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    he said government does have a few ways to deal with the debt It can try to grow its way out but at current economic growth levels that does not seem likely It can also launch austerity programs However cutting back on government spending can slow growth Governments of countries such as the U S are unlikely to default on their debt he said so the likely scenario is that they will try to inflate it away The hope is that if inflation rises and the economy continues to grow at its current rate government debt will be reduced This is good news for the Canadian economy as by the time governments inflate their way out of debt commodities the backbone of the Canadian economy will have once again gained favour Canada s recent economic doldrums are because commodities which enabled the economy to grow during the financial crisis have fallen into disfavour For this reason he said they are recommending that investors maintain their current allocations to commodities as they will be too expensive to reacquire once they return to favour Foreign Equities Record Exceptional Returns The month of April once again saw exceptional returns for foreign equity funds sold in Canada says preliminary data from Morningstar Canada However domestic equity funds found themselves in negative territory Thirty three of its 42 indices had positive results for the month including increases of more than two per cent for eight of the 23 equity fund categories The top performing fund index in April was the one that measures the aggregate performance of funds in the Japanese equity category it posted a 7 8 per cent increase for the month extending its winning streak to six consecutive months Also among the top performers were the fund indices that track the Asia Pacific equity global small mid cap equity international equity and European equity categories Mixed economic data globally including positive real GDP growth for the first quarter in the United States and a disappointing decline in Chinese manufacturing contributed to a volatile month that concluded with most of the major markets showing improvement says Achilleas Taxildaris a Morningstar fund analyst Environment Favourable To Active Management The favourable active management environment that was evident for most of 2012 has extended into 2013 with 79 per cent of large cap Canadian equity investment managers beating the S P TSX Composite Index in the first quarter of 2013 says the Russell Canadian Active Manager Report That compares to 81 per cent in the fourth quarter of 2012 which was the highest in 8 years The median large cap manager return was 4 7 per cent in the first quarter of 2013 compared to the benchmark S P TSX Composite return of 3 3 per cent This sounds like a repeat of what we said a year ago at this time but the environment was excellent for active managers in the first quarter of 2013 says Kathleen Wylie head of Canadian equity research at Russell Investments In fact taking into account the fourth quarter of 2012 the back to back percentage of investment managers outperforming the benchmark was the highest since the middle of 2001 even better than what we saw last year Private Equity Industry Launches Data Standard Several major private equity firms have formed a new global industry alliance called the AltExchange Alliance The AltExchange Alliance now has the private equity industry s first comprehensive standard for data formats The common format defined by this new standard will transform the way general partners limited partners fund of funds and fund administrators share aggregate and analyze data The data standard uses tailored XML taxonomies an open standard and spans many relevant elements including portfolio company financials investor organizations and contacts fund information cash flows capital accounts and more The data standard has a corresponding validation platform Firms using the standard can submit a data file to the validation engine for certification prior to distributing or consuming it Baring Updates Equities Baring Asset Management s multi asset team has upgraded equities adopting the highest risk profile it has held in several years to take advantage of the differing growth dynamics in global equity markets The team believes that equities look like the most attractive asset class in part due to the poor returns available on alternatives such as government bonds that provide only a meager coupon and cash returns that are derisory With investment grade bonds at minimal spreads compared to governments only junk bonds seem to have any potential left and even there spreads are getting slim by historic standards The implied risk premium of equities looks high compared to bonds and earnings expectations are very low after last year s slowdown Most importantly though it says is the fact that policy settings globally are resolutely in favour of promoting risk taking which should favour equities April 29 2013 No Spending Changes For Wealthy Households The country s wealthiest households which account for nearly half of all consumer spending have no intention of cutting back on household spending this year says a study by the American Affluence Research Center Of this 10 per cent of households more than half do not plan to reduce or defer their expenditures in eight major categories such as autos homes and home improvements and 17 products and services such as vacation travel entertainment activities home good durables apparel and fine jewelry over the next year Seventy per cent of them seem to be fairly positive about having the same or higher net worth and 60 per cent expect their income to be the same or higher during the next 12 months says Ron Kurtz a representative of the American Affluence Research Center As a result most are apparently not feeling pressure to reduce or defer expenditures Asian Retirees Asset Rich Income Poor Households in Hong Kong Japan Singapore South Korea and Taiwan have relatively high levels of accumulated wealth and more efficiently mobilizing these assets could significantly supplement other sources of retirement income says Asset rich income poor Key components of retirement income security for aging Asia a report by Manulife Asset Management The report examines the economies of these five countries which are in the advanced stages of their demographic dividends and have accumulated considerable levels of household wealth While these levels of wealth suggest that constituent households should be able to retire with a high degree of income security evidence indicates that many are actually entering retirement asset rich but income poor Michael Dommermuth president of international asset management Manulife Asset Management Asia says While the market tends to focus on the accumulation phase of preparing for retirement we believe that it is just as important to be mindful of the de cumulation phase Our analysis reveals that all five economies have relatively bright prospects for improving retirement income security within the structures of existing policies programs and practices For example generally high levels of household wealth can be more efficiently mobilized by diverting cash holdings into equity fixed income or asset allocation products many of which are income generating Investors Shifting To Private Equity High net worth investors are continuing to shift assets into private equity says a report from TIGER 21 the learning group for HNW investors Highlights from the report which measured investment exposure at the end of the first quarter of 2013 include continued growth in private equity allocations and a decrease in real estate with most other categories remaining flat Private equity allocation increased to 22 per cent a rise of three percentage points from the fourth quarter of 2012 and up 13 percentage points from a low of nine per cent as recent as fourth quarter of 2010 Private equity investments have always been a favorite of our members who largely come from entrepreneurial backgrounds where they were actively involved in running companies says Michael Sonnenfeldt founder and chairman of TIGER 21 We believe the findings indicate that members are going back to what they know best and are more focused than they were before 2008 on keeping things simple he says Opportunities Grow In Resource Optimization Investors should consider strategic long term allocations in resource optimization opportunities says Simon Gottelier senior portfolio manager at Impax Asset Management Speaking on Investing Globally in Solutions to Resource Scarcity at a BNP Paribas Investment Partners Resource session he said there are several long term trends ranging from economic growth in emerging markets to the impact of climate change on water supplies driving demand for products and services that optimize the delivery and use of resources globally Much of the demand is coming from emerging markets such as China and India Growth is these countries is putting tremendous strain on resources especially as they become more and more wealthy and demand more resources This demand is driving up prices for resources Resource optimization is a key solution for resource demand but so far investors have focused on resource supply and resource optimization is an under allocated opportunity It is no longer just about renewable energy only as companies are responding with innovative solutions in energy efficiency alternative energy resource recovery and food and agricultural markets And the universe of these companies is growing There are new 2 400 companies operating in this area compared to just 250 in 1999 The universe is very diverse with cyclical defensive and special situation opportunities Retirement May Grow More Expensive Retirement is expensive and could become even more expensive in the future with improved longevity and uncertain future global economic growth says Jean Claude Ménard OSFI s chief actuary Speaking to the B C Public Sector Pension Conference on Setting Assumptions for Funding Actuarial Valuations he said in preparing actuarial reports for funding purposes the Office of the Chief Actuary uses its best estimates to develop economic and demographic assumptions However there is an inherent uncertainty in estimating the cost of pension plans and actuaries do not have a crystal ball to see the future As such it is generally understood that experience gains and losses as well as changes in economic and demographic environments could result in plan costs that are different from projected he said Canadians Optimistic About Market Canadian investors are optimistic about the market and their ability to meet their financial goals but a majority believe they can achieve their investment goals without holding stocks says Franklin Templeton s 2013 Global Investor Sentiment Survey Canadian and American investors share a sense of optimism about the markets In Canada 60 per cent of investors believe their domestic stock market will rise in value this year as do 65 per cent of Americans An overwhelming majority 81 per cent of investors in both countries expressed optimism about reaching their financial goals Yet by comparison only 69 per cent of European investors share the same optimism However this confident outlook is not yet translating into confident investing for Canadians Half of Canadian investors indicated that they will be adopting a more conservative investment strategy in 2013 compared to less than one quarter 22 per cent who will get more aggressive U S investors are more evenly divided with 39 per cent indicating they will invest more conservatively and 31 per cent planning to invest more aggressively It also shows Canadian and U S investors have more confidence in their domestic markets than in either developed or emerging markets Canadians allocated 71 per cent of their investments to their home markets and Americans allocated 78 per cent of their investments domestically last year the highest levels of domestic investment in any surveyed region Identifying Risks A Struggle Risk leaders are struggling to identify and manage the major risks facing their organizations says the biannual Aon Global Risk Management Survey The survey suggests there has been a significant decline in risk readiness among many of the survey respondents On average reported readiness for the top 10 risks dropped a material seven per cent from 66 to 59 percent from the 2011 survey and reported loss of income increased 14 per cent One possible explanation of the decline in risk readiness could be that the prolonged economic recovery has strained organizations resources thus hampering the abilities to mitigate many of these risks says Stephen Cross chairman of Aon Global Risk Consulting Our survey revealed that despite diverse geographies companies across the globe shared surprisingly similar views on the risks we are facing today whether or not they feel prepared The top three risks identified are economic slowdown slow recovery regulatory legislative changes and increasing competition SME Owners Lacking Confidence The confidence of small business owners continued to decline in April says the Canadian Federation of Independent Business CFIB The Business Barometer Index fell half a point to 62 4 After a promising January and February more business owners appear to be disappointed with their firms performance so far this spring says Ted Mallett CFIB s chief economist and vice president These latest results are back in line with what we saw in the last months of 2012 when the economy was exhibiting only lacklustre growth The pattern across the country has been quite uneven he says Succession Planning Lost In Day To Day Business The importance of succession planning for small and mid sized Alberta businesses gets lost in day to day concerns such as cash flow inventory and HR challenges and that s dangerous says Wellington Holbrook executive vice president business and agriculture at ATB Financial Owners who don t pay attention to succession planning run the risk of one day closing down their business when if planned correctly they could sell it he adds More than four in 10 42 per cent of Alberta small and mid sized business owners are 55 years of age and older Forty five per cent have been in business more than 20 years 30 per cent are self described as in the mature or winding down stage and more than one third are concerned with succession planning Only seven per cent had a formal written succession plan and almost six in 10 58 per cent had no succession plan at all April 22 2013 Canada Enjoys Healthy Net Worth Canada s net worth was at a healthy 648 per cent of gross domestic product in the final quarter of 2012 says a report from Capital Economics an independent economic research firm By contrast U S net worth was a more modest 550 per cent in the same period Canadians wealth advantage is built mostly on the big run up in housing prices in recent years and that s a very shaky foundation it says The firm has been forecasting for some time now an overall reduction of 25 per cent in Canadian house prices to bring the ratio of house prices to per capita income back to historic norms If that happens Canadians may have to give up their bragging rights in the North American wealth sweepstakes Foreigners Buying Montreal Luxury Homes Foreigners make up half of luxury home buyers in Montreal QC a higher proportion than in Vancouver BC or Toronto ON says a report by Sotheby s International Realty Canada And while foreigners have long been suspected of investing heavily in the Toronto and Vancouver housing markets non Canadian buyers from China Syria Mexico Russia and the United States are behind nearly half of top tier luxury purchases in Montreal Foreign buyers were responsible for about 40 per cent of luxury home purchases in Vancouver and 25 per cent of high end properties in Toronto The report s findings are said to be based on Sotheby s sales many of which are conducted privately and not registered on the multiple listing service MLS along with a survey of Sotheby s agents CEO Turnovers At Highest Rate The largest 2 500 public companies in the world revealed that the CEO turnover rate in 2012 was 15 per cent the second highest since 2000 and lower only than in 2005 says Time for New CEOs The 2012 Chief Executive Study by Booz Company a global consulting firm Furthermore companies are actively planning their CEO successions The share of planned turnovers at 72 per cent of all turnover events is the highest in the 13 year history of the study indicating that companies are seeking to build on the leadership stability most have enjoyed with the improved economy During the economic crisis boards took a reactive approach to CEO turnover and postponed CEO transitions Gary L Neilson senior partner at Booz and co author of the study says planned turnovers are at the highest rate ever and insider CEOs make up the majority of new CEOs indicating companies are taking a more thoughtful approach to ensure the right leaders are in place Volny Participates In Arizona Vintage Car Rally Peter Volny a frequent contributor to Private Wealth Canada with articles such as Collector Car Market Grows Stronger and The Wheels Haven t Fallen Off These Investments participated in one of North America s premier vintage car road rallies Arizona s Copperstate 1000 His co driver Dan Merson entered one of his all time favourite cars a 1970 DeTomaso Mangusta Only 401 of this combination of an Italian aluminum body designed by the famed Giorgetto Giugiaro with a mid mounted Ford 302 V8 engine were built and this was the only one participating They affectionately named it The Goose A total of 102 cars were entered including 17 Ferraris two very rare D Type Jaguars a genuine Ford GT40 six Cobras seven Mercedes 300SLs a 1958 Lister Jaguar Knobbly and numerous other classics With this year s event over and the focus on next year Volny says the only debate now is whether to take the risk and participate in next year s event with an open top car Is Cash No Longer Safe The recent expropriation of personal savings accounts in Cyprus serves as a warning that even cash in the bank

