The week in review: September 2-5, 2008

By Kate McCaffery | September 9, 2008 | Last updated on September 9, 2008
5 min read

Welcome to the weekly roundup of news affecting you, as covered by and our sister publication, Objectif Conseiller. Read this section every week to catch up on the news you missed, or click here and subscribe to the week in review to get regular updates sent to your in-box or blackberry.

In the news this week, a new study suggests the industry could see a huge influx of new cash as workers transition to retirement and roll group retirement assets into advisor-sold retail products; the Bank of Canada announced it is holding the line on interest rates, Morningstar examines slumping commodity prices and performance among its mutual fund indices and IFIC releases the industry’s latest sales numbers. We also cover news from Quebec, product announcements and the latest moves made by regulators, who are turning to your clients, retail investors, for guidance and advice about how to do their work.

Skip to: Quick links, stories this week.

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The Bank of Canada announced this week that it will keep key overnight and bank rates at 3% and 3.25%, while a world economic organization says Canada will likely only grow 1.2% in 2008, down from initial estimates that called for growth around the 1.8% mark. U.S. economic growth meanwhile, is expected to soften to 0.9% in Q3 and 0.7% in Q4, following a surprise second quarter spike where growth hit 3.3%, possibly the result of rebate cheques mailed out as part of the U.S. federal government’s stimulus package.

A review of the Canadian investment landscape this week shows falling commodity prices hurt returns for resource focused funds in August. The Morningstar Precious Metal Equity index fell 11.3% after falling 12.5% in July. Canadian income trusts were top performers, followed by science and technology and the Health Care Equity index. The full Morningstar performance report is available here. Fund sales reported by the Investment Funds Institute of Canada, meanwhile, held steady in August, with net asset numbers coming in 1.5% higher than numbers reported in July.

Product changes announced this week, include changes to Manulife Mutual funds — the company is adding to its Simplicity Portfolio lineup, launching an Elite T Series for high net worth investors and making changes to the Manulife Global Opportunities Class, Strategic Income Fund and the Global Natural Resources Fund (now available for retail investors). AGF, meanwhile, has launched a new series of retirement notes, and announced several portfolio manager changes, Star Hedge Managers plans to launch a new portfolio of private investment funds managed by Rohit Segal, Eric Sprott and Niormand Lamarche; Goodman & Company plans to streamline its wrap programs, Investors Group received unitholder approval to merge three funds into others with similar mandates, and Sun Life Financial is calling for advisors to consider the use of TSFA accounts in their insurance planning with clients.

On the regulatory front meanwhile, four members of IIROC, the Investment Industry Regulatory Organization of Canada, announced they are planning new measures to get direct input about product suitability from retail investors. The group plans to ask clients about the information they get from advisors, if specific products should be prohibited or made available and if regulators should focus on product specifics or on regulating how products are sold and distributed.

People Watson Wyatt Worldwide named a new head of western retirement, announcing that it is promoting and relocating senior actuary, Doug Chandler, to the firm’s retirement practice in Calgary. Meanwhile, the Canada Pension Plan Investment Board (CPPIB) has named its new chairman, Robert Astely. The former CEO of Clarica Insurance Company and former president of Sun Life Financial Canada takes over from founding chair, Gail Cook-Bennett when her term expires in October.

News from Quebec After many years of operating and forming partnerships in the options space, the Montréal Exchange announced it has acquired a majority ownership interest (53.2%) in the Boston Options Exchange Group, LLC. COMMENT FROM CONSEILLER EDITOR. In other news, Bonneau says XXX XXXX XXX WHAT IS GOING ON IN MONTREAL? WHAT STORIES ARE INTERESTING? WHAT ARE THEY FOLLOWING?

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Other trends Although the number of M&A deals rose in Q2 this year, a recent report suggests the aggregate value of second quarter transactions reached $18.5 billion, the lowest number reported level in nearly five years and more than $6-billion short of values reported in Q1. Compared to 2007 numbers, the results are even more striking — M&A value in the second quarter of 2007 reached a reported $163.5 billion. The relative absence of “mega-deals” and the lack of credit available for new leveraged transactions are being blamed for the drop.

Finally, a new U.S. study could prove to be interesting for Canadian advisors as well — roughly $2.3 trillion is expected to enter the retail product market, starting with $300 billion in 2008, increasing to roughly $500 billion by 2013, as more U.S. workers transition to retirement and roll their assets over from group retirement plans into advisor-sold retail products.

Quick links: news, September 2-5, 2008.

New features this week:

History, your marketing tool: In the past 10 years markets, large mergers, provincial politics, regulatory developments and clients themselves have dramatically changed the face of the industry. Reflect on where you’ve been, how far you’ve come and share that message with clients and employees alike. Learn how to write your own history and put it to work in your practice.

Building a better referral network: Imagine receiving a phone call from a respected accountant or lawyer, telling you that he has a client who really needs your expertise and would like to speak to you as soon as possible. How do you make this scenario reality on a regular basis? Start by following these steps to getting to know centres of influence.

Planning for post-secondary education: Although summer doesn’t officially end until September 21, for most of us Labour Day marked the end of cottage months. It also means your client’s kids are kicking off another school year, with many of them entering university for the first time. With that in mind, we’ve compiled a list of back to school tips that will help your client plan better for their children’s future.

Premium Advice – Using product allocation to your client’s long-term advantage: There’s more to being an advisor than selling life insurance. These days, creating a portfolio full of diversified investment products is paramount if you want to have a successful business. Manulife’s Chris Paterson explains how long-term thinking and the right product planning can protect your client’s financial future.

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Kate McCaffery