers ETF (“HEP”)), were changed following receipt of the required unitholder and regulatory approvals. The ETFs’ new names and tickers began trading on the TSX on June 27, 2022. For more information, please refer to the disclosure documents of the ETFs on www. HorizonsETFs.com.
Nick Piquard, portfolio manager and options strategist, Horizons ETFs
Bank of Canada and, to a greater extent, the US Federal Reserve have indicated. Higher volatility means call options are typically more expensive, so firms such as Horizons ETFs can potentially generate high premiums, meaning their covered call products could perform better and pay a more attractive yield compared to less volatile periods.
Piquard said that covered call options can be viewed as a defensive strategy because you are effectively reducing the volatility of the underlying securities. “The premium helps minimize the downside, but you’ve capped some of the upside through the call sale,” he said.
There is also the benefit of a monthly yield compared to just the dividend if you owned the underlying stock, which can be a substantial difference. For example, the QQCC product, which tracks the tech-heavy
distributions, can be found on Horizons ETFs’ website at www.HorizonsETFs.com.
As with all investments, there are some risks in covered call products. This is where Horizons ETFs’ experienced team plays an active role. The strategy requires a balance between giving up too much upside versus generating yield – something they watch daily.
Piquard said now could be one of the best envi ronments that he has seen for covered calls for many years – not just because of the increase in volatility but also the lack of significant upside given central bank policy and inflation.
“You want to maintain your asset exposures, and this is a good way to get paid a good yield while you wait out this market,” Piquard said.
For financial advisors, even a modest allo cation to covered call strategies can poten tially help meet clients’ needs for income in today’s marketplace.
The financial instrument is not sponsored, promoted, sold, or supported in any other manner by Solactive AG nor does Solactive AG offer any express or implicit guar antee or assurance either with regard to the results of using the Index and/or Index trade name or the Index Price at any time or in any other respect. The Index is calculated and published by Solactive AG. Solactive AG uses its best efforts to ensure that the In dex is calculated correctly. Irrespective of its obligations towards the Issuer, Solactive AG has no obligation to point out errors in the Index to third parties including but not limited to investors and/or financial intermediaries of the financial instrument. Neither publication of the Index by Solactive AG nor the licensing of the Index or Index trade name for the purpose of use in connection with the financial instrument constitutes a recommendation by Solactive AG to invest capital in said financial instrument nor does it in any way represent an assurance or opinion of Solactive AG with regard to any investment in this financial instrument.
Nasdaq®, Nasdaq-100®, and Nasdaq-100 Index®, are trademarks of The NASDAQ OMX Group, Inc. (which with its affiliates is referred to as the “Corporations”) and are licensed for use by Horizons ETFs Management (Canada) Inc. The Fund(s)have not been passed on by the Corporations as to their legality or suitability. The Fund(s) are not issued, endorsed, sold, or promoted by the Corporations. THE CORPORATIONS MAKE NO WARRANTIES AND BEAR NO LIABILITY WITH RESPECT TO THE FUND(S) or PRODUCT(S).
Certain statements may constitute a forward-looking statement, including those identified by the expression “expect” and similar expressions (including gram matical variations thereof). The forward-looking statements are not historical facts but reflect the author’s current expectations regarding future results or events. These forward-looking statements are subject to a number of risks and uncertainties that could cause actual results or events to differ materially from current expectations. These and other factors should be considered carefully and readers should not place undue reliance on such forward-looking statements. These forward-looking state ments are made as of the date hereof and the authors do not undertake to update any forward-looking statement that is contained herein, whether as a result of new infor mation, future events or otherwise, unless required by applicable law.
This communication is intended for informational purposes only and does not constitute an offer to sell or the solicitation of an offer to purchase exchange traded products (the “Horizons Exchange Traded Products”) managed by Horizons ETFs Management (Canada) Inc. and is not, and should not be construed as, investment, tax, legal or accounting advice, and should not be relied upon in that regard. Individ uals should seek the advice of professionals, as appropriate, regarding any particular investment. Investors should consult their professional advisors prior to implementing any changes to their investment strategies. These investments may not be suitable to the circumstances of an investor.
The views/opinions expressed herein are solely those of the author(s) and may not necessarily be the views of Horizons ETFs Management (Canada) Inc. All com ments, opinions and views expressed are generally based on information available as of the date of publication and should not be considered as advice to purchase or to sell mentioned securities. Before making any investment decision, please consult your investment advisor or advisors.
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“Covered calls replace existing stock exposure that you might have with an asset which is highly correlated to stocks, but it can earn a very attractive yield in this high-volatility environment”
Stephen Poloz reflects on his time leading the central bank, his surprising inspirations, and why he wrote his full name on the money
STEPHEN POLOZ went to university to become a doctor, taking economics as “a bit of a lark.” But then he fell in love with it and, after understanding what a powerful instrument the Bank of Canada is, made up his mind in the blink of an eye he wanted to be governor. A doctor helps one person at a time, he rationalized, but a central banker can help lots of people all at once.
Almost 40 years later in 2013 – and 35 years after he was a summer student at the bank – Poloz fulfilled his dream and became only the ninth governor in the bank’s history. Misty-eyed might be stretching it but the sense of satisfaction in his voice when looking back over his seven-year tenure is unmistakeable, and his description of his time in charge as a once-in-a-lifetime experi ence is no hyperbole.
He says: “Overall, you had this intense feeling of carrying a responsibility, not just for a few people, but basically for every body; this sense that everything you do matters to so many people. It’s a really rich feeling. It’s hard to describe. There’s not much that can compare.”
He regards his time as governor, and as a macro policy-maker, as a success. When he took over, the economy was still reeling from the global financial crisis and then in 2014 oil prices collapsed. Both times the bank worked to get things back on track to the point where, six months before COVID hit, inflation was at 2 percent and unemployment was at a
40-year low. The lesson, he says, is that the healthier the economy, the more resilient it will be in the event of a shock.
“What we’ve seen over the past few years is the economy has adapted extraordinarily well and outperformed all the forecasts by the economics community, and outper formed what was laid out in budgets by governments. The main lesson is it’s always worth investing in getting the economy back to where it belongs, because that gets it set up for whatever might come along [next].”
BEYOND THE BANK OF CANADA 2002 to 2004 President, Ottawa Economics Association 2011 to 2013 President, Export Development Canada 2013 to 2020 Member, Board of International Settlements 2020 to present Special Advisor, Osler, Hoskin & Harcourt LLP 2022
Author, TheNextAgeofUncertainty: HowtheWorldCanAdapttoaRiskierFuture
Perhaps surprisingly, though, the highlights of Poloz’s reign are more personal. Getting his signature on the money was symbolic of an ambition achieved. And while it’s usual for the governor to sign only their initials, Poloz spelled out his full name so both Stephen, his mother’s family name, and Poloz, his father’s, were in full view.
He is also proud of getting the first Canadian woman “on the money” when Agnes MacPhail, the first female parliamen tarian, featured on a commemorative bank note. He views this as a “huge accomplish ment,” while under his leadership, the Bank of Canada also appointed its first female senior deputy governor in Carolyn Wilkins.
Poloz’s leadership style has been influ enced by many people over the years, but it’s surprising to learn that his primary inspirations are fictional – Jean-Luc Picard, captain of the starship Enterprise in Star Trek , and Jed Bartlett, President of the United States in The West Wing. It’s a topic he delves into in his book, The Next Age of Uncertainty: How the World Can Adapt to a Riskier Future, which came out in February of this year.
It explores how these two characters represent the core of leadership: under standing yourself, your own values, and finding ways to communicate them. With that philosophy in mind, he made a conscious decision as governor to foster a more collab
Name: Stephen Poloz
Organization: Bank of Canada
Title: Former governor (2013 to 2020)
Experience: 40 years in financial markets, forecasting, and economic policy
Career highlight: Overseeing central bank through 2014 oil price collapse; getting the first Canadian woman “on the money”
orative environment. It’s what Bartlett and Picard’s storylines espouse, and Poloz remains in awe of the two shows’ leadership writing. He believes he took the essence of these two characters into the bank.