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  • Private Wealth Canada News
    going ahead March 1 and in the Euro area may have weighed on sentiment says Craig Wright senior vice president and chief economist RBC This weak spot should be short lived however as we expect that global demand for Canadian exports will recover providing a welcome boost for domestic manufacturers April 1 2013 Boomers Break Retirement Planning Conventions The Boomer generation is changing the nature of retirement planning and not always for the better says Randy Siller a financial services veteran A few areas of concern are that Boomers have been borrowing more are providing more financial support for their kids and are not taking into account that they are living longer he says With interest rates decreasing for several decades now and with house prices rising until 2008 refinancing mortgages was easy It was also easy to pull out additional funds that is to increase the amount of the mortgage and keep the payments the same due to lower interest rates The excess funds could be used to buy cars go on otherwise unaffordable vacations and so forth Now with larger mortgages on homes that have decreased in value some retirees will be stuck in those homes until housing prices come back Another concern notes Siller is that more than 90 per cent of Boomers say they are helping their children as the kids face such a tough job market To the extent that help entails having the children move back in temporarily that s not a big deal However where children are trying to live on their own and their Boomer parents are supporting that financially it can have a significant impact on the Boomers own retirement plans It s important to have an understood time frame for when that support will stop The third concern is that people are living longer On average men are now living to almost 76 women to almost 81 Siller concludes that Baby Boomer s need to sit down and create a realistic plan for retirement taking into account their longevity getting adult children to stand on their own feet financially as soon as possible and getting out from under large mortgage debt when the housing market bounces back Tax Credit Elimination Disappointing Canada s Venture Capital and Private Equity Association is disappointed with the 2013 federal budget proposal to eliminate retail investors ability to access tax credits for their investments in labour sponsored venture capital corporations LSVCCs We are puzzled at the federal government s actions on tax credits for LSVCCs says Peter van der Velden president of the CVCA and managing general partner of Lumira Capital Over the past several months the federal government has consulted with the CVCA on the Venture Capital Action Plan VCAP which is projected to increase the supply of venture capital available to fast growing small and medium sized companies in Canada Unfortunately the federal government elected not to consult with the CVCA or its members on the specific question of the current role and impact of LSVCCs in the market and it is the CVCA s view that this budget measure poses a severe risk of constricting the supply of venture capital There are two impacts of this budget measure which are of specific concern First LSVCCs are particularly active in Canada s regions outside the main centres of economic activity The budget puts this aspect of regional investment at risk Second LSVCCs play a structural role in regional and national fund of funds managers private independent venture capital funds and are frequent co investors with these funds in high growth companies across a variety of stages and sectors throughout the country By eliminating the federal tax credit a critical piece of infrastructure may be stripped from the entrepreneurial and venture capital eco system High Debt Levels Hurtful To Economy Seventy five per cent of executive chartered accountants surveyed believe the high level of personal debt among Canadians is hurting the economy says the CICA Business Monitor Fifty five per cent of respondents also view high debt levels as a threat to future demand for products or services at their company Clearly business leaders are uncomfortable with the high level of personal debt in the country says Nicholas Cheung a director with the Canadian Institute of Chartered Accountants CICA The executive CAs understand that at some point interest rates will rise When that happens many Canadians could be challenged to keep up with mortgage or debt payments and this would greatly impact their ability to purchase goods or services No consensus is emerging as to whether Canadians are following the advice of Bank of Canada Governor Mark Carney and the federal government to reduce personal debt levels Thirty eight per cent of respondents agree it is happening 31 per cent disagree 25 per cent are neutral and five per cent do not know PPI Seeks Best Course For 10 8 Plans PPI Financial Group Inc a marketer of insurance solutions acknowledges that measures in the federal budget will affect the so called 10 8 leveraged insurance arrangements These plans typically used by high net worth individuals and their corporations involve the purchase of a life insurance policy and the subsequent use of that policy as collateral to borrow funds for other investment purposes Policyholders are able to deduct the interest they pay on the loan thus generating a considerable tax benefit Measures in the federal budget aim to prevent the arrangements from being used in the future by making it punitive for clients to continue with the program Specifically the budget proposes to eliminate the deductibility of interest paid as part of a 10 8 arrangement eliminate the deductibility of premiums paid for policies assigned in support of 10 8 loans and restrict the credit to a corporation s capital dividend account where these policies are corporate owned Clients have until the end of the year to unwind their existing 10 8s before the tax benefits associated with the arrangements begin to be denied PPI has begun determining the best course of action for clients with existing 10 8 arrangements Alternative Budget Recommended For Nova Scotia The Canadian Centre for Policy Alternatives is calling on the Nova Scotia government to make a temporary tax bracket for those earning more than 150 000 permanent In its 2010 2011 budget Nova Scotia introduced a tax of 21 per cent on people earning more than 150 000 But the government said it would repeal that once the books are balanced The centre says revenues from that tax bracket were estimated to hit 60 6 million this fiscal year and call for the tax rate for the top two brackets raised by one percentage point to 18 5 per cent for those with incomes between 93 000 and 149 999 and by two percentage points to 23 per cent for those making 150 000 and over Vancouver Home To Mercedes Driving Academy As part of its efforts to help make Canadian roads safer for everyone Mercedes Benz Canada has launched a driving academy for new drivers The driver education program incorporates proprietary best practices and curriculum from other established Mercedes Benz driving schools around the world with intensive coaching methods that are personalized to Canadian students The academy offers driver education and training programs that go beyond learning the basic traffic regulations and fundamental driving techniques necessary for novice drivers to obtain their licence A combination of classroom in car and online education sessions will equip new drivers with skills and core competencies needed for safe and enjoyable motoring The Canadian academy will be operated by Driving Unlimited of Vancouver BC a long time partner of Mercedes Benz Canada U S Viable Tax Haven For Canadians The United States meets virtually all of the requirements of a good tax haven for Canadians but it is almost never mentioned when discussing worldwide tax havens says Robert Keats president of KeatsConnelly a cross border wealth management firm In his book A Canadian s Best Tax Haven the U S Take Your Money and Drive he illustrates the tax savings for Canadians using the U S as their tax haven and compares it with a traditional tax haven on an island in the middle of nowhere I cringe every time I hear a Canadian advisor tell his or her clients You don t want to move to the U S because you ll have to deal with the IRS says Keats Read more CSA Adds Managerial Requirements The Canadian Securities Administrators CSA are implementing requirements to ensure all investors receive essential information about the costs and performance of their investments The requirements apply to all firms registered to deal in securities or act as portfolio managers and are set out in amendments to National Instrument 31 103 Registration Requirements Exemptions and Ongoing Registrant Obligations NI 31 103 It is taking these steps as research shows that many investors currently do not receive this information Providing investors with clear and meaningful information about the costs and performance of their investments will enable them to assess their progress toward their investing goals and the value of professional advice they receive Investors can expect cost disclosure what product and service costs they can expect to pay transaction and any deferred costs and annually a summary in dollar terms of what they were charged SME Confidence Down The confidence of small business owners took a hit in March after two months of encouraging growth says the Canadian Federation of Independent Business CFIB The Business Barometer index dropped 3 points from February s results to 62 9 The numbers show a decline in optimism but they re in line with what we saw in late 2012 says Ted Mallett CFIB s chief economist and vice president Small business owners in Saskatchewan 71 5 and Newfoundland and Labrador 69 4 are the most optimistic in Canada while the biggest declines in confidence occurred in Alberta 66 7 and Ontario 61 9 Measured on a scale of zero to 100 an index level above 50 means owners expecting their businesses performance to be stronger in the next year outnumber those expecting weaker performance According to past results index levels normally range between 65 and 70 when the economy is growing at its full potential March 25 2013 Budget Targets Loopholes While the federal budget calls for no changes to income tax rates much of it is directed at closing down what the government regards as loopholes says a McCarthy Tétrault Commentary It says while certain transactions depending on their particular facts can be challenged by the government based on existing rules in the Income Tax Act ITA such challenges could be both time consuming and costly Consequently the government is introducing specific legislative measures to ensure that appropriate tax consequences apply to these transactions Transactions that are targeted include character conversion trades synthetic monetizations 10 8 life insurance arrangements transactions that avoid the application of the loss streaming rules on the acquisition of control of a corporation and transactions designed to utilize losses of trusts Budget 2013 will increase the effective tax rate on dividends other than eligible dividends received by individuals It proposes to reduce the gross up factor applicable to non eligible dividends from 25 per cent to 18 per cent and the corresponding dividend tax credit from two thirds of the gross up amount to 13 18 This measure will apply to non eligible dividends paid after 2013 The lifetime exemption on capital gains realized by individuals on the disposition of certain qualified property including qualified small business corporation shares will increase to 800 000 from 750 000 effective for the 2014 taxation year For taxation years after 2014 the LCGE will be indexed to inflation The new LCGE limit will benefit all individuals including those who have previously used the LCGE Two leveraged life insurance arrangements commonly referred to as 10 8 arrangements and leveraged insured annuities will be monitored and if structures or transactions emerge that undermine the effectiveness of the proposed measures further changes with possible retrospective application will be considered Young Investors Connect With Social Media Nearly 10 per cent of affluent investors in the U S with investable assets of at least 100 000 are younger than age 30 a demographic that lacks even a basic awareness of many of the leading mutual fund companies and products they offer says a study by Cogent Research Based on the ways this age group gathers and consumes information firms will need to dramatically alter how they engage with affluent Gen Y investors especially as their wealth and numbers increase As a group affluent investors are familiar with an average of 10 mutual fund firms while Gen Y investors are typically aware of half as many They rely more on different contact methods to connect with investment firms Older people watch commercials on TV read newspapers and listen to radio channels that Gen Y does not use People in their 20s are almost 10 times more likely to develop relationships with asset managers via social media They are almost twice as likely to depend on advisers for provider recommendations a reflection of their relative inexperience with investing If you want to gain a quick appreciation for how different Gen Y is in the way it consumes information simply ask a 20 something how they get their news stay current with their favorite programs and learn about new products says Meredith Lloyd Rice senior project director at Cogent Research Demonstrating a commitment to caring about Gen Y investors and engaging with them meaningfully in places and through media where they spend their time and energy makes sense says Lloyd Rice The companies that get there first and do it better will be leaps and bounds ahead of the competition Retirees Affected By Financial Repression Too many retirees or should be retirees are suffering the ill effects of financial repression a phenomenon whereby savers are systematically punished by negative real interest rates initiated by debt laden governments says Nick Barisheff CEO of Toronto based Bullion Management Group Inc Financial repression is a policy that sees many central banks cap interest rates for fixed income