By Kelsey Sheehy
THE ASSOCIATED PRESS
Money, it’s a gas. Unless you need to borrow some from your parents. Then it’s a conversation many adults will avoid at all costs, even if it means paying for groceries with couch nickels.
That’s not the only money conversation we avoid. More than 60% of millennials have never asked for a raise, largely because they don’t feel comfortable doing so, according to the salary data site PayScale. In many couples, partners hide debt, sometimes to the detriment of their relationship.
Avoiding these conversations often yields worse results than simply facing them head-on. These tips will help you get through tough money talks, like asking your parents for money, negotiating your salary and talking to your partner about money.
ASKING YOUR PARENTS FOR MONEY
Even bonafide adults need help from the bank of mom and dad sometimes. In fact, 70% of young adults (ages 18-34) received financial support from their parents in the past year, according to a 2018 survey by Merrill Lynch.
Asking your parents for money can be humbling, but swallowing your pride is better than letting your car insurance lapse.Here’s how to approach the conversation.
_ BE SPECIFIC. Tell your parents where you could use their help, whether it’s covering some (or all) of your rent, paying your car insurance, or buying groceries. Say upfront if you need ongoing help, rather than going back to them each month for more money.
_ OWN YOUR MISTAKES. This will play better than blaming other people or circumstances, says Nathaniel Ivers, an associate professor in the department of counselling at Wake Forest University.
_ PRESENT A PLAN. Create a budget to show your parents that you are trying to get your finances under control. Ask for their input and avoid getting defensive if they scrutinize your spending.
Taking this advice into account, Ivers suggests your ask could sound something like this:
“I was wondering if you could help me with my rent this month. I had a lot of unforeseen expenses (give examples) and, honestly, I didn’t manage my expenses as well as I could have.
“I have already started a budget to monitor things more closely. Would you be willing to go over it with me? It’s kind of tight, but if I cut down on some of the extra things … I will definitely have enough to cover things next month.”
TALKING WITH YOUR PARTNER ABOUT DEBT
Debt is a reality in most relationships, so it’s wise to disclose any you carry when things get serious. Ripping off the debt Band-Aid may be terrifying, but it can ultimately strengthen your bond, says Marla Mattenson, a relationship expert.
“The more comfortable you get about talking about your finances together, the easier it will be for you to discuss all the challenges that arise in a relationship,” Mattenson says.
Ask your partner to set aside time to chat and give them a heads up on where the conversation is heading, she adds. Keep it simple, something like: “Can we set aside 30 minutes sometime this week to talk about my personal finances?”
Be transparent during your conversation about how you got into debt, whether it’s student loans, credit cards or a combination of the two, and articulate your plan to pay off your debt. You should also share with your partner any fears you have about how this might affect your relationship.
Your salary serves as the basis for future raises and job offers. That’s why negotiating your salary at the outset and throughout your tenure is critical. Here’s how to approach the conversation.
_ RESEARCH INDUSTRY SALARY. Use sites like Glassdoor to research salaries by city and company and ask people in your network what someone with your experience can expect to earn. If you’re comfortable, talk to current coworkers about their compensation when angling for a raise.
_ BRING A LIST OF WINS. Come to the conversation armed with tangible examples of how you’ve added value to the company (if you’re asking for a raise). Prepare a list of business you’ve brought on, successful campaigns you’ve run or other metrics you’ve moved. If you’re negotiating for a new job, articulate how your skills and experience will add value to your new employer.
_ BE PREPARED FOR A `NO.’ If your boss declines your raise request, ask for an explanation. Welcome any recommendations for how to improve your performance and set the expectation that you would like to revisit the conversation in the coming months. When negotiating for a new job, find out if there is any wiggle room and consider negotiating for benefits like more vacation time in lieu of a higher starting salary.
Source: Nerd Wallet
The annual pace of inflation heated up in November as gasoline prices posted their first year-over-year increase since October 2018, Statistics Canada said Wednesday.
The agency said the consumer price index rose 2.2 per cent compared with a year ago to end a three-month streak where the annual pace of inflation had held steady at 1.9 per cent.
