After several months of Canadians letting their guards down, a surge of COVID-19 cases in the fall has once again had an impact on the economy and financial markets.
Advisors and investors are looking at the short- and long-term repercussions of the pandemic. From preparing for a tax season unlike any other, to focusing on investments that put a priority on environmental, social and governance (ESG) factors, to running an advisory business after the dust settles, there’s little doubt all are exploring the possible outcomes.
Here are the 10 articles published on Globe Advisor that received the most attention among readers in October:
The coming tax season is expected to be even more complicated than usual for Canadians who took advantage of the federal government’s COVID-19 relief measures, throwing off projected payments based on income and deductions from years past. Advisors recommend Canadians pull documents together to prove eligibility for programs such as the Canada Emergency Response Benefit and set aside cash that might be needed to cover taxable benefits from them or the forgivable portions of business loan programs.
Clean-energy stocks are getting a tailwind as politicians and governments pledge to cut carbon emissions and mitigate the negative impact of climate change. Given potential investment opportunities in a greener future, Globe Advisor asked Erica Lau, chief executive officer and lead portfolio manager of North Growth Management Ltd., Andrew Simpson, director of investment management and portfolio manager at Vancity Investment Management Ltd., and Bruce Campbell, president and portfolio manager of StoneCastle Investment Management Inc., for their top picks among renewable energy plays.
COVID-19 has triggered a wave of succession planning among advisors that some experts believe could become the largest transition the industry has ever seen. A big reason is that during the global financial crisis, advisors had to wait years for the value of their books to get back to a level at which they could seriously consider selling their businesses without making a major financial sacrifice. But the market’s recovery this time around has outpaced that of the underlying economy, potentially adding more urgency to the current wave of advisor succession planning.
Advisors ready to begin the succession planning process amid COVID-19 may find that the usual strategies no longer apply. That’s particularly so for independent advisors hoping to recruit and groom a younger heir to take over their books of business as some experts warn the process has become slower and more challenging because of the pandemic. Add widespread expectations of continuing market volatility to the mix and the result is a growing divide between what older and younger advisors are willing to provide one another to facilitate a smooth succession.
A recent amendment to Canada’s securities regulation that makes it easier to hire portfolio managers in certain client-facing roles could be a game-changer for wealth and asset management firms looking to add to their ranks. Regulation for registration of advising representatives (ARs) used to require portfolio managers to have at least two years of experience in securities selection and research, regardless of their role. But the addition of new terms and conditions to the registration requirement to the rule in June eliminated that requirement for portfolio managers who deal exclusively with clients, creating a new role defined as client relationship manager advising representatives.
Investing in small-cap companies can be risky, but rewarding. They can offer higher growth than their larger peers and even become takeover targets with a juicy premium. Globe Advisor asked Stephen Takacsy, president, CEO, chief investment officer and lead portfolio manager at Lester Asset Management Inc., Bruce Campbell, president and portfolio manager of StoneCastle Investment Management Inc., and David Barr, president, CEO and portfolio manager of PenderFund Capital Management Ltd. for their top picks among stocks that could be attractive takeover candidates.
As many advisors continue to work remotely, some are making the decision not to return to their offices or renew their leases, making way for entirely new working environments for themselves, their staff and their clients – even after the pandemic subsides. “I’m not going back [to an office building],” says Shayne Stephens, president and family office director at Landmark Advantage Multi Family Wealth Office in Stouffville, Ont. “The cost-benefit of creating a home office is that it’s giving me a 50-per-cent return on the investment from the get-go.”
Advisors are tapping into a growing number of tools to help them choose sustainable investments that best meet clients’ increased interest in companies’ environmental, social and governance (ESG) performance. Toronto-based Act Analytics Corp. launched its analytics platform earlier this year to help advisors construct customized, ESG-themed portfolios for their clients. In July, Morningstar Inc. finalized its acquisition of ESG ratings and research firm Sustainalytics, the latter of which made its ESG risk ratings on more than 4,000 public companies available on its website. In addition, Bloomberg LP and Refinitiv are now providing ESG data and scores to help advisors pick and screen investments based on their individual responsible investment criteria.
Investment returns are just one way advisors can help retirees increase their net worth. Many advisors also look for tax-reduction strategies and say year-end is a good time to finalize those moves. “It’s easy in the fall months to tax plan,” says Ethan Astaneh, a financial advisor at Nicola Wealth Management Ltd. in Vancouver. “If something needs to be done by year-end, now is the best time to maybe estimate, for example, the investment income earned throughout the course of the year.”
For Canadian investors with modest portfolios, the old adage “it takes money to make money” rings especially true when the fee model for high-end financial advice is broken down. Three high-end advisors – David Baskin at Baskin Wealth Management, Kathryn Del Greco at TD Wealth Private Investment Advice and John Zechner at J. Zechner Associates Inc. – say smart advisors should recognize the mutual long-term benefit from taking on the right clients, regardless of the size of their portfolios, and those modest investors could get the best advisors if they commit to growing their assets.