investors below the real rate of inflation It liquidates the real value of government debt but is devastating for retirees that depend on the cash flow from their investments Many people my age are panicking because traditional stock and bond investments are just not working Many are resigning themselves to working into their 70s if they are able or taking risky bets to chase some form of income stream To help seniors Bullion Management Group Inc has constructed a mutual fund that combines the 12 year safe haven stability of uncompromised gold bullion with a mechanism to receive monthly cash flow from capital gains in a tax efficient manner Morningstar Publishes Trend Report Despite ongoing worldwide economic uncertainty the global fund management industry grew at a 3 9 per cent organic growth rate in 2012 says the Global Fund Flows Trend Report by Morningstar Inc a provider of independent investment research The report examines the trends that drove 2012 mutual fund asset flows in five key markets Australia Canada Europe Japan and the United States and provides a worldwide overview that includes these regions as well as other markets in which Morningstar tracks fund performance and assets Excluding money market funds 565 billion flowed into mutual funds during 2012 Yet these massive inflows fell short of 2009 and 2010 which saw inflows of 746 billion and 672 billion respectively Moreover the average management fee that the industry gathers from investors has fallen dramatically since 2007 due to the cyclical shift to fixed income products and a secular inclination toward less expensive funds says Syl Flood product manager investment research for Morningstar The prevailing global trend in 2012 was investors hunger for yield and quest for the perceived safety of fixed income funds Worldwide fixed income funds gathered 535 billion in 2012 or nearly 95 per cent of long term net inflows Collector Car Market Grows Strong In today s economy the collector car market has shown amazing resilience as it continues to set record after record Auction Week in Scottsdale AZ is the barometer of the market with six auctions over the span of a week This year saw the seemingly impossible 200 million barrier not just broken but totally annihilated with 228 million in sales collectively for the six auctions No less than 31 vehicles sold for over the 1 million mark which was more than double last year s tally In Collector Car Market Grows Stronger Peter Volny recaps some highlights of the auction Read more Recovery Impacts Recruitment North America s slow but steady economic recovery has had an impact on recruitment says a global research study The Michael Page Global HR Barometer 2013 shows 90 per cent of businesses in North America are planning to recruit in 2013 compared to 76 per cent of organizations in Europe It also found that a solid recruitment and talent acquisition strategy is the top priority for 2013 for HR leaders in North America Compensation and benefits rank second Despite being a key area of focus for HR professionals for half of businesses the search for good candidates remains difficult or very difficult As a result North American HR departments and companies are adopting multiple channels to source the best talent with 96 per cent using online job posting sites 88 per cent using their own company websites and 75 per cent employing recruitment consultancies Long term Investments Impact Job Creation Long term investments in assets such as infrastructure or commitments of patient capital to fuel product development have a direct impact on job creation innovation productivity long term GDP growth and the environment says Mark Wiseman president and CEO CPP Investment Board CPPIB In remarks to the Canadian Australian Chamber of Commerce he discussed the dramatic need for governments worldwide

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2013-04-11 (2016-04-26)
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    tax at KPMG in Canada Sales tax property tax capital tax and other local business taxes are all considerations International companies should analyze all of these costs carefully and how they interact Canada s corporate tax rate dropped by two per cent to 26 per cent in 2012 from 28 per cent in 2011 but the decline in most regions of the world in 2012 was much smaller at less than one per cent Based on these results the survey says the global trend towards falling rates will continue in 2013 albeit at a slower pace than in the past Canada s general corporate tax rate for 2012 which includes federal and provincial tax compares favourably with the U S corporate rate of 40 per cent but is still higher than the UK rate of 24 per cent and the European region average of 20 5 per cent Great Time To Invest In U S Equities It s a great time to invest in U S stocks for a variety of reasons says Rick Przybylski chief investment officer at STYLUS Asset Management He points to a number of factors very attractive stock fundamentals excellent dividend yields relative to bond yields and the support of a slow but sustained economic recovery in employment housing prices and manufacturing Also for Canadian investors who already have exposure to Canadian stocks an investment in the U S market acts as an excellent diversifier More than 75 per cent of the S P TSX Composite Index is invested in just two sectors resource and financial stocks By comparison the largest two sectors in the S P 500 Index technology and financial stocks account for only 34 per cent of its weight A broader mix of stocks in the U S means more choice and opportunity and less reliance on volatile commodity prices The final piece of the puzzle is the fact that Canadians can invest in the U S market with the dollar virtually at par which would be an added benefit to investors in the next few years as the U S dollar strengthens Russia Unusual For Emerging Market Russia is somewhat unusual for an emerging market economy says Igor Danilenko senior equity portfolio manager at TKB BNP Paribas Investment Partners Russia as it was once one of the world s leading economies However he told the BNP Paribas Investment Partners information breakfast seminar Russia Dispelling the Myths to Reveal the Opportunities the former communist country has created a lot of wealth from scratch over the last two decades Calling it a remarkable transformation it is now a top 10 global economy which is slightly larger than Brazil For investors it offers a number of benefits Russia compares well within the emerging markets universe with its balanced budget low economy wide leverage and relatively good macro situation with three per cent growth expected for 2013 It is a market where good active managers can significantly outperform the index and active opportunities can be found within listed companies with unique sustainable competitive advantages he said Private Equity Offers Alternative Despite the North American economic recovery headwinds facing public markets private equity continues to represent an alternative investment strategy that is delivering sustained investor returns says Rick Nathan managing director of Kensington Capital Over the past several years traditional portfolios of stocks and bonds have largely failed in their core mission to create wealth generate income and secure long term retirement savings he says However the private equity market has been providing investors with a reliable avenue to participate in the steady economic growth Private equity represents an investment in the real economy where wealth creation is based on real measures such as earnings growth and profitability and the abilities of private equity managers to translate these measures into tangible gains for investors he says Low Growth Doesn t Translate To Returns Investors in Canada need to keep three things in mind says Roger Aliaga Díaz a senior economist with the Vanguard Investment Group One is that low growth does not translate directly to equity returns It s not a one to one relationship especially because markets are forward looking and trends and equity valuations are already priced in As well many investors look at countries such as Canada as a way to gain exposure to underlying commodities but it s important to keep in mind that investing in equity markets of those countries doesn t mean gaining exposure to the underlying commodities The correlation of equities in Canada to equities in the rest of the globe and in the U S is much higher than the correlation with equities to commodities As a result investors may get much less diversification than they were expecting when they use these strategies Finally they need to keep a long term perspective he says It s very difficult to time the movements in commodity prices and it s important to keep in mind long term goals and maybe focus on costs which can be controlled in the short term Morningstar Investment Conference Date Set A panel discussion on the macro economic outlook will lead off the 2013 Morningstar Investment Conference As well a panel of Morningstar analysts will provide insights on portfolio construction and the company s head of retirement research will address the factors that advisors can control in adding value for their clients It takes place June 5 at The Carlu in Toronto ON For more information visit Morningstar Conference Advocis Proposes Professions Model Canadian investors need better assurances that the financial advisor they are working with is properly qualified to manage their money says Advocis The Financial Advisors Association of Canada In the current environment anybody can set up shop and call themselves a financial advisor regardless of their training education or ethics it says This puts Canadians at risk every day as they take financial advice from people who may not necessarily be experts Advocis is proposing the implementation of a professions model for financial advisors that will tightly regulate the use of the title financial advisor and require membership in a recognized professional association Too often the headlines are about Canadians being defrauded of their hard earned money or losing their retirement savings because of the shady actions of someone who calls him or herself a financial advisor says Greg Pollock president and chief executive officer of Advocis We want to raise the professional bar and protect the wealth of Canadians by ensuring that when they turn to a financial advisor they are turning to a person they can trust If that trust is broken we want Canadians to have a reliable course of action Mandates Respond To Canadians Seeking Income And Growth Canadian investors seeking income and growth potential insightful access to worldwide opportunities and deep on the ground stock picking expertise will now have access to two investment portfolio solutions In collaboration with Lazard Asset Management Brandes Investment Partners Co has launched two mutual funds to the Canadian market a global equity income fund a total return investment solution and an emerging markets multi strategy fund a less volatile means to invest in the growth of emerging markets The two respond to the demand for prudent risk conscious strategies without sacrificing long term growth potential says Carol Lynde president at Brandes Checking Off The Bucket List With 122 countries checked off his bucket list Peter I Volny says he has seen and done a lot Yet his latest adventure Gorillas In Rwanda tops his list Visiting Rwanda to see the Silverback gorillas in the Virunga mountains Volny recounts his experiences with these gentle primates and recounts his face to face moments with them Read more Business Barometer Upward Trend Continues After a lacklustre November and December Canadian entrepreneurs are feeling more optimistic in early 2013 says the Canadian Federation of Independent Business CFIB Its Business Barometer index continued January s upward trend by rising another half a point to 66 2 in February For the first time in a while small business owners are reporting index numbers that indicate the economy is growing nearer its potential says Ted Mallett CFIB s chief economist and vice president The January and February results suggest Canadians are seeing modest but widespread economic growth Measured on a scale of zero to 100 an index level above 50 means owners expecting their businesses performance to be stronger in the next year outnumber those expecting weaker performance According to past results index levels normally range between 65 and 70 when the economy is growing at its potential Less Than Half Have Website Only 46 per cent of Canadian small businesses have a dedicated website and less than half 48 per cent of those businesses sell their products and services through their websites says an RBC small business survey With the majority of consumers choosing to research and shop for products and services online businesses without a web presence are missing a significant opportunity says Jim Mulligan national director retail RBC Royal Bank Businesses need to be visible where consumers choose to be so investing in an online strategy is fundamental to attract new customers and stay competitive In fact 56 per cent of the entrepreneurs in the survey rate finding and keeping clients as one of the top business challenges that they will face over the next year yet only 41 per cent of those surveyed promote their business using a dedicated website Family Business Sales Grow Sixty per cent of Canadian family businesses reported sales growth in the last year and in the next five years 87 per cent plan to grow steadily says the Canadian supplement of PwC s Global Family Business Survey However securing talent to drive this growth is a challenge it says It found that for the next five years attracting a skilled workforce is the top concern for 62 per cent of Canadian family businesses while the economy is the primary issue 66 per cent for global respondents Sharon Duguid director of the Centre for Entrepreneurs and Family Enterprise at PwC says the difference lies in the relative stability of the Canadian economy aging workforce and the tight talent pool Canada is facing While everyone is competing for the same talent typically family businesses are not able to compete with multi national players when it comes to compensation On the development end their conservative growth strategies are not appealing for younger talent who want to climb the ranks quickly Yet a family businesses structure can offer significant benefits particularly their agility continuity and their long term perspective mindset Family businesses need to do more to highlight their competitive advantages their commitment and loyalty to their people People are attracted to companies that have strong values and where they know their efforts will be recognized both of which are characteristics of family businesses she says February 25 2013 Americans Need More Investment Communication Nearly half of ultra wealthy Americans 49 per cent feel isolated when making financial decisions says a survey by SEI a provider of asset management services and investment processing solutions Nearly two in five 39 per cent feel most confident getting advice for difficult financial decisions from a wealth advisor and more than half 57 per cent feel their wealth advisor is not giving them all the information they need to assess investment risk The results point to a lack of communication between the ultra wealthy and their advisors when it comes to the potential risks involved in investment decisions The challenge is trying to balance the need for external input with clients instincts to take the lead on family decisions financial or otherwise It really comes down to having frequent and meaningful communication with clients in order to arm them with all the information and advice they require to make confident decisions Hopefully in doing this the client will feel more connected and more informed when assessing financial decisions says Michael Farrell managing director for SEI Private Wealth Management Results also showed that the ultra wealthy believe they would feel financially secure with double the level of assets they currently have regardless of present net worth What s more the amount