Performance figures for each account are calculated using time weighted rate of returns on a daily basis. The Composite returns are calculated based on the asset-weighted monthly composite constituents based on beginning of month asset mix and include the reinvestment of all earnings as of the payment date. Composite returns are as follows:

More Clients Considering Switching Investment Advisers

By Richard Chu

Source: Business In Vancouver

Massive drops in investment portfolio values over the past year have convinced more investors to ditch their financial advisers, industry professionals say.

“The most you’ll see people change advisers is right now,” said Clay Gillespie, vice-president at Rogers Group Financial. “There’s such a high level of dissatisfaction that people are going to be moving around at quite a frequent pace.”

David Sung, president of Nicola Wealth Management, said the number of prospective clients coming to his firm has increased by roughly 50%. “We’ve seen a lot more movement in the past year of investors willing to make a change from long-standing relationships they might have had. From a business perspective, it’s been a tremendous past year in terms of growth in our own company.”

An Investor Economics report ranked Nicola second in Canada among companies with assets between $350 million and $1 billion for its growth during the first six months of 2009. From January to June, the firm’s total assets rose 21.1% to $840 million.

Sung said Nicola’s assets have grown to $1 billion as of September 30, with $140 million coming from new capital from clients and the remainder being generated by investment returns.

He added that the average client is up around 18%.

“[That] doesn’t put us at the top of the pack … but most of our clients are well above water where they started in 2008. Our average client account in 2008 only lost 6.5%, which put us in the top 1% to 2% of investment managers across the country.”

While Sung credits Nicola’s investment style for its relatively strong performance in the past two years, he noted the company’s focus on providing financial planning has also been key.

“Planning is very important, and I think firms that focused on that have weathered the storm quite well.”

Gillespie added that clients need a financial plan, because it not only establishes an investor’s financial goals and needs but also creates a strategy to deal with market downturns.

“I tell my clients that my job is to make sure your money outlives you. It’s a planner’s job to plan for the eventual negative event that’s going to happen in people’s lives. From the people I’ve talked to, that was ignored more than it should have been.”

He said people who invested their money without a financial strategy were hit hardest by the falling equity market.

“Any time there’s a big bull market, people tend to go to the easy money, which are just investments,” he said. “When there’s a down market, those same people will get hurt because there wasn’t a plan based with it.”

Cary List, president and CEO of the Financial Planners Standards Council of Canada, added that having a professional financial planner might also have protected investors from themselves.

“People who manage their own financial affairs … can end up with a buy-high-selllow strategy and it’s those people who are never going to get their money back, because they’ve cashed out when they shouldn’t have, not because they needed the money.”

Despite the potential value of having a financial planner, many Canadians still don’t have one. A BMO Bank of Montreal study in July found that 80% of baby boomers and 77% of seniors have not spoken to a financial adviser about what to do with their inheritance.

Many are turned off by the potential that an adviser might try to sell them an investment, something Gillespie said is the result of the financial services sector being segregated by product, such as insurance, equities, mutual funds and GICs.

While Canada plans to establish a national securities regulator, List said that won’t necessarily benefit the financial planning industry, because authorities focus on specific products as opposed to regulating how financial advice and planning is conducted.

He noted there is a distinction between someone who is licensed to sell a product and one registered to provide professional financial advice.

“Licences are [issued] around the sale of a product; [they’re] not around providing professional advice. There’s no regulation of professional advice. We believe there should be.”

He said the financial planning industry should be regulated in the same way as the medical and legal sectors are, with professional organizations providing industry standards, oversight and enforcement. Quebec is the only province that legally requires financial planners be registered. It remains voluntary in every other province, although B.C. has provided some certification requirements.

“It’s good that the B.C. Securities Commission and the Insurance Council of B.C. have, at least, recognized the need to be qualified to offer professional advice, but we think regulation needs to go further and it needs to be tighter. We think professional financial advice and planning should supersede product regulators.”

View BIV’s 2009 “Biggest Financial Planning Firms in Metro Vancouver” List

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