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Private Wealth Canada News Archive 2010

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December 27, 2010

Cost Of Living Concerns Canadians
The rising cost of living, followed by climate change, damage to the natural environment, cancer, and finally speeding traffic/dangerous drivers top the list of concerns of Canadians as 2010 winds down, says a study by global insurer RSA. However, although the concerns identified are reasonable, Canadians put disproportionately more weight on these risks than other countries with far less economic and social stability prompting experts to wonder if Canadians are risk averse. While Canada called the rising cost of living as the number one concern, other nations such as China cited life-threatening earthquakes as their greatest concern while Poland identified drunk driving. "Ironically, the risks Canadians are most concerned about reflect their optimism about the future and the strong performance Canada has turned in through the Great Recession," says Richard Worzel, of Futuresearch. "Whereas citizens of other countries are concerned mainly about direct physical dangers, Canadians are concerned about more subtle dangers that take longer to make themselves felt, like the rising cost of living, climate change, cancer, and environmental degradation. While these risks are certainly real enough, they are still much more intangible than the risks that people elsewhere are concerned about."  

ROI Offering Private Placement Pooled Funds
ROI Capital is moving to fill the gap for retail investors wanting to use private placements to add yield and diversification to their portfolios. It is providing a a series of pooled funds that provide both of those attributes, in a tax-efficient manner and with daily liquidity. The funds are comprised of a portfolio of private placements, primarily secured loans to Canadian corporations or private equity investments. As such, there is no correlation to financial markets. Individual investors can participate in a private placement for as little as $25,000.

Rules Needed To Smooth Cycle
Regulators aiming to ward off the next financial market failure need to implement rules to smooth the boom-bust cycle in margin requirements and haircuts used in securities financing and derivative transactions, which seriously exacerbated the last financial crisis, says a study from the C.D. Howe Institute. In ‘Warding Off Financial Market Failure: How to Avoid Squeezed Margins and Bad Haircuts,’ David Longworth, adjunct professor at Carleton University and former deputy governor of the Bank of Canada, argues that key elements in a system-wide regulatory framework should include rules to mitigate swings between loose terms for margins and haircuts in boom times, and tightened terms during busts. The study is at

Industrialized Countries Trailing
Emerging nations are still in the lead in terms of economic growth, while industrialized countries are trailing and hoping to resolve their structural issues quickly, says the Desjardins group economic studies team. "However, after a long period of inertia, some investors seem to be regaining a little appetite for risk, which is rippling into bond yields and stock markets," says François Dupuis, its chief economist. Many uncertainties continue to hamper global economic growth, especially in industrialized nations. This is especially true in Europe, where there are growing fears associated with the financial situation in some nations. While, in G7 nations, the economic recovery is still uncertain, emerging nations are posting impressive economic growth and real GDP is forecast to grow 6.1 per cent for 2010. It also found the Canadian economy has lost a lot of its lustre in the last few months. Soft U.S. demand, the strong loonie, and fast import growth have prompted the trade balance to deteriorate sharply.

First Wave Turning 65
As the first wave of Canada's Boomer generation turns 65 years old in 2011, almost one-quarter (23 per cent) are concerned about having enough savings, says the ‘21st Annual RBC RRSP Poll.’ However, the majority (71 per cent) of Boomers who will reach their milestone 65th birthdays next year, with financial plans in hand, say that they are better off financially as a result of those plans. Two-thirds of 64-year-old Boomers first developed their financial plan at an average age of 35, once they began accumulating assets and started saving. Four-in-10 (42 per cent) Boomers have a formal written financial plan, compared to 19 per cent of the country's general adult population. The RBC poll also found that overall, Boomers say their best outcome for retirement would be good health (28 per cent) followed by living life the way they envisioned (25 per cent), and having saved enough money for a comfortable retirement (23 per cent). For 64 year old Boomers, the vast majority (67 per cent) is in agreement that the best gift they could receive is "good health."

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December 20, 2010

Higher Income Canadians Decreasing Debt
A majority (67 per cent) of higher income Canadians are comfortable with their debt levels, says a consumer lending survey by PricewaterhouseCoopers. However, 64 per cent plan on decreasing their debt over the next 12 months. What they are most willing to delay purchasing in their efforts to reduce their borrowing levels are new cars ‒ 64 per cent; new electronics ‒ 59 per cent; and new houses or upgrades to bigger houses ‒ 56 per cent. However, even with relatively high consumer debt levels, 78 per cent of respondents think they have the capacity to borrow even more.

Managers Bullish On Canadian Equities
Investors could experience plenty of good cheer during the holidays as 77 per cent of investment managers are bullish on Canadian equities for the fourth quarter of 2010, says the latest Russell ‘Investment Manager Outlook.’ “Canadian equities were the prime benefactor of improving sentiment, with the proportion of bullish investment managers up from 56 per cent to 77 per cent. Bears fell from 31 per cent to just 15 per cent. “Although Canada is not immune to economic challenges – especially if the U.S. recovery continues to lag – our nation’s strong resource base is clearly a valuable asset as the global economy picks up steam,” says Sadiq S. Adatia, chief investment officer of Russell Investments Canada Limited.
Equities To Outperform Bonds
Equity market returns will likely soften in the next few years, but they’ll still outperform bonds, says Paul Taylor, chief investment officer at BMO Harris Private Banking. He expects the S&P/TSX composite index to reach a target of about 14,200 in 2011 and is particularly bullish on cyclical sectors such as energy, consumer discretionary, technology, and materials. However, many retail investors need to see more economic stability before they’ll be willing to re-enter the stock market.

Emerging Markets To Lead The Way
Emerging markets will lead the way for the global economy in 2011, say analysts with BofA Merrill Lynch Global Research. Its analysts' forecasts for the year ahead project global GDP growth of about 4.2 per cent, slowing from 4.9 per cent this year. Most of that is going to be driven by emerging markets which the report projects will grow 6.4 per cent. It also sees upside in stocks with global equities rising by about 15 per cent in 2011. The S&P 500 index will reach 1,400 in 2011, driven by a combination of stronger earnings and some expansion in price-earnings ratios.

Adding Staff Resolution For New Year
Adding new staff, reducing operating overheads, and introducing more performance related pay are the top New Year's resolutions for Canadian businesses, says a survey by Regus, a global provider of flexible workplace solutions. It found 45 per cent of Canadian businesses indicated that they intended to increase staff in 2011, with only four per cent responding that they would cut staff. Unlike the much criticized guaranteed bonus culture in the financial sector, Canadian businesses are planning to make performance related pay a key part of their 2011 plans, matching rewards with real results. Set against an overall bullish business outlook, high-performing staff can look forward to enhanced earnings in the New Year further highlighting that businesses see no room for complacent workers as economic recovery takes hold.

Expensive Items Lead To Spending Binges
Buying expensive things that don't fit in with your current home decor or wardrobe leads to more shopping binges, says a neuromarketing study by Henrik Hagtvedt, of Boston College, and Vanessa Patrick, of the University of Houston. It found who purchase luxury items that don't blend in with their wardrobe or their home tend not to return these products. Instead, they buy more ‒ usually cheaper ‒ products to complement their new acquisitions. The cost more often than not exceeds that of the original purchase, creating a vicious cycle of consumption the researchers call ‘aesthetic incongruity resolution.’ They conclude that all it takes to spur purchases is convincing someone with spending power to buy something that really does not fit in their house.

Crisis Is Not Yet Over
“History suggests that recessions involving financial crises tend to be deeper and have recoveries that take twice as long,” says Bank of Canada Governor Mark Carney. Writing in his ‘Breakfast with Dave’ column, David A. Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc., says Carney’s speech to the Economic Club of Canada, ‘Living with Low for Long,’ is well worth a read and a re-read. Carney said “current turbulence in Europe is a reminder that the crisis is not over, but has merely entered a new phase. In a world awash with debt, repairing the balance sheets of banks, households, and countries will take years.” Rosenberg says the speech is a reminder of why it is vital for governments, companies and households to refrain from overindulgence during this period of ultra-low interest rates in the ‘developed world’ and how the world’s imbalances are at risk of getting worse, not better, over the near-term. 

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December 13, 2010

Majority To Put More In RRSPs
A majority of Canadians (79 per cent) who already have money invested in RRSPs plan to invest the same or more this tax year than they did last year, says research from Investors Group. That’s an increase of 11 percentage points from the intentions of last year’s contributors (68 per cent). As well, Tax-Free Savings Accounts continue to gain popularity as a savings and investment tool for Canadians. Forty-three per cent have opened a TFSA account compared with 24 per cent at this time last year. Among those who have not yet opened a TFSA, 19 per cent plan to open one in 2011.

RONA To Pay Semi-annual Dividend
RONA inc. has started a new dividend policy under which a cash dividend will be payable to holders of its common shares on a semi-annual basis. The board declared the first payment under the new policy, a seven-cent per share dividend payable on March 25, 2011, to holders of record on March 10, 2011. RONA's board will review the policy from time to time in light of its cash flow, earnings, financial position, and other relevant factors. "The commencement of a dividend policy at RONA clearly illustrates how confident we are with the execution of our strategic plan, no matter the temporary slowdown in our industry,” says Robert Dutton, president and CEO.

Investors Trust Advisors
Despite a difficult two-year period for investors, trust in their financial professional remained high, says the 2010 ‘Economics of Loyalty’ survey by Advisor Impact, Charles Schwab Advisor Services, and researchers at Texas Tech University. The survey found 92 per cent of respondents gave their advisor a four or five out of five rating while 77 per cent were satisfied and loyal, with 93 per cent saying they are either somewhat or extremely likely to continue to work with their financial professional. “The good news is that the study found 58 per cent of ‘engaged’ clients referred clients because they wanted to ‘re-pay’ their advisor for a great experience. In other words, engaged clients want to help their advisors continue to be successful,” says Julie Littlechild, president and founder of Advisor Impact.

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December 6 , 2010

Income Inequality Growing
Income inequality in Canada is growing, says research from the Canadian Centre for Policy Alternatives. It reports that Canada’s richest one per cent – whose average income is $405,000 – accounted for almost a third of all growth in incomes from 1997 to 2007. By comparison, when the economy grew at a similar rate, in the 1950s and 60s, the richest one per cent of Canadians only accounted for eight per cent of all income growth. The CCPA also says that while the richest one per cent has seen its share of total income double, the richest 0.1 per cent has seen its share almost triple, and the richest 0.01 per cent has seen its share more than quintuple since the late 1970s. This outsized income growth for the richest Canadians is increasingly due to their jobs. Back in 1946, pay cheques accounted for less than half, 45.5 per cent, of the income of the wealthy. Today, 67.6 per cent of their income comes from wages, with the balance mostly coming from professional fees, dividends, interest, and investment income. For the richest 0.01 per cent, almost three-quarters of their income, comes from employment pay.