needed for investors under the age of 50 to feel they have financial security is even greater coming in at more than three times their current net worth Investors Acknowledge Emotional Investing Thirty four per cent of Canadian investors acknowledge that they take an emotional approach to investing and another quarter 26 per cent are unsure of whether they do or not says Time to Take Stock a report by Franklin Templeton Investments Corp Canadians are still looking at equities through bear market glasses The dramatic market drop of 2008 continues to stand out in investors minds even as the market has climbed back up says Ronice Barlow head of strategic planning and business development Canada Franklin Templeton In fact when Canadian investors were asked if they currently view fixed income assets including bonds and bond mutual funds as a safe haven for their money 61 per cent indicated that they do Also 35 per cent believe that fixed income assets offer the best returns in today s markets These views on fixed income may be keeping many investors on the equity market sidelines and further from their long term financial goals in a period where the S P TSX composite index has risen about 68 per cent since the market bottom in March 2009 Time to Take Stock outlines three concepts as to why investors hold the beliefs and make the decisions they do These include availability bias wherein decision making is greatly influenced by what is personally most relevant recent or dramatic loss aversion whereby the pain of loss is generally much stronger than the reward felt from a gain and herding defined as an innate tendency to follow the crowd which makes it easy for investors to get caught up in what everyone else is doing Confidence Rises For Mergers and Acquisitions Confidence to undertake mergers and acquisitions M A is returning among Canadian companies says KPMG s Global M A Predictor Not only do companies appear to have their appetite back for M A they also have the capacity to transact Over the last two years the capacity for deals has been steadily rising as companies have focused on reducing debt and building cash reserves We are seeing significant transaction appetite with private equity having capital to deploy and corporate balance sheets having significant capacity to transact says Neil Blair partner KPMG Corporate Finance The outlook for 2013 is more positive than it has been for over two years the winning combination of confidence capital and capacity bodes well for the health of the Canadian M A market Manager Optimism Guarded Money managers are more optimistic about potential equity returns this year but that optimism is guarded with negative views on world growth and medium term government bonds says a survey of managers by Towers Watson The largest looming issues for managers are fiscal resolution in the U S and the European Central Bank s success in propping up the periphery as a significant number of managers still expect a sovereign debt default in the Eurozone It found government intervention is dominating the economic landscape globally and real GDP growth is expected to fall this year despite better equity returns expected U S equity returns are expected to be around seven per cent this year down from a projected eight per cent last year Expectations for the UK and Japan are six per cent China returns are expected at 10 per cent up from 7 8 per cent Focus Needed On Substantial Risks While there are indications that this year will see broader growth led by improving economic conditions in the U S and China institutional investors still need to focus on managing the substantial risks that remain says Mercer Although uncertainty remains over the global economy if the corporate and private sectors shift their state of mind to low growth from no growth it will bode well for risk assets such as equities As well wage restraint corporate restructuring and an improving credit environment in parts of the U S and western Europe could also signify a revival of market spirits However it predicts a more of the same scenario will apply to Europe and possibly the U K Given this forecast it is encouraging clients to maintain broadly diversified asset portfolios hedge against inflation consider reducing commitment to safe haven assets improve shareholder engagement avoid unnecessary turnover manage capital efficiently and flexibly manage portfolios Bullion Joins SIO Bullion Management Group Inc has become an associate member of the Social Investment Organization SIO The SIO is the national association for the socially responsible investment SRI industry in Canada with a primary mandate of providing a leadership role in furthering the use of social and environmental criteria within the Canadian investment community BMG is Canada s first precious metal s company to join the SIO Our SIO associate membership is one more way for BMG to extend its commitment to provide uncompromised bullion says Nick Barisheff its CEO Anyone who monitors the gold mining and refining industry knows with the 12 year rise of the gold price illegal unethical mining and refining operations have emerged across the developing world Investors in BMG s funds and BullionBars program must be confident that bullion purchased and stored on their behalf is obtained from ethical and legal sources RCA Income Eligible For Splitting Bill C 45 the Jobs and Growth Act 2012 would make income received from a Retirement Compensation Arrangement RCA eligible for pension income splitting in certain circumstances effective for the 2013 and subsequent taxation years says an Aon Hewitt Information Bulletin An amendment to the definition of eligible pension income in the ITA would include certain amounts received out of or under an RCA by persons age 65 and over To qualify the RCA

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    Canada account for 96 per cent of SRI assets The most common strategy used globally is negative exclusionary screening with 8 3 trillion in assets Assets utilizing ESG integration are at 6 2 trillion Canadian Banks Downgraded Moody s Investors Service has downgraded the long term ratings of six Canadian banks The long term senior debt ratings of the banks were all downgraded by one notch It also removed systemic support from the ratings of all rated Canadian banks subordinated debt instruments including those issued by Royal Bank of Canada RBC David Beattie a Moody s vice president says the downgrade of the Canadian banks reflects our ongoing concerns that Canadian banks exposure to the increasingly indebted Canadian consumer and elevated housing prices leaves them more vulnerable to unpredictable downside risks facing the Canadian economy than in the past However following the action Canadian banks still ranked amongst the highest rated banks in its global rating universe Entrepreneurs Feeling Optimistic Canadian entrepreneurs started 2013 with a healthy boost of optimism says the Canadian Federation of Independent Business CFIB Its Business Barometer index jumped three points to 65 7 in January Small business owners in Alberta 70 5 are once again the most optimistic the country although Newfoundland and Labrador 69 3 and Saskatchewan 66 7 are close behind Ontario 65 Nova Scotia 64 2 Manitoba 63 5 Quebec 62 7 New Brunswick 61 7 and Prince Edward Island 58 3 all experienced increased small business confidence Only British Columbia 61 6 firms saw a decline in optimism Full time hiring plans have jumped to a post recession high with 27 per cent of businesses expecting to hire additional staff in the next few months Similarly 44 per cent of business owners described their state of business to be in good shape the best score in the past four years According to past results index levels normally range between 65 and 70 when the economy is growing at its potential January 28 2013 Affluent Investors Very Optimistic Affluent North American investors are feeling very optimistic about their personal finances heading into 2013 say the Manulife Financial and John Hancock Investor Sentiment Index surveys Seventy per cent of affluent investors in both Canada and the United States agree that they are either ahead of plan or on track to meet their personal financial goals and about 50 per cent anticipate that their financial position will improve over the next two years Just one in five indicated that they are behind on their financial goals but say they are likely to catch up In Canada the overall affluent investor sentiment index strengthened in the second half of the year rising to 31 from 26 in January 2012 In the U S investors confidence held steady in the fourth quarter of 2012 with the John Hancock index ticking upward slightly to 18 from a score of 17 in the third quarter of last year Other findings from the surveys show that Canadians and Americans are aligned in their financial New Year s resolutions and how they plan to achieve their top financial goals In Canada 31 per cent and in the U S 29 per cent the top financial planning New Year s resolution is to trim household budgets Rebalancing portfolios is second at 19 per cent for both Top financial priorities for 2013 among affluent Canadians and Americans differ slightly Canadians top three priorities are to manage maintain current lifestyle 32 per cent pay down debt 18 per cent and save for retirement 15 per cent American respondents say their top financial priorities are the same However they differ in order with maintain manage their current lifestyle 35 per cent topping the list followed by saving for retirement 29 per cent then paying down debt 11 per cent Seven in 10 Canadians work with a financial advisor to achieve their financial goals In the U S five in 10 seek professional financial advice Canadian CEOs More Confident Canadian CEOs are generally more confident of their revenue prospects and the economy in the short and longer term compared to their global peers says PwC s Global CEO Survey They say they are very confident about their company s prospects over the next three years and they have a higher confidence level than their global counterparts 60 per cent versus 46 per cent globally About half say they expect the economy to stay the same in 2013 while roughly a quarter expect some improvement Last year nearly half of leaders said things would get worse in 2012 and few were expecting an improvement Half of Canadian CEOs said that all of their staff is encouraged to get involved in strategic decision making compared to 31 per cent globally CEOs also stay active in succession planning with 85 per cent saying they are identifying multiple successors for their jobs However Canadian CEOs are less likely to provide global mobility and international experience opportunities to develop their leadership pipeline than other countries including the U S the BRIC economies EU zone and Australia Only 39 per cent of Canadian CEOs use global mobility as a development tool compared to the global average 61 per cent Moreover they were less inclined to say global opportunities are an effective way to develop their leaders Brandes To Offer LAM Mutuals Brandes Investment Partners Co has arranged with Lazard Asset Management to offer Lazard mutual funds to retail investors in Canada This collaboration expects to initially offer two mandates focusing on global dividend opportunities and emerging market equity and debt opportunities Brandes has been doing business in Canada for almost 40 years says Charles Brandes chairman of Brandes In fact my first client was a Canadian so I m delighted that we are taking this step to further expand our commitment to Canadian investors by partnering with another world class manager With more than 280 investment personnel worldwide Lazard s diversified global investment platform manages in excess of 146 billion and is noted for its emerging markets capabilities and success Risk Disclosures Didn t Anticipate Market Decline The recent global financial crisis had little impact on the risk disclosures of non financial Canadian firms says a study by the CGA Canada Accounting and Governance Research Centre CGA AGRC It suggests that investors examining changes in risks faced by non financial companies between 2007 and 2008 would have been at a loss to anticipate the decline in market values that occurred in that period A change in the financial headwinds has to affect risk disclosures says Daniel Zéghal FCGA and director of the CGA AGRC at the Telfer School of Management University of Ottawa If there is no impact it s very likely that the analysis of risks is not thorough enough or risk communicating strategies used by companies are ineffective The findings in this study underline the need to pay particular attention to the quality of risk disclosures CVCA Launches Visa Pilot Program Canada s Venture Capital and Private Equity Association CVCA is entering into a partnership with the federal government in launching the new Start Up Visa pilot program It will be canvassing its venture capital fund members about participation in this new pilot program and will subsequently provide a list of those member venture capital funds to the Minister of Citizenship and Immigration CVCA will also provide regular reports to the department of Citizenship and Immigration on program utilization by its members The global competition to attract the best and the brightest entrepreneurial talent is heating up and several countries from the U S to Great Britain and Chile have introduced comparable programs designed to lure entrepreneurial talent to their shores Entrepreneurs create companies and venture capital funds are in the business of providing the necessary funds for those entrepreneurs and companies Those companies in turn provide returns to their investors and the countries in which they are located via job creation exports and R D Search For Yield Leads To Maples The search for yield in 2013 may take investors to maple bonds says Richard Usher Jones vice president of Canso Investment Counsel Ltd Speaking at a Pembroke Private Wealth Management session he said corporate bonds performed strongly last year particularly maple bonds We still see very good value in corporate bonds and as a subset of corporate bonds maple bonds as well he said Maple bonds are bonds issued by foreign entities on the Canadian bond market in Canadian dollars These types of bonds are a good fixed income investment because they offer higher yields than their domestic counterparts Red Tape Costs More In Canada Most businesses in Canada pay more per employee than their counterparts in the U S to comply with regulatory requirements says a report from the Canadian Federation of Independent Businesses CFIB The report updates the total cost of regulation to Canadian businesses and provides a first ever direct comparison of these costs to those faced by U S businesses The largest cost difference was found in the small business category fewer than five employees the largest category for businesses in Canada and the U S Businesses of this size pay 45 per cent more per employee in Canada 5 942 to comply with government regulation than their U S counterparts 4 084 The total cost of regulation to Canadian businesses is 31 billion a year which has remained relatively stable since CFIB first started estimating regulatory costs in 2005 The total cost of regulation in the U S is 198 billion The report also found that about one third of business owners in Canada might not have gone into business had they known about the burden of red tape compared to about a quarter of U S businesses January 21 2013 Cash Buildup Not Knee jerk Reaction While critics have raised alarms about the rising cash holdings on corporate balance sheets there are broader long term reasons for the move to cash that go far beyond a knee jerk reaction by business to current economic uncertainty says the report Not Dead Yet The Changing Role of Cash on Corporate Balance Sheets from the C D Howe Institute Corporate cash holdings have increased in waves over the past quarter century in response to changing economic conditions and business process improvements says Finn Poschmann vice president of research at the institute He says that while corporate cash as a share of assets has risen