“My willingness to be a team member, as opposed to the boss, made [being governor] a very enjoyable experience,” he says. “I like to think I left some people behind that are very, very capable because they had a lot of first-hand experience in the deep end of the pool, when they weren’t being told what to do all the time.”
It is hoped this next generation of leaders is equipped to deal with a future Poloz believes will feature even more volatility. Shorttermism, he stresses, is guaranteed to fail. Instead, financial advisors, governments, and consumers will all need to invest more in resilience buffers, which he calls “investments in nimbleness,” allowing for a quick reaction but in the context of a longer-term view.
What has undoubtedly been hard to navigate in both the short- and long-term in recent months has been Russia’s invasion of Ukraine. For Poloz, it’s personal. His grand father and his brother came to Canada from Ukraine (a third brother stayed behind) by mailing their shared passport back after the first person had arrived. The former governor admits it’s hard to find words to describe the human devastation but said political isolationism is a growing concern.
The likes of Russia and Brazil will only add to the potential for geopolitical risks as the world deglobalizes to some degree; another worry line in Poloz’s “age of uncertainty.”
On a personal level, however, he is enjoying a new level of variety to his working life. As well as penning his book, he was appointed to the board at Enbridge, a multi national pipeline company headquartered in
Calgary, and CGI, a provider of IT services. He also joined the Toronto-based law firm Osler, Hoskin & Harcourt as a special advisor. It’s work he clearly enjoys but there remains a tinge of nostalgia for the days when he lived out his dream as governor, pushing himself that extra mile to help lots of people all at once, rather than just one person at a time.
“Overall, you had this intense feeling of carrying a responsibility, not just for a few people, but basically for everybody; this sense that everything you do matters to so many people. It’s a really rich feeling”
Tashia Batstone has embraced a position of humble leadership and collaboration in pursuit of a bright vision for Canada says. “When you talk to these individuals, and you get to meet with them, the barriers they face are just astronomical.”
BEING THE head of a national organization is a tough job for any person. But for Tashia Batstone, her first 18 months at the helm of FP Canada have been a valuable exercise in leading through change.
“It’s an awesome responsibility,” the presi dent and CEO of FP Canada told Wealth Professional. “Everybody within the industry – within FP Canada, the board, the profes sional financial planners that I have met with, and the regulators – has been so supportive.… Knowing that people are going to support you is huge when coming into a new role like this.”
For Batstone, being the head of FP Canada has represented a culmination of a decadeslong vocation for finance and financial literacy.
She’s held several senior leadership roles at CPA Canada; there, she played an instrumental role in developing a new national CPA program. She also collabor ated with the Martin Family Initiative on a mentorship program for Indigenous youth. More recently, in 2020, she was named among Practice Ignition’s top 50 women in accounting globally.
“Throughout my career, I’ve been a real advocate of ensuring economic prosperity for Canadians, and in particular women from more marginalized groups, new Canadians, and Indigenous people,” she
The selection committee tasked with appointing FP Canada’s new CEO named Batstone after a stringent process of vetting highly qualified individuals – and for good reason. They were looking for a leader who could build on FP Canada’s many achieve ments over the past few years and lead the organization in its mandate to advance professional financial planning for Canadians.
Batstone assumed her new role as president and CEO in May 2021 – a challenging time to be joining any organization, considering the crisis that was still hanging over the country and the new virtual working environment.
“We were in the middle of COVID when I joined FP Canada,” Batstone recalls. “I think every CEO today, coming out of COVID, is having to do some re-evaluation of strategy: How has the world changed? And how do we respond to that changing world?”
She has embraced the challenge of the
“There is a responsibility and a pressure that comes with leading an organization that has played such an instrumental role in the financial planning profession over the years,” Batstone says. “I am excited to continue to build on all the outstanding work that FP Canada has done to champion better financial wellness for all Canadians.”
role, leading FP Canada with a sense of deter mination and purpose. Part of that involves the IMAGINE 2030 Vision, an ambitious promise to ensure access to professional financial advice for all Canadians.
“When I got to FP Canada, IMAGINE 2030 had already been developed,” Batstone says. “One of the first initiatives I took on was
“I think every CEO today, coming out of COVID, is having to do some re-evaluation of strategy: How has the world changed? And how do we respond to that changing world?”
Name: Tashia Batstone
Organization: FP Canada
Title: President and CEO
Years in the industry: 31
Career highlight: Being appointed president and CEO of FP Canada; playing a leading role in the unification of the accounting profession
to lead the board through a strategic planning process … we’ve laid out a roadmap for how FP Canada is going to work with the broader community and stakeholders to try to deliver on our IMAGINE 2030 vision.”
A recent win for consumers that FP Canada celebrated has been the promulgation of the Financial Professionals Title Protection Act in Ontario. Under that framework, financial advisors and financial planners now have to fulfill certain minimum proficiency requirements and must act in the best interests of their clients.
“FP Canada had done a tremendous amount of work around title protection, so it was wonderful to be there when title protec tion came into effect,” Batstone says. “FP
see how we can ensure that this profession is serving all Canadians, regardless of their income, age, gender, or race.”
Aside from continuing the financial benchmark study every year, Batstone sees an opportunity for FP Canada to review its processes to ensure its paths to certification are efficient and barrier-free, while making sure certificants continue to have all the skills and competencies they need to uphold their clients’ interests. Beyond that, she is focused on keeping abreast of what’s happening in the complex regulatory environment of financial planning.
“We have to know how we can help our certificants manage through some of the regulatory changes, while at the same time
“I think the data helps us understand where the gaps exist, but it’s a difficult story to process when you look at some of those numbers. We’re embarking on a journey that is going to help all Canadians”
Canada was one of the first approved creden tialing bodies, and we’re continuing to advo cate for regulatory change in the interest of consumers across Canada.”
Batstone also oversaw FP Canada’s inaug ural IMAGINE 2030 Benchmark Report, a ground-breaking national survey that exam ines how Canadians are doing across the four dimensions of financial well-being, financial confidence, financial access, and financial trust through the lenses of diversity, equity, and inclusion.
“I think the data helps us understand where the gaps exist, but it’s a difficult story to process when you look at some of those numbers,” Batstone says. “We’re embarking on a journey that is going to help all Canadians. We now have the data we need, and we’re working with our partners from across the financial planning profession to
help to shape some of those regulatory changes so that they align with the best interest of consumers,” she says.
Most importantly, Batstone emphasizes the importance of collaboration. Even as a CEO, she recognizes the need to learn and listen to others within and outside her leadership as she makes crucial strategic decisions. She also realizes that FP Canada’s resources can only stretch so far, and it will take concerted cooperation with other stake holders to bring their vision of financial security for all Canadians to life.
“I want my team to feel passionate about what we do every day, and to have a sense of pride and meaning in their work,” Batstone says. “I think that’s really important – to be that motivator, that leader who gives people a sense of purpose, and then empowers them to be able to act on that.”
and research indices to track progress toward FP Canada’s vision of financial wellness for all Canadians
Launch of new three-year strategic plan, which lays out key steps to realizing FP Canada’s IMAGINE 2030 goals
Proclamation of title protection legislation for financial planners in Ontario, for which FP Canada has consistently advocated
Approval by FSRA of CFP certification and QAFP certification for use of the financial planner title in Ontario
*Source:FPCanadaAnnualReport2021–2022
TECH MATTERS and when done correctly, it moves the needle. That’s exactly what Wealth Professional ’s 5-Star Wealth Tech Providers are doing for their clients. It’s an evolving and effective synergy.
Industry expert Jason Pereira, partner and senior financial consultant at Woodgate Financial, explains, “Ask any advisor to think about the technology that they used 10 or 20 years ago, and whether they think they can
compete or be as efficient in the current landscape with that technology — and the answer is no.”
In its most recent outlook published in April, BlackRock projected US equities to see a 7.1% nominal return over the next decade, compared to 14.8% in the past 10 years ending in 2021. Forecasts from Morningstar Investment Management (5.8%) and Research Affiliates (6.3%) are
even greyer. Translation: expect portfolio management to be considerably more chal lenging for the foreseeable future.