FAIR Wants Disclosure Improved
The Ontario government needs to improve disclosure in the investment industry and impose a fiduciary duty on financial advisors, says the Canadian Foundation for Advancement of Investor Rights (FAIR). In a submission to Ontario's Ministry of Finance, it is urging the adoption of greater investor protection measures for retail investors. FAIR Canada is calling for increased transparency of investment fees and returns, particularly for mutual funds; a mandatory duty for financial advisors to act in the best interests of their clients; more resources to help investors make informed financial decisions; and tougher consequences for financial firms that supply misleading information.

Strategies Can Reduce Taxes
While the 2010 tax filing deadline is still a few months away, considering tax saving strategies before the year-end can help maximize savings, says John Waters, manager of tax planning at BMO Nesbitt Burns. He says waiting until the new year to start thinking about taxes is too late since many cut-off dates that can reduce clients’ taxes fall at the end of the calendar year. Here are some year-end tax-saving strategies to consider:

  • Investments that have depreciated in value can be sold before year-end to offset capital gains realized earlier in the year to reduce overall tax bills. However, it is critical to ensure that a sale makes sense from an investment perspective since stocks sold at a loss cannot be repurchased until at least 30 days after sale to be effective.
  • Instead of donating cash to charities, consider donating appreciated publicly-traded securities. This can provide a tax credit equal to the value of the securities donated. Doing this could potentially eliminate the capital gains tax otherwise payable on the gain accrued on the security.
  • Personal tax rates on eligible dividends were increased in 2010, with further rate increases occurring in 2011 and 2012. In light of these recent changes, portfolios should be reviewed to determine if any changes to the investment mix are warranted.

Canadian GDP Mixed Bag
To say that third-quarter Canadian GDP was a mixed bag is a bit of an understatement, says David A. Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc. Writing in his ‘Breakfast with Dave’ column, he says real GDP came in at one per cent quarter over quarter annualized, below the Bank of Canada’s 1.6 per cent estimate, below the consensus estimate of 1.5 per cent, and below our forecast of 1.4 per cent. This was the worst performance since the third quarter of 2009 (when our recession officially ended). However, the details were generally much better that the headline implied. The business sector was booming with machinery and equipment investment up 28.7 per cent.

FTSE Creates Custom Index
FTSE Group has licensed Pro-Financial Asset Management to create a mutual fund for the Canadian marketplace based on the FTSE Custom North American Dividend Index. Nayan Acharya, custom specialist manager, says “As investors, asset managers, and fund providers seek increasingly tailored measures of performance, FTSE Custom is well-positioned to provide these consultative investment solutions.”

TSX ETF Launched
Horizons BetaPro S&P 500 Index ETF is trading on the Toronto Stock Exchange under the symbol HXS. HXS is the second ETF launched by BetaPro that will track an index already available to Canadian investors through another TSX listed index-tracking ETF. It seeks to replicate, to the extent possible, the performance of the S&P 500 Canadian Dollar Hedged Index (Total Return).

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November 29 , 2010

Fees Must Be Stated Before Trades Close
The Mutual Fund Dealers Association of Canada is proceeding with its proposed rule requiring firms to advise clients of any sales charges, fees, or other transaction costs, before completing a trade. In response to some of the concerns from the industry, the MFDA notes that the proposed amendments largely codify existing industry practice and are intended to address complaints where investors have advised staff that they were not informed of fees and charges before their order was accepted and only found out about these transaction costs when they received their trade confirmation or account statement. The changes will be brought forward for member approval at the association’s annual meeting in December.

Canadians Willing To Trade Returns For Security
A majority (seven in 10) of Canadians are still willing to sacrifice the potential for larger gains in their investment portfolio as a trade-off for safety, says a survey by Bank of Montreal. It found the majority of Canadians are still wary of the markets with 61 per cent worried about the safety of their investments and 74 per cent looking to include investments that guarantee returns. Those who have an annual income of $60,000+ are more likely to be looking for guaranteed investments (71 per cent) relative to those who have an annual income of less than $40,000 (56 per cent).

Landmark Hotels Re-open
For two landmark hotels, history begins again in 2010. London’s Savoy and the Fairmont Peace Hotel, Shanghai, have both re-opened. The Savoy, which originally opened in 1889, has re-opened after an extensive two-year restoration. Its 19,000 square feet of flexible meeting space includes the 4,500 square-foot Lancaster Ballroom which was immortalized in the movie ‘Notting Hill.’ The Fairmont Peace Hotel, which officially opened on August 1, 1929, and was widely known as the ‘Number One mansion in the Far East,’ underwent a comprehensive restoration program following its closure in 2007. The newly-revitalized hotel offers 270 deluxe guest rooms and suites with a selection of six restaurants and lounges, including the Jazz Bar, a Shanghai institution since the 1930s. Both are owned by Canada’s Fairmont Hotels & Resorts.

Lexus Makes Small Improvements
The 2011 model year for the Lexus IS 350 features small, but multiple, improvements. The Lexus IS 350 sport sedan has added all-wheel drive. It works in combination with the IS 350's vehicle stability control, traction control, and braking systems. The new AWD model will also be packaged with comfort features such as standard heated leather power seats, headlamp washers, high-intensity-discharge headlamps, and LED daytime lights. All IS models have had a minor makeover including a redesigned front grille, a new fog lamp design, new rear tail lights, and an updated exhaust pipe tip design.

Consumer Confidence Growing
Consumer confidence increased 3.9 points to 83.6, says the Conference Board of Canada’s latest survey. It’s the second monthly rise following declines during the summer. But it may not be enough to help retailers for the holiday shopping season, it says. On the question of whether now is a good time to make major purchases – such as a home, car, or major appliance – almost of respondents said no. The number of Canadian households who thought their finances would improve over the next six months rose to the highest level in six months, yet at about 25 per cent that number is still below what it was at the beginning of the year. Regionally, B.C., Ontario, and Atlantic Canada all registered increases in confidence. Quebec and the Prairie provinces had marginal decreases.

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November 22 , 2010

Rules Would Improve Compensation Disclosure
Canadian securities regulators have proposed rule amendments designed to improve the disclosure investors receive regarding executive compensation. The Canadian Securities Administrators is proposing to require companies to disclose whether their board has considered the implications of the risks associated with the company’s compensation policies and practices; disclose whether executives are allowed to hedge their exposure to their equity compensation; disclose fees paid to compensation advisors; and reconcile any difference between the fair value of equity or options awards when they are granted and their accounting fair value. It believes the proposed changes, which range from drafting changes to substantive new requirements, “would enhance the quality of information provided to investors and assist companies in fulfilling their executive compensation disclosure obligations.” It also says that the changes will help investors make informed voting and investing decisions.

Housing Market Not On Verge Of Bubble
BMO Capital Markets Economics asserts that housing market valuations are only moderately above long-term trends and Canada is not on the verge of a real estate bubble that is ready to implode. “All things considered, the Canadian housing market does not appear to be in a bubble and is unlikely to suffer a U.S.-style collapse,” say BMO economists Earl Sweet and Sal Guatieri. A comparison of the ratio of prices to incomes with the long-term trend suggests Canadian house prices were overvalued by as much as 18 per cent in late 2009. However, a three per cent decline in seasonally-adjusted prices so far this year, coupled with continued moderate income growth, has reduced overvaluation to a less worrisome 11 per cent in the third quarter of 2010. The report does take note of regional differences with B.C.’s housing market shown to be more overvalued than Ontario’s or Alberta’s. Consequently, B.C. likely faces a greater downside risk than other provinces. Valuations in Alberta and Ontario are closer to the current national estimate.

Quebec Rich Pay More Taxes
Not only do ‘the rich’ in Quebec not escape from paying taxes, their tax contribution is substantially greater than their share of income, contrary to popular belief, says an ‘Economic Note’ by the Montreal Economic Institute (MEI). It says with a salary of $50,000 a year, a family with two children pays 28 per cent of its income in taxes, taking into account government benefits received, sales taxes, municipal and school taxes, and contributions to various social assistance programs. For a doctor whose gross business income is $275,000, the proportion of income paid in taxes climbs to 39 per cent. For a taxpayer occupying a key position in a large corporation and earning $1 million a year, the rate hits 48 per cent, even with the help of advanced tax planning. As a group, taxpayers earning over $100,000 a year generate 19 per cent of all income, but pay 31 per cent of taxes.

Giving Back Considered Important
A solid majority of high net-worth Canadians (76 per cent) say they believe it is important to personally give back to their community, says a survey for BMO Harris Private Banking. The survey found that, despite the recent recession and market volatility, 62 per cent of affluent Canadians plan on giving away between one per cent and three per cent of their wealth this year and 59 per cent reported that the recession has not impacted their donating habits. The survey also found that 89 per cent of those who hold a business as an investment vehicle say that personally giving back to the community is important to them. As well, women (91 per cent) are more likely than men (72 per cent) to say it is important to personally give back to their community.

Insiders Sell In Record Numbers
The big news making the headlines is that the retail investor is back, plowing money into equity funds. However, this is happening just as the big boys are taking chips off the table, says David A. Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc. Writing in his ‘Breakfast with Dave’ column, he said retail investors “plowed money into equity funds now in three of the past four weeks (with inflows of $729 million last week).” However, insiders sold a record $4.5 billion of their company stock last week, the biggest weekly number ever recorded by tracking company No other week ever had more than $2 billion in net selling. Furthermore, selling in just S&P companies hit a whopping $2.8 billion, over four times more than the prior week and just as the market was testing a new recovery high.

Some Caution Required With Emerging Markets
While there is a great deal of investor optimism about emerging markets, Ben Kottler, institutional portfolio manager at MFS Investment Management, says there are also reasons for caution. In the long term, he told its ‘2010 MFS Fall Investment Seminar,’ the economic fundamentals are strong. However, equity returns have not always correlated with GDP growth due in part to dilution and concerns about poor governance. The question, he said, is whether it is different this time. Favourable demographics are setting the stage for sustainable growth and most have lower levels of debt versus developed markets. As well, over the past decade there has been a positive correlation between economic growth and market performance. And while emerging markets equity investors have not always been compensated for volatility, higher returns in the past decade have compensated for additional risk and volatility has started to come down.

Canadians Feel Better About Finances
Many Canadians are feeling better about their financial outlook this quarter as the capital markets enjoy a resurgence of late, says the Russell Financial Health Index (RFHI). “The results reflect the cautiously optimistic mood of investors as the capital markets made positive strides. For instance, the S&P/TSX Composite Index returned over 10 per cent in the third quarter of this year,” says Fred Pinto, managing director of distribution services. “Things are still unsettled, but we’re edging towards a recovering economy and a stock market that will continue to rebound in fits and starts.” Canadians remain most worried about having sufficient income for a desired lifestyle; leading an active and healthy lifestyle, and having a reliable source of income. In addition, the financial impact of medical issues and healthcare needs saw the largest drop in concern in the index during this period after reaching an all time high level of concern last quarter.