in the past decade the share of other non income earning current asset components such as inventories and accounts receivable has significantly fallen Businesses appear to have been responding to long term trends in economic conditions including enhanced business processes that have shrunk inventories by better managing their balance sheets Choosing Right Funds Not Simple Fifty one per cent of Canadians who own mutual funds agree that choosing the right fund is neither simple nor straightforward yet most spend more time planning luxuries instead of annual investments says a survey by ING DIRECT The survey showed that Canadian mutual fund investors spend an average of 3 4 hours a year planning their mutual fund investments By comparison they spend more time planning purchases such as a smartphone television or computer five hours a vacation 6 6 hours or a car purchase lease 9 2 hours Though not surprising it s discouraging to see that Canadians are prioritizing vacation planning and car purchases over their mutual fund investment decisions says Silvio Stroescu head of mutual funds at ING DIRECT Mutual funds are the most popular investments in retirement portfolios so to spend a little more time researching your options is worthwhile and can lead to significant savings in the long term Financial Literacy Remains Issue When it comes to finance most Canadian small businesses know they need help says a survey by Intuit Canada It indicates that 83 per cent of Canadian small businesses face a serious financial literacy skills gap In a 10 question quiz involving entrepreneurs two per cent scored great 16 per cent good 39 per cent basic and 44 per cent scored below basic which reveals both a serious skills gap and a lack of access to the tools and resources that can help says Jeff Cates managing director of Intuit Canada Fifty per cent of respondents also understand that financial management is important Canadian small business owners know what needs to be done to start closing the knowledge and skills gap as 42 per cent said they wanted to spend more time with an accountant 24 per cent indicated they would benefit from information sessions with other small business owners and 22 per cent said they would benefit from online tutorials Financial Planning More Strategic For Self Employed Self employed workers may find themselves in a difficult situation if an illness or an accident prevents them from functioning normally says Denis L Hostie senior manager financial planning at the Laurentian Bank For self employed workers financial planning takes on a much more strategic dimension requiring a global strategy and a long term vision he says The investment strategy must be adapted to the worker s income If their income is insufficient to save for retirement alternatives will need to be considered such as adapting the strategy to the individual s age or assets Generally the company is the self employed individual s main asset says L Hostie Therefore to ensure investment diversification and reduce risk they must select other investments These should be less volatile and adapted to their investor profile Regardless of the strategy selected self employed workers must be disciplined to achieve their objectives Incorporating a business is one way to gain more flexibility in a financial planning strategy Changing to a corporate status allows self employed workers to defer their taxes thereby benefiting from advantages that would not otherwise be available However this step should only be taken when the self employed individual earns sufficient income to be able to absorb the costs of incorporation SRI Assets Continue To Climb Socially responsible investment SRI assets in Canada continue to climb showing growth in virtually every major market segment and outpacing growth of total assets under management says a report by the Social Investment Organization The Canadian SRI Review 2012 shows that assets managed under sustainable and socially responsible guidelines in Canada grew by 16 per cent between June 30 2010 the effective date of the last report and December 31 2011 By comparison total assets under management grew by nine per cent in the same time period Total assets managed under SRI guidelines is 600 9 billion up from 517 9 billion At 600 9 billion this represents 20 per cent of assets under management in the financial industry up from 19 per cent of the market in 2010 Sun Life Launches Income Funds Sun Life Global Investments has launched four new income funds geared toward providing investors a source of income as well as one new equity value fund The current environment we are in is quite difficult for investors to navigate through They are looking to generate income while trying to protect what they have accumulated through their working years says Sadiq S Adatia chief investment officer Sun Life Global Investments As Canadians enter the retirement stage these new funds aim to provide income and generate long term capital growth With interest rates remaining persistently low and our aging population on the rise income funds are growing in popularity Growth Predicted For Canada Canada s top economists strategists and portfolio managers predict modest growth for Canada continuing below trend interest rates modest inflation and average equity market returns over the next few years says Towers Watson s Annual Survey of Economic Expectations Growth expectations for Canada are muted in the near term However respondents are more positive over the longer term expecting above average growth at 2 5 per cent Survey respondents expect the overnight rate to rise to only two per cent between 2014 and 2017 and inflation is expected to remain controlled at two per cent While survey respondents expect that Defined Benefit solvency funded ratios will improve over the long term DB pension plans will continue to face the dual challenges of lower than average long term interest rates and volatile equity markets in the near term Not surprisingly the cost of the DB promise continues to weigh heavily on the financial performance of the organizations that sponsor DB plans Balance Sheets Need To Recover While there is lots of academic literature about asset bubbles it is important to study the liability side as well says John Greenwood chief economist for Invesco He told its Economic and Investment Outlook for 2013 session The Progress of Balance Sheet Repair that western economies will be dealing with the aftermath of the debt crisis bubble for this decade and the one to follow The recovery starts with businesses and individuals trying to reduce their debt loads followed by governments taking similar action However the government debt also includes the funds put into the economy to avoid recessions Developed economy governments hate recession so they increase spending Then they need to borrow to finance this spending The U S is further ahead on this balance sheet recovery and is well on its way to full recovery The UK private sector is making some progress albeit minimal However in the Eurozone there has been no progress in part due to the fact they did not acknowledge for example the subprime crisis was anything more than a U S issue The private sector there did not start the deleverage process until the Greek crisis To get the Eurozone back on the road to recovery he said it needs to start moving to full monetary and fiscal union with federal fiscal transfers a common tax and revenue base and unified budget and spending control January 14 2013 High End Market Red Hot While Canada s conventional housing market is showing signs of a slowdown the

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    By comparison the transportation and warehousing industry can count on price increases and developed cost control practices to enable strong profit growth going forward December 17 2012 Woman Face Challenge of Glass Ceiling When it comes to salaries promotions important decisions and travel the glass ceiling the unseen but unbreachable barrier that keeps women from climbing the corporate ladder is a very real challenge for today s female business leaders says a survey by Randstad Canada a provider of staffing recruitment and HR services The survey indicates that Canada s female managers and executives are still seeing a divide on a range of factors when it comes to the differences between men and women in the workplace with salary topping the list Seventy seven per cent of respondents felt there remains a moderate or large divide between the financial compensation a man receives in a leadership role compared to what a woman receives in the same position Only seven per cent believe that women s workplace salary is perfectly equal with their male equivalent while 16 per cent say they notice a small divide Moving up in the organization also seems to bring about the same divide as salary with 92 per cent of those women polled feeling there was at least some divide in the opportunities for men and women to be promoted When it comes to business travel more than four out of five women feel that men are given somewhat more travel opportunities than women with half of those polled feeling there remains a very large or moderate divide when it comes to business travel Based on the survey results alone it is clear there are many divisions seen in the workplace and we still have a long way to go when it comes to salaries promotions decision making opportunities choice assignments and even business travel says Hanna Vineberg vice president Central Ontario Randstad Canada Income Inequality Holds Steady Income inequality has remained relatively flat in Canada for more than a decade contrary to conventional wisdom says a report by the TD Bank The report says income inequality also known as the income gap a country s broadest measure of what rich people earn versus what poor people make was escalating rapidly until about 1998 but has remained surprisingly unchanged since then The report bases much of its findings by looking at the Gini coefficient a mathematical figure that economists often use to compare incomes across a broad spectrum A country with perfect income equality one in which every citizen earns the same amount would have a Gini coefficient of zero Conversely a country in which one person earns all the country s money would have a Gini figure of one By giving countries a ranking on the Gini scale economists say they are able to compare them fairly In 1998 Canada s Gini coefficient was 0 43 It is still at that level today says TD Bank Nomadic Approach Key To Wealth A global nomadic approach

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    in 2013 following a raise in the annual contribution limit to 5 500 says Ted Menzies Minister of State Finance Since the Harper government made TFSAs available in 2009 Canadians have been able to earn tax free investment income on contributions of up to 5 000 per year All Canadians can earn tax free income through a range of investment products TFSAs have become increasingly popular and approximately 8 2 million Canadians have opened an account Roughly 2 5 million Canadians contributed the maximum amount in 2011 When the TFSA was introduced the government announced that the annual contribution limit would be indexed to inflation in 500 increments The upcoming raise is the first such increment CI Investment Adds Management Teams CI Investments Inc CI has added two alternative asset management teams to its mutual fund lineup Under the changes Red Sky Capital Management Ltd is sub advisor to a portion of the CI Canadian Small Mid Cap Fund Red Sky Capital manages a multi strategy hedge fund focused on North American equities In addition Lawrence Park Capital Partners Ltd is sub advisor to a portion of the United Canadian Fixed Income Pool which is part of CI s United Financial lineup of managed solutions ETFs Gaining Momentum Financial advisors expect to see increased use of exchange traded funds ETFs in client portfolios while aversion to risk remains high says a study by Invesco Ltd Advisors surveyed believe ETFs will make up 24 per cent of portfolio allocations over the next 12 months and 33 per cent over the next three years representing a 10 per cent increase over results of Invesco s 2011 survey With continued global economic uncertainty advisors see clients remaining vigilant in their aversion to risk and 91 per cent believe their clients are more interested in minimizing losses than maximizing gains The survey also found a growing appetite for complex strategies such as smart beta ETFs but broader adoption will require more education on how these strategies can best serve investors ETF adoption rates in the U S have tended to lead those in Canada by several years suggesting that ETF usage can be expected to continue among Canadian advisors Engaging Workforce Starts With Leadership Creating an engaged workforce starts with a series of steps based on leadership says Dana Mitchell an associate partner performance rewards and talent at Aon Hewitt Speaking at its 2013 Best Employers in Canada luncheon she said one of the characteristics of its best employers is that their employees are engaged Engaged employee are more productive provide better customer service are absent less frequently and care how their company performs she said And these companies all have leaders who pay attention to what employees think and include this in their decision making They also put effective managers in place who help employees grow in their careers Engaged employees want their opinion to count and feel valued and appreciated by their managers and their co workers Tactical Allows Managers To React Tactical asset allocation is often confused with market timing but it is different says Deborah Frame vice president investments at Cougar Global Investments LP With tactical asset allocation you are doing the opposite of what 90 per cent of managers are doing she told the ETF Strategies For Institutional Investors panel at the TSX CETFA Exchange Traded Fund Conference for Institutional Investors Traditional managers are generally bound by investment policy guidelines and end up spending much of their time rebalancing their portfolios However she said this why so many lost money during 2008 s financial crisis as they are forced to reallocate assets to fixed income from equities when markets are doing well and buy more equities when they are not As well investment policies can prevent them from reacting to changing markets which means they are doomed in certain markets Succession Becomes Top Concern Business succession has very quickly become one of the top concerns identified by high net worth clients A survey by RBC Wealth Management also shows retirement planning and tax minimization remain other key concerns expressed by clients We are seeing a recent shift in the concerns of our high net worth clients While they continue to seek out advice on retirement planning and as part of that tax minimization to ensure a successful retirement they are also now increasingly putting on their business owner hat and seeking out advice around the succession of their business says Howard Kabot vice president financial planning at RBC Wealth Management Services Older Workers Offer Value An overwhelming majority 96 per cent of Canadian owners of small and medium sized businesses agree that workers 65 years and older offer more valuable experience and expertise than younger workers says research from Investors Group As well 69 per cent contend that this group is not more expensive to employ The majority of small business owners do not have concerns about lack of stamina and reduced productivity from older workers Eighty five per cent say that workers 65 years and older are just as productive as younger workers and 79 per cent concur that senior workers have the required level of energy and ambition for their jobs As more boomers and seniors continue working in their later years it s encouraging to see that their value and contribution to the workplace are acknowledged by Canada s small business owners says Dave Ablett director tax and estate planning at Investors Group At the same time finding work in later years will require thinking outside the box and a sound retirement plan