Regulatory and compliance pressures are also mounting. Within the first year of intro
“Ask any advisor to think about the technology that they used 10 or 20 years ago, and whether they think they can compete or be as efficient in the current landscape with that technology – and the answer is no”
Jason Pereira, Woodgate FinancialSource:
ducing a comprehensive change through its client-focused reforms, the Canadian Secur ities Administrators (CSA) is pressing on with the planned creation of a new single self-regulatory organization by the end of 2022. A CSA consultation on total cost reporting, which proposes to harmonize rules for mutual funds and segregated funds, represents another potential burden.
Advisors also need the ability to communi cate digitally, remote options to conduct proficiency testing and help in succession planning, and the capability to manage docu ments in the cloud. Data gathered from The Tech’s Factor: the digitalization of private markets in 2022 and beyond , shows 90% of US senior executives of firms with assets under management of more than US$1 billion report technological capabilities are a top priority.
In the face of these industry challenges, WP ’s 2022 winners are partnering with
Financial Solutions this year, 71% of respondents said improving efficiencies was their primary goal for their technology spend in 2022.
“We are like any other industry in that at the end of the day, we have to worry about efficiency,” adds Pereira. As the curator of the only online map of the Canadian Fintech Landscape and host of the Fintech Impact podcast, Pereira is an established thought leader in the Canadian wealth tech space.
According to the Broadridge survey, 58% of Canadian financial services firms said the top area of improvement within their company as a result of digital transformation was “increased productivity and resulting lower costs.” One area that promises to benefit from greater productivity is financial planning and Conquest Planning, based in Manitoba, is tackling that with its artificial intelligence (AI) SAM engine.
“A very large majority of the firms that we
Wealth Professional invited technology service providers from around Canada to submit nominations, detailing the problems or pain points their offering is designed to solve or relieve for wealth management professionals and how their solution differs from that offered by competitors.
The WP team objectively assessed each entry for detailed information, true innovation and proven success –along with benchmarking against the other entries – to determine the 30 5-Star Wealth Tech Providers.
the average number of clients using wealth tech solutions
the winners have financial advisors as their target audience
Brad Joudrie, Conquest Planning
have been in business for more than 10 years
advisors and firms across Canada to deliver ingenious tech solutions which have a proven ability to elevate how they serve their clients.
Fortune favours the efficient In the fourth annual Digitally Transforming Canada survey conducted by Broadridge
work with have viewed AI in a very positive way to drive efficiency within their practice,” says Brad Joudrie, chief revenue officer at Conquest Planning, a 5-Star Wealth Tech Provider.
“We often use the analogy of a caddy and a golfer: SAM, our AI engine, suggests strat
egies or scenarios that might be most effective to consider for a client’s particular situation, and ultimately, the advisor is the one to hit the shot or make the decision to execute with their client.”
Over 15,000 advisors use Conquest Plan
“When robo advice came along, there was a fear that robos would take over and replace human advisors. And I think we’ve proven out now that robos can be an assistant technology”
ning’s tech, an impressive feat considering the company has only existed for three years. However, Joudrie admits some firms have resisted the technology, concerned it elim inates the advisor’s role.
“When robo advice came along, there was a fear that robos would take over and replace human advisors. And I think we’ve proven out now that robos can be an assistant tech nology,” he says.
“We’re ultimately trying to empower those professionals with more efficient technology so that we can service more clients together.”
In Broadridge’s study, 44% of Canadian financial services firms said improving user experience was the top goal in implementing new technologies in 2022. Quebec-based Mako Financial Technologies, one of the 5-Star Wealth Tech Providers, is doing just that by helping firms migrate their paperbased client onboarding processes into a digital format.
“The wealth management industry has one of the largest repositories of private and confidential data in the world. Yet, customers find themselves filling in the same informa tion over and over again,” says Shawn Prodgers, COO and CFO of Mako Fintech.
“This can lead to unavoidable errors and increase friction in the onboarding process.”
Prodgers says industry players are real izing that with proper controls and permis sions, personal information can be auto matically filled to reduce unnecessary repetition and improve the customer experi ence. This realization comes as part of a broader pandemic-driven awakening to the benefits of digital transformation.
He says, “Going paperless did not only enhance the client-advisor relationship, but also introduced other instrumental benefits like a better user experience, better compli
ance tracking and faster onboarding times with fewer errors.”
Raphael Bouskila, CEO of Mako Fintech, adds, “To develop custom solutions, the Mako team first listens to a firm’s unique needs before designing automated workflows to streamline them. Common use cases include digital onboarding, refreshing KYC infor mation, subscription agreements and even bulk repapering.”
Wealth firms are moving more of their busi ness onto the cloud. Of the financial firms surveyed by Broadridge, 56% cited cloud computing as the most significant emerging technology, driven by expectations of a continued hybrid working environment.
As more data gets stored in cyberspace, wealth firms are looking for ways to securely manage clients’ information online — and for good reason. According to PwC’s Canadian Cyber Threat Intelligence Year in Review Report: 2021 , around 62% of Canadian organizations either suffered from a ransomware incident or had an attempted ransomware attack. A prominent theme across cases was the use of weak security controls in the cloud environment.
Toronto-based FutureVault, a 5-Star Wealth Tech Provider 2022, offers a platform for clients and advisors to share vital docu ments digitally, while still ensuring their information is protected from bad actors.
“Today’s wealth management firms require solid cybersecurity implementation to grow and prosper,” says Nevin Markwart, FutureVault’s chief information security officer.
“As the essence of a wealth firm’s brand is client trust and confidence, wealth management organizations now rely on formal cybersecurity policies and procedures, with direct executive managerial oversight,
to ensure that client data is safe and secure.”
Wealth management firms in Canada have to comply with the Personal Information Protection and Electronic Documents Act, federal legislation that sets out 10 fair infor mation principles that define firms’ responsibilities with respect to information security and personal information privacy management.
The Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada, the country’s two self-regulatory organizations for the investment industry, have also long held cybersecurity and cyber risk management as priorities for registrant firms.
“By constantly monitoring and testing against cybersecurity threats, along with being compliant with institutional-grade security frameworks like SOC 2, customers can trust that firms are guarding their customers’ data while bringing a better experience for all,” adds Prodgers of Mako Fintech.
The pandemic might have set off a broad acceleration of tech adoption across the wealth space, but that could be slowing: 53%
of respondents to Broadridge’s survey this year graded their firms’ digital transforma tion efforts an “A” or a “B”, down from 66% in 2020. Global wealth tech investment trends also point to a slowdown; according to FinTech Global, wealth tech investment within the first half of 2022 stands at US$8.8 billion, putting it on track for a whole-year total of US$17.6 billion compared to US$24.9 billion for the whole of 2021.
Firms might believe they’ve done enough on the tech front, but Pereira argues they should consider technology adoption as a continuous journey. Beyond that, he urges advisors to assume a proactive mindset.
“There are technologies that are table stakes in the rest of the world, that Canadian advisors will not even consider using even though they exist in this country,” he says.
“When one person says no, they’re not just saying no for themselves, but they’re also hurting the prospects of that technology proliferating in the industry. Advisors have to take a firmer hand in the running of their own practices and embrace the fact that they need to continuously improve the digital delivery of their services.”
“By constantly monitoring and testing against cybersecurity threats, along with being compliant with institutional-grade security frameworks like SOC 2, customers can trust that firms are guarding their customers’ data while bringing a better experience for all”
Shawn Prodgers, Mako Financial Technologies
Phone: (416)
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Phone: 1 877 310 1088 Email: info@cidirectinvesting.com Website: cidirectinvesting.com
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Email: inf-systems.com/contact Website: inf-systems.com
Phone: 1 877 310 1088
Email: info@cidirectinvesting.com Website: cidirectinvesting.com
Phone: (416)
Email: inf-systems.com/contact Website: inf-systems.com
Phone: 1 877 310 1088
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The explosion of terms, frameworks, and ratings in the space poses challenges for asset managers, investors, and advisors alike
OVER THE past two years, the landscape of ESG has undergone tectonic changes.
