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Ottawa’s strategy to increase the number of immigrants it welcomes to Canada dramatically is a massive, multi-year opportunity for financial advisors looking to grow their books of business. Still, experts say advisors need to ensure they have the right approach with newcomers if they want to attract and retain them as clients.

The federal government announced recently that it’s increasing immigration targets for the next three years, aiming to admit almost 1.5 million new permanent residents to Canada by the end of 2025. The strategy is intended to help fill critical labour gaps and fuel economic growth.

Ottawa’s annual immigration plan aims to add 465,000 permanent residents in 2023, 485,000 in 2024 and 500,000 in 2025. About 60 per cent of admissions will be in the “economic class,” which means they’re educated, fill targeted labour and skills shortages, contribute to innovation, and can “integrate into the Canadian labour market with ease,” the federal government stated.

Canada’s immigrant population has been rising steadily during the past several decades. Recent census data from 2021 show almost one-quarter of the people living in Canada were born in another country, the highest percentage since Confederation. The report also shows immigrants are bypassing Toronto, Montreal and Vancouver increasingly in favour of smaller cities across the country.

Recent surveys also show Canadians are embracing newcomers. A recent poll found that more than two-thirds (69 per cent) of participants support Canada’s immigration efforts compared with just 35 per cent in 1977.

Advisors are being encouraged to embrace newcomers to Canada, a suggestion that has been promoted in recent months through the Newcomer Financial Series and Summit. It’s a series of financial literacy events for new Canadians and the advisors who serve them. Some of the topics covered in the series include building credit in Canada, buying a home and demystifying insurance.

Globe Advisor spoke recently with Pat Dunwoody, executive director of the Canadian ETF Association, one of the partners behind the series, about the role advisors can play in helping newcomers succeed in Canada.

What do you think advisors should know about newcomers to Canada?

What many people don’t realize is that many newcomers aren’t refugees. They’ve come to Canada for various reasons such as work or to be closer to family. They have money, and they’re looking for ways to invest it. It’s not just buying a home but also investing in public and private assets. So, they need financial planning and advice on how things work in Canada, which might differ from where they’re from.

How should advisors work with newcomers?

Advisors should understand that each community is different based on its culture and customs. You need to respect that.

For example, you might be dealing with a family saving money for their daughter’s dowry – [a payment, such as property or money, paid by the bride’s family to the groom or his family at the time of marriage]. You’re not going to steer them away from that, but you can help them ensure that the assets stay with their daughter by bringing in a lawyer to help with that kind of planning.

Advisors should do some research before working with newcomers and ask questions to help build relationships.

What’s your advice for advisors looking to build their list of new clients from other countries?

They should consider getting involved in the community by attending events, not to sell anything, but to get to know people. You need to build trust.

These newcomers may have assets, but they’re not going to give them all over to you right away. Advisors can play a role in ensuring that immigrants to this country are treated well. As an industry, we want to provide them with the right tools and advice to help them be successful here in Canada.

This interview has been edited and condensed.

- Brenda Bouw, special to The Globe and Mail.

Must-reads from Globe Advisor this week

How to play a bull case for lithium as the spot price soars

Skyrocketing demand for electric vehicles (EVs) – critical in the energy transition from fossil fuels – has sparked a “white gold” rush. The push to net-zero emissions has caused a boom in lithium, a silver-white elemental metal needed for batteries that power EVs and the build-out of renewable-energy storage systems. And now a supply crunch has fuelled a red-hot rally in the lithium-carbonate spot price to around US$74,300 a tonne from US$6,750 a tonne at the start of 2021, according to S&P Global Platts data. Shirley Won looks at where prices for the metal are headed and what this means for investors who want to jump in.

Innovative seg funds with evolving guarantees see growing demand

Segregated funds are having a moment. More precisely, these investment products with an insurance wrapper have seen rising demand amid increasing market uncertainty and higher inflation. At the same time, the seg fund market has “evolved” with insurers offering a growing number of innovative products to meet the needs of clients. Yet, even with all the new options, some advisors see only limited use for these products. Joel Schlesinger reports on a whole new generation of seg funds coming to the market and how advisors would use these in portfolios.

How Canadians who move provinces bring challenges, opportunities for top advisors

Interprovincial migration, particularly out of Ontario, is on the rise – and that may create opportunities for advisors in locations where newcomers decide to reside. A report from Scotiabank Economics showed that Ontarians were more likely to relocate to Nova Scotia, New Brunswick, Prince Edward Island and British Columbia. Some of the advisors on The Globe and Mail and SHOOK Research’s Canada’s Top Wealth Advisors: Best in Province ranking have also witnessed the migration trend. Deanne Gage speaks wirh them about how they’ve handled the influx of clients and retained those that have moved away as well.

Taxes are a major concern for top advisors as many lean on specialists for complex strategies

Taxes are one of life’s certainties, even if many Canadians would rather not think about them – particularly when it comes to their investments. Yet, taxation is always top of mind for some advisors on The Globe and Mail and SHOOK Research’s Canada’s Top Wealth Advisors: Best in Province ranking because it affects just about every aspect of clients’ investment portfolios and wealth management plans. Next to providing steady investment returns to achieve client goals – be it retirement, capital preservation amid high inflation, or passing wealth on to the next generation – taxation is often the next greatest concern for advisors. Joel Schlesinger looks at the various strategies top advisors use to mitigate taxes for clients.

Also see:

What traits led to top wealth advisors’ success?

Seeing ethnic representation helps minorities continue in the business, say top advisors

Small-town advisors face higher scrutiny because they’re more ‘visible in the community’

U.S. stock hedging strategies backfire during market rout

Big hedge funds shop for bargains in corporate debt markets

What you and your clients need to know

Aggressive strategy focuses on smaller Canadian energy stocks

Energy bulls have been rewarded this year as companies capitalize on oil prices that haven’t been seen since 2014. The energy sector has been reporting exceptional earnings, paying down debt and providing sustainable dividends to shareholders. Investors who can stomach the sector’s cyclicality and who have a long-term focus may further be rewarded as the commodity proves to be an inflationary hedge. Joshua Farruggio of Morningstar Canada looks at small and mid-cap Canadian energy companies with earning momentum and adequate cash flow to pay down debt.

Growing number of mortgage loans have amortization periods of more than 30 years

A growing share of mortgage loans made by major Canadian banks have amortization periods of more than 30 years, a sign of the rising stress borrowers are under as interest rates soar. With every interest-rate hike by Canada’s central bank, the cost to service a variable-rate mortgage rises. But at most banks, the borrower’s monthly payment doesn’t increase right away. Instead, the amortization period – the time it takes to pay the loan off in full – gets longer. When the loan’s term comes up for renewal, the amortization has to snap back to its original length, which in the current environment of rising rates forces a sudden increase in monthly payments. James Bradshaw and Rachelle Younglai looks at what this means for borrowers.

Exit interviews are common but to help retention firms should conduct stay interviews

There’s been a lot of focus through the pandemic on those who have made a career pivot, changed jobs or left the workforce. But what about the workers who stay? After an employee leaves, their colleagues are usually left to pick up the slack during the hunt for a replacement. They inherit more work and responsibilities – sometimes with more compensation or support from co-workers, but often not. Candy Ho of the University of Fraser Valley writes about why stay interviews are more than a simple check-in with loyal employees.

– Globe Advisor Staff

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