to ease the transition into a new phase of life Entrepreneurs Delayed Retirement The 2008 2009 recession prompted many baby boomer entrepreneurs to delay their retirement plans and stay in business longer than they had anticipated says a report from the Canadian Federation of Independent Business CFIB Passing on the Business to the Next Generation found almost a quarter 23 per cent of business owners have delayed the timing of their exit date between one and four years Only five per cent said the downturn prompted them to accelerate their exit date The report also found that almost half of small and mid size enterprises SMEs currently have a succession plan in place Out of these small business owners one half will exit their businesses in the next five years While estimates vary Canadians will see a massive transfer of small business assets in the next decade possibly more than a trillion dollars The recession clearly had an impact on succession planning says Doug Bruce CFIB s vice president of research Instead of passing the business on to the next generation some small businesses decided to hold onto their business until its value returned to pre recession values November 26 2012 Trump Investors Want OSC Investigation Some of the investors in the Trump International Hotel Tower Toronto are asking the Ontario Securities Commission to launch a formal investigation into the investment scheme offered as part of the hotel This is a last bid effort to obtain immediate assistance before their November 29 closing dates Though promised by the developers of the hotel Talon International Inc that the hotel units could be easily financed as residential condominium units investors have come to learn that Canadian banks are treating the hotel project as a commercial enterprise and have all refused financing as a condominium purchase The investors have also discovered that their investments are running at losses of upwards of 175 a day per unit due to the current shortfall between the maintenance fees and the hotel unit revenues Most of the investors have a November 29 closing date and with the banks refusing financing investors are faced with either having to come up with substantial amounts of cash to close or resort to secondary financial institutions which will only provide partial financing for this project as a commercial investment at prohibitively high interest rates Some of these investors have already commenced a multi million dollar lawsuit against Talon and its directors as well as a number of Trump organizations and their directors including Donald Trump Sr Ontario courts have declined to hear the matter on an urgent basis notwithstanding the upcoming November 29 deadline and have pushed any preliminary hearing of this dispute into late 2013 Talon however has extended the closing date to December 13 to allow more time for it to respond to recent inquiries made by the OSC Succession Planning Risk To Economy Getting SME business owners to turn their attention to succession planning is a growing issue says Benjamin Tal deputy chief economist CIBC in a report from CIBC World Markets Close to 30 per cent of small and medium sized businesses in Canada will exit ownership or transfer control of their companies within five years Within the next 10 years one half will exit their business Close to 60 per cent of SME owners have no succession plan in place potentially posing significant risk for the Canadian economy The economic implications of the accelerated pace at which firms are changing hands should not be underestimated says Tal Given the magnitude a faulty or badly executed succession planning process could have a ripple effect throughout the Canadian economy The sheer number of business owners that will retire in the coming decade is turning this micro issue into a potentially damaging macro problem he says CFOs Positive About State Of Industry U S chief financial officers CFOs of middle market companies remain generally positive about the state of their own industries and they continue to see measured growth over the next three years says the GE Capital Mid Market CFO Survey Sentiment on the state of the U S economy and their respective industries declined slightly since the first quarter survey but remained above the levels of a year ago However the view on the current health of the world economy continues to deteriorate The majority of CFOs expect to grow their revenues this year and nearly two thirds still plan to hire in the next 12 months although both figures have fallen from six months ago Middle market CFOs still see expansion opportunities over the next three years but remain cautious as concerns about the business environment and uncertainties in areas such as tax and healthcare policy persist says Dan Henson president and CEO of GE Capital Americas From our perspective as a provider of capital we see positive year over year growth in both lending and leasing Economic sentiment while still positive is slightly more guarded than we saw in the last survey In the meantime the credit markets are very healthy providing extremely attractive terms for borrowers as credit facilities come up for renewal and as acquisition or other investment opportunities develop Fund Invests In Small And Micro cap Spartan Fund Management Inc s latest offering is the Teraz Fund Its objective is to provide investors with long term capital growth by investing in a diversified portfolio of Canadian small and micro cap companies The fund invests utilizing three strategies long positions in early stage companies run by successful entrepreneurs including start ups listed cash rich shells and merger and acquisition candidates opportunistic investing including deep value arbitrage theme investing and technical trading and short positions in companies with suspected fraud questionable management and over promotion Investors Confident About Equities Professional investors have bedrock confidence in the financial future of equities despite present and foreseeable uncertainties including growing inflation says a survey of Portfolio Management Association of Canada members It finds that responding CEOs of Canada s leading investment companies believe inflation will rise slightly but meaningfully in the next 10 years to 2 8 per cent or almost one per cent higher than the actual rate for the previous 10 years 1 9 per cent That would offset bond returns which averaged 6 2 per cent over the last decade but which will only earn 2 9 per cent over the next 10 years These trends can be addressed in the coming decade through a diversified portfolio of equities Specifically global equities which they project will earn 7 8 per cent up from 3 6 per cent and emerging marketing equities which they believe will return 9 1 per cent Emerging Markets Offer Opportunities Emerging markets continue to offer opportunities says Stephen Way senior vice president and portfolio manager at AGF Investments Inc Speaking at its Beyond BRIC discussion he said their domestic consumption remains intact and they are becoming increasingly competitive and are expanding outside of their borders However investors need to be aware of some of the long term risks in these markets With developed market currencies devaluing because of quantitative easing international currency wars could start which concerns emerging markets Increasing government intervention and reform in China Brazil and India is creating uncertainty And they also face resource scarcity both in terms of skilled labour and commodities Finally to increase productivity improvements need to be made in their infrastructure business processes and machinery However emerging markets margins have actually come down making him quite optimistic about those companies in these markets that understand what it takes to make profit Expectations Need To Be Managed Asset managers need to do a better job of managing expectations says Catherine Payne vice president and portfolio manager at Fiera Capital Speaking at AIMA Canada s How to Generate Yield session she said clients are looking for x per cent as their return but she can only give them what is coming out of the market This makes it about managing expectations and finding out if they want yield or preservation of capital going forward As well as they get older and have a shorter time horizon to save for retirement they want to preserve capital with some return The other consideration is the low interest rate environment is not going to last forever so investors have to start preparing for increases in these rates Activism Making Front Page Shareholder activism in Canada isn t necessarily on the rise says Stephen Erlichman executive director Canadian Coalition for Good Governance it may just be that there is more press coverage Speaking on a Panel Discussion on the Rise of Shareholder Activism in Canada at the CVCA Canada s Venture Capital Private Equity Association Professional Development Series he said there hasn t been a huge rise in the number of shareholder actions there is just way more coverage Major institutional shareholders with the assistance of the press are making their views known across Canada he said and the press is putting how they are going to vote on the front page of newspapers As well these same institutional shareholders are willing to team up with the hedge funds which are starting these actions and Canadian boards didn t think they would do that RBC Introduces Low Volatility Funds RBC Global Asset Management Inc has launched its RBC QUBE Low Volatility Canadian Equity Fund and RBC QUBE Low Volatility U S Equity Fund The funds use quantitative investing to offer investors the upside potential of equities with less risk and volatility than broad market indexes says Bill Tilford head of quantitative investments at RBC Global Asset Management They are monitored daily and adjusted to deal with changes to their risk and return profiles Using a custom risk model that is designed to more accurately measure and forecast risk the funds are appropriate for investors who have a long term investment horizon and who are able to tolerate a medium level of investment risk November 19 2012 Overall Economic Optimism Declines Two thirds of entrepreneurs believe the Canadian economy will grow over the next year a sharp 12 per cent decline from only six months ago says the Ivey Entrepreneurs Index Coupled with a decline in overall economic optimism high growth entrepreneurs are becoming less likely to hire additional employees This past spring 84 per cent of respondents planned on hiring however that figure now stands at 77 per cent In spite of diminished economic confidence 90 per cent of entrepreneurs still expect their revenue to grow a figure which has remained relatively steady over the past two years But over the past six months six per cent fewer entrepreneurs believe their profits will grow in the next year Entrepreneurs in Canada are becoming more cautious says Stewart Thornhill executive director at Pierre L Morrissette Institute for Entrepreneurship at the Richard Ivey School of Business This may be indicative of a wait and see attitude amongst this normally bullish group External factors such as warnings surrounding the looming fiscal cliff in the United States and unpredictable economic developments in Europe have dampened the spirits of high growth private business in this country Online Women Investors Feel Successful The majority of women who manage their investments online feel they ve been successful at closely matching or outperforming the markets says the International TD Women Investor Poll a joint poll by TD Waterhouse Canada TD Direct Investing UK and TD Ameritrade U S More than twice as many women in the U S 31 per cent and UK 38 per cent manage their investments online compared with their Canadian counterparts 13 per cent Of these women online investors more than three quarters in Canada 76 per cent say they ve consistently outperformed or performed close to the market This is consistent with women investors in the U S and UK The majority of women online investors in all three countries Canada 87 per cent U S 94 per cent and UK 87 per cent also say they are quite confident or level headed about managing their portfolio although in each country surveyed approximately one in 10 women say they re nervous and never feel like they re making the right decisions when it comes to their investments Despite that the majority of women say they have changed nothing in their portfolio in reaction to volatility in the markets saying they are confident they have a

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    8 3 per cent Passenger car and luxury light truck sales showed a gain of 5 7 per cent fueled by strong E Class S Class and SL Class sales On the luxury light truck side year to date growth is 20 7 per cent As well the pre owned division also achieved the best October results ever Lyxor Switches Indices Lyxor the third largest ETF provider in Europe by assets under management has chosen to replace the indices it uses as the basis for its global real estate ETFs It will switch to the FTSE EPRA NAREIT Developed Global Real Estate indices Previously it used the MSCI Real Estate Index The move was made because the FTSE EPRA NAREIT indices are the most widely used global benchmarks for listed real estate Employers Need To Justify Termination Being able to demonstrate that a termination or other employment related action was based on something other than age will only become increasingly important says Fasken Martineau s The HR Space Managing the End to Mandatory Retirement It says the federal government is about to join most of the provinces in making mandatory retirement for the most part unlawful The deadline is December 15 However earlier this year the Canadian Human Rights Commission issued a news release cautioning employers against using the time leading up to December 15 to force employees to retire before they are ready to It said that the transition period should not be viewed as a licence to force aging workers out the door Forcing someone to retire because of their age clearly contradicts parliament s intent even if a defence in the law still appears to be available As a result it may be more prudent for federally regulated employers to govern themselves in the regime that will exist following December 15 where they may still offer voluntary retirement programs and may be able to justify mandatory retirement where they are able to show a bona fide work requirement As well employers should start implementing effective performance management programs for all their employees including older employees October 29 2012 Tech Enabled Offerings Leverage Growth While 74 per cent of CEOs say tech enabled offerings are the future of the media and entertainment industry they agree emerging markets hold the key to unlocking that potential revenue and growth says a survey by Ernst Young With three per cent to eight per cent projected growth in income and high mobile subscription rates in emerging economies there is a great opportunity for growth in these markets particularly where new technology and digital are concerned says Martin Lundie Canadian media and entertainment leader at Ernst Young But improving infrastructure such as broadband and mobile networks to handle the demand will be critical to realizing the opportunity Growth Anticipated For Luxury Goods Market Worldwide luxury goods market revenues will grow by seven per cent in the final three months of 2012 compared to 2011 culminating in full year growth of 10 per cent says Luxury Goods Worldwide Market Study a study by global management consultants Bain Company Revenues will see double digit increases reaching 275 billion Sales in Asia Pacific driven by China are projected to grow by 18 per cent The Americas will see revenues rising by 13 per cent by year s end However growth in Europe will be approximately five per cent half of last year Bain estimates that the luxury goods market will grow in real terms by four to six per cent per year between 2013 and 2015 pushing the market to between 312 and 325 billion by mid decade Retirement More Than Slowing Down Retirement means more than withdrawing from one s occupation It