The idea of doing good by doing well has captured the imagination of investors across the world. Enthusiasm has built around themes like green energy and the net-zero transition, giving rise to a whole
new universe of investment solutions.
But that growth has come with real chal lenges as well.
“I think the last 12 to 18 months have been very challenging from ESG, just from a reputational point of view,” Marcus Berry, vice president and ETF specialist at Invesco,
said in a recent webinar on ESG hosted by Wealth Professional . “There’s been a lot of misunderstanding and confusion around what it is and what it isn’t.”
At the heart of the problem, Berry said, is a lack of clear agreement on definitions. While some might see ESG as a way to mitigate regulatory and political risks within their portfolio, others look at it as a chance to make a positive impact. There’s been some progress in terms of creating a common language around ESG, but there’s still a plethora of terminologies being used without much distinction.
“We essentially are using terms like sustainable investing, responsible investing, ESG, and even [socially responsible investing] to some extent interchangeably, which is causing ambiguity and confusion,” says Adelina Romanelli, director of respon sible investing at SLGI Asset Management, a subsidiary of Sun Life Financial.
Different frameworks and standards have cropped up around the world. Some ESG-minded asset managers and companies may look to the UN Principles for Responsible Investing, while others may focus on the Global Reporting Initiative (GRI), the Task Force on Climate-related Financial Disclosures (TCFD), or SASB (Sustainability Accounting Standards Board) standards in forging their strategies.
Another related challenge comes from the different rating systems used to evaluate companies. There are more than 20 ESG rating agencies around the world, including prominent providers of investment metrics like Moody’s, MSCI, and S&P Global. Each follows its own methodology, and there’s no shortage of research pointing to how a company’s ESG score is largely in the eye of the beholder.
“We quickly went from an environ ment of very little choice in terms of true
sustainable, ESG, or responsible investing, to an absolute abundance of choice,” Sonia LeRoy, senior wealth advisor at LeRoy Wealth Management Group with IPC Securities, told Wealth Professional in an interview. “That has led to confusion on the part of investors and people not necessarily investing in what they’d hoped to invest in.”
As more investors and products stampede in, many see the ESG space as a new Wild West where the lack of clear definitions and fragmented landscape of frameworks spell danger for investors, but it’s not just the buyers who should beware.
According to Marie-Justine Labelle, head of responsible investment for
pre-existing investment funds a second life with an adjusted mandate and an updated green identity. Alyssa Stankiewicz, asso ciate director of sustainability research at Morningstar, argues there’s a risk of investors not understanding the ESG factors considered in the investment process and the potential impact of a new sustainable investment mandate.
“When it comes to the proliferation of these ESG products, I think the risks come mainly from the question of investor under standing as well as asset manager transpar ency,” Stankiewicz told Wealth Professional.
Regulators in North America have been stepping up their efforts to help ensure ESG funds’ underlying strategies are aligned with how they’re communicated to investors.
Desjardins Investments, greenwashing –exaggerating ESG attributes of a fund – has become a more talked-about risk among asset managers. Headlines around the topic gravitate toward deceptive marketing, but she stressed that even well-intended managers may fall into the trap of green washing if they’re not careful.
“Our retail audience might not be respon sible investment specialists, so we have to be careful about how we talk about it and how it will come across,” Labelle said during WP’s online ESG webinar. “We’ve been working on a guide on common pitfalls to avoid greenwashing, which are mostly around the impact and outcomes of our products.”
Rather than build brand-new ESG funds from whole cloth, some asset managers give
In guidance issued January this year, the Canadian Securities Administrators (CSA) clarified its expectations around ESG prod ucts with respect to fund names, invest ment objectives, investment strategies, sales communications, and other aspects. In May, the US Securities and Exchange Commission proposed new rules that would require SEC-registered advisors to include ESG factors and strategies for investors in fund prospectuses, annual summaries, and brochures; the proposed rules’ impact on a fund depends on whether it’s categorized as an integration fund, an ESG-focused fund, or an ESG impact fund.
The Canadian Investment Funds Standards Committee (CIFSC) also published a Responsible Investment
“Our retail audience might not be responsible investment specialists, so we have to be careful about how we talk about it” Marie-Justine Labelle, Desjardins Investments
Identification Framework in July. The framework is meant to help Canadian investors find products that suit their nonfinancial investment preferences, and acts as a complement to the CSA’s guidance as well as the CFA Institute’s Global ESG Disclosure Standards for Investment Products.
While there are no strict requirements associated with ESG fund marketing at the moment, many serious asset managers are taking the view that honesty is the best policy.
“I think transparency is crucial,” Berry said. “If we’re making claims that we have an ESG screen, or a sustainable approach to the management, can we clearly show that to our investors? Can we provide them with tangible data, such as the carbon reduction from the portfolio? What is the ESG impact score?”
With the risks of misalignment so high on both sides of the suitability equation, ESG poses a multi-pronged challenge for advisors. Not only must they become proficient in an evolving language of investing, metrics, and frameworks, but they must also act as match makers who understand their clients’ prior ities beyond financial objectives.
“What’s important is for advisors to look under the hood of the products and under stand what it is their clients are trying to achieve, both from an investment objective as well as an ESG or values objective, and then go to the product providers out there,” Berry said.
“At the end of the day, greater fund disclosure is a plus. It gives advisors and
investors something tangible that they can rely on – especially if it’s being audited by a regulator – to understand what these funds are doing,” Stankiewicz says. “That said, it’s definitely a challenge for advisors and investors to understand where things are moving as definitions are still being worked out and disclosure expectations are still evolving.”
For advisors, embracing ESG also means beefing up their KYC processes to create a fuller profile of their clients as ESG investors. According to Labelle, investors
who are interested in responsible invest ment can generally be mapped into three categories based on the reasons for their interest: better financial performance, alignment with their convictions, and a desire to contribute to positive environ mental and social outcomes.
“The role of advisors is to help clients really identify and articulate what their values are, and what they’re most passionate about, then look at the complex landscape of what’s out there and go through a process of elimination to find what aligns with what their clients want to achieve,” LeRoy says.
“Having a responsible investment fund framework is helpful as it narrows down the universe. But there’s still going to be an awful lot of due diligence necessary on the part of individual advisors if what we’re going for is to align our clients’ money with their values – and I think that’s what our clients want to achieve.”
“The role of advisors is to help clients really identify and articulate what their values are, and what they’re most passionate about” Sonia LeRoy, LeRoy Wealth Management
Hazelview Investments believes strong real estate opportunities exist in current climate for the savvy investor
HAZELVIEW INVESTMENTS takes pride in its inclination to zag when the rest of the investment sector zigs. Nothing could illustrate this better than the firm’s upbeat outlook on the current opportunities in the real estate sector despite a series of body blows, including a global pandemic that gutted downtown office leasing and the more recent interest-rate hikes.
While many investors are turning away from real estate due to the perception of how higher borrowing costs will affect returns, Hazelview sees it differently: “Rate hikes are typically coupled with strong economic activity, and real estate, with its ability to adjust rents in pace with this growth, provides for a great hedge against inflation.”
But what happens when rate hikes finally do their job to stymie economic growth? According to Hazelview, that’s when the truly active investors shine.
“Our strategy is not reliant solely on market growth – most of the value we create comes from finding assets in good locations but that are not achieving their full poten tial. We then roll up our sleeves to bring that asset in line with the market.”
And, while many investment funds are
concentrated in a specific property type or geography, Hazelview preaches the import ance of being nimble. “Having the ability to dig for value in every corner rather than being boxed into a specific geography or sector even when the original strategy no longer makes sense is important and provides resiliency through different market conditions,” says CEO Ugo Bizzarri.
This includes investing both privately or through public markets and through equity or debt investments.
The fund, which celebrated its 10th anni versary in 2021, has been delivering an average annualized net return of 8.6 percent since inception.
This was ultimately the thesis behind Hazelview’s Four Quadrant Global Real Estate Partners, a fund that invests in real estate in whatever way they feel allows them to generate the best value.
