Ontario is finally regulating the terms financial planner & financial adviser

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The recent 2019 Ontario Budget finally introduced a proposal that is long overdue – formally regulating the terms financial planner and financial adviser. While specific details about proficiency standards are yet to come, most of us in the financial advice and investment industry are eager to have a valid framework in place as soon as possible.

There is a difference between a financial adviser and a financial planner. A financial adviser typically helps clients manage their investments, while a financial planner helps clients identify and meet major goals, such as retiring comfortably or paying for a child’s education. While appropriate licensing is required for someone to advise in the purchase or sale of a mutual fund, a stock, or an insurance policy, anyone can offer general financial advice without any evidence of qualification. As a result, many investors can fall prey to a regular stream of frauds and incompetent advisers.

For the past few years, our industry has been focused on a few key issues, such as the fees investors pay. While regulators have concerns with respect to their transparency, many players in the industry seem to be focused on whether or not they are too high in terms of their fees. Both of these perspectives are important, but miss the point.

In my view, the big issue is whether or not the advice is qualified, competent, and valuable. How one pays for it, and what one pays for it, are secondary.

It’s critical that investors are able to tell financial advisers apart, first to help protect themselves from fraudsters, and second, to help guide them to properly qualified practitioners. You don’t have to spend too long on Google or reading newspapers to find stories about investors being scammed out of their money. But regulating the use of financial adviser and financial planner titles is a simple and effective first line of defence against criminals. It’s like locking your doors and closing your windows.

Today, Canadians are facing a retirement-income crisis. Here’s what is driving the severity and urgency of the problem:

  • The fastest growing segment of the population is baby boomers. By 2024, one in five Canadians will be over 65.
  • Fewer than 23 per cent of tax filers made an RRSP contribution in 2016, according to the most recent data from Statistics Canada. The result is that there is nearly $1-trillion in unused RRSP contribution room available.
  • While TFSAs are popular, they are used as much for short-term savings as for long term, with 47 cents in withdrawals for every $1 contributed.

According to MNP, a leading consulting firm for accounting, tax and business, 46 per cent of Canadians are within $200 of financial insolvency.

The fact is more Canadians are reaching retirement age faster than we realize. And they are getting there with less money put aside in order to live longer than they expect to. There is a sense here of burning the candle at both ends.

While many things can impact your economic reality, it is clear that financial illiteracy is widespread. Most Canadians are really passengers in their own financial lives and are headed for disaster. When they do decide to grab the wheel, most of them need help, advice, and assistance to get back on track. When they seek the help of a professional, they deserve to get qualified, experienced advice. Indeed, a great adviser can make an enormous difference.

But lousy ones can derail us in disastrous ways. An important aspect of my work is something I refer to as “forensic financial planning.” It involves finding and correcting the damage that bad advice has done. Think of dentists who must fix problems other dentists have created. But then not everyone can be a dentist. My industry is different since, until now, anyone could hang a shingle.

What kind of mistakes happen? Here are four big ones:

  1. The incorrect use of leverage.
  2. Over-allocating to securities that are high-risk.
  3. Buying mutual funds that are too expensive and proprietary.
  4. The excessive use of whole life insurance.

And this is only the tip of the iceberg. Often the salesperson is well meaning, but not particularly competent. Let’s hope that this new initiative from the Ontario government makes it easier for clients/consumers to find qualified professionals.

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I want to become a general insurance agent. What are the qualifications and how do I apply? Here’s how.

Postal code change leaves couple facing insurance hike

Ryan Flanagan, Producer, CTVNews.ca

An Ontario couple saw their home and auto insurance premiums increase to the tune of hundreds of dollars per year because of a change in their address – even though they didn’t move.

Christine and David Pindar live in a rural part of Oshawa, Ont., east of Toronto.

They were notified by Canada Post last summer that the last three digits of their postal code would be changing. Once the change took effect, they passed on the new information to their insurance company, the Allstate Insurance Company of Canada.

“They said ‘Oh, well that means your premiums are going to have to go up,’” Christine Pindar told CTVNews.ca.

Pindar said her house insurance premium rose by 37 per cent and the premiums for her and her husband’s three cars increased by about 10 per cent each. She pegged the overall increase at approximately $600 per year.

Taking a deeper dive into the numbers, she found that her insurance company now believed it would cost her more to replace her house in the event it was destroyed – not just because of inflation, but also because of the new postal code – while the actual assessed value of the home remained the same.