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November 15 , 2010

Competition For Clients Heating Up
The high net worth market will become fiercely competitive in the next few years, says Keith Sjögren, director of research and advisory services consulting at Investor Economics Inc. Speaking at the Portfolio Management Association of Canada’s annual general meeting and conference, he said an increasing number of firms are chasing a relatively static number of dollars in that specific section. There are about 12,700 advisors targeting high net worth clients in Canada with approximately 66,000 high net worth clients who will be seeking a financial advisor this year, about 5.2 prospective clients for each advisor. The volume of new high net worth clients is so limited, he said, that advisors need to become more aggressive in attracting clients from other advisors in order to continue growing their assets under management. Relying on referrals will no longer be sufficient for advisors to grow their businesses.

Quebec Battles Tax Evasion
Quebec has tabled a bill designed to improve investor protection and combat tax evasion. The province’s finance department says the objective of the bill is to implement a new oversight structure for businesses offering money services such as currency exchange, funds transfers, cheque cashing, and operating private automated teller machines. This is part of a broad offensive against tax evasion and money laundering. It would broaden the powers of the Bureau de décision et de révision; add a new infraction in the Securities Act regarding market manipulation; provide civil immunity for whistleblowers to the Autorité des marchés financiers; and amend the Derivatives Act to improve the oversight of those authorized to market derivatives and strengthen the process of authorizing the marketing of a product.

Personal Approach Preferred To Cookie-cutter
Canadians today no longer relate to the one-size-fits-all, cookie-cutter investor profiles that financial advisors have relied on for years, says the ‘2010 Desjardins Financial Security Retirement Survey.’ Instead, they want financial advisors to drop the usual lecture in favour of a more personal approach. At the core of this change is the fact that the majority of respondents feel a disconnect between traditional retirement planning and the reality of their lives. In fact, 39 per cent found the process stressful and only 8.3 per cent were making retirement saving a priority. Instead, 84 per cent said they were preoccupied with the pressures of making ends meet and maintaining a work/life balance.
Canadians Delaying Retirement
Canadians tend to think that they will take their retirement a little later than planned, says the AXA ‘Retirement Scope’ study. It says this is probably the effect of the recent economic crisis. In fact, among the working population, the five-year gap between the ‘ideal age’ and the ‘planned age’ for retirement – 57 versus 62 – has increased since the previous edition of the survey. But no matter what their current stage of life, those surveyed believe that they will still be able to stop working on average three years before the legal retirement age of 65. It is also interesting to note that 10 per cent of those surveyed have no idea at what age they will retire. This is a sign that these respondents have not yet started to plan their retirement.
TFSA Fundamentals Confuse Canadians
Canadians are still unclear on the fundamentals of the Tax-Free Savings Account (TFSA) approaches, says a Bank of Montreal survey. It shows that, despite the fact that more than 36 per cent of Canadians currently have a TFSA, few know what investments can be held within one. “While the adoption rate has been swift, we are seeing some uncertainty and confusion among Canadians when it comes to how to make the most out of a TFSA,” says David Heatherly, vice-president. The survey also found that, of those who do not hold TFSAs, 40 per cent stated it is because they do not have enough money to invest in one.

Boomers Revolutionizing Retirement
The baby boomer generation has revolutionized every life stage to date andwill also revolutionize retirement, says Bensimon Byrne's ‘Consumerology Report.’ "While most Canadians view retirement as a 'second life' – an opportunity to do the things they really want – we found three-quarters of Canadians are financially unprepared to afford the lifestyle they imagine," says Jack Bensimon, president of Bensimon Byrne. "The 'new retirement' will look a lot more like a 'working retirement,' as retirees try to afford the quality of life they want to maintain." Among the findings are that most people would like to retire earlier than they expect to be able to, but only a third of Canadians expect to be retired before 65 and almost one in five expect to be working after age 70. "Due to the images marketers portray, we have a clichéd and dated view of retirement, centered around passive leisure," says Bensimon. "The reality is that many Boomers intend to have active retirement lifestyles. Over 50 per cent of Canadians expect to work in some capacity well into their so-called golden years, whereas more than three-quarters of current retirees haven't worked in any capacity.”

Sun Life Offers Retirement Education Website
Sun Life Financial Inc. has launched a new interactive retirement education website for consumers. My Retirement Café ( is designed to offer consumers a stress-free, no-obligation environment where they can access resources and tools to help them work towards their retirement plans. “My Retirement Café is a revolution in retirement education,” says Kevin Strain, senior vice-president of individual insurance & investments. “We want to create a stress-free place where Canadians can go online, have a coffee, and think about retirement. The more you know, the easier it is to set goals and work with an advisor to create a plan that will really work for you.” When visiting the site, Canadians can learn about what to expect in retirement, how their expenses will change, and risks they face at this stage of life. The website provides this information through a number of resources including video case studies, tools, calculators, games, and quizzes.

ROI Passes $1 Billion
ROI Capital crossed the $1 billion in total assets under management in just eight years. Its tax credit fund was originally launched in 2002 and it now has more than 65,000 investors across 10 funds. “Retail investors are now discovering the true benefits of private placements that institutional investors have known all along. There is a rich history here and we are thrilled that many at the street level are recognizing the value of private placement investing,” says Fernando Cipriano, its co-founder and president. ROI Capital is driven by a strict private placement investment philosophy, where capital preservation and security backed investments are paramount.

Lincoln Offer Free Maintenance
Ford’s Lincoln brand will make its free-maintenance program permanent for all of its 2011 model year vehicles. The program covers oil and filter changes, tire rotations, and multipoint inspections on wear-and-tear items such as windshield wipers and brake linings for eight service visits. The service is also fully transferable if the vehicle is sold. It started offering free maintenance as a short-term incentive over the summer. It joins other luxury auto makers –Jaguar, Saab, BMW, Land Rover, Volvo, and Cadillac – in offering some sort complimentary maintenance.

Avoid Investment Fraud
In light of ‘International Fraud Awareness Week,’ from November 7-13, the CFA Institute is offering investor-friendly tips on how to avoid investment fraud. Read full article.

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November 5 , 2010

Election Results Good News For Investors
The mid-term election results in the U.S. are probably good news for investors was the consensus of a panel on developed markets at the Legg Mason Investment Symposium ‘Rethink 2010.’ Patrick Kaser, co-head, large cap value, for Brandywine Global, said investors like it when there is a division of power. As well, a more conservative congress means the so-called ‘Bush’ tax cuts may continue. He also believes that from an investor and manager standpoint some of the worst fears of derivatives legislation may be lessened, however, regulatory risk is still overhanging the investment sector. Sam Peters, senior portfolio manager at Legg Mason Capital Management, believes there will be a recovery in capital spending by U.S. corporations as they have been holding off until after the election. Michael Kagan, senior portfolio manager at ClearBridge Advisors, thinks the election results mean that the U.S. can now turn to real issues such as fiscal policy and the deficit. When Barack Obama was elected president, he had an agenda to pursue and knew it needed to get done right away. Now, the focus will be put on what they should be focusing on, he said.

Boomers Revolutionizing Retirement
The baby boomer generation has revolutionized every life stage to date andwill also revolutionize retirement, says Bensimon Byrne's ‘Consumerology Report.’ "While most Canadians view retirement as a 'second life' – an opportunity to do the things they really want – we found three-quarters of Canadians are financially unprepared to afford the lifestyle they imagine," says Jack Bensimon, president of Bensimon Byrne. "The 'new retirement' will look a lot more like a 'working retirement,' as retirees try to afford the quality of life they want to maintain." Among the findings are that most people would like to retire earlier than they expect to be able to, but only a third of Canadians expect to be retired before 65 and almost one in five expect to be working after age 70. "Due to the images marketers portray, we have a clichéd and dated view of retirement, centered around passive leisure," says Bensimon. "The reality is that many Boomers intend to have active retirement lifestyles. Over 50 per cent of Canadians expect to work in some capacity well into their so-called golden years, whereas more than three-quarters of current retirees haven't worked in any capacity. And while future retirees expect family to be a big part of their retirement, they are also looking forward to going back to university, learning a new language, picking up a new skill, starting a business, and getting involved in the community."

Economic Environment Abnormal
“We are definitely in an abnormal economic environment,” says David A. Rosenberg chief economist and strategist at Gluskin Sheff + Associates Inc. Writing in his ‘Breakfast with Dave’ column, he says “we just came off a two per cent real GDP growth performance in a quarter – the fifth in this nascent recovery – where the economy is usually humming along at a 4.3 per cent clip and on a lot less government stimulus.” Yet, just as the market became a feeding frenzy after the Fed began to aggressively cut the discount rate in August 2007, few people are focusing on the reasons why the central bank is being so pro-active. “The Fed just may well be seeing something in the economic outlook that has yet to fully register with Mr. Market,” he says.
Market Shouldn’t Dictate Risk Level
Investors should not let the market dictate the level of risk in their portfolios, says Nicolas Papageorgiou, associate professor of finance at HEC Montreal and director of quantitative research at BrockhouseCooper inc. Speaking at AIMA Canada’s luncheon ‘Thriving in a 30-VIX World,’ he said asset allocation and risk management should be addressed separately and there is a systematic and predictable component to volatility that managers and investors should exploit. Exposure should be managed actively so as to keep the portfolio volatility at the target level with market exposure removed if volatility rises above the target level and added if it falls below target level. This eliminates fat-tails by ensuring that the draw-downs are consistent with the volatility targets and, in essence, “we are ‘normalizing’ the return distribution,” he said.
Households Comfortable With Higher Debt Load
Fears about record high Canadian consumer debt may be overblown because Canadians are also beginning to save more and increasing their household wealth, says a Scotia Economics study. "Households today are comfortable carrying a higher debt load relative to their annual income flow in part because they have greater wealth," says Warren Jestin, Scotiabank's chief economist. The central bank has estimated that Canadian debt- to-income ratios hover around 147 per cent. That means that for every dollar earned, consumers owe $1.47. Jestin understands recent concern over the rapid rise in borrowing that has pushed Canadian household debts to new records. However, household net worth, or assets minus liabilities, is still close to a record high, he added. That's because personal savings levels are increasing, house prices remain close to record highs, and stock values have returned. “Many households in Canada emerged from the recent global downturn less damaged than their G7 counterparts in terms of job losses and wealth declines, and more confident to take on additional debt."