means freedom financial security and the ability to travel says a survey by TD More than half 52 per cent of Canadians said retirement isn t about stopping or slowing down It s about freedom and flexibility Other recurring themes from submitted definitions include financial security 27 per cent the ability to travel 25 per cent escape from the nine to five grind 21 per cent and spending time with friends and family 14 per cent Spending time away from work with family and friends can be done on a small budget however one quarter of Canadians submitted definitions based on hopes to travel Moderate Salary Increases Ahead A sluggish economic outlook is causing organizations to plan for another year of moderate base salary increases for 2013 The Conference Board of Canada s Compensation Planning Outlook 2013 projects average increases for non unionized employees of three per cent next year largely in line with actual gains in 2012 Employers have not yet felt the full effects of looming workforce shortages But it is apparent that the labour market is tightening especially in Western Canada and in the natural resources and professional scientific and technical services industries says Karla Thorpe its director of leadership and human resources research Assuming no significant hiccups to the global economy the unemployment rate is expected to dip in 2014 and labour supply shortages will re emerge over the medium term The survey found 69 per cent of organizations report challenges with recruiting and or retaining personnel The top professions in demand include engineering specialist information technology and skilled trades Double digit Return Days Gone The days of double digit portfolio returns are long gone says a report from TD Economics It projects that diversified portfolios will produce average annual returns of between four per cent and six per cent over the next 10 years with bonds returning three per cent and equities generating seven per cent Using those projections it projects an income portfolio with a heavy weighting in cash and fixed income will return just over four per cent a balanced portfolio should return five per cent and a growth portfolio with a heavy weighting towards equities would return 6 2 per cent While there will certainly be years where these portfolios achieve higher rates of return they will likely be offset by periods of weakness The low return on fixed income over the next few years especially given the potential capital losses on longer term bonds suggests that investors may need to have exposure to equities in order to bolster portfolio returns it says SMEs Hit Hard By Increased Premiums The Workplace Safety and Insurance Board s WSIB increase in mandatory insurance premiums on employers will hit the small business sector the hardest says the Canadian Federation of Independent Business CFIB Small business owners have anticipated higher insurance premiums since a report indicated the WSIB had a 14 2 billion unfunded liability The province s workers compensation system is entirely funded by premiums on employers Currently Ontario s average premium rate is the third highest in Canada Regardless of the business increasing taxes on payroll could not have come at a worse time for the Ontario economy Small business confidence in Ontario is lower today than it was at the beginning of 2012 says Satinder Chera Ontario vice president CFIB Rolling the dice on higher taxes will further jeopardize jobs and the province s economic recovery October 22 2012 Allocation Structure Relatively Static Affluent investors appear comfortable with their current holdings says a report from TIGER 21 a learning group for high net worth investors in North America The current report represents the investment exposure of US 19 billion in investable assets controlled by the group s 200 members as of the end of the third quarter of 2012 The allocation structure for TIGER 21 members remained relatively static when compared with last quarter s report The only noticeable differences were a decrease in the allocation to hedge funds from eight per cent to seven per cent and an equal increase in the public equity allocation from 22 per cent to 23 per cent All other categories remained unchanged The theme running through the Third Quarter Asset Allocation Report echoes the sentiment I ve heard from many HNW individuals says Thane Stenner managing director and founding member of TIGER 21 Canada By and large they re comfortable with their current holdings While they re not finding a lot of screaming bargains out there they don t seem to be paying all that much attention to those who are predicting a stock market collapse either he says Heirs Unaware Of Intentions Over half of Canadians have clearly outlined their intentions for their estates with a will says a study by BMO Harris Private Banking It found that of those people who have a will 60 per cent of the assets are left to their children 25 per cent to other family members and three per cent is set aside for charities and friends While many people have written out their intentions they have yet to inform their heirs Only 17 per cent of children realize their parents intend to leave them something which could be an issue for the family For a successful wealth transfer people need to let their heirs know about their intentions says Sara Plant vice president and national director BMO Harris Private Banking The 17 per cent of people who are not doing so risk creating problems down the road The more the heirs know ahead of time of what the person s thoughts are and their intentions are the more they will be ready to receive that when the time comes says Plant When that 17 per cent doesn t know what to expect from their family s estate that s where you can meet with unmet expectations and challenging family dynamics and potential litigation Luxury Sales Pace Slows Worldwide luxury sales will grow at less than half last year s pace in 2012 and rise at a similar speed through 2015 says Bain Co Spending on luxury apparel accessories watches jewelry perfume and other personal items in 2012 may climb five per cent to 273 8 billion That compares with growth of 13 per cent last year the consultant estimated Concerns about market weakness are somewhat overblown says Claudia D Arpizio lead author of the study But we are seeing sharp disparities between brands that are not keeping up with the quickening pace of change in the market and those that are adjusting to shifts in tastes and demographics Employees Mistrust Senior Leaders More than 60 per cent of Canadian employees don t trust their senior leaders says a Canadian Management Centre study Build a Better Workplace Employee Engagement Edition found only 39 per cent of Canadians trust what their senior leaders say and less than four in 10 feel that senior leadership is doing a good job of communicating what is happening in their workplace We knew that leadership trust and confidence was an issue in Canada but we were surprised to reveal the actual low level of trust that working Canadians have in the leaders of the organizations in which they work and that this low level exists despite the significant financial investment and efforts of organizations to improve this perception in recent years Organizations need to take notice and properly address the issues around employee engagement trust and confidence in their leaders because getting it right will ultimately benefit their bottom line and long term success says John Wright president and managing director of the centre Employee engagement is a leading indicator of performance and competitiveness and not to be confused with employee satisfaction Engaged employees care about the future of the organization and are willing to invest on their own initiative to see that it succeeds Mercedes Benz Breaks Ground Mercedes Benz Canada has broken ground and started construction of a dealership in St Nicolas QC Located on a 3 5 acre site adjacent to the Trans Canada Highway it will provide a prominent corporate identity for the Mercedes Benz AMG and smart brands that is highly visible from the highway Construction is expected to be completed in May 2013 At that time Mercedes Benz St Nicolas will be ready to serve the sales after sales parts and accessories needs of customers with a 22 300 square foot retail facility that features a 10 000 square foot showroom and a state of the art service area with 12 bays The design and floor plan of the new structure will follow the Mercedes Benz Autohaus which makes use of large quantities of glass to create a sense of transparency and maintain a bright open concept environment throughout the dealership Importance Of Emotional Intelligence Understood Nine in 10 91 per cent of Canadian managers and supervisors recognize the importance of improving their emotional intelligence in the workplace and believe it is possible to do so And yet across all sectors managers and supervisors scored as having more challenges than strengths in the skill areas that were measured says a survey by the Great West Life Centre for Mental Health in the Workplace The survey measured the emotional intelligence of managers in Canada specifically relating to how they may respond to the emotional distress of their employees Emotional intelligence in the workplace encompasses skill areas such as the ability to deal with other people s negative emotions and reactions to understand and manage our personal reactions and to communicate effectively including resolving conflict says Mike Schwartz senior vice president of group benefits for Great West Life and executive director of the centre While clearly recognizing the importance of these skills almost half 47 per cent of respondents are rated as challenged in one or more of these skill areas and only one per cent of managers were rated as strong across all measured skill areas The skill areas where respondents experience the most challenges in working with distressed employees are communicating effectively and understanding their own emotional reactions The survey found nearly one third of managers supervisors had some challenges in these areas Advisor Confidence Boosted The strong rally in global stock markets has bolstered the confidence of Canadian investment advisors who are substantially more bullish in their outlook for stocks than they were in third quarter says the Q4 Advisor Sentiment Survey from Horizons Exchange Traded Funds Inc The majority of advisors who responded are very bullish on stocks Bullish sentiment on the S P TSX 60 Index increased from 54 per cent in the third quarter to 68 per cent for the fourth quarter after a 5 9 per cent return on that index last quarter A similar uptick in confidence was observed with the S P 500 Index after it returned 5 8 per cent last quarter with 63 per cent of advisors now bullish on the benchmark U S index Bullish sentiment on the technology heavy NASDAQ 100 Index also increased from 59 per cent to 62 per cent after a seven per cent gain on the quarter Only the MSCI Emerging Markets Index saw a decline in advisor confidence where bullish sentiment dropped from 48 per cent in the third quarter to 45 per cent for the fourth quarter even though the index generated a seven per cent return in the third quarter The vast majority of Canadian advisors expect the rally in North American stocks we saw in the third quarter to continue through until the end of the year says Howard Atkinson CEO of Horizons Exchange Traded Funds the exception being emerging market stocks which despite strong returns last quarter Canadian advisors clearly expect to underperform North American stocks Low Volatility Real Benefit Risk Reduction Low volatility equity strategies are a third dimension of style taking relevant parts from value and growth investing says Paul Martin institutional portfolio manager at RBC Global Asset Management Speaking on The Next Evolution In Investing Low Volatility Strategies at Quant Invest Canada 2012 he said however the way they are being marketed is dangerous A nascent strategy with strong merit and potential the marketing to date has focused on returns because its origins are found in an observation that returns from low volatility stocks are higher than for high volatility equities Thus it is only natural to market them using this information The problem is that studies over relatively long time frames show while it outperforms in a majority of four year rolling periods it underperformed 43 per cent of the time This means he said the tracking error in these strategies is huge The real benefit is they can be used to take the most volatile part of a portfolio and reduce its volatility by up to 25 per cent This in turn frees up room in the risk budget allowing investors to own more risky assets elsewhere in a portfolio Relying On Business Equity Risky The majority of Canadian small business owners plan to sell their business 66 per cent to fund part of their retirement and 14 per cent admit they are counting on the sale of their business to fund their entire retirement says a poll by TD However John Tracy a senior vice president at TD Canada Trust cautions small business owners against putting all of their retirement nest eggs in one basket He says relying on the equity of a small business to fund 100 per cent of a retirement strategy may be too risky While the equity in your business could potentially be a significant source of retirement income it s equally important to make regular contributions to build your personal investment portfolio both as a safety net and to maximize retirement income he says Entrepreneurs should consider balancing the high risk investment strategy of a small business with other investment products like mutual funds or GICs He suggests they open an RSP and automate their savings use income splitting strategies to boost family retirement savings consider issuing dividends to fund the RSP contribution and open a Tax Free Savings Account TFSA These can all help to plan for a comfortable retirement while growing a small business SMEs Plan To Invest In Businesses A majority almost 60 per cent of