When she contacted Allstate, she said she was told that the new postal code put her into a higher-risk area.

Particularly strange, as Pindar sees it, is that the new postal code didn’t exist before last summer – making her wonder how exactly it can be deemed risky.

“It’s a brand-new postal code. How can that create an increase? It just blows my mind,” she said.

Pindar said she and her husband are looking into their options and if there is anything they can do to lower their premiums.

“For anybody, $600 is a slap in the face for no reason,” she said.

A spokesperson for Allstate Canada declined to address the Pindars’ situation specifically.

WHAT HAPPENED?

According to Canada Post, the Pindars’ home is one of approximately 500 in the Oshawa area which saw their postal codes reassigned as part of changes to postal routes. The changes “are necessary to accommodate increased growth in the area and to improve overall delivery efficiencies,” according to a spokesperson for the agency.

“Postal code changes do not happen often and we go to great lengths not to change them,” the spokesperson said.

Postal codes play a significant role in determining insurance premiums in Ontario. The Allstate spokesperson said the company includes postal code data as well as a home’s age and type when calculating home insurance policies. Auto insurance policies are based on factors including the vehicle’s safety rating and usage, as well as the driver’s experience and previous claims.

“All insurance companies operating in Ontario are mandated by the provincial regulator to consider postal codes when calculating premiums and we must adhere to that regulatory framework,” Jordan Kerbel, the company’s director of external relations, said in a statement.

According to the Financial Services Commission of Ontario, people living in urban areas generally face higher rates because of higher traffic levels and increased likelihood of theft.

Pindar suspects this may be at play in her case, as her previous postal code covered an area spread further out from Highway 407 than the area of the new code.

Jasmine Daya, a Toronto-based lawyer, told CTV’s Your Morning Monday that Ontario’s so-called postal code discrimination tends to benefit drivers in downtown Toronto and outside the Greater Toronto Area, while drivers in suburban parts of the GTA typically have to pay higher auto insurance rates.

“People in Brampton, people in Scarborough, their rates are very high,” she said.

“People who are paying lower rates, being outside the GTA, are very happy to have postal code discrimination because they benefit.”

Two bills introduced at Queen’s Park last fall called for the Ontario government to ban the practiceof letting insurance companies set rates based on addresses or postal codes.

Swap These Financial Stocks to Reduce Risk

Victoria Hetherington

Rising household debt, falling house prices, slowing credit applications – it’s a wonder anyone is still buying shares in Canada’s Big Six banks. Indeed, from financing weed suppliers to exposing itself to a potentially volatile American market, big Bay Street bankers may be too rich by half for the low-risk appetites of domestic investors looking to them for stability.

Take Bank of Nova Scotia (TSX:BNS)(NYSE:BNS), with its exposure to the U.S. economy, for instance. Scotiabank does substantial business south of the border, and as such may have left itself vulnerable to the potential of a widespread market downturn in the U.S. Even with this leg up, though, it still managed to underperform the Canadian banking industry as well as the TSX index for the past year.

More shares have been bought than sold by Bank of Nova Scotia insiders in the past three months, though not in vastly significant volumes. The usual boxes are ticked by its value, indicating P/E of 10.6 times earnings and P/B of 1.4 times book, while a stable dividend yield of 4.88% is augmented by a good-for-a-bank-stock 6.6% expected annual growth in earnings.

Again, overexposure to the United States market is an issue with Bank of Montreal(TSX:BMO)(NYSE:BMO). Specifically, this comes from BMO Harris Bank, a large personal and commercial bank; BMO Private Bank, which offers wealth management across the U.S.; plus BMO Capital Markets, an investment and corporate banking arm of the parent banker.

With year-on-year returns of 8.1%, BMO outperformed the industry and the market, and as such seems a safe bet on the face of it. Its one-year past earnings growth of 24.6% shows rapid recent improvement given its five-year average growth rate of 6.1%. Meanwhile, a P/E of 11.3 times earnings and P/B of 1.5 times book show near-market valuation, and a dividend yield of 3.9% is matched with a 3.6% expected annual growth in earnings.

Try the “insulated” alternatives

An example of domestic alternative on the TSX index would be Laurentian Bank of Canada (TSX:LB). Although its one-year past earnings dropped by 4.2%, a five-year average past earnings growth of 14.3% shows overall positivity, while a P/E of 9 times earnings and P/B of 0.8 times book illustrate Laurentian Bank of Canada’s characteristic good value. A dividend yield of 6.3% coupled with a 9.2% expected annual growth in earnings gives the Big Six a run for their money.