Fund Focuses On Technology
Cumberland Private Wealth Management Inc. has launched a market neutral fund offering investors a way to diversify their wealth portfolios with a strategy uncorrelated with the ups and downs of the markets. Focusing on the technology sector, it is designed to earn a positive absolute return while limiting market and liquidity risks by exploiting pricing inefficiencies across public markets, primarily NYSE-listed and NASDAQ-listed equity securities. The fund is intended for high-net-worth individuals, financial advisors, family offices, and smaller institutional investors.

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October 29, 2010

Scotia Offers Total Wealth Solution
Eligible high net worth investors and entrepreneurs will be able to access credit easily and efficiently through a fully automated and integrated lending platform launched by Scotia Private Client Group. The Total Wealth Credit Solution enables eligible clients to use a broad range of their wealth assets in combination as loan collateral to take advantage of investment opportunities. As well, clients can borrow against multiple asset classes held in different locations, under a single, integrated investment line of credit. This lets clients leverage their broad-based wealth in a more efficient and convenient manner.

Affluent Dip Into Savings
One in five affluent U.S. investors have dipped into their savings to meet immediate financial needs in the past year and a majority expect to delay retirement, says a Merrill Lynch survey. Their top three reasons for dipping into their nest egg were to cover regular monthly expenses (35 per cent), pay down excess debt (27 per cent), and compensate for a loss in income within their family (19 per cent). While 41 per cent are feeling financially better off today than they did one year ago (37 per cent feel roughly the same), more than half, 61 per cent, now expect to retire later than they had originally planned, up from 29 per cent in January 2010.

Private Wealth Business Goes To National Bank
National Bank of Canada and Montrusco Bolton Investments have finalized an agreement that will see the private wealth management customer service division of Montrusco Bolton in Quebec and Ontario join National Bank’s Private Wealth 1859 division. Montrusco Bolton Investments Inc. will now pursue its activities as portfolio manager with a mostly institutional clientele or as a sub-advisor for large distribution networks of financial products, including National Bank Financial Group. Since it was created a little over a year ago, National Bank’s Private Wealth 1859 has offered exclusive services and advice for all wealth management activities to affluent individuals and their families. In the summer of 2010, National Bank Trust’s activities were combined with those of Private Wealth 1859 in order to offer high net worth clients a wider, consolidated range of services.

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October 22, 2010

Properly Designed Stock Options Still Rewarding
Stock options received significant attention in the last decade from various stakeholders. Initially, the attention focused on the excessive payouts to executives as the financial markets soared. Full article >

RRSP May Not Be Best Solution
Canadian small business owners may be better off in retirement if they invested excess cash inside their corporation rather than paying out a salary merely to make an RRSP contribution, says a report by Jamie Golombek, CIBC's managing director of tax and estate planning. Full article >

Invest In Company, Not RRSP
Canadian small business owners may be better off in retirement if they invested excess cash inside their corporation rather than paying out a salary merely to make an RRSP contribution, says a report by Jamie Golombek, CIBC's managing director of tax and estate planning. ‘Rethinking RRSPs for Business Owners: Why taking a salary may not make sense’ reassesses the age-old maxim that Canadian small business owners should always pay themselves enough salary or bonus to ensure they can maximize their RRSP contributions each year regardless of whether they actually need the cash. Golombek argues that to the extent that the business owner needs cash personally, it may be preferable to extract the cash from the corporation in the form of dividends and forgo the RRSP contribution. For more, see the article ‘RRSP May Not Be Best Solution.’

Bond Investments Difficult Task
Income oriented investors will need to continue looking to the bond and equity markets for better returns. However, after the big rally in bonds over the past six months, this is a more difficult task in bonds, says The Harbour Group of RBC Dominion Securities’ ‘Quick Comment.’ And this may be more difficult as The Bank of Canada (BoC) left the overnight rate unchanged at one per cent and signaled that it will likely remain at this level for many months to come. It has also cut its Canadian growth forecasts for both 2010 and 2011, reflecting an era of fiscal consolidation ahead and households weighed down by a huge debt burden. Of greater importance is an underlying concern about currency markets and global imbalances that could hit the global recovery if not handled properly. Over the coming year, the overnight rate is likely to rise only slightly, to 1.5 per cent. Returns on holding cash are going up, but the pace is likely to remain uncomfortably slow for investors.

CC&L Drops Performance Fee
Connor, Clark & Lunn Financial Group is now offering a small cap market neutral strategy to individual investors. As well, in a departure from common pricing practices for alternative funds, it has elected to offer the fund without a performance fee. Instead, a flat management fee of 2.5 per cent will be charged for the A class and 1.5 per cent for the F class. Investors will be able to access the strategy via a fund distributed through investment dealers. With a performance history dating back to March 2006, the strategy has delivered strong absolute returns for clients, including significant positive performance in 2008. Previously, direct investment in the strategy has only been available to institutional investors and partners of Connor, Clark & Lunn.

Luxury Sector Rebounds
The luxury sector is rebounding better-than-expected this year thanks in large part to wealthy Americans replenishing their wardrobes after a year of self-denial and nouveau riche Chinese indulging in a worldwide spending spree, says a Bain & Co. study. Sales of designer clothes, fine leather goods, jewelry, watches, and other indulgences around the globe are forecast to surge 10 per cent to $236.7 billion in 2010, recovering from a disastrous 2009 when sales declined eight per cent. Sales in the U.S. market were up by 12 per cent, compared with six per cent growth in Europe and 22 per cent growth in Asia. Leather goods, the only category to hold steady during last year's dramatic declines, is expected to grow by 16 per cent while apparel, the leading sector, grew by eight per cent. Asian luxury sales were powered by China where sales grew by a whopping 30 per cent, poising China to become the third largest luxury market in five years.

Canadian Household Wealth Contracts
Canada saw a contraction in household wealth due to the financial crisis – almost 30 per cent leaving wealth per person still 12 per cent below the 2007 level, says a report from Credit Suisse. The report observes that Canada is similar to the U.S. in having more than half of its household wealth in financial assets, although at 56 per cent, it is less than in the U.S., where financial assets make up 67 per cent of total assets. The wealth distribution in Canada also differs from that of the U.S., it notes. Canada has both a larger fraction with wealth of less than $1,000 and a larger percentage with wealth over $100,000. In addition, Canada has a smaller proportion of millionaires in its adult population (3.5 per cent) than the U.S. (4.3 per cent).

Vertu Offers Luxury Smartphone
Mobile phone handset manufacturer Vertu has released its first smartphone. The Constellation Quest handset is designed to "seamlessly complement and enhance a discerning lifestyle" by combining "unparalleled luxury services" with business tools. Each handset is built by one technician who signs the unit personally. Users will find a sapphire crystal screen for clarity and durability and a casing formed from surgical grade stainless steel. Other features include Wi-Fi, a 3.5mm headset jack, a photo camera with dual LED flash and video recording, and a 32GB SD card pre-installed. It comes with quad-band GSM and quad-band WCDMA connectivity, so it can be used in Europe, North America, and Japan. Depending on the materials, the Constellation Quest costs between $8,000 and $28,000.

Government Changing Stock Option Tax Treatment
The federal government is proposing to eliminate certain tax benefits associated with stock options. However, even after eliminating the preferential tax treatment, stock options can be an appropriate form of compensation when properly designed and awarded, says Nadine Côté, an employment and executive compensation lawyer at Davis LLP. In the article ‘Properly Designed Stock Options Still Rewarding,’ she discusses the proposed changes and how to accommodate them in a stock option program.

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October 15, 2010

Brain’s Relationship To Financial Decisions Examined
Patricia Lovett-Reid, senior vice-president, TD Waterhouse, and neuroimager, Dr. Ravi Menon, Canada Research Chair in Functional and Molecular Imaging at The University of Western Ontario, have teamed up to help investors understand what is happening in their brains when they make financial decisions and how they can use this information to their advantage. “It is easy to get carried away and make investing decisions based on what we think of as ‘gut reactions’,” says Lovett-Reid. “The truth is that our decision-making process is a complex one – and better understanding how and why we behave the way we do can help investors to make smart choices.” Decision-making affected by emotions and instincts are not always very helpful to investors. For more see the article ‘Understanding Brain Helps With Investment Decisions.’

Scotia Offers Investment Alternatives
Scotia Private Client Group has launched two new portfolios and five new investment solutions for high net worth clients designed to deliver a broader set of investment alternatives to meet a variety of investor objectives. These solutions will provide additional opportunities for high net worth clients in short term and high yield fixed income investments, U.S. mid cap growth and value, and emerging markets investments.

View On Investments Holds Ground
After major swings in two earlier polls this year, Canadians seem to be holding their ground in how they view investments, says a national poll for Manulife Financial. The ‘47th Quarterly Manulife Investor Sentiment Index’ gained just one point in mid-September and showed stable results across most categories, after sharp changes in two quarterly surveys earlier this year. The September index edged a single point higher to +26. That follows an eight-point drop in a similar June poll on the heels of a record leap of 15 points in March, the biggest gain since 1999. "Given mixed news about global debts, the economy, and other challenges, many Canadians are likely waiting to see where things are headed," says Paul Rooney, president and CEO, Manulife Canada. "There's been a grab bag of economic forecasts and hopefully most Canadians are working closely with an advisor to determine where best to make changes to suit their own plans."
Global Wealth Increases
Global wealth has increased by about 72 per cent over the past 10 years, says a report from Credit Suisse. The report found that, despite the global financial crisis, the bursting of a significant housing bubble, and minimal equity returns over the past 10 years, global net worth per adult rose 43 per cent from US$30,700 in the year 2000 to US$43,800 by mid-2010. Also, as the population of adults increased from 3.6 billion to 4.4 billion over this period, aggregate household wealth rose by 72 per cent. Most countries have seen their wealth grow over this period. Large countries such as the United States and Japan only saw modest gains. The leading nations in 2010 are Switzerland, Norway, Australia, Singapore, and France, each of which records wealth per adult above US$250,000. Canada ranks eighth in the world in terms of aggregate household wealth and 10th in wealth per adult. Its current wealth level, US$226,000, is slightly behind the United States at US$236,000.

Executives Get Enhanced LTD
Manulife Financial is introducing Executive LTD, an enhanced long-term disability program designed to protect executives and professional employees. This meets the needs of advisors and employers seeking disability coverage to help close the income replacement gap for many higher income earners. Employers seeking a way of improving the long-term disability programs they offer key employees now have a new option available for their group benefits plans. "Employers across Canada have told us they need an enhanced and integrated benefit to provide their executives and professional staff with a higher level of long-term disability protection. This product helps them offer that protection to these key employees on a group basis that provides excellent value," says Rick Brunet, executive vice-president, group benefits.

