Desjardins launches $45-million fintech fund

Desjardins Group is launching a $45-million fund to invest in financial technology startups as it seeks to build more direct relationships with a nascent sector that once looked poised to disrupt traditional banking.

The new fund will make investments ranging from a few hundred thousand dollars to as much as $3-million, taking stakes of 10 per cent to 25 per cent in early-stage “fintech” companies. It will be managed by Desjardins Capital, the financial co-operative’s venture capital arm, which has invested in more than 400 companies.

The fund builds on existing partnerships and investments Desjardins has made with more than 20 fintechs dating back several years. The burgeoning fintech sector was once seen as a threat to established institutions such as Desjardins but, faced with the high cost and difficulty of acquiring new customers, many fintechs have changed course and have begun collaborating with large financial companies to help them with the transition to digital banking and insurance services.

By creating this new fund, Desjardins is looking to take tighter control of its investments in financial technologies, and to sharpen its focus on products and services that can directly contribute to its strategy, from innovation in insurance and wealth management to strengthening cybersecurity.

Desjardins has already pumped $25-million into Luge Capital, a venture fund focused on fintech and artificial intelligence that launched last year with a total of $75-million from backers such as Caisse de dépôt et placement du Québec and Sun Life Financial. Desjardins will continue to back Luge, but now wants to make its own investment decisions as well. Whereas past investments have often been confined to startups in Quebec, the new fund will also seek out opportunities in the United States, Britain, Europe and Australia.

“With $45-million, we can do a lot,” said Guy Cormier, chief executive of Desjardins Group. “There’s a lot of noise, there’s a lot of buzz in the fintech industry, and we just have to be quite careful and quite clever about the kind of partnerships [we choose]. We really know what we want to do, what we want to accomplish, so we’re not trying to go everywhere. But with this fund now we have more capacity.”

The fund’s first investment falls outside the normal boundaries of fintech. Desjardins is putting $400,000 into X-TELIA Group Inc., a company that operates a wireless network tailored to home automation and connecting the so-called internet of things, to help expand its network across Canada. Desjardins sees applications to home and auto insurance, but is also a major lender to the agricultural sector, and X-TELIA connects smart sensors on farmers’ grain silos to make it easier to manage inventory.

“We want to add to our offer. It’s not any more enough for a financial institution to do the financing or to do the everyday banking,” said Martin Brunelle, vice-president of transformation and special projects at Desjardins. “What we want is to ease the lives of our members or our customers.”

Three other fintech companies are currently in the pipeline to receive investments from the new fund, Mr. Brunelle said. But they are at different stages of maturity and some could take years to bear fruit, if they flourish at all.

“The first goal is not return on investment for us. It’s really to build a relationship that is stronger, tighter with these fintechs, and will help us to build something that is great for our members and clients,” Mr. Cormier said. “The return on investment will be there maybe in a few years.”

Source: The Globe and Mail

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Fairfax Financial says chief financial officer David Bonham died suddenly

THE CANADIAN PRESS

Fairfax Financial Holdings Ltd. says chief financial David Bonham died suddenly during the weekend.

Fairfax chief executive Prem Watsa says the entire Fairfax family mourns the sudden and unexpected loss.

John Varnell, Fairfax’s vice-president, corporate development, has been appointed to serve as chief financial officer on an interim basis.

Varnell previously served as the chief financial officer of Fairfax on two occasions, as well as the chief financial officer of Northbridge Financial Corp. and Fairfax India Holdings Corp.

Fairfax is a holding company with subsidiaries in property and casualty insurance and reinsurance.

 

Technical CE Credits for BC Insurance Licensees

Technical CE Credits for BC Insurance Licensees

Continuing Education requirements for insurance licensees in British Columbia varies based on your experience and if you have any professional designations.

All BC Insurance licensees must meet the CE requirements for their class of license, annually from June 1 to May 31 .

Only technical courses qualify for CE credits.

What are technical CE credits?

For General insurance, if you are a Level 1 or Level 2 licensee, the only qualifying insurance continuing education is technical material directly related to:

  • General insurance products.
  • Compliance with insurance legislation and licensee requirements such as Council Rules, Council’s Code of Conduct, the Insurance Act, and privacy legislation.
  • Ethics.
  • Errors and Omissions.

For level 3 licensees, “technical material” is broadened to include courses relating to management, accounting, and human resources.

For Life/A&S insurance, the only qualifying continuing education is technical material directly related to:

  • Life insurance products.
  • Financial planning, provided the education is geared to life insurance and not a non-insurance sector, such as securities or mutual funds.
  • Compliance with insurance legislation and requirements such as Council Rules, Council’s Code of Conduct, the Insurance Act, privacy legislation, and anti-terrorism/money laundering legislation.
  • Ethics.
  • Errors and Omissions.

 

ILScorp online courses will display the word Technical in the course credit type.  For example, the online course Cyber Insurance, which covers topics such as privacy and actual cyber coverage forms has the credit type: General/Adjuster – Technical, which will display in the course description as well as on your completed CE certificates.

Other courses such as, Dealing with Difficult People and A Structured Approach for Terminating Employees, deals with topics related to management and human resources. ILScorp does not display the word Technical in the course description or the CE Certificate of these soft skill type courses however, they do qualify as Technical CE for Level 3 Licensees only.

Before starting your online courses with ILScorp, be sure to check the credit type, and accrediting provinces associated with your course. Some courses are Technical in nature, some courses are not, some courses are accredited in BC, while others are accredited in Ontario only.

Your course description with display all the valid accreditation criteria so be sure to double check all the details before you start the course.

ILScorp offers General/Adjuster – Technical CE as well as Life/A&S-Technical CE credits.

All courses are provincially accredited and completed entirely online. ILScorp will also keep your completed course history and CE certificates on file for up to 7 years in case of audit.

Remember BC, your deadline is May 31, 2019 and you can only complete a maximum of 7 technical CE credits per day and excess credits cannot be carried over into the next annual license period.

Contact ILScorp today to meet your CE requirements!

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.

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.

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