Through the Four Quadrant Fund, Hazelview has developed a vehicle that offers access to the inflation-hedge bene fits of real estate equity with the stable and consistent yield of real estate debt while
“When we launched the Fund, no one had a product like this, with investments across all different facets of real estate – those being public, private debt, and equity” Corrado Russo, managing partner and head of global securities, Hazelview Investments
also achieving enhanced liquidity through the public investments.
“It can be challenging to offer private investment strategies with a robust redemp tion feature for investors. To do this, it is incredibly important to match the liquidity you are providing investors with the liquidity of the underlying investments. Our allocation to public investments is specif ically designed to ensure we maintain that balance and has allowed us to fulfill all redemption requests since inception.”
From Hazelview’s perspective, having the right kind of diversified portfolio of real estate products in times like these can present meaningful opportunities to savvy investors.
“When we launched the Fund, no one had a product like this, with investments across all different facets of real estate –those being public, private debt, and equity,” says Corrado Russo, Hazelview’s managing partner and head of global securities.
While Hazelview may have been the first
to introduce this strategy in a fund concept, they admit this is not a new strategy. Larger institutional investors have been building portfolios in this way for many years.
“We built the Four Quadrant Fund to bring an institutional approach to real estate investing to an audience that may not have the means to achieve the divers ification independently,” says Russo, who,
“As population in Canada grows, agricultural land becomes increasingly more valuable” Ugo Bizzarri, CEO, Hazelview Investments
along with CEO Ugo Bizzarri, cut his teeth running real estate investments for one of the biggest institutional investors in Canada, the Ontario Teacher’s Pension Plan Board.
This strategy of investing both publicly and privately in real estate debt and equity allows the investment firm to maximize the total return for investors while minimizing volatility. The Fund also invests globally; it can capitalize on pricing inefficiencies in different markets around the world to provide better diversification, Russo says.
In today’s market, Hazelview is particu larly interested in three main property types, says Hazelview CEO Ugo Bizzarri.
The first two are multifamily and indus trial sectors. Both allow Hazelview to exer cise a value-add philosophy that is critical to
Corrado Russo, managing partner and head of global securities, Hazelview Investments
its success. Industrial has become intriguing in recent years with the surge in online retail. The company is particularly bullish on warehousing, Bizzarri says, because trendlines in online shopping indicate that retail will move further into warehousing.
“Industrial has the same type of longterm investment real estate fundamentals that we like, where there’s a gap between how much warehousing space we need and how much supply there is,” he says.
A surprising third area Hazelview is targeting these days is farmland, a specialty sector that many other investment firms ignore. The impacts of climate change coupled with population growth make this sector particularly interesting.
Bizzarri says farmland represents an important investment opportunity. “As population in Canada grows, agricultural land becomes increasingly more valuable. And to be clear, we’re not buying farmland to develop. We’re buying farmland to farm – preserving its agricultural use over the long-term.”
While the broad diversification of the strategy is important to the Four Quadrant Fund’s success, both Russo and Bizzarri stress that it’s this value-add philosophy that truly sets the Four Quadrant Fund apart from the pack.
“We’re not just going out there and buying assets,” says Russo. “We’re going into every investment thinking, how can we create value? At the end of the day, investing in real estate is about accessing the underlying stable cash-flow stream, the contractual rent obligations that tenants pay you, and the ability to add value to that real estate.”
“At the end of the day, investing in real estate is about accessing the underlying stable cash-flow stream, the contractual rent obligations that tenants pay you, and the ability to add value to that real estate”
THE WEALTH INDUSTRY is at a crossroads.
For decades, it was tilted in the direction of firms and wealth professionals. With exclusive access to market intelligence and investment knowhow, brokerages and financial firms were able to command high fees and secure a consistent base of business from consumers.
Now, customer appetites have changed with the times.
Steve Willems, a Wealth Advisor at the Willems Wealth Planning Group with Assante Financial Management, says, “As advisors, our approach needs to address these emergent trends. … Client preferences are changing
quickly, so it’s important that the incoming generation of advisors contribute solutions that intersect with these trends.”
Wealth Professional’s Rising Stars 2022 have been recognised for their ability to adapt to the changing landscape and perform admir ably. Being a Rising Star is an accolade many want but only a few successfully earn.
“We have a lot of great, young talented Canadians entering the wealth management industry here in Canada,” said Thane Stenner, senior portfolio manager and senior wealth advisor at Stenner Wealth Partners+, CG Wealth Management. “My sense is that a lot more people
are trying to get in the wealth management industry. … For example, we posted eight roles in our firm and got 450 applications.”
While the industry faces threats from multiple sides, it’s also able to strengthen itself in remarkable ways, thanks to the new talent that’s emerging.
Rising Star Willems has distinguished himself by having a direct hand in several digital initiatives. Drawing from his profes sional experience helping businesses with their
“Client preferences are changing quickly, so it’s important that the incoming generation of advisors contribute solutions that intersect with these trends”
Steve Willems, Willems Wealth Planning Group with Assante Financial Management
digital marketing efforts, he helped launch a monthly call where clients can participate in a dynamic discussion of market events, launched a video series on behavioural finance topics, and also oversaw the delivery of over a dozen virtual donor events for five local char ities, among other major value-adding projects.
“There are no shortcuts in life, and unfortu nately no secret formulas,” Willems says. “But being a third-generation business owner has shown me that grit and determination are certainly necessary ingredients.”
Among several keystone principles and habits, Willems believes in quickly creating “a visible pile of activity” around new ideas, which can give rise to even better ideas and initiatives over time. “Don’t worry about the first idea not being perfect; just produce evidence of that concept,” he explains.
Believing that it takes a team to achieve great things, he also attributes much of his success to colleagues.
“Within your organization or region, find a small handful of other highly driven profes
cost-conscious, online brokerage platforms are challenging traditional advisors’ value prop osition with low commissions, trading fees, and bargain management fees for the do-it-yourself investor.
“I think fee compression is an issue. That’s not to say that there aren’t any expensive prod ucts out there that might not be in the client’s best interest... But when it comes to having an advisor, it shouldn’t be a race to the bottom,” he says. “There are perhaps cheaper alterna tives, but I tell my clients that those might not get them to where they want to be. And that they’re not going to find anybody more committed to their success than myself.”
Ouellette has built an impressive book of clients in just his first 21 months, surpassing the firm’s required targets. That achievement is made even more impressive by the fact that he made his initial outreaches in the midst of the global pandemic crisis when people were practicing social distancing and avoiding in-person meetings. “You need to have a great attitude and to master the basics,” he says.
To uncover the most promising young professionals in the Canadian wealth management industry, Wealth Professional undertook a rigorous marketing and survey process, leveraging its connections to thousands of advisors across the country. Starting in June, companies were given the opportunity to nominate professionals for consideration based on their performance and achievements over the past 12 months.
To be eligible, nominees had to be age 35 or younger (as of September 30, 2022) and working in a role that relates to, interacts with, or impacts the wealth management industry. When reviewing the nominations, WP concentrated on those who have committed to a career in the industry and clearly hold a passion for wealth management. In order to maintain a focus on new talent, only nominees who hadn’t been previously recognized as a WP Rising Star (or Young Gun) were considered.
After reviewing all the nominations, the WP team whittled down the list to 42 deserving winners.
sionals. Come together on a predictable schedule, set an agenda, and you’ll find that being in their presence will provide the motiv ation needed to grow,” he says.
Another Rising Star is Mathieu Ouellette, investment advisor at The Oyler-MacDougall Group with BMO Nesbitt Burns. He is boosting his reputation as he navigates a central industry concern: as the retail crowd is becoming more
“Have integrity, do what you say you’re going to do, return your calls, and basically be the advisor that you would like to have.”
Megan Martin, associate vice president, invest ments at Invico Capital Corporation, is another Rising Star turning heads at her company.