Sun Life Global Investments Launched
Sun Life Financial has launched a new investment company, Sun Life Global Investments (Canada) Inc. Its suite of 12 funds includes seven funds sub-advised by MFS Investment Management, bringing MFS’s investment capabilities to Canadian investors through six global, U.S., and international equity funds and one global balanced fund. The inaugural fund family also includes four Milestone funds, Sun Life’s brand of target-date funds, and one money market fund sub-advised by McLean Budden. The new funds will be available through its distribution reach which includes Sun Life advisors, MFDA and IIROC advisors, and Sun Life’s group retirement and direct distribution businesses through its segregated fund platform. They are eligible for inclusion in registered plans, such as RRSPs, RRIFs, and TFSAs. The company is scheduled to begin accepting investments from clients October 25.

Claymore Launches Commodity ETF
Claymore Investments, Inc. has launched the Claymore Broad Commodity ETF. It seeks investment results that correspond generally to the total return (before fees and expenses) of the Auspice Broad Commodity Total Return Index, which is designed to benefit from upward trends in the broad commodity futures markets while at the same time minimizing downside risk during downtrends. This is Canada’s first broad commodity ETF.

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October 8, 2010

Mutual Fund Investors More Confident
Canada’s mutual fund investors are feeling more confident about their investments and the fund industry this year, says a survey by the Investment Funds Institute of Canada. It found mutual funds now rival primary residences as the investments in which investors have the greatest confidence. As well, the majority of mutual fund investors (87 per cent) have confidence that their retirement finances will allow them to live the life they plan in retirement. “Canadians have spoken and they have told us that they have confidence in the mutual fund product, the advice they are receiving, and their ability to save for retirement,” says Joanne De Laurentiis, IFIC president and CEO. The report can be found at

Tiger 21 Comes To Canada
Tiger 21, a ‘peer-to-peer’ learning group for high net worth investors will be launching programs in Vancouver, BC; Calgary, AB; Toronto, ON; and Montreal, QC. Tiger 21 hosts monthly meetings of the ‘super-affluent’ to exchange investment ideas and share personal experiences on a range of wealth-related issues. To qualify, members must have $10 million in investable assets. Canadian membership will be capped at 112 members.
Thane Stenner, founder of Vancouver-based Stenner Investment Partners and a director of wealth management at Richardson GMP, will serve as the managing director for Canada.

Luxury Sales Still Weak
Retail sales continued to grow in September at a pace that was roughly equal to that in August, providing some reassurance that consumers are continuing to spend, albeit in a  cautious manner, says MasterCard Advisors' ‘SpendingPulse.’ However, the growth was uneven across the various sectors, with shoppers continuing to purchase largely the items they most needed and only buying non-discretionary items very selectively. And sales of luxury items were weak despite a September stock market rally. This was surprising as sales in this segment tend to track trends in the financial markets. Sales of luxury goods – including high-end restaurant sales, but not jewelry – fell by 5.4 per cent from last September. This was the sector’s second consecutive month of year-over-year declines.

Christmas Book Offers Glass Pool Floor
The 84th edition of Neiman Marcus' Christmas Book features everything from a $4,500 Tory Burch-designed tricycle to a glass pool floor worth $1.5 million. However, the catalogue, famous for its extravagant gift ideas – such as a $248,000 commemorative charm bracelet or a 2011 Chevy Camaro fully loaded for $75,000 – again features a number of items costing less than $250. This year also marks the first time customers can access the book using their iPads. First published in 1926 as a 16-page booklet, it was initially intended as a Christmas card to the store's best customers.

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October 1, 2010

Mutual Funds Grow Critical About Compensation
Canadian mutual funds are growing more critical of management proposals on executive compensation, says the annual ‘Proxy Voting by Canadian Mutual Funds’ report. It found funds voted against one in four proposals in 2009, compared to voting against one in five proposals in 2006. ‘Say on pay’ shareholder proposals filed at Canada’s largest banks received strong support from Canadian mutual funds. In 2008, funds voted 52 per cent of their proxy ballots for ‘say on pay’ and in 2009 this grew to 68 per cent.

‘Bucket List’ Vacations Increasing
Multi-destination vacations top the list of the hottest destinations, experiences, and modes of travel for the coming year, says Thomas Stanley, COO of Cox & Kings, the 250-year-old travel company. He says travelers want to get the most out of their vacations and with new air routes coming on board, visiting two countries in one trip is more convenient than ever. Riding the rails is also developing as a vacation trend as a number of new luxury trains have been launched in the past year. Rail travel is an easy and comfortable way to maximize travel time, allowing travelers to see a large number of sites without having to pack up and fly or drive between these locations, he says. For example, the Maharajas' Express, India’s first state of the art cross-country train, offers guests luxury and comfort and amazing off-train excursions. And ‘bucket-list’ experiences are also on the rise. Travelers are looking to tick these must-see travel experiences off their lists. The ‘Nepal: Himalayan Helicopter Safari’ journey offers the opportunity to view eight of the highest mountain peaks in the world, including Mount Everest, while the ‘Splendors of Tanzania’ enables travelers to experience the annual zebra and wildebeest migration in the Serengeti.

Being Frugal Grows Trendy
Being frugal, even in luxury circles, is trendy right now, says a report by The Luxury Institute. It found that more than one in three wealthy people plans to decrease overall spending on luxury goods and services throughout the end of the year. Only six per cent of those surveyed actually plan to increase their luxury spending. However, the decrease in spending is only planned for certain categories. Consumers won’t be spending more on jewelry, home furnishings, watches, handbags, shoes, and automobiles. They will, however, spend on travel, dining, technology, and fitness.

Reasonable Limits Needed On Covenants
Restrictive covenants are not likely enforceable unless they are clearly worded and contain reasonable limitations on duration and territory, says a Spectrum ‘HR Employment Law Alert.’ It says a judgment by the Alberta Court of Appeal in ‘KOS Oilfield Transportation Ltd. v. Mitchell’ says agreements containing restrictive covenants, particularly those regarding confidential information, solicitation of business, and non-competition, must be limited as to time and territory. As well, the limitations of time and territory must be reasonable and appropriate and these agreements must be clear as to what types of activities they are intended to restrict. Former employees are generally entitled to compete with former employers, unless there are ongoing contractual or common law duties such as fiduciary obligations that can be justified by the former employer. The same general rule applies to circumstances of solicitation of business and maintaining the confidentiality of business information. Further, even for fiduciary employees, these obligations still only last for a “reasonable period of time.” 

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September 24 , 2010

Quebec Trusts Examined Closely
Countries as diverse as China, Czechoslovakia, Estonia, and many others have looked closely at how trusts are codified in Quebec civil law because they are increasingly seen as a legal vehicle that can attract foreign investment, says Lionel Smith, director of the Quebec Research Centre of Private and Comparative Law at McGill University's Faculty of Law. The concept of a trust has been around since the Middle Ages and in use in countries with a common law tradition including England, the United States, and elsewhere in Canada. However, in many countries, including most of Europe, they are not used. Quebec's code has been rethought with a civil understanding of the law of property, but also in a way that allows it to be used in all kinds of applications, including business succession and personal wealth management. Trusts also provide protection against insolvency or bankruptcy claims as well as more flexibility about the terms of distribution of assets of a business or an individual's wealth.

Demographics Dampen Equity Prices
Changing demographics may be a factor in the fact the S&P 500 has seen a lack of expansion in its price/earnings multiple, despite a very sharp rebound in earnings, says a report from National Bank Financial.  It says the continuing fear of a double dip in the economy is playing a role in holding down equities, but structural factors are also at work. In particular, it suggests, that unusual weakness in investor demand for U.S. equities at this point in the cycle also reflects the lower risk tolerance of an aging population in the aftermath of a very big negative wealth-effect shock. Equities (held directly or indirectly) currently account for more than 36 per cent of all household financial assets in the U.S., a share that is well above the historical average. However, the report finds it very unlikely that aging investors, who in the past decade have endured two of the worst bear markets in more than 70 years, will let this proportion rise.

Asset Managers May Need To Transform
A report by PricewaterhouseCoopers (PwC) reveals a number of factors that point to a major transformation in the asset management industry over the next few years. The study says that lower asset values, growing competition, and rising operational costs are causing asset management firms to experience lower profit margins. At the same time, investors are looking for increased transparency and more frequent reporting while regulators are placing more pressure on managers to provide this transparency. Some of the changes that asset management companies will need to address to succeed and remain competitive include more contact with customers as during lean economic times increased client contact by relationship managers is considered the top tactic to retain clients. As well, as baby boomers near retirement and life expectancies increase, the importance of savings and retirement will be even more significant. Asset managers will need to target the aging population by developing compelling investment strategies addressing the varied needs of their investors.

Group Caters To Families With $25 Million Plus
The Bank of Montreal (BMO) has set up a private wealth group under BMO Harris Private Banking in Canada that caters to families with at least $25 million in net worth. It will target families in Canada who are business owners. The private wealth group in Canada is a counterpart of the so-called ‘My Comprehensive Family Office’ of BMO's private banking operations in the U.S.

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September 17 , 2010

Global Wealth Slipped Four Per Cent
Despite a marked increase to the tune of 7.5 per cent, global financial assets at the end of 2009 were still four per cent lower than the level of 85.590 trillion euros reached before the crisis, says the Allianz ‘Global Wealth Report 2010.’ Global financial assets have been growing by an average of 3.7 per cent a year since 2001 – slower than nominal economic output. Per capita growth at 2.8 per cent was below average global inflation of 3.4 per cent. The reasons for this weak performance can be found in the developed countries. Low savings rates and, above all, the severe losses during the financial crisis and triggered by the bursting of the internet bubble have depressed average growth. The biggest losers of the financial crisis are almost exclusively established industrial countries – with the USA, Greece, and Spain at the fore. In the global investment mix, securities have lost six percentage points since the year 2000 whereas bank deposits have gained five percentage points and insurance policies one percentage point. The study shows that stock market crashes have a lasting impact on investment. Although securities purchases recover after the crash, long-term the securities ratio remains some five percentage points lower.

Edward Jones Offers Fee-based Program
Edward Jones has launched a fee-based managed investment program for individual investors who want to step back from active day-to-day trading and still have the diversification benefits of holding multiple mutual funds. Its ‘Portfolio Program’ allows investors to choose from 11 portfolio models managed by SEI. The models are designed to meet a range of investors' goals, timeframe, and risk tolerance and are built on the principles of asset allocation and active investment management. It uses a ‘manager-of-managers’ investment strategy to execute specific mandates based on their area of expertise.

Series Promises Guaranteed Income
Sun Life Financial and CI Investments are now offering a segregated fund solution designed to help Canadians achieve financial security through a guaranteed income for life and other powerful features. The ‘SunWise Essential Series’ is available in three classes with different guarantees, allowing clients to customize a solution that effectively meets their individual needs for investing, and retirement and estate planning. Clients can choose from three classes, depending on their goals – Income Class, Investment Class, and Estate Class. Income Class offers a guaranteed, sustainable income for life available at age 65. Investment Class is primarily for investors who are continuing to build their wealth and want to see their investments grow. Estate Class is for Canadians who are concerned primarily about preserving their assets for their heirs, including the minimization of estate settlement costs and delays.

