DAC 2013 – Day 1: Global Wealth Management and New Economic Trends

Knowledge Bureau president Evelyn Jacks’ presentation started the first day of DAC 2013, the most successful conference in the 10 year history of this exclusive event for Canadian wealth advisors from coast to coast.

Over 200 delegates explored the theme “Back to the Future, Collaborative Wealth Management” in the beautiful and serene Ojai, CA resort. Citing former Bank of Canada Governor Mark Carney who said back in April that “Momentum is coming,” Jacks believes that there is evidence that this momentum will come from small business owners and entrepreneurs — a market that’s ripe for advice. “We believe that we may be embarking on the Era of the Wealth Advisor and that planning with business owners is a big opportunity in the immediate future,” Jacks told the multi-advisor audience. “This requires expertise in managing multi-stakeholder family relationships, as opposed to working with individuals only.”

Here’s one statistic that should make advisors shudder: half of investors under age 50 take advice from the Internet, according to research done by Cisco’s Internet Business Solution Group. That’s why Jacks says advisors need to go back to basics — concentrate on things that worked in the past and tailor it for a future generation. This is where DAC 2013’s “Back to the Future” theme comes into play. “We need to go back in time; we need to get out there and have those conversations we have in our offices or in their offices, and facilitate those deeper conversations to preserve the family wealth face to face. We are instrumental in helping families achieve the prize of peace of mind: something we can’t do as well on the phone or on the Internet.” Real Wealth Management is about accumulation, growth, preservation and transition of wealth, and it is fueled by deeper, multi-generational client experiences. However, this all takes more time, and we need to adjust best practices accordingly.

Dr. Jack Mintz, School of Public Policy, University of Calgary, spoke about global economy trends. He noted Canada was not in bad shape and was positioned well for the future. But the growth in Asia is “the shining part of the world” as more Asians move from poverty to the middle class. When people think about Asian growth, they tend to think China but Dr. Mintz mentioned Korea, Vietnam, and Indonesia which all have high single-digit growth rates. In terms of what advisors can do to best assist their clients, he advised they “try to manage the risks that are out there.” It’s also crucial to keep abreast of upcoming policy changes such as the possible elimination of tax preferential treatment of family trusts. “Make sure clients have the flexibility to shift assets if surprises occur,” he says. Other things to watch out for include possible pension reform.

Canada may get a bad rap for not saving enough but that’s contrary to recent reports from Statistics Canada which found two-thirds of us save too much — more than what we need for retirement, especially when we take our homes into consideration. “We’re still very prudent in this country,” says Dr. Mintz. “When Canadians retire, they intend to pay down their debt.”

Those who don’t save enough, however, never had enough wealth for what they need for retirement in the first place, he adds.

In an attempt to get clients more diversified, advisors might suggest buying an international investment. But Shaun Osborne of TD Securities cautions that this introduces additional risk via the exchange rate. For example, when a foreign currency appreciates, investment returns increase in the home currency — a good thing. Just remember the opposite holds true when a foreign currency depreciates.

Regulation and compliance requirements are as complex as ever and Richard Croft sees even more on the horizon. The onus is on advisors to explain the nature of the advisory relationship, says Croft, president of Croft Financial Group Inc. “Are you talking to your clients as an investment advisor or as an insurance agent?” he says. Advisors must also justify why product choices were suitable for clients at that time.

While compliance is onerous, Croft nevertheless sees the increasing paperwork as an opportunity for advisors to better position their services. “You have an opportunity under the new rules to detail your value proposition,” he says. Clients, for instance, like one-stop shopping for services like investments, tax planning and risk management.

Finally, Charlie Spiring, senior vice-president, vice chairman and director of National Bank Financial, had some words of wisdom from his 18 years of running his own firm (Wellington West) before selling to National Bank. Hire the best, give them a chance to run their own business and see what happens. Ultimately, “good people attract other good people,” he said.