Enhancing the professionalism of financial advisors in the best interests of the consumer



Editor's Letter – Kristin Doucet

This & That

Field Notes – Parties that Empower by Andrew Guilfoyle

Innovators – Charting New Courses by Kira Vermond & Kristin Doucet

Retirement Planning – Case Study by Michael Callahan

Tax & Estate Planning – Estate Fees by Jamie Golombek

Financial & Retirement Planning – Annuities by Lynn Biscott

Succession Planning – Both Sides Now by Craig Harris

The Small Business Client – Renewals by Mike McClenahan

Advocis News

The Final Word by Dean Owen


Charting New Courses

Innovation can start as a spark of an idea, or it can be a slow building of thought that leads to action. Innovation is about leveraging the knowledge that there is a better way to do something, a smarter way to work. Whichever path they’ve taken to get to where they are now, this year’s innovators are changing the world for the better

By Kira Vermond and Kristin Doucet

The Differentiator:
Michael Lee-Chin

At 61, Michael Lee-Chin is as full of energy and determination as he was when he bought his first mutual fund business, AIC, back in 1987. After a three-year hiatus following the sale of AIC to Manulife Financial Corp. in 2009, the Jamaican-born entrepreneur, who has been featured in Forbes’s Billionaires issue, is returning to his roots in the mutual fund industry — but with a twist.

As of October 1, 2012, Lee-Chin’s new company, Burlington, Ont.-based Portland Investment Counsel, will bring private equity investing to the retail investor — an industry first. Lee-Chin views his private equity funds as a way in which advisors can differentiate themselves to clients by offering institutional-quality investments that until now have only been available to institutional investors like the Ontario Teachers Pension Plan, OMERS and the Canadian Pension Plan.

“We have a dysfunctional situation right now with how money is managed,” says Lee-Chin, who coined the famous “buy, hold and prosper” slogan. “Why should an investor’s portfolio be 100 per cent invested in public companies? Therein lies the opportunity to have a righteous premise.”

In looking at how portfolios are constructed today, Lee-Chin saw a discrepancy between the composition of the average mutual fund and how wealth is actually created. “I asked myself, ‘who in the real world does the best job in creating wealth?’” He found the answer in successful business owners.

Lee-Chin recognized five things wealthy entrepreneurs do to build wealth: 1. They own a few high quality businesses; 2. They understand those businesses; 3. They ensure those businesses are in strong, long-term growth industries; 4. They use other peoples’ money to invest prudently in those businesses; and 5. They are in those businesses for the long run. And because business owners have “skin in the game,” adds Lee-Chin, they are less likely to base decisions on market fluctuations, management compensation or earnings expectations.

When Lee-Chin measured the quality of the average mutual fund against these five principles of wealth building, he saw a void in the investment industry that needed to be filled. The average mutual fund typically holds between 80 and 100 different stocks; not all are in strong growth industries, and most have an annual turnover rate of 80 per cent. Given the volume of stocks in a mutual fund, it’s next to impossible for investors to truly understand each business they are invested in (never mind that most people simply don’t have the time or desire to do so.)

At a time when demographic trends, low interest rates and fluctuating markets are working against investors, making private equity accessible to the public is one way of growing wealth while reducing overall volatility and ultimately keeping investors invested for the long haul. This approach could have particular appeal for the wealthy, more risk-averse baby boomer client who is near or in retirement and can’t afford to take the same risks as younger clients.

Portland’s private equity funds will be offered to accredited investors who either have $100,000 to invest, a net worth of $1,000,000, a personal income of $200,000 per year, or an annual household income of $300,000.

The advisor business has become highly commoditized. Advisors are finding they need to prove their worth to current and prospective clients now more than ever. There are approximately 90,000 financial advisors in Canada today, many of whom are vying for the attention of the high-net-worth client. Lee-Chin believes that to succeed in that market, there are three things every advisor needs to ask him or herself: 1. How are you differentiating yourself? (What makes you unique from other advisors?); 2. What kind of reputation are you building for yourself based on your actions today? (It’s your reputation that will get you in the door.); 3. How are you really addressing your client’s needs?