Luxury Shoppers Cutting Spending
Over one-third (36 per cent) of luxury shoppers plan to decrease overall spending on luxury goods, says a research report from the Luxury Institute. It found only six per cent intend to spend more on luxury items. However, when they do spend, they are more willing to pay for leisure travel, dining, fitness, and technology, while cutting back on jewelry, home furnishings, gifts, watches, handbags, shoes, and cars. As well, it says 56 per cent of upscale shoppers believe craftsmanship on luxury products has waned. Fifty-one per cent say the quality is decreasing, 50 per cent see slippage in customer service quality, and 48 per cent say luxury products are losing their design value. As a result, it says the move away from luxury may have something to do with a feeling that the luxury products are not so lux anymore.

Mining CEO Bonus Payouts Rise
Canadian mining CEOs saw their cash bonus payouts rise from 61 per cent of salary in 2009 to 88 per cent of their salary in 2010, says a survey by Coopers Consulting Ltd. and PricewaterhouseCoopers (PwC). However, the 2010 average annual base pay of Canadian mining CEOs at $480,000 showed little change from the comparable figure reported in 2009. The survey also shows that the average total cash compensation package (annual base salary plus cash bonus) in 2010 was $840,000 (compared to $670,000 in 2009); the average actual cash bonus payout in 2010 was $540,000, compared to $303,000 in 2009; and the highest reported cash incentive percentage amount was 434 per cent of base pay, compared to 104 per cent in 2009. The survey indicates that salaried mine site staff in western Canada are generally better paid than their eastern Canadian counterparts. Results also show that salaried mine staff in coal, industrial, and other minerals operations are generally paid more than the other commodity groups while base metal mining in general, sees smaller pay cheques across the board.

Quintessentially Opens Canadian Offices
Quintessentially, a luxury lifestyle group and private members club, has opened its doors in Toronto, ON, and Vancouver, BC and plans to expand to other cities across Canada and the United States. Quintessentially says it was a natural step to open offices in both cities in order to fulfill the demand for memberships and to provide more insider knowledge and customer service expected by its current members locally and worldwide. In its launch year in Canada, the head office situated in Vancouver is servicing all of the Western provinces while the Toronto office is serving from Manitoba to the East Coast. With 55 offices worldwide, the luxury lifestyle conglomerate minimizes the time and energy that members would otherwise invest in organizing and planning out leisurely pursuits and maximizes the quality of the experience. 

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September 3 , 2010

Advisor Information Goes Online
The Investment Industry Regulatory Organization of Canada (IIROC) has introduced a resource to help investors learn the background of advisors who are currently approved to work at IIROC-regulated firms. With the ‘AdvisorReport,’ investors can obtain relevant on an advisor's educational background including industry courses that are completed for proficiency requirements; find out what functions or roles the advisor has received IIROC approval to perform; and learn about the advisor's disciplinary history. "Recent frauds and Ponzi schemes that have victimized investors underscore the need to give investors better tools to verify that their financial advisor is registered with and regulated by a securities industry regulator," says Susan Wolburgh Jenah, IIROC’s president and chief executive officer. IIROC is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada.

Investor Confidence Slips
Globally, investor confidence fell 4.4 points from July’s revised reading of 96.5 to 92.1, says State Street’s ‘Investor Confidence Index for August 2010. Confidence decreased in North America, dropping 5.7 points to 95.3 from July’s revised reading of 101. It also decreased among European investors dropping 1.2 points from 99.9 to 98.7 and Asia followed suit with confidence ticking down 1.6 points from 103.8 to 102.2. The results indicate that institutional investors remain non-committal in the face of a weaker macro-economic backdrop.

Designer Goods Not So Bad
Fake designer goods may not be so bad after all, says a study funded by the European Union. It says counterfeit goods have "greatly" improved in quality and seem to promote the brands they're trying to copy. The report concludes that people who buy counterfeits "would never pay for the real thing anyway." As well, it estimates the real cost of counterfeit goods may be as little as one-fifth of the previously estimated losses. The report concedes that as many as three million UK consumers buy fake goods annually, and nearly a third of counterfeit sales take place over the Internet. Fake goods are estimated to be a 1.3 billion-pound business just in the UK.

Franklin Starts As CFA Chair
Margaret Franklin has started her role as chair of the board of governors of CFA Institute, the global association for investment professionals. As chair of an 18-member board comprised of professionals from eight countries, she will bring the unique Canadian perspective of having witnessed the global recession from a well-regulated and comparatively sound economy. Franklin is currently the president and CEO of Kinsale Private Wealth Inc. and has more than 20 years of investment management experience with both institutional and private clients. Franklin will be joined on the board by Beth Hamilton-Keene, director and portfolio manager at Mawer Investment Management Ltd.

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August 30, 2010

Executive Salaries Going Up
Base salaries are expected to rise next year by an average of 3.1 per cent for executives and three per cent for management, says Towers Watson Data Services’ ‘2010/2011 Salary Budget Survey Report.’ As well, for all employee groups, the budgeted incentive/bonus pools are higher than those originally projected for 2010. The survey found Canadian employers are cautiously optimistic about economic recovery in 2011 and 98 per cent project salary increases for 2011, up from 95 per cent in 2010 and 70 per cent who actually gave increases in 2009. It also foundwithin organizations that plan to grant increases, average salary increases are projected to be higher than those budgeted for 2010. More organizations are also expected to adjust salary range midpoints in 2011 versus organizations that already adjusted or plan to adjust salary range midpoints in 2010.

Philanthropic Solution Launched
Canaccord Wealth Management has partnered with the Benefaction Foundation to offer a tax-efficient, cost-effective solution to enhance charitable giving contributions. Complete Canaccord Philanthropic Solutions, as part of a donor’s overall estate plan, allows donor legacies to live on, while also providing them with tax advantages. It provides donors with two different options for their charitable contributions. Direct Funds offer a direct-to-recipient gift of contributions. Donor Advised Funds are charitable giving vehicles tailored to reflect contributors’ personal philanthropic goals.

There’s An App For Lexus
Lexus has launched an iPad app that lets users at UK trade shows request brochures on specific models and book test drives at their nearest dealerships. The app is designed to take consumers’ information at motorshow events such as the British International Motor Show.  

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August 23 , 2010

Investment Fraud On The Rise
The economic downturn and the rising popularity of social media are being cited as reasons for increased investment in fraudulent schemes, says the ‘Criminal Intelligence Service Canada’ report. Securities fraud, in particular, has become increasingly sophisticated as fraudsters have taken advantage of social networking sites to exchange lists of victims and recruit accomplices. The report shows that 26 per cent of Canadians were approached with an attempted act of fraud in 2009, up from 17 per cent two years earlier. It also reports a rise in Ponzi schemes exposed by “the recent economic downturn” with collective Canadian losses of $320 million to date. It found that debit card fraud jumped 36 per cent from $104.5 million in 2008 to $142.3 million last year, while credit card fraud dropped slightly. While the number of people buying fraudulent investments remained stable, they lost more. In 2009, 38 per cent of investors in fraud schemes put in more than $5,000, compared to 32 per cent in 2006.

Mobile Device Security An Issue
Security and privacy appears to be an issue for Canadians when using a mobile device for banking and shopping, says a survey from KPMG International. It found only 19 per cent of Canadians surveyed feel comfortable using their mobile phone for financial transactions, compared to 34 per cent of global respondents. As well, only 15 per cent of Canadians have done banking through a mobile device compared to 45 per cent globally.

The number of Canadians making purchases using mobile phones doubled to eight per cent, but still well below the global number of 28 per cent. “These consumer concerns over privacy and security are pivotal to the continued adoption of e-commerce and mobile commerce,” says Brendan Maher, national industry leader of its information, communications and entertainment practice. “Companies that implement robust policies and safeguards and provide for full disclosure of these measures are likely to reap the rewards through enhanced customer attraction and retention.”

Cork Accessories Finding Audience
Designer accessories made from cork from the Algarve region of Portugal are seeing increased sales after an exhibition at New York city’s Modern Art Museum. Items including umbrellas and ladies’ purses made from Algarvean cork were exhibited at the MOMA until the end of July and an autumn/winter catalogue has been launched from which the items can be purchased. Eleven luxury designer products – including cosmetic pouches, aprons, wrist watches, shopping bags, and mens’ wallets – all made from the cork tree were showcased to introduce Portuguese company Pelcor. Products have been sold to the rich and famous and can be found in the homes of people like Madonna and Saudi Arabian Princess Jawaher Abdulaziz.

Salary Freezes Coming To An End
Canada organizations are showing strong signs that they are slowing down on freezing salaries, says surveys from two Canadian consulting firms. Aon’s annual ‘Pay Increase Survey’ shows that only one out of 25 participants expect to freeze salaries in 2011, compared to one out of six respondents that implemented salary freezes in 2010 and one out of three in 2009. As well, the ‘Mercer Compensation Planner’ that the number of companies that froze salaries dropped dramatically from 31 per cent in 2009 to six per cent in 2010.  Only two per cent of organizations are projecting an all-employee salary freeze for 2011. Aon’s projections indicate that salary increase budgets will be approximately three per cent of payroll in 2011 while the Mercer survey predicts pay increases of 2.9 per cent for 2011.

CSR Summit Looks At Innovation
‘How Social Innovators Are Breaking Boundaries, Shaking Up Traditional Business Models and Achieving Results’ will be the focus of a session at the ‘8th Annual Summit on Corporate Social Responsibility.’ Panelists will be Dr. Rafi Hofstein, president and CEO of MaRS Innovation; Chris Jarvis, owner and co-founder of Realized Worth/3BL Media; and David Labistour, CEO, Mountain Equipment Co-op. Organized by Canadian Business for Social Responsibility, it takes place October 21 in Toronto, ON. For more information, visit

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August 16 , 2010

Advisors Can Boost Assets
Canadians who work with financial advisors have substantially higher levels of investable assets than non-advised Canadians, says a report by the Investment Funds Institute of Canada. ‘The Value of Advice’ also shows they invest in securities with more potential for growth. The report analyzes a variety of independent, third-party research on the role that financial advice plays in the Canadian retirement savings system. In the report, IFIC argues that the Canadian public policy debate about retirement savings has demonstrated a lack of understanding and appreciation of the value that advice brings to investors. Its research also found that advisors effectively help individuals choose the right vehicles, plans, and investment mixes to optimize outcomes for their unique circumstances.