Alternatively, Manulife Finanical (TSX:MFC)(NYSE:MFC) offers a way to stick with financials but ditch the banks. This ever-popular insurance stock was up 2.33% in the last five days at the time of writing and is very attractive in term of value at the moment, with a P/E of 10.3 times earnings and P/B of 1.1 times book.

Manulife Financial’s 3.5% year-on-year returns managed to beat the Canadian insurance industry, but just missed out on walloping the TSX index’s 4.2%. In terms of the company’s track record, its one-year past earnings growth of 138.1% eclipsed the market and its industry, though its five-year average is sadly negative. Its balance sheet is solid, however, with its level of debt reduced over the past five years from 60.2% to the current 41% today.

The bottom line

Sidestepping banks may be a shrewd move at the moment, with other forms of financials offering a more insulated route to a broader space. While more regionalized banks like Laurentian Bank of Canada are one option, stocks like Manulife Financial, with its dividend yield of 4.17% and 11.3% expected annual growth in earnings offer a similar but less risky play on the TSX index’s financial sector.

Your Pregnancy App May Be Selling Your Data – to Your Boss

Rachel Wells | Glamour

Tracking health data has gotten intimate. Thanks to the booming femtech industry, there are now dozens of fertility and pregnancy apps like Ovia, which give moms-to-be an easy way to input daily health updates during their pregnancy journeys. The apps, featuring colors like purple and blue, create a fun and welcoming environment to track women’s most personal data—sexual activity, menstrual cycles, fertility, pregnancy symptoms, dates for delivery, and even pregnancy loss—in a free, user-friendly mobile app. The idea that these apps might be selling your data isn’t new. But what if your data wasn’t going to some third-party advertiser but rather someone much closer to you—like your boss?

Earlier this week The Washington Post reported that Ovia Health, the parent company behind apps for fertility, pregnancy, and parenting, is selling users’ data to their employers. The Post spoke with Diana Diller, a 39-year-old event planner in Los Angeles who was using Ovia during her pregnancy to log daily activity such as bodily functions and sex drive. Her employer, Activision Blizzard, a video game company, was following along.

Activation Blizzard is part of a program offered by Ovia Health where employers can pay to offer employees a special version of the app as an employee benefit. The catch? The company gains access to the aggregated, anonymized data shared by its employees. Milt Ezzard, vice president of global benefits for Activision Blizzard, told the Post that offering “pregnancy programs such as Ovia help the company keep skilled women.” But experts worry employers could use the information to increase or decrease health coverage depending on what they see in the data. There’s also the fear that companies could use incredibly intimate details like whether or not a woman was having premature birth or suffering a miscarriage in order to make business decisions. “The health information is sensitive but could also play a critical role in boosting women’s well-being and companies’ bottom lines,” Paris Wallace, chief executive of Ovia Health told the Post, pointing to rising rates of premature birth and maternal death as the reasons they want to sell this information to employers.

“It feels like a very big breach of privacy,” says Brianna Bell, 29, a writer based in Guelph, Ontario. “It makes me feel uncomfortable, and it feels like this company has preyed on women who are in the most exciting and vulnerable time of their life.” Bell used Ovia’s pregnancy and parenting apps for 18 months without knowing the company could sell her information. (Ovia’s consumer apps—the free-to-download Ovia Fertility, Ovia Pregnancy, and Ovia Parenting—“do not share any data with employers,” a representative of the company said in a statement provided to Glamour. But the apps’ terms of service do state that by agreeing to use the product, users grant Ovia the right to “utilize and exploit” their anonymous personal data for research, marketing purposes, or sale to third parties.)

The idea of your data—even if it has been stripped of your name—floating around out there for use is unsettling. But is there really anything to worry about? Users need to opt in to Ovia’s employer programs like the one offered by Activation Blizzard, according to the company, and of course, you can always choose not to input certain data. “An employer then only receives population-level data once a certain threshold of users has been reached,” Ovia told Glamour, adding that the app’s makers work only with large companies to reduce the risk of a specific pregnant woman being identified in the office. “We are not reporting personal, intimate information like cycle data or pregnancy symptoms to employers,” the company says.

But that’s not much of a comfort to many women. “It seems as though nowadays anyone can find any information they want on someone even if we think we’re in control of our data,” says Raz Pele, 30, who used Ovia’s fertility app for two years and the pregnancy app for six months, tracking information like her ovulation cycle and the dates of her period. Even with the limited information she put into the app, she isn’t comfortable with the idea of her employer, a large commercial real estate advisory firm, viewing it.