“These are three things that every professional — and business — should be thinking about every day,” says Lee-Chin. “And the only way I know how to do that is to have a righteous premise … that’s what’s going to give you the passion to persevere and the confidence when you’re prospecting.”

The Matchmaker:
Randy Ambrosie

Back in 2011, Randy Ambrosie stood in front of a group of Concordia University students in Montreal to talk about one of his favourite topics: finding the right financial advisor. The twentysomethings that made up the crowd listened intently. As soon as Ambrosie finished speaking, he knew he’d struck a chord. Within moments, dozens of students approached him with questions.

The most common question was “Can you help me find someone I can trust and work with?”

It’s a question Ambrosie, founder and CEO of Oakville, Ont.-based Accretive Advisor, gets all the time. It was also the question that spurred him on to launch the advisor marketing company, which uses research to help advisors learn from clients so they can better address their needs. In return, potential clients are able to find out how advisors operate so they can choose the most appropriate one.

Although Accretive connects advisors and clients, it’s not the eHarmony of the financial world, says Ambrosie. Instead, some of the best advisors and planners in the industry are profiled and highlighted on his searchable site.

“I just had so many advisors that I had great respect for and I thought, ‘What if I could shine a light on them? What if I just stood up for advisors who were deeply committed to their clients and really made the investing public aware of these superstars?’” he says today.

Ambrosie, who once played nine seasons in the Canadian Football League, originally planned to become a Chartered Accountant. But after being unable to convince an employer he planned to article for that he could work and train, he called a family friend who gave him a piece of sage advice.

“He said, ‘Randy, you have way too much personality to be an accountant. You should be a broker!’”

He has never looked back. Before founding Accretive in 2009, Ambrosie was the president of AGF Funds and held senior leadership positions at HSBC Securities and HSBC Brokerage USA, CIBC Wood Gundy, Merrill Lynch and Midland Walwyn.

Although he says he loves the corporate world, when he noticed changes in the advisor industry — the heady days of the boomer generation were starting to fade and many clients were heading into the de-accumulation phase — he wanted to help great advisors prosper. However, rather than simply launch the business, Ambrosie took his time talking, listening and gathering advice.

“I wanted the industry to want us in it and to be supportive of what we were going to do. I didn’t want to be a disruptive force,” he says.

Ambrosie is the first to admit that the business truly took off in 2010 when it acquired Advisor Impact, a company founded by financial luminary Julie Littlechild. Her research, which has been conducted in Canada, the U.S. and the U.K., helps advisors understand their client relationships so they can harness their power and repair them when needed. A tool, Client Audit, grabs data advisors can use to address concerns or even land game-changing referrals.

In the end, Ambrosie is a master of connecting advisors with clients — and ensuring their relationships succeed. It’s work that inspires and enlightens.

“I find it incredibly rewarding talking to the advisors who thirst for knowledge and improvement,” he says. “I get a chance to do that every day.”

The Educators:
Laura McDonald and Susan Misner

Not long ago, while waiting in line at a Starbucks with her family, Laura McDonald felt someone tap her shoulder. She turned around to find a stranger staring back at her.

“Are you Laura from Golden Girl?” the woman asked. “I love what you’re doing! So many women love what you’re doing.”

This kind of scene is playing out more frequently these days for McDonald, who joins fellow Winnipegger Susan Misner as half of the dynamite duo who launched goldengirlfinance.ca in 2010. Since then, the site has gone on to become one of the more influential personal finance websites in the country with hundreds of thousands of page views per month. And as its name implies, the site is geared toward women.

It was a gap in the finance industry that needed to be filled, says McDonald, who has a marketing background.

“Before us, the financial media that did focus on women tended to talk about deals, steals and coupon clipping. That’s fun and interesting, but we really wanted to talk about the stock market and investing,” she says.

Misner, a 20-year industry veteran and former wealth manager with Wellington West Capital, saw wealth management’s darker side too. While husbands and partners were quick to sit in on meetings with her, women tended to stay away.

“I didn’t see a lot of women coming through my door to talk about their money,” says Misner. “So we saw this very clear market opportunity. The financial services industry just wasn’t reaching women, so we set out to change that and innovate in that space.”