Canadians Ready To Drop Penny
A majority of Canadians are ready to get rid of the penny. In a poll conducted by Ipsos Reid for, 60 per cent of Canadians want to abolish the one-cent piece, a four-point increase over the last two years. Opinions on the penny vary by geography with 71 per cent of Quebecers willing to abolish the penny, followed by Atlantic Canadians (62 per cent. Canadians living in Manitoba and Saskatchewan are least likely to want to drop the one-cent piece (55 per cent). Men (70 per cent) are far more likely to dislike the penny than women (51 per cent). And, the younger a respondent, the less likely they wanted to get rid of the penny. Sixty-seven per cent of those age 55 and over wanted the penny gone, versus 52 per cent of people age 18-34.

Luggage To Match New Lexus
Tumi, an international brand of premium travel, business, and lifestyle accessories, is partnering with Lexus to create a premium line of travel cases customized to complement the look and feel of the 2012 LFA supercar. The luggage for the LFA supercar has a hybrid construction and is styled using components that are directly related to the appearance of the car. The custom sizes enable the pieces to be easily packed and lifted from the cargo area. It will also be inscribed with the vehicle identification number (VIN). Initial deliveries of the Lexus LFA begin in January 2011.

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August 9 , 2010

Retirement Benefits Retain Affluent Employees
Other than compensation and promotions, retirement benefits are the next greatest factor keeping affluent employees loyal to a company, says the Merrill Lynch ‘Affluent Insights Quarterly.’ Significantly more respondents chose retirement benefits than having a good boss (45 per cent), a convenient commute (31 per cent), or the option of flex time (30 per cent). Comparable to the importance they assign to retirement benefits, affluent employees also cite healthcare benefits (58 per cent) among top reasons for staying with their employer. However, respondents believe more could be done by their employer, mainly providing affluent employees with access to financial education or advice services. For more, download the Word document.

Fewer Purchases, More Spent
For sales of luxuries like garden and outdoor items, linens and bedding, 2009 was a rocky year, says a report from Unity Marketing. Far fewer affluent consumers purchased items from these categories. However, those who made purchases spent on average 50 per cent more than they spent on luxuries for their home in 2008. Affluent home owners, however, invested in sprucing up their homes in 2009, helping home improvement retailers to increase their share of high-end sales of furniture, lights, and floor coverings. In addition, luxury items for outdoor living got a boost in 2009 as luxury consumers invested more in outdoor furniture, power equipment, outdoor lighting and barbecues.

Investors Rely On Advisors
Canadian investors remain extremely reliant on their financial advisors for guidance and consider the relevancy of advice the most important factor contributing to the value of that advice, says a survey by Vision Critical, a global research and technology company. It found that 83 per cent of investors expect to call their financial advisor when they need financial advice and guidance, with 47 per cent making that their first call. The next most popular resource for investors looking for information is news and industry websites, with nearly 40 per cent of Canadian investors referring to these sites to help frame their financial strategies. Investors also have high expectations in terms of the frequency of communications from their advisor. For more than half of respondents, annual communication is not enough and 34 per cent prefer information on their investments at least once a quarter. High net worth individuals have significantly higher expectations, with more than 60 per cent expecting traditional investment communications at least once a quarter. The topics that investors want updates on most regularly include traditional investments, risk management, portfolio diversification, and alternative investments. In contrast, investors said it’s less important to regularly address such topics as insurance products, charitable donations, inheritance planning, and estate planning. These topics only need to be discussed once every few years.

Warning Issued On ETF, Green Technology Scams
Leveraged and inverse exchange traded funds and green technology scams are among the traps that could catch investors trying to rebuild their damaged portfolios, says the North American Securities Administrators Association. Its annual list of products and practices that deserve special scrutiny singles out products such as leveraged and inverse ETFs, which it says may contain hidden traps and complexities and may consist of highly leveraged bundles of exotic financial instruments; currency and foreign exchange trading schemes, which can involve high commissions; gold and precious metals schemes; green technology scams, including those related to the Gulf of Mexico oil spill clean-up; and oil and gas scams. Dubious practices on the list include affinity fraud which involves abusing membership or association with a religious or professional group to convince potential investors to trust the legitimacy of an investment; undisclosed conflicts of interest; fraudulent private offerings; ‘off the books’ deals that are sold on the side rather than through a broker’s employer; and unsolicited online pitches.

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August 2 , 2010

Investors Rely On Advisors
Canadian investors remain extremely reliant on their financial advisors for guidance and consider the relevancy of advice the most important factor contributing to the value of that advice, says a survey by Vision Critical, a global research and technology company. It found that 83 per cent of investors expect to call their financial advisor when they need financial advice and guidance, with 47 per cent making that their first call. The next most popular resource for investors looking for information is news and industry websites, with nearly 40 per cent of Canadian investors referring to these sites to help frame their financial strategies. Investors also have high expectations in terms of the frequency of communications from their advisor. For more than half of respondents, annual communication is not enough and 34 per cent prefer information on their investments at least once a quarter. High net worth individuals have significantly higher expectations, with more than 60 per cent expecting traditional investment communications at least once a quarter. The topics that investors want updates on most regularly include traditional investments, risk management, portfolio diversification, and alternative investments. In contrast, investors said it’s less important to regularly address such topics as insurance products, charitable donations, inheritance planning, and estate planning. These topics only need to be discussed once every few years.

Logo Size Reveals Social Status
The logo on a designer handbag or sports car may say far more about social status and social aspirations than the brand name itself, says the study ‘Signaling Status with Luxury Goods: The Role of Brand Prominence’ by the USC Marshall School of Business. It found that luxury brands charge more for items with subtle logo placement and discreet appeal. The study identified four luxury good consumer species, according to their preference for goods with prominently placed brand logos versus goods with subtle logo placement. Patricians are wealthy consumers low in need for status who pay a premium for products that only their fellow patricians can recognize. Parvenus are high in need for status and they use prominently branded luxury goods to signal to the less affluent that they are not one of them. Poseurs lack the financial means to buy luxury goods, yet are highly motivated to buy counterfeit items to “emulate those who they recognize to be wealthy. Finally, there are proletarians who have no drive for status consumption. The study found that a price disparity of several hundred dollars can be based solely on how prominently marketers display the brand on a purse and counterfeiters predominantly copy the lower-priced, louder luxury goods which appeal to the non-patrician status-seekers and rarely copy the higher-priced, subtle items.

FAIR Wants Conflicts Managed
The Canadian Foundation for Advancement of Investor Rights (FAIR Canada) is calling on the TMX Group Inc. to do more to manage the conflicts of interest that arise from the fact that it both profits from the business of listing companies and regulates that listings function. In a report, it examines the way seven other exchanges have dealt with these conflicts including the New York Stock Exchange and Nasdaq in the United States, along with markets in the UK, Japan, Hong Kong, Australia, and Scandinavia. The report concludes that those exchanges have all implemented measures to deal with these conflicts including corporate governance policies, changes to organizational structures, and other corporate policies and procedures.

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July 26, 2010

Canadians Introduce More Risk Into Portfolios
Canadian households haven’t changed their investment strategies dramatically since the market collapse of 2008 and 2009 and have actually introduced more risk into their portfolios, says research from Environics Analytics. ‘WealthScapes 2010,’ its financial database that measures the assets, liabilities, and wealth of Canadians, shows that in 2009 investors increased their holdings of stocks and mutual funds, and scaled back their bond and GIC holdings. The average Canadian household held $43,936 in stocks in 2009, up from $40,989 in 2008, while mutual fund holdings rose to $68,617 from $57,811 in 2008. Average bond holdings fell to $9,587 in 2009 from $11,079 in 2008 and GIC holdings dropped to $38,362 from $40,505. Households also substantially boosted their holdings of cash in 2009 to an average of $35,377 from $28,998 in 2008, indicating a higher degree of caution in the aftermath of the financial crisis. The average net worth of Canadians rose by 4.6 per cent to $351,282 with British Columbia as the wealthiest province with an average net worth of $489,812, followed by Alberta at $415,712. Ontario is rapidly closing in on Alberta’s second-place ranking with an average household net worth of $403,194.

Wealthiest Americans To Spend More
The wealthiest Americans will spend more on luxury items in 2010 than they did last year, says a survey from American Express Publishing. However, the ‘2010 Survey of Affluence and Wealth in America’ survey says high-end retailers wishing to capitalize on the surge must adapt to a luxury consumer who is family oriented and shops when happy, instead of as a means of attaining happiness. It shows that for the first time in three years, luxury spending is rebounding, aided by a rise in the number of discretionary households.mansion Also boosting luxury spending is the receding of the ‘luxury shame’ phenomenon, which had consumers foregoing purchases of high-end items because they felt guilty about shopping when others were struggling amid the recession. It found that 43 per cent of affluents surveyed in 2010 said they like it when others recognize that they are wealthy, up from 20 per cent in 2009. In addition, only 45 per cent said they feel guilty purchasing luxury goods in this economy, down from 54 per cent last year.

Canadians Bullish On Global Opportunities
Canadians are bullish about investment markets and global opportunities in particular, says national research from Franklin Templeton Investments Corp. Of Canadians surveyed who expressed an opinion, 54 per cent expect stock markets to rise, while only 19 per cent believe markets will fall. Emerging international markets such as Brazil and China were identified by 61 per cent as presenting the greatest investment opportunities in the next decade. The global sentiment reflects the bias of Canada's major institutional investors, says Don Reed, president and chief executive officer. For example, publicly-listed global equities make up 78 per cent of the Canada Pension Plan's equity portfolio,.

Spending Goes Up On Comfort
When it comes to luxury items for the home, spending is going up on mattresses and box springs. A study on luxury spending trends by Unity Marketing shows increasingly, when wealthy people spend money on their homes, it's to make them safer, calmer, and more comfortable, rather than to make them flashier. The top 20 per cent of U.S. earners spent significantly more on these kinds of low-key items in 2009 than they did in 2008. Spending on mattresses tripled; home security system spending rose 157 per cent; sheets and towels were up 107 per cent; and air conditioners increased by 91 per cent.

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July 19, 2010

Recovery Gets Vote Of Confidence
Canadian firms are giving the recovery a vote of confidence in a key quarterly survey by the Bank of Canada. It shows firms were concerned about the fall-out from the European sovereign debt mess, but still generally upbeat about the coming year. “Overall, (business executives) are positive about the outlook for business activity over the next 12 months,” the bank says. “For the first time in two years, firms, on balance, reported an improvement in their past sales activity.”

FINRA Using Google To Fight Fraud
The U.S. Financial Industry Regulatory Authority will use Google to combat online Ponzi schemes called high-yield investment programs (HYIPS), which are being pitched through social media sites such as Facebook and Twitter. It says that HYIPs display some of the classic signs of fraud, including the promise of extraordinarily high returns and the payment of ‘referral fees’ to current investors that bring in new recruits. In order to help combat this growing online fraud, FINRA will be using search engine advertising to direct online investors searching for HYIPS to its investor alert warning about these schemes.