As a senior member of Invico’s investment
Rising Stars are advisors or associate advisors
is the age of the youngest Rising Star
of the Rising Stars are women
“You need to have a great attitude and to master the basics. Have integrity, do what you say you’re going to do, return your calls, and basically be the advisor that you would like to have”
Mathieu Ouellette, The Oyler-MacDougall Group with BMO Nesbitt Burns
Advisor/ Associate Advisor
Executive (CEO, President, Vice President)
Associate/ Portfolio Manager
Financial Planner
management team, she developed the fund performance analysis methodology and proced ures used in Invico’s reporting to dealer part ners, investors, and regulatory bodies for several classes of shares with different return provisions. She is responsible for monitoring select loan portfolio accounts, and has been a critical driver of investment and credit docu mentation in compliance with underwriting policies related to return and, more recently, responsible investing and ESG. In recognition of those and other accomplishments, she has been promoted three times in three years.
“I remain open to learning new things,” Martin says. “I believe that stepping up to the
plate and outside of my comfort zone has been, and will continue to be, my secret formula.”
Willems has a similar philosophy of learning through discomfort. “Clients will ask hard questions, you’ll have to give a frank assess ment, you’ll need to deal with ethical quan daries. Expect this. And every time you go through one of those hard moments, write down what you learned and lock it in your lesson vault.”
That ethos of experimentation is something that Sol Amos, founder of AdvisorSavvy, sees more broadly among the emerging crop of new financial advisors by how more willing they are to leverage technology.
“They have a real appetite for different approaches to building portfolios for clients – not the very traditional 60/40 split portfolio, but they’re looking at other options and whether that’s getting them into private equity or private debt,” Amos says. “They are looking at a much broader product selection when they’re working with younger individuals.”
For Ouellette, it’s all about elevating his level of service.
“We don’t want to automate the client experience or take the personal out of the rela tionship, definitely not,” he adds. “But when it comes to administrative tasks, I think there’s opportunity to incorporate a little more tech nology so we’re spending more time actually dealing with clients.”
According to Amos, many young advisors today come into the industry because they feel the needs and perspectives of Gen Y or Gen Z clients are not being understood perfectly by older professionals.
“Their goal is really to relate and be a confi dant or partner in that relationship with that younger segment that they feel is not being served right now,” Amos says. “Younger successful advisors are genuine in their conver sations with their client. So they tend to be genuine in the way that they’re talking about their practice or their returns or just general planning, which is one conversational piece that might have been missing before from previous generations of advisors.”
The coming of a new breed of wealth manage ment professionals could also help shine the spotlight on — and ultimately solve — longstanding challenges of diversity and representation.
On gender equality, Martin says, “In many instances, women are relegated to ‘token’ positions, so I’m not convinced the solution is to implement gender diversity quotas … I believe that taking more of a top-down approach and focusing on education to help
“I believe that stepping up to the plate and outside of my comfort zone has been, and will continue to be, my secret formula” Megan Martin, Invico Capital Corporation
break long-standing stereotypes is likely the best path to gaining authentic diversity in the industry.”
From Martin’s perspective, the market extremes that the new wave of investment professionals have lived through since the onset of their careers have given them a greater ability to evaluate and monitor risk. But as a veteran, Stenner sees things very differently.
“Those under 35 have not really seen a deep recession or a really tough bear market. They’ve seen some volatility but for the last 12 years,
it’s been a really strong bull market since the last great recession,” he says. “I think the expect ations of the newer generation is that things usually have just gone up. Well, this year is demonstrating that there are bear markets. … [W]e’re starting to see some layoffs in the US, primarily in wealth management in the large brokerage firms. I think there will be some eyes opened in the next 18 to 24 months during what mostly likely will be a recession period.”
As grey as the near-term outlook appears, Stenner remains optimistic. He forecasts a bright
future as long as the new crowd of financial professionals get their credentials, go the extra mile, hone their abilities in critical software tools, and sharpen their presentation skills.
“If you want to do exceptionally well in the wealth management industry, you have to hustle. You have to demonstrate enthusiasm and passion for this industry. You’ve got to show up, be present, and really exert time and effort,” he says. “Quite candidly, for those that do, I think there’s exceptional opportunity in the industry.”
Investment Advisor
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Management
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Assante Financial Management
Phone:
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Executive Financial Consultant
IG Wealth Management
Phone:
Email: konstantine.theodor@igpwm.ca Website:
Phone: (902) 393 7979
Email: mmartin@invicocapital.com Website: invicocapital.com
Phone: +1 604 669 3136
Email: pooja@dixonmitchell.com Website: dixonmitchell.com
Phone: (647) 505 3250
Email: stephan.cantanna@ipcc.ca
Website: ipcc.ca
Assante Financial Management Ltd.
Phone: 604 859 4323
Email: swillems@assante.com Website: willemswealthplanning.ca
Alex Mahrt
Associate Portfolio Manager
The Mahrt Investment Group
Wellington-Altus Private Wealth
Ann Babic
Portfolio Manager
CWB Wealth Management
Anna Premyslova
Associate Portfolio Manager
CWB McLean & Partners Wealth Management
Blake Cluff Investment Advisor Assante Capital Management
Brad Winlaw Investment Advisor
Green Private Wealth/Harbourfront Wealth Management
Caitlin Deckert
Associate Advisor
Generations Financial Solutions/Assante
Carly Plate Vice President, Client Portfolio Management
RPIA
Darrell Mayo Associate Portfolio Manager & Trader Exponent Investment Management
Gurtej Varn Financial Planner
White Coat Financial
Jas Sandhu
President (Blackwater) and Investment Advisor (Manulife) Blackwater Advisors and Manulife Securities
Jason Hunt
Senior Associate, Family Office Practice First Avenue Investment Counsel
Jennifer Clyne Associate PM Leede Jones Gable
Jeremy Kelly
Certified Financial Planner Kelson Financial
Jillian Kosolofski
Regional Sales Manager
AGF Investments
Joel Cann Investment Advisor-Financial Planner
iA Private Wealth/ Flagstone Financial Group
Jordan Rausch Wealth Advisor, Client Relationship Manager
Nicola Wealth
Josh Mays-Quinn
Regional Sales Manager, BC Harvest ETFs
Kain Big Canoe
Associate Vice President, Indigenous Services T.E. Wealth
Kevin Parton
Executive Financial Consultant IG Wealth Management
Kristina de Souza
Certified Financial Planner Kleinburg Private Wealth Management
Kyle Taylor Wealth Advisor and Portfolio Manager TriDelta Financial
Marcus Basara Investment Advisor Wellington-Altus Private Wealth
Matthew Sears Vice President and Financial Consultant T.E. Wealth
Nicky Correa President CorrWealth Management
Rajan Dhot Investment Associate Scotia Wealth Management
Ralph Abdel Nour
Investment Advisor & Associate Portfolio Manager Nour Private Wealth
Ross Ripley Chief Executive Officer CU Financial Management
Ryan Archambault
Investment Advisor and Portfolio Manager Wellington-Altus Private Wealth
Sylvanna Asia Portfolio Manager Harbourfront Wealth Management
Timothy Stranks
Wealth Advisor, Client Relationship Manager Nicola Wealth
Trevor Fennessy
Senior Planner T.E. Wealth
Victoria Rempel
Wealth Advisor, Mutual Funds
iA Private Wealth, Investia Financial Services
Vishesh Pandya
Client Service Advisor Ontario Pension Board
THE ALTERNATIVES space is becoming crowded and complex as markets labour and the quest for income intensifies. But Jason Roque, CEO and founder of Equiton, a private real estate investment company which tripled its assets under manage ment during the pandemic and is currently approaching $1 billion in AUM, believes its laser focus and simple investment philosophy gives the company an edge over competitors in the space.
Equiton makes no bones about sticking to what it’s good at – income-producing real estate – with a model everyone, from end clients to advisors, understands. Roque explains the model is essentially real estate investing 101 – Equiton owns and manages apartments on behalf of the investor, collects rent, and uses that to maintain buildings, cover expenses, and pay off the mortgage. Advisors and their clients benefit from the monthly income the property generates and the appreciation of the asset over time.