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    many new business owners make and it is a mistake that can cost thousands in tax penalties and professional fees says Jamie Golombek of the CIBC A report focused on helping small business owners avoid key taxation mistakes indicates that while business owners may find it easier to deposit cheques to a personal bank account or to charge business expenses to a personal credit card these decisions can put them at risk He notes that sorting out what is a business expense and what is a personal expense at tax time can be tricky and individuals can inadvertently deduct an ineligible expense Golombek recommends keeping personal and business expenses separate keeping good records and seeking expert advice October 1 2012 Number of Entrepreneurs To Increase Canadians are expected to become their own bosses at an accelerated pace in the coming decade with more than half a million entrepreneurs in the process of establishing their own business this year says a report from CIBC Irreversible structural forces suggest that the next decade might see the strongest start up activity in the Canadian economy on record says Benjamin Tal deputy chief economist at CIBC The gradual shift to a strong culture of individualism and self betterment the role of technology in driving the transition from boardrooms to basements the more global and inter connected markets that require greater specialization flexibility and speed and a small business friendly demographic trends are among those forces that are likely to support a net creation of 150 000 new businesses in Canada in the coming 10 years says Tal Top QC Earners To Pay More Tax The Parti Québécois is moving to hike taxes on higher income earners in the province The PQ says it will introduce two new tax brackets immediately incomes over 130 000 and those over 250 000 It also said it would consider bringing in a higher tax on dividends and capital gains While the new tax rates have yet to be determined during the election campaign the party said it would consider a four per cent increase to 28 per cent on taxable income above 130 000 Another three per cent increase would be placed on income above 250 000 bringing the provincial tax rate to 31 per cent for that group Combined with federal tax rates Quebec s higher income earners will remain the most heavily taxed in the country Upscale California Townhomes Near Completion The upscale townhome rentals at Costa Pointe in Carlsbad CA are nearing completion and will be open for occupancy soon The 58 three story luxury townhomes feature three to four bedrooms with up to 3 baths and range from 1 326 to 2 042 square feet Residents can choose from four floor plans featuring such distinctions as a master bedroom on its own floor or a rooftop deck complete with a fireplace and television hook ups Homes start at 2 300 per month Collector Car Auction Breaks Records Barrett Jackson auctioneer of collector cars generated more than 23 million in sales of rare high end collectible vehicles exotics customs classics and Shelbys during its Las Vegas NV auction The company increased its overall hammer average from 2011 proving that the car market is stronger than ever Sales reached more than 660 000 a 45 per cent increase from a year ago More than 68 000 car enthusiasts attended the event representing a 10 per cent increase from last year The auction broke world records when a 1967 Mustang Shelby Super Snake sold for 330 000 a 1970 Shelby GT500 for 220 000 and a 1962 Lincoln Continental Convertible for 113 300 the highest sales for vehicles of their kind In addition to these world records the highest selling cars included a 1970 Plymouth Hemi Superbird Two Door Hardtop for 297 000 and a 1967 Ford Mustang Custom Fastback selling at 275 000 Ethics Help Restore Confidence Commitments to strong ethics high standards of education and better enforcement are needed to restore public confidence in financial markets says John Rogers president and CEO of the CFA Institute Speaking to the Economic Club of Canada on What is the Future of Finance he said the financial crisis rattled the public s trust in the financial markets breaking the social contract between clients and firms and prompting investors to move away from equities and hide their assets in real estate and gold As a result these investors will end up having a difficult time meeting their retirement savings goals It could force them to work longer on or rely on government to transfer wealth from young workers to retirees The other option is seniors can live in poverty he said To get them back into markets the industry needs to regain their trust and it can only do so by adhering to a strong ethical values Incidents Due To ETNs The incidents of spring 2012 involving the TVIX ETN issued by Credit Suisse were created by factors specific to ETNs with no relation to the particular exposure to a volatility index says an EDHEC Risk Institute study The Risks of Volatility ETNs a Recent Incident and Underlying Issues says the main factors suggested by the academic literature are the inefficient share creation process and the speculative motive of uninformed return chasing investors Under normal market conditions short selling can suppress the accumulation of positive premiums However if share creation is suspended during a significant surge in demand the security may become unavailable for borrowing which limits short selling activities The study notes that the volatility exposure through volatility exchange traded products is typically to a constant maturity VIX futures index that can differ substantially from the spot VIX index Investor Confidence Drops In September The State Street Investor Confidence Index ICI fell from August s revised reading of 91 to 86 9 North American investor confidence continued to decline this month falling 3 2 points from August s reading of 84 3 to end at 81 1 Asian investors followed suit with the Asian ICI declining 5 6 points to 87 6 Only European investors were an exception and an increase in risk appetite led the European ICI up by four points from 101 in August to 105 in September This month s decline in global investor confidence is the result of diminished risk appetite among both North American and Asian investors says Harvard University professor Kenneth Froot a co developer of the index While diminished growth expectations for Asia account for some of the reticence in that region the third consecutive decline in confidence among North American investors is more puzzling especially given recent announcements by monetary policy makers on both sides of the Atlantic It is clear that in their actual portfolios institutional investors continue to exhibit caution given the global growth backdrop Safety Ranks Higher Than Return Canadians rank safety of their investments as more important than the highest interest rates when considering Guaranteed Investment Certificates GICs says the Guarantees in Life RBC 2012 GIC Poll Four in 10 Canadians 44 per cent who hold GICs or would consider holding them place safety first highest interest rates come in second at 32 per cent While the popular belief is that the best rate is paramount when choosing to invest in GICs our findings confirm that Canadians consider guaranteed principal first and foremost for the protection and safety of their investment says Rosalyn Kent head GICs and savings We also found that most Canadians are taking a long term view of their GIC investments with 65 per cent saying that when deciding to purchase a GIC having the flexibility to cash in their GICs before their maturity date was the least important consideration GIC investors would be interested in increased benefits and flexibility such as GICs that offer an interest rate that increases every year 80 per cent GICs that provide a regular income 70 per cent and GICs that are linked to the stock market 65 per cent New Businesses Lack Expert Resources Nearly one fifth 19 per cent of all established business owners say that a lack of expertise to draw on including financial advice was an obstacle they had to overcome to be successful in their first few years of business says a CIBC poll by Leger Marketing When they look back some successful business owners realize that they would have benefited from advice about how to manage their money in the early years of their business says Jon Hountalas executive vice president business banking for CIBC The company offers tips to new business owners to help them establish a strong financial foundation including preparing your business to deal with the ups and downs of cash flow by understanding and anticipating your day to day cash needs Pain Of Loss Greater Investors are not always rational says William Jack of William D Jack Associates In an article at Irrational Investors he says this is partly due the fact that the pain of losing money is greater than the pleasure of gaining the same amount This motivates people to sell low and triggers feelings of greed when prices are rising so they end up buying high Toolkits Teach Financial Skills Your Financial Toolkit designed by the Financial Consumer Agency of Canada FCAC the Investor Education Fund IEF and l Autorité des marchés financiers AMF helps Canadians become more capable and confident financial consumers In simple non technical language it covers the basic financial topics that most Canadians have to deal with every day says Ursula Menke the FCAC commissioner It touches on everything from banking budgeting and saving to debt management fraud protection and retirement planning and provides Canadians with an opportunity to practice new financial skills and apply the information to their own situation she adds The resource is divided into 11 modules and includes worksheets quizzes questionnaires tools calculators educational videos and case studies that give Canadians the option of completing the whole program or select the topics in which they are the most interested They can also use its self assessment tool to find modules and tools that are useful for them based on their situation and needs September 24 2012 Mercedes Adds Insurance Protection Mercedes Benz Financial Services Canada is launching its First Class Insurance an automobile insurance plan designed exclusively for Mercedes Benz drivers The program will be the first of its kind in Canada and the only branded auto insurance program sponsored by a luxury automobile finance company says the company It was developed by Marsh Canada Limited an insurance broking and risk management firm and Aviva Canada Inc a property and casualty insurance company First Class Insurance is a pioneering program that will further differentiate the overall Mercedes Benz driving experience for our valued customers says Stefan Karrenbauer president and CEO Mercedes Benz Financial Services Canada The program was designed to protect our customers while providing a high level of service that is truly commensurate with the Mercedes Benz brand Highlights of the insurance program include preferred automobile insurance rates including multi vehicle discounts repairs performed at a Mercedes Benz approved collision centre genuine Mercedes Benz replacement parts new car replacement if a vehicle is a total loss within the first five years and preferred residential insurance rates including multi policy discounts The program is the latest addition to the company s suite of products which currently includes lease protection tire and rim protection and guaranteed auto protection Gaps Found In Discount Brokerage Satisfaction Although overall investor satisfaction with Canadian discount brokerage firms increases year over year closing the satisfaction gap with U S firms large gaps in the investor experience remain says the J D Power and Associates 2012 Canadian Discount Brokerage Investor Satisfaction study Survey results indicate that Disnat ranks highest 768 in discount brokerage investor satisfaction for a fourth consecutive year followed by BMO InvestorLine 720 and National Bank Direct Brokerage 719 Overall investor satisfaction with discount brokerage firms in Canada averages 700 on a 1 000 point scale representing an increase of 21 points from 679 in 2011 In comparison investor satisfaction in the U S averages 768 As well satisfaction in the Canadian discount brokerage industry trails satisfaction in the Canadian full service brokerage industry by 20 points and in the retail banking industry by 53 points The study finds that the largest gaps in satisfaction between brokerage firms in Canada and the U S are with problem resolution trading charges and fees and interaction CFOs Leading Sustainability Practices Two thirds of CFOs say they are involved in driving sustainability strategies in their organizations and more than half say their involvement has increased over the last year says Sustainability CFOs come to the table by Deloitte Touche Tohmatsu Limited DTTL Companies are sitting up and taking notice that sustainability is not just a brand or a corporate responsibility element it is becoming a key driver of financial performance and the future of business says Dave Pearson Deloitte sustainability leader Indeed sustainability seems to be increasingly operationalized with the percentage of CFOs and COOs accountable to their company s boards for sustainability issues nearly doubling from 20 per cent to 36 per cent in the past year As such CFOs have become focused on a number of sustainable operating practices such as increased focus on sustainability in tax and financial reporting and increased investment in technology Total Ownership Experience Includes Concierge Service Infiniti Canada has launched its complimentary Personal Assistant a premium hospitality feature that provides owners with unlimited 24 hour access to a live team of professional assistants Accessible primarily through the owner s mobile phone callers can ask for answers or assistance on a range of topics and tasks including such things as driving directions city guides party planning advice travel arrangements emergency assistance schedule reminders stock markets and sports score information consumer product reviews and movie times and reviews Infiniti purchasers are registered with the service before taking delivery of their new Infiniti G M EX FX JX and QX Along with cell phones assistance is also available via e mail text messaging and online portals in both English and French Fiscal Crisis Now Underway The world has moved from a financial crisis to a fiscal crisis and the resulting austerity is slowing economic recovery says Patti Croft an independent economic analyst In the session A Trip Around the World Economy Class at the 2012 CPBI Atlantic regional conference she called it a brave new world as governments and consumers pay down debts to delever In fact she said there is a massive deleveraging underway but the debt being reduced in the private sector is being offset by increases in public debt With consumers spending less government has to spend more to keep the economic recovery underway Canadian consumers however are continuing to spend and not pay down their debt which concerns the Bank of Canada she said As well it is an era of collateral damage as in the aftermath of the 2008 crisis no one knows the long term implications of what they are doing with monetary policy Road To Stability Littered With Obstacles Global economic and financial issues remain sizable and the road to greater stability is littered with obstacles says the Desjardins Group economic studies team China is raising concerns the United States fears a fiscal cliff the euro zone is in recession and Canada s growth drivers are weakening it says In Canada the pillars for growth are dwindling Consumer spending on goods is being slowed by the rebalancing of household budgets while exports are being hurt by the lethargy of trade partners As well government expenditures are declining due to the budget cuts by the federal and provincial governments The key event of the summer was the promise from the president of the European Central Bank ECB to do everything necessary to preserve the euro It is in this context that the ECB can now make unlimited purchases of bonds from countries that have asked for help from the bailout fund so as to ease the financial pressures on these countries On the other hand there is still a lot to do in this region to stabilize the situation China s economy is of increasing concern and other stimulus measures are on the menu All of this it says suggests that the central banks will hesitate to raise their key rates for several more quarters with most still trying to stimulate growth with increasingly bold measures QE Could Boost TSX The announcement of an open ended quantitative easing QE program in the U S could breathe new life into the TSX says The Harbour Group RBC Dominion Securities QE3 Implications for Canadian Investors It says prior iterations of QE have led to higher commodity and equity market valuations by depressing the value of the U S dollar which has a significant impact on the Canadian equity market Since the TSX is heavily weighted to these often volatile sectors the QE3 announcement has breathed new life into the TSX as investors anticipate higher commodity prices and thus higher earnings for the commodity producers that dominate the index Gold in particular has benefitted from the anticipation and announcement of more monetary accommodation as prices have generally risen as the Fed s balance sheet has expanded Energy and metals prices have also rallied on the news and have been further boosted by geopolitical tensions and new infrastructure commitments out of China respectively High speed Trading Poses Risks High speed trading poses widespread risks to market safety says research from the Federal Reserve Bank of Chicago The study found out of control algorithms were more common than anticipated prior to the study and that there were no clear patterns as to their cause It says that two of the four clearing dealers two thirds of proprietary trading firms and every exchange interviewed had experienced one or more errant algorithms It also found that there may be times when

    Original URL path: http://privatewealthmagazine.ca/private_wealth_news.php?date=2012-10-13 (2016-04-26)
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