The increase in the pace of inflation compared with October came as energy prices in November posted their first year-over-year increase since April. Energy prices climbed 1.5 per cent compared with a year ago compared with a decline of 2.9 per cent in October.
Gasoline prices were up 0.9 per cent year-over-year compared with a drop 6.7 per cent in October.
Royal Bank senior economist Josh Nye said oil prices were down in November last year.
“The fact that wasn’t repeated this November means energy price growth is back into positive territory,” he said, noting that inflation will likely remain above two per cent in the short term due to the lower gasoline prices a year ago.
The strongest pace in a decade
However, Nye said the underlying inflation trends appear to be firming with the average of the core measures of inflation at their strongest pace in a decade.
Excluding gasoline, which had been weighing on overall inflation in recent months, the consumer price index was up 2.3 per cent compared with a year ago, matching the increase in October.
And, the average of Canada’s three measures for core inflation, which are considered better gauges of underlying price pressures and are closely watched by the Bank of Canada, was 2.17 per cent compared with a revised figure of 2.10 per cent for October.
In the statement accompanying the Bank of Canada’s decision to keep its key interest rate on hold at 1.75 per cent earlier this month, the bank said it expected inflation to increase temporarily in the coming months due to year-over-year movements in gasoline prices.
However, the central bank said at the time that it “continues to expect inflation to track close to the two per cent target over the next two year
Higher costs for food, auto insurance, mortgage interest
CIBC senior economist Royce Mendes said the Bank of Canada won’t be too concerned with headline inflation rising above two per cent for a few months, given that it’s largely the result of base effects.
“However, if the core measures accelerate further, monetary policy-makers could start to take more notice of consumer prices, something they haven’t had to do given that inflation has been so consistently around the central bank’s target recently,” Mendes wrote in a report.
The overall increase in prices of 2.2 per cent compared with a year ago was driven by increased mortgage interest costs, passenger vehicles and auto insurance premiums. The increases were partly offset by lower prices for telephone services, Internet access and traveller accommodation.
Canadians also saw the price for meat rise 5.2 per cent compared with a year ago, the fifth month of increases at or above 4.0 per cent. The cost of fresh or frozen beef was up 6.2 per cent, while ham and bacon prices rose 9.1 per cent. Fresh or frozen pork was up 0.7 per cent.
Regionally, prices on a year-over-year basis rose more in November in every province except British Columbia.
Massive reorganization at one of the country’s largest financial services firms
By David Scanlan | Bloomberg.com
Billionaires Andre Desmarais and Paul Desmarais Jr. are stepping down as co-chief executive officers of Power Corp. of Canada as part of a massive reorganization at one of the country’s largest financial services firms.
The Desmarais brothers, sons of the family who runs the Montreal-based firm, will stay on as chairman and deputy chairman. Jeffrey Orr, current CEO of the Power Financial Corp. unit, takes the top job at a new entity combining the two main units of the insurance and asset management company.
“The reorganization is a natural step that reflects our evolution from a diversified holding company into one that is primarily focused on financial services,” Andre Desmarais, 63, said in a statement Friday.
Shares of Power Corp. surged as much as 7.5 per cent, heartened also by a 10 per cent increase in the dividend, while Power Financial was up as much as 9.4 per cent. Both were the biggest intraday increases in a decade and handing the brothers an immediate payoff. The family was worth $8.38 billion in 2018, putting them seventh among Canada’s wealthiest families according to Canadian Business magazine.
By combing the two companies, Power Corp. says it will simplify its corporate structure, eliminating the dual-holding format and reducing costs. That may help unlock shareholder value. Neither Power Financial nor Power Corp. have regained their pre-2008 financial crisis highs, unlike the country’s big banks.
Power Corp. also said the new structure should allow the company to focus on financial services, where it faces relentless pressure on fees from ETFs and robo advisers, and from declining interest rates for its life insurance business. Power businesses include insurer Great-West Lifeco Inc. and money manager IGM Financial Inc.
“Canadian banks have been able to take advantage of their booming individual, or retail, businesses in Canada to substantially grow their earnings and balance sheets,” Paul Desmarais Jr., 65, said in a May 2018 speech. “By contrast, during the same 10-year period, the individual businesses of the three major Canadian life insurance companies – including our subsidiary Great-West Lifeco – have more or less stagnated.”