Lavelle Lindo, VP, national & strategic relationships, says it’s nothing different than
what the average Canadian has gone through when either buying or renting a property. “When speaking to portfolio managers and analysts, after hearing the full story, a number of them at a lot of these large firms have said, ‘Wow, that’s really easy to under stand, and that’s actually easy for the investor to understand.’ There’s nothing that’s too
which were typically available only to insti tutional or ultra-high-net-worth investors –accessible to the investing public. An active manager that prides itself on strong govern ance but also being agile, nimble, and aggres sive, Equiton offers funds with a minimum investment starting as low as $5,000.
Its flagship Apartment Fund is pure-play
complicated about what we do and that’s a key selling point. We like to keep it simple to understand and simple to explain.”
Equiton’s mission since it was founded in 2015 has been to make institutional-grade private market real estate investments –
multi-residential and 100 percent Canadian, and has had 77 months of positive returns since inception, performing well through the pandemic and ensuing market volatility and the highest inflation we have seen in decades. The fund is tax-efficient, too, with
Equiton has grown rapidly and credits its easy-to-understand philosophy and skill investing in income-producing real estate
“This is the one real estate asset class where, in an inflationary environment, with higher interest rates, you can do very well”
Jason Roque, CEO and founder
distributions treated as 100 percent return of capital.
As a pure play, the fund, which targets 8 to 12 percent annual net return, is different from anything else in the market. Lindo says: “People always want to know what they can compare us to. And you know, the answer is, ‘There are no competitors.’ There are companies that do slivers or aspects of what we do, but not the whole piece. We’re also Canadian-based only and that’s a very important distinction as well. Again, it’s very easy to understand and explain when you don’t have to talk about markets we don’t live in.”
Equiton provides other investment opportunities through its Income and Development Fund, which targets a 12 to 16 percent annual net return over a 10-year period, as well as through its real estate development offerings. The company’s philosophy is that, given the huge supply–demand housing imbalance in key markets in Canada, investing in new developments will be a critical strategy for years to come. These opportunities feature different aspects of the real estate asset class – lending, development, commercial, and industrial.
While the Equiton philosophy is easy to understand, many clients’ thinking may
be clouded by the current environment of inflation and rising interest rates. The blanket verdict tends to be that this is bad for the sector. But this misunderstands the industry; while single-family homes are feeling the pinch, multi-residential apart ment buildings do much better because as inflation and interest rates pick up, so do rent prices.
Roque says: “Apartments are typically considered a good hedge against inflation. Put simply, in an inflationary environment, rents go up, which means that apartment owners’ income is going up, and because these are hard assets, they go up in value.
This is the one real estate asset class where, in an inflationary environment, with higher interest rates, you can do very well.”
Lindo adds that during previous periods when the single-family-home index went down, the private apartment index actually fared well.
From a portfolio perspective, the funds offer enviable returns compared to fixed income, along with the tax-efficiency element. They also feature low volatility and
essentially no correlation to the traditional asset classes. The nature of Equiton’s approach means it also takes risk off the table for the investor, one of the reasons the pureplay multi-residential apartment market is so appealing.
“When clients are looking at buffering their portfolio, we’ve seen that a number of the biggest brokerage firms and banks are now allowing a 25 percent allocation to alternatives,” Lindo says. “And we think
that we’re an incredible play in that riskadverse investment decision. Certainly, a private investment allocation to Equiton in a portfolio to combat the natural volatility that comes from public markets is definitely prudent.”
This is no flash-in-the-pan investment idea, either. The housing shortage and imbal ance in Canada means the outlook for the next 10 to 20 years presents many invest ment opportunities. The Canada Mortgage and Housing Corporation (CMHC) believes the country needs 5.8 million new homes by 2030 to tackle the affordability crisis. The current rate of new construction is expected to add 2.3 million units by that time, repre senting a 3.5 million shortfall.
Roque says: “Based on that, the multiapartment residential space becomes a very opportune place over the foreseeable future until this problem gets solved. If more people are coming in quicker that we can build houses, then there will certainly be upward pressure on the rental market for a longer period of time.”
“People always want to know what they can compare us to. And you know, the answer is, ‘There are no competitors.’
There are companies that do slivers or aspects of what we do, but not the whole piece”
Lavelle Lindo, VP, national & strategic relationships
EVEN AS a young man living in apartheid-era South Africa, Brian Kadey was fascinated with the world of capital markets.
“From a very young age, I was very intrigued by how everything that happened in the world got reflected in the prices of commodities, equi ties, currencies, and other asset classes,” said the senior investment advisor at Canaccord Genuity Wealth Management, which recently rebranded to CG.
After high school, Kadey earned his commerce degree from the University of the Witwatersrand, then got an accounting degree and did his articles at an accounting firm. Aside from satisfying his intellectual curiosity, he devoted those years to education in order to avoid military service, which was compulsory at the time for white male citizens who did not choose to pursue further studies.
“I came to Canada on vacation in 1987, and was supposed to return to South Africa and join the army for two years,” he said. “I phoned my parents and told them I didn’t want to work for something I don’t believe in.”
It was this conviction, among other things, that ultimately drew Kadey to CG Wealth management. “CG has created an environment where diversity and equal opportunities exist for everyone, no matter where you come from,” he notes.
After working at an accounting firm to earn his landed immigrant status, Kadey applied
for a job at Merrill Lynch Canada, and was one of only 13 people accepted out of a field of more than 1,000 interested jobseekers that year. Little did he know that his first day in the industry would also be a historic one: October 19, 1987, also known as Black Monday.
“I was sitting there looking around, and all the brokers at Merrill Lynch were kind of frozen,” Kadey recalls. “The quote screens couldn’t even keep pace as to where the prices were. No one knew where anything was trading.”
Despite that ominous start, he’s come a long way. Today, his book of 50 families represents assets of over $850 million in-house with, by his estimates, another billion dollars outside.
Kadey works with an exclusive clientele of smart, sophisticated individuals – many having been with him for more than three decades – who are crucial to what he calls his “wealth-creation business.”
“I use very little information from financial analysts or investment bankers,” he says. “Most of my information comes from my clients, who are very smart entrepreneurs in different fields, and we work together on different wealthcreation opportunities.”
“Sometimes we’ll meet someone who really understands a certain sector that we’re trying to figure out, and we’ll take them on as a client, even if they have a fairly small account, because of value they add to the group.”
Kadey’s investment approach relies heavily on developing a deep understanding of different companies, as well as what’s happening in the world; equipped with that knowledge, he can decide which companies are worth buying stakes in.
On the wealth-management side of Kadey’s business, his focus is on “working with clients to help identify their unique investment object ives, and designing very customized portfolio
Even in this challenging rising-rate environment when companies are hardpressed to access capital from investors, Kadey’s deep knowledge of his portfolio companies lets him stick to his guns. “We do have a very in-depth knowledge of the business and the industry, and confidence in the management team [of the companies in our portfolio],” he says. “We have no problem supporting and defending the companies we’re invested in.… If we can hold a company forever, it means we’ve done a really good job, because that’s where you can make the biggest returns.”
After a principled departure from apartheid-era South Africa, investment industry veteran Brian Kadey has engineered a successful wealth management business and amassed more than $850 million dollars in managed assets
solutions to meet those objectives, based on their level of risk tolerance.”
Many advisors might fixate on the total assets they manage, but Kadey prizes his ability to call and have conversations with CEOs of public companies, who share whatever information they can. Doing that legwork lets him get a much better handle on companies and industries than any analyst report, which in turn helps strengthen his
convictions in challenging conditions.
“I tell most of my clients, ‘you’re probably not going to hear from me much when things are good, but if something bad happens, you’ll hear from me immediately,” he says.
“Obviously, nothing goes straight up, and there have been very tough times in the market. The most important thing is not how you handle the good times, but how you deal with the bad times.”
“I use very little information from financial analysts or investment bankers. Most of my information comes from my clients, who are very smart entrepreneurs in different fields”
Mandeville’s 2022 advisor conference in beautiful Banff featured lively debate, inspiring speakers, investment strategy … and a final-night hoedown mountains with a renewed sense of purpose and be inspired to Level Up their mindset and take their respective businesses to the next level,” said Diana Oddi, Mandeville’s head of marketing and practice management.