Zurich Canada names new Head of Liability

Marco Royer has been named Head of Liability for Zurich Canada.

Royer will be a member of the Zurich Canada Executive Team and will report to Zurich Canada CEO Saad Mered. His first day at Zurich will be July 1.

Royer will be responsible for leading the market-facing underwriting teams in Zurich Canada’s liability portfolio, including casualty, energy casualty, construction liability, environmental liability and commercial automobile.

Royer will also oversee Zurich Canada’s Alternate Risk Transfer team and will be responsible for the development and growth of the healthcare and public sector industry verticals.

He will also work closely with other Zurich Canada executives to coordinate effective execution of portfolio management, distribution management, risk services and claims management.

Royer comes to Zurich with more than 30 years of experience in the European and Canadian insurance marketplaces. He has a strong technical casualty underwriting background and has held ascending levels of leadership responsibilities, including 18 years at Gen Re, where he led teams in ParisLondon and Montreal. Following Gen Re, he joined Aon Benfield as vice president and casualty specialist, then Quebec regional manager and head of Facultative Operations, reporting directly to the CEO.

In this most recent position, Royer was the head of the Canadian-London team, responsible for all Canadian reinsurance placement in the London market.

“We are very excited to have a leader of Marco’s caliber and deep experience and relationships in the Canadian market joining us,” Mered said. “With his addition to Zurich Canada, we continue to build a diverse, experienced and proven senior leadership team that will enable the transformation and repositioning of Zurich’s presence in Canada.”

Marco has certified as a Chartered Financial Analyst and is a member of London UK CFA Society. He also holds a Master of Business Administration and a Bachelor of Arts in Economics from McGill University in Montreal. He is also a board member of La Fondation OLO in Montreal whose mission is to help low-income families bring healthy babies into the world and teach them healthy eating habits early on.

SOURCE Zurich North America

Legally growing pot in Canada could void your home insurance

Digital Journal | Excerpted article was written By KAREN GRAHAM

Vancouver – A recent court ruling in British Columbia, Canada that focused on the “material change” clause in homeowners insurance policies could have the potential to shed a spotlight on the incompatibility of such a position with new federal cannabis laws.

According to the Globe and Mail, The decision of Vancouver Supreme Court Justice Margot Fleming in February 2019 could very well have far-reaching effects for all homeowners in Canada who grow even a single marijuana plant inside their home.

Justice Fleming ruled in favor of Wawanesa Mutual Insurance Company after hearing evidence from the insurance company’s underwriting expert, Liz Strocel, retained by Wawanesa, on the risks of growing cannabis. Based on her testimony, a cannabis grow operation on a homeowner’s property constitutes a “material change” sufficient enough to void the insurance policy.

Strocel testified the company “did not and does not insure any property with a marijuana grow operation, whether or not it is legal, because of the inherent risk. She identified the risk as including drywall being susceptible to mold from the humidity, fire (for a number of reasons), the risk of robbery or a break in, and additional liability issues. She also testified that Wawanesa would void a homeowner policy if it learned the insured had a grow operation and refund the premiums.”

Surprisingly, the underwriting expert also testified that she was “not aware of any general insurer in Canada that would take on the risk of any cannabis grow operation, or even the presence of a single marijuana plant.” This one line of testimony was emphasized in the judge’s ruling.

The Schellenberg case

The Schellenbergs had a fire in an outbuilding on their property in Chilliwack, British Columbia in 2014. The outbuilding was constructed in 2012, with Mr. Schellenberg notifying the insurance company he wanted the building added to his homeowner’s policy. He apparently failed to mention he also had a legal cannabis grow license and the building in question housed the operation.

The failure of the Schellenbergs to tell their insurance company the building contained 310 marijuana plants was used by Wawanesa to void the homeowner’s policy. Wawanesa claimed that the marijuana grow constituted a “material change”—a change to the property that would have led to either higher premiums or denial of coverage if it had been reported.

The insurance company’s decision to void the insurance policy led to the Schellenberg’s suing the company, claiming it did not have grounds to void the policy. With the court ruling in favor of the insurance company, it remains to be seen if we may hear of more court cases involving homeowner insurance claims.

It might be a good idea if homeowners growing marijuana on their property, even just one plant, check with their insurance companies – just to be sure of their coverage.

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