During the past few months, the investment industry, financial advisors and Canadians have been getting accustomed to life after lockdown and focusing on the issues that are going to have a notable impact in the months and years ahead.
The articles published on Globe Advisor during the past month focused on some of these key themes. Advisors and their clients were particularly interested in what to do upon early retirement – including whether to take a pension’s commuted value, how to take advantage of the pandemic to improve business practices or skill sets, or the importance of providing and receiving the right advice during challenging times.
Here are 10 articles that drew particular attention from readers in August:
COVID-19 is magnifying the tendency for some Canadians to retire earlier than they had planned as their runway has been shortened suddenly by a disappearing business or changing employment situations. Darren Coleman, senior vice-president, private client group, and portfolio manager at Coleman Wealth, a division of Raymond James Ltd. in Toronto, says many Canadians have had to face that reality. “We’re seeing lawyers who have been affected … restaurant owners, service providers, many, many people whose plans were going along just fine and, suddenly, there’s nowhere to hide,” he says.
For Canadians who are planning to retire or have perhaps lost their jobs and who have a defined-benefit pension plan, there has never been a better time to review the age-old question of whether they should keep the pension or take the commuted value, writes Matthew Ardrey, vice-president and portfolio manager at TriDelta Financial Partners Inc. in Toronto. That’s because according to the Canadian Institute of Actuaries’ Actuarial Standards Board, changes to the interest rate and retirement age assumptions will be implemented on Dec. 1 that will cause the commuted value to be lower.
The COVID-19 pandemic has initiated a wave of transformation within the financial services sector. Most notably, there has been new technology rolled out across the industry to onboard clients digitally, which is making it easier than ever for investors to move their business to another financial advisor. That’s a good thing for investors as it serves notice to advisors who fail to improve their value proposition continuously. Jonathan Durocher, president of National Bank Financial Wealth Management, says there are 10 specific behaviours advisors should watch for – and change without haste – to avoid this fate.
Although the investment industry is in favour of an Ontario government proposal to tighten the rules around who can use the titles “financial planner” or “financial advisor,” it’s seeking clarity and some changes before they’re finalized. For example, Michelle Alexander, vice-president and corporate secretary at the Investment Industry Association of Canada, says the organization is looking to ensure there’s no duplication in credentialing oversight.
Although tax deductions for expenses such as portions of home internet or electricity bills or even mortgage interest payments are nothing new, advisors have rarely utilized these breaks in the past because they did most of their business in offices. However, the pandemic has spawned renewed interest among advisors in the tax benefits that come with working remotely – especially as many plan to leave their offices sitting empty indefinitely.
In the world of thematic exchange-traded funds (ETFs), recent offerings are aiming to ride the COVID-19 tailwind. But while hot trends may be enticing, investors need to tread carefully before buying niche ETFs to avoid overexposure to stocks they may already own – or wind up in money-losing funds. The benefit of thematic ETFs is that they can give exposure to names not represented in broad market indexes and also reduce risk from making “a bet on a single company,” says Daniel Straus, vice-president of ETFs and financial products research at National Bank Financial Inc.
Advisors are used to talking to clients about saving and investing to raise a family, maybe start a business and eventually retire, but as Canadians live longer and long-term care costs continue to climb, they’re now also talking to clients about how to help pay for their parents’ living situations. The COVID-19 pandemic has also put many people out of work, including seniors who may fall short of their retirement goals. That could mean they need some financial backing from adult children – a reversal of roles from decades past.
The Ontario government’s Capital Markets Modernization Task Force released a set of recommendations in July containing many thoughtful and worthy ideas. But one’s a clunker. It’s the suggestion that the Ontario Securities Commission (OSC) should be required to pursue “a public policy imperative of growing the capital markets in Ontario,” while making them more competitive, too. Requiring the OSC to boost market growth is going a step too far for several reasons, argues Neil Gross, president of Component Strategies, a capital markets policy consultancy in Toronto.
Accessing resources to work out of the office has been a challenge for smaller firms – especially when competing with bigger counterparts seeking the same equipment and services. But for these firms and their advisors, this size has allowed them to be more nimble in helping clients find solutions and cope with the fallout from the pandemic. The COVID-19 crisis has also been a test of these firms’ business-continuity plans, with mostly positive results.
More advisors are working toward higher designations and credentials during the pandemic as they take advantage of a greater number of courses available online and extra time that they would’ve spent commuting to the office. In fact, after an initial drop in new registrations at the start of the COVID-19 lockdown, there has subsequently been a marked increase in interest for several of Advocis’s online webinars, courses and designation programs, says Barbara Riddell, vice-president, education and membership, for the organization.