Corporate Bond ETF Launched
Jovian Capital Corporation and its subsidiary AlphaPro Management Inc., the manager of the Horizons AlphaPro exchange traded funds, have launched an actively managed corporate bond ETF – the Horizons AlphaPro Corporate Bond ETF. The investment objective of the Corporate Bond ETF is to seek long-term moderate capital growth and generate high income. It will invest primarily in a portfolio of debt securities of Canadian and U.S. companies, directly or through investments in securities of other investment funds, including exchange trade funds.

Kids Can Go Gucci
Gucci, the high-end Italian fashion house, has unveiled a line of luxury kids' clothes – Gucci for Children. The spring 2011 collection will include opulent sippy cups, clothing, shoes, accessories, and sunglasses for kids ranging in age from infant to 8 years old. All items will bear a golden teddy bear logo. Oscar de la Renta announced its children's line in late May and Dolce & Gabbana has had a juniors collection since 2001, when it capitalized on the luxe diaper bag trend.

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July 12, 2010

Investors Turning To Collectibles
High net worth individuals are returning to 'investments of passion,' says Capgemini & Merrill Lynch’s annual ‘World Wealth Report.’ The report says this rise focuses primarily on two specific categories of investments – art and ‘other’ collectibles which includes stamps, coins, autographs, and other memorabilia. It says with financial markets still in flux, investors are approaching their passion investments as 'investor-collectors,' seeking out items perceived to have tangible long-term value. Towards the end of last year, high end service providers, luxury goods makers, and, most importantly, auction houses all reported a steady increase in demand. A breakdown of the core regions driving luxury industry growth indicates the dominance of Asia and China in the global market. Asia has witnessed a 10 per cent growth in the market, while China has seen growth of 15 per cent. This has resulted in world record prices within, for example, the Chinese market. In recent months, Chinese auctions have seen $94,000 bid for a bottle of Château Pétrus 1982 vintage wine and $710,600 for a rare 1897 Red Revenue Stamp.

Loss Of Confidence Hurts Industry
A loss of confidence among wealthy clients and a lack of efficiency in banking business models has hit the global wealth management industry, says Scorpio Partnership’s ‘2010 Global Private Banking’ study. However, it also found there is $10 trillion in high net worth bankable assets that have yet to be captured. These, it says, are the real answer for industry recovery. The wealth management industry now has $16.5 trillion in assets under management, up from $14.5 trillion in 2008.  Wealth is concentrated among the top wealth managers, with the top 10 now collectively managing $8.733 trillion in high net worth assets, 64 per cent of total industry of fee-based managed assets.

German Car Industry Rebounds
Germany's car industry is rebounding faster than expected thanks to a luxury car boom in China. The latest global sales figures from German premium car makers show that the nation's biggest auto companies are recovering from the severest industry downturn in decades. Volkswagen AG's Audi is expected to reach a record number of cars sales this year after first-half sales climbed 19 per cent to 554,950; BMW AG reported a 13 per cent rise to nearly 700,000 cars in the first half; and Daimler AG's Mercedes-Benz reported Mercedes sales rose 15 per cent to 556,700.BMW Private Jet However, Daimler's Smart small car struggled, with sales falling 17 per cent year-over-year in the first half. Sales in the U.S. and emerging markets have surged, but the largest factor is China where BMW more than doubled sales in the first half to 75,615 cars, as did Mercedes to 60,500 cars. Audi's China sales in the same period shot up 64 per cent to nearly 110,000 vehicles. The fast-growing number of affluent Chinese car buyers tends to prefer longe luxury sedans loaded with extras, making them more profitable for the makers.

Luxury Vacation Property Demand Slips
Demand for U.S. luxury vacation properties may be fading after an early 2010 rebound. Demand for homes in expensive resort towns surged in the first three months of 2010 with, for example, sales in the Hamptons on New York’s Long Island more than doubling in the first quarter from a year earlier. In Key West, FL, there was a 26 per cent increase in first-quarter sales from last year. Some of that surge was due to pent-up demand from wealthy buyers who had put off purchases during the financial meltdown that accelerated in 2008. However, concern about the financial markets and the world economy are dampening that demand.

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July 7, 2010

Apple Makes Rich Happy
The brands that make the rich happy include Apple, Microsoft, Best Buy, and Sony, says a study from the Affluence Collaborative, a research project formed by several marketing groups. The study helps explain why sales of iPhones and other gadgets were so resilient throughout the Great Recession. It reported that the top 10 per cent of all Americans control about 70 per cent of the wealth, and an even greater percentage of discretionary spending power. According to those in the survey, many wealthy consumers still don't want their purchases to appear excessive, with many respondents saying that they are finding new satisfaction in saving. This makes this research yet another piece of evidence reinforcing the view that consumers are holding on to the thrifty habits they developed in the depths of the economic crisis.

Disclosure Website Enhanced
The Investment Adviser Public Disclosure (IAPD) website has been enhanced to allow investors to electronically access information about individuals who work for money management, financial planning, and other investment advisory firms, including background information such as customer complaints, criminal or regulatory disclosures, including any disciplinary incidents over the past 10 years, professional qualifications, and employment history, says the North American Securities Administrators Association (NASAA). Previously, the IAPD only provided instant access to registration documents filed by registered firms. The move gives investors the important information they need to evaluate who they should hire to help them with their financial planning.

Sovereign Debt Concerns Business Leaders
Rising sovereign debt in the developed world is one of the main concerns for the world's business leaders and financial executives, says a survey for RBC Capital Markets. The debt problems facing eurozone nations have raised questions about the monetary union's future in its current form. Almost half of those surveyed agree that there is a greater than 50 per cent chance of one or more countries leaving the eurozone in the next three years. More than one-third (36 per cent) see at least a 25 per cent chance of a complete breakup of the eurozone over the same period. Out of those who see a significant chance of the eurozone losing a member in the next three years, Greece is considered the country most likely to leave the eurozone, followed by Portugal, Spain and Ireland. The survey also shows that the U.S. dollar is expected to remain the world's reserve currency for the near future. However, 40 per cent of respondents believe that over the next three years the currencies of exporting countries – such as the Persian Gulf States, Taiwan, and Hong Kong – will stop being pegged or managed closely against the dollar. The recent action by the Chinese government which led to the removal of renminbi's unofficial peg to the dollar further strengthens this expectation.

Canadians Lose Optimistic Edge
Some Canadians have lost a bit of their optimistic edge from earlier this year, says a national poll for Manulife Financial. The ‘46th quarterly Manulife Investor Sentiment Index’ in mid-June lost just slightly more than half of its record gain in March, when most economic signals pointed upward. The June index fell back eight points, to +25, after a similar March poll had registered a 15-percentage-point jump and the biggest single increase in more than a decade. Each of 11 categories that comprise the index lost some ground in the most recent survey, just three months after each area recorded gains.

"Some Canadians are likely reacting to more measured news about global debts, the economy, and other challenges," says Paul Rooney, president and CEO. "Given the economic turmoil everyone faced in 2008 and 2009, it's no surprise that some were hoping to see stronger signs by now of steady job growth and a more robust economy."

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June 24 2010

High Net Worth Investors At 10-million Mark
The world’s population of high net worth investors returned to the 10-million mark in 2009, despite the weakness in the global economy, says a report by Merrill Lynch Global Wealth Management and Capgemini. It says that the increase in the world’s population of wealthy investors was driven by emerging markets. However, the U.S., Japan, and Germany still accounted for 53.5 per cent of the world’s high net worth investor population in 2009. North America maintains a 31 per cent share of this investor population – 3.1 million – which is still the world’s largest. Canada’s population rose to 251,000 from 213,000 during the year. Looking at asset allocation, their allocations to fixed income instruments rose to 31 per cent from 29 per cent. Equity holdings also rose to 29 per cent from 25 per cent. Cash holdings declined slightly. High net worth investors are defined as those having investable assets of US$1 million or more, excluding primary residence, collectibles, consumables, and consumer durables.

More Guidance On Products Wanted
The vast majority of Canadian high net worth investors look to investment advisors for advice. However, many would like more guidance when it comes to selecting investment products, says a BlackRock, Inc.’s iShares exchange traded fund business survey. The survey of 500 Canadians with investable assets of at least $500,000 – not including their homes or employer-sponsored pensions – showed 67 per cent said they turn to advisors for at least some advice or decision-making, including help with managing risk and selecting investment products. Another 11 per cent said they retain advisors or brokers to effect transactions. Two-thirds of the high net worth investors said they are very confident when it comes to decisions around investing for retirement. However, only 53 per cent were as confident picking between stocks and funds, an indication that investment products are an area where these clients need guidance from their advisor.

Private Wealth Canada NewsMore than 80 per cent said they felt it was important that advisors or financial planners give consideration to their clients’ financial well-being and put their interests first.

Wealth Management Capabilities Expanded
Sun Life Financial Inc. is expanding its wealth management capabilities by establishing its own mutual fund company and a new family of funds in Canada. The initiative includes bringing the investment capabilities of MFS Investment Management, its U.S.-based asset manager, to Canadian retail investors. The new fund line-up will become available in the fall of 2010 through its advisors, wholesale distribution channel, and segregated fund platform. It will be in addition to the funds already available to Sun Life advisors through its ongoing strategic partnership with CI Investments.

Baby Boom Exodus Could Hurt Economy
Canada’s economic growth beyond 2014 will be constrained by the exodus of the baby boom generation from the labour market, says The Conference Board of Canada’s ‘Canadian Outlook: Long-Term Economic Forecast.’ Pedro Antunes, director, national and provincial outlook, says beyond 2014 economic growth will be restrained as the baby boomers leave the workforce. Labour shortages brought on by a wave of retirements will be the dominant economic trend until about 2030. Increased capital investment and improved productivity growth are key elements in sustaining strong economic performance over the long-term horizon. Strengthening these areas will help generate income and revenues necessary to sustain prosperity and to help pay for public programs such as healthcare.

CEO Pay Has Soft Landing
Canadians may have been hit hard by a worldwide economic recession, but Canada’s 100 highest paid CEOs enjoyed a soft landing, says a report by the Canadian Centre for Policy Alternatives (CCPA). ‘Soft Landing: Recession and Canada’s 100 Highest Paid CEOs’ says Canada’s 100 highest paid CEOs pocketed an average $7.3 million in 2008. As well, between 1998 and 2008, Canada’s top 100 CEOs’ average compensation outpaced inflation by 70 per cent. In contrast, Canadians earning the average income of $42,305 lost six per cent to inflation over that period.

View Private Wealth News Archive 2011

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