THE ASPIRATIONAL, and inspirational, theme of the 2022 Mandeville Advisor Conference was “Level Up,” and no location suited this better than spectacular Banff, Alberta. The firm’s advisors congregated amid breathtaking mountains that, just like the event’s theme, invited you to climb a little higher, improve yourself, and enjoy the rewards.
For advisors at Mandeville Private Client Inc., who benefit from its renowned alterna tive investment platform and mission to democratize strategies used by the major
“The iconic Banff mountains were the inspiration for this year’s Level Up theme. Level Up means pushing yourself to reach for greater heights and improving your skills with each level. Our intention for this year’s conference was for all participants to leave the
pension funds, the Level Up message was clear: assess where you are and how you can reach that next level.
To that end, the three-day event at the Fairmont Banff Springs hotel featured an awards ceremony, round-table discussions
on private investments and Mandeville’s six pillars of success, and presentations on new technology and the generational wealth challenge. Some stardust was added by chairman and CEO Michael Lee-Chin, short-lived White House director of communications turned crypto investor Anthony Scaramucci, and – the ultimate embodiment of levelling up – Warren Macdonald, who scaled Kilimanjaro after losing both legs in a freak rock fall.
The engaging agenda followed a call to arms from Frank Laferriere, Mandeville COO, who
“Our intention for this year’s conference was for all participants to leave the mountains with a renewed sense of purpose and be inspired to
Level Up their mindset and take their respective businesses to the next level”
Diana Oddi, Mandeville’s head of marketing and practice management
provided a “Level Up Report” addressing the major challenges facing advisors and the industry: demographic changes, the tech nology explosion, and the ongoing paradigm of regulatory changes.
He said: “There’s a woeful lack of leader ship within society as a whole, and in a time of much information and complexity, you really need leaders and mentors. Part of levelling up is we’ve got to step up to make sure we’re meeting the challenge of helping clients and fulfilling their dreams.”
He warned the skillset that served his generation will not be fully translatable to millennials, who don’t want to be preached
at. Instead, they want advice. The repeated message from the podium in Banff was that advisors must speak to this young cohort in a more collaborative way – as equals but armed with a body of knowledge they can help them absorb.
Mandeville advisors, Laferriere said, typify these changes in attitudes, and the firm is close to laying out its new tech nology stack, an integrated digital experi ence, both for clients and its advisors, to assist them further.
“We must appeal to people who are [going to be] controlling the wealth, like young people, like women. It’s about making
sure people leverage the technology, not to dehumanize the experience but to spend the time on creating those close relationships.”
Three years since Mandeville’s last NO GRIT. NO PEARL. Conference in Halifax, and with everyone having endured the pandemic, human relationships were back to the fore in Banff. After some rigorous debates during the day, the evenings featured rides up the Banff gondola, bowling competitions, a trip to stunning Lake Louise, and a closing night Wild West hoedown party.
“The conference was designed to not only provide our advisors with educa tional content, unique sector and market
perspectives, industry updates and trends, and business development ideas, but also to foster creativity, collaboration, and a great opportunity to strengthen and build our corporate culture,” says Diana Oddi. “I am delighted that the conference was so well received by our advisors and spon sors – it clearly reaffirms that our advisors and management team are aligned and committed to the Mandeville Difference.”
But don’t be fooled – while Mandeville advisors like to let their hair down, they work to tight frameworks. From Lee-Chin’s three Ps of wealth creation (predict, plan, and persevere) to the advisors’ six pillars of success – institutional investment framework, prospecting, asset allocation, financial planning, client service, and compliance – the path to success is clear. The panel discussion on
the Six Pillars of Excellence, moderated by WP, featured senior investment advisors Melissa Prusky, Ralph Weekes, and Michael Hayhoe, as well as Michael Prittie, portfolio manager. They addressed each pillar in turn, offering examples
of what had worked and what hadn’t en route to building successful practices.
Hayhoe, an early adopter of alternatives before Mandeville was even founded, is a successful exponent of using these invest
“There’s a woeful lack of leadership within society, and in a time of much information and complexity, you need leaders and mentors. Part of levelling up is we’ve got to step up to make sure we’re meeting the challenge of helping clients and fulfilling their dreams”
Frank Laferriere, Mandeville COO
ments to minimize portfolio volatility. He has a large sleeve of alternatives for his primarily baby boomer clients focusing on private debt and private real estate, while he also uses dividend-paying equities and public debt in appropriate volumes. In short, he manages in a pension-fund style. “It’s similar to CPP or OMERS in that we diversify across assets, but with a real focus on being conservative and delivering income.”
From a field dominated by hedge funds, the space has evolved to feature opportun ities in big apartment REITs, for example, while private lending now has a much broader scope. Recognizing Mandeville as a leader in the space, Hayhoe has no regrets about joining the firm.
He said: “I came to Mandeville because they position themselves as a leader in alternatives – and it [still] holds true. They’ve got a good product shelf, a good process in place to get new alternatives approved, and a good process in place to evaluate the alterna tives that are there, and to stay on top of it. It’s definitely worked out [for me].”
At a time of rising interest rates and inflation, Mandeville has been able to demonstrate the volatility-dampening qualities of alternatives and its ability to find good opportunities for wealth creation, which is the crux of billionaire Lee-Chin’s approach.
But as important as asset allocation and alternative investment options are, Laferriere also stressed that successful advisors of the future will stand or fall on their attitude and integrity. He praised Mandeville advisors for having high emotional intelligence (EQ) and being able to put the client first consistently. When looking to recruit new advisor talent, these traits are at the top of his checklist. But as well as integrity, intelligence, and persis tence, he wants people who are not satisfied with what is happening in the industry.
“The industry is doing a great disser vice to clients,” he said. “Everything is
product-driven; nobody’s talking about actually making clients wealthy. Our main theme is being able to give advisors the ability to use public and private pensionlike investing but using private and alterna tive assets that are the quality of what the pension plans themselves would use.
“We’re looking for the right attitude, the right integrity, and the right desire to learn. Everything else you can be taught or acquire, but attitude is the key thing.”
That mindset was in plentiful supply in Banff as advisors relished the chance to ditch the Zoom calls and discuss things face to face. For Laferriere, the success of the event reminded everyone of the value of meeting
clients and fellow advisors in real life.
“No matter what anybody says, this is a relationship organization. Video conferen cing is okay, it’ll do, but it’s not the same as having a drink or dinner with people and having honest discussions, knowing there’s somebody really at the other end [of the conversation] whose expression you can gauge, who is concerned about what you’re thinking, and who really wants to help.”
Armed with an enviable alterna tives platform and a stringent framework geared to the creation of wealth for clients, Mandeville is facing the challenges of today with determination, skill, and, crucially, integrity. That’s the Mandeville Difference.
It’s no secret that the road to building a comfortable retirement has become much more difficult over the last few decades. In today’s economic environment, retirees will have to adjust their retirement planning to meet a number of evolving challenges.
Dynamic's Retirement Income Centre is designed to provide a road map to retirement insights, investing strategies and new perspectives on helping retirees, and those on the cusp, create sustainable cash flow to meet today's retirement realities head on.
Find out more at dynamic.ca/ric
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.
WP is proud to announce that the Women in Wealth Management Summit Canada is returning in its fifth year this December 6th, 2022.
Advisors from across the wealth space are coming together to be part of a conversation on creating an inclusive approach to wealth management, increasing confidence and resilience in diverse leaders, and encouraging tangible action to drive positive change in the industry.
Join us for this powerful virtual event and start breaking down gender bias and barriers today.
■ Collaborate with inspiring leaders and changemakers and gain practical strategies to support women in the industry
■ Discover actionable takeaways on how to conquer challenges and create opportunities for career progression
■ Gain insights on how a female-centric approach to wealth can drive the industry forward
■ Keep ahead of the latest best practices, industry trends and thought leadership to create positive industry change
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