That commitment is paying off. Not only are they building an adoring online community that wants more than recipes and parenting advice, they’ve published a book, It’s Your Money Honey: A Girl’s Guide to Saving, Investing, and Building Wealth at Every Age and Life Stage. They’re now working on the follow-up.

McDonald believes the main reason they’ve been successful so quickly is that they know what women want: useful information that they can use in their daily lives, in a variety of different digital forms. For instance, e-newsletters might be seen as throwback to an earlier decade, but she says women still enjoy them.

“They see them as a blessing in their lives, whereas men view them as junk. It’s a different mentality in terms of how men and women consume digital media,” she says.

Advisors can learn something from what McDonald and Misner are discovering about women as clients. Quite simply, many women attach an incredible amount of emotional weight to the almighty dollar.

“For women, money is a sense of security. Women are very focused on dreams and goals and how they can help their families. The money is their lifeline to that,” says Misner, who advises planners to get out of the office to have coffee with their female clients and listen, listen, listen.

Getting to know their female clients better now could pay off in spades for advisors in the future — especially over the next 20 years as a demographic shift takes hold. Considering that 60 per cent of university students are now women, and that a growing minority of women are becoming their households’ main breadwinners, advisors and the rest of the financial community would do well to recognize them as key wealth influencers.

“For a long time women were seen as a niche market, but they’re a very powerful force in Canada and globally,” says Misner. “That’s very exciting.”

The Influencer:
The Honourable Charles Sousa

When the Pan/Parapan Am Games roll into Toronto in 2015 and thousands of athletes take to the pool, field and ring, Charles Sousa, Ontario’s Minister of Citizenship and Immigration, might take a moment to watch a basketball game or see what canoe slalom athletes can do on whitewater. After all, as the minister responsible for the mega event, won’t he deserve a moment to take a breather?

Sousa, who was first elected to the Ontario Legislature in 2007 and re-elected in 2011, is a member of the Treasury Board/Management Board of Cabinet. He has also served as the Minister of Labour and as a member of the Standing Committee on Finance & Economic Affairs.

Although the Pan/Parapan Am Games will bring big changes to Toronto and the surrounding areas — he foresees that 15,000 jobs will be created, that the West Don Lands waterfront will finally get an overhaul, and that the Union-Pearson air-rail link will finally be completed — a main concern is ensuring everyone, both the able and the disabled, can fully enjoy the games.

“One of the successes of the games will be our fiscal management so it can be accessible and affordable to many,” he says.

Sousa speaks like a banker — not surprising considering he used to be one. Before going into politics, he spent over 20 years at Royal Bank of Canada (RBC) Financial Group after spending a few years running a small factoring business. Sousa’s work as a registered lobbyist for RBC put him in contact with the political side and eventually he was elected to represent Mississauga South. Since then, Sousa has gone on to push for the protection of Mississauga’s waterfront, has worked on poverty reduction strategies, and was instrumental in the passage of a new consumer protection legislation to regulate payday lenders in 2008.

“Payday loans are a form of financing that exists, but it should not be at exorbitant rates — not when people are only getting half of their paycheque. That’s crazy,” the Minister says.

As part of the legislation, lenders would help finance a financial education fund, which put Sousa on the path toward getting financial literacy education into the curriculum at elementary and secondary schools in Ontario. This resolution was unanimously approved.

“Knowing that students will get student loans and credit cards, I want them to have a better sense of what that would mean and how they can be better prepared to use them responsibly,” says Sousa.

Perhaps because Sousa has come from a strong financial background, he’s able to sit and chat as easily as he does with Advocis members. Sousa has attended a few Advocis annual Legislature Days at the Ontario Legislature in Toronto, where Advocis members from across the province meet with MPPs to discuss the importance of financial advice to Ontarians and the economy. He was there on April 24, 2012, the most recent event, and says he’s impressed with the professionalism of Advocis advisors — whether they’re helping clients with mortgages, insurance, retirement or succession planning.

“Kudos to the members of Advocis and the advisors who really want to further elevate not only their profession, but also client and consumer protection,” he says.

Kira Vermond is a freelance writer based in Guelph, Ont. and can be reached at kira@vermond.ca. Kristin Doucet is the editor of FORUM and can
be reached at kdoucet@advocis.ca.