As part of the reorganization, Power Financial shareholders will receive 1.05 Power Corp. subordinate voting shares, or $33.50, and some cash for each share they own. That’s little more than the $32.77 Power Financial last traded at. Power Financial is currently controlled by Power Corp.
“There’s change but it’s evolutionary change and it’s continuity,” Orr told analysts on a conference call. “It’s just part of an ongoing strategy that we’ve been pursuing to create shareholders value.”
The shake-up makes no mention of Paul Desmarais III, 37, son of Paul Jr. and a senior vice president of Power Corp. who oversees the company’s startup strategy, which includes majority-owned robo adviser Wealthsimple Inc. He is also the executive chairman of Sagard Holdings, a subsidiary of Power Corp. which has invested in public and private equity since its founding in 2005 and has moved into private credit last year.
The Desmarais family will continue to control the company through its Pansolo Holding Inc.
With assistance from Sandrine Rastello, Paula Sambo and Doug Alexander
JAMES BRADSHAW BANKING REPORTER | The Globe and Mail
Brookfield Asset Management Inc.’s private-equity arm is making a long-term bet on Canada’s mortgage market with a $2.4-billion deal to take control of Genworth MI Canada Inc., the country’s second-largest mortgage insurer.
Brookfield Business Partners LP, a publicly-traded subsidiary of the global asset manager, is acquiring a 57-per-cent stake in Genworth MI Canada from the mortgage insurer’s American parent company, Genworth Financial Inc.
Brookfield will pay $48.86 a share for nearly 49 million shares in Genworth MI Canada – a 5-per-cent discount to the price at Monday’s close on the Toronto Stock Exchange, but an 18-per-cent premium compared with the date when the company was formally put up for sale.
The deal appears to relieve a headache for Richmond, Va.-based Genworth, which has waited years for regulators to approve a separate deal that would see the American company acquired for US$2.7-billion by a privately held Chinese buyer, China Oceanwide Holdings Group Co. Ltd. That transaction, which was first announced in October, 2016, has stalled while awaiting approval from Canadian regulators and federal officials, who are required to consider the potential impact on Canada’s mortgage industry and have held the deal up over national-security concerns, even after U.S. regulators gave it a green light.
Earlier this summer, Genworth Financial announced it was considering “strategic alternatives” for Genworth MI Canada, seeking to break the deadlock. That raised the prospect that, absent a suitable buyer, Genworth Financial’s stake in its Canadian subsidiary might have to be sold into the public market at a discount. But Brookfield emerged with deep pockets and the industry expertise needed to take control.
“We are pleased to find such a high-calibre buyer for our interest in Genworth Canada,” said Genworth Financial president and chief executive Tom McInerney.
Genworth Financial’s share price shot up 15.8 per cent on Tuesday, and Brookfield Business Partners shares rose 2.7 per cent, but stock in Genworth MI Canada fell 1.7 per cent.
The Canadian arm of Genworth is a rare asset. It is Canada’s largest private-sector mortgage insurer, providing a backstop against defaults to residential mortgage lenders, and it trails only the government-owned Canada Mortgage and Housing Corporation (CMHC) in size. Its only privately owned competitor is Canada Guaranty Mortgage Insurance Company, which is jointly owned by Ontario Teachers’ Pension Plan and financier Stephen Smith.
Genworth Canada currently has a 33-per-cent share of the country’s mortgage-insurance market, while CMHC holds half and Canada Guaranty the remaining 17 per cent, according to data from RBC Dominion Securities Inc. But the federal housing agency has been ceding its share to the private insurers.
Genworth’s improving position in a highly consolidated market made it a logical target for Brookfield Business Partners, which seeks to acquire and manage companies in sectors where the barrier to entry is high. Brookfield also has extensive expertise in mortgages and housing: It is one of the largest residential real estate developers in North America, active in real estate financing, and owns the Royal LePage brokerage.
Brookfield Business Partners managing partner David Nowak described Genworth Canada as “a high-quality leader in the mortgage-insurance sector,” in a statement.
The total share of mortgages that are insured has been falling, from 57 per cent in 2015 to 41 per cent in 2019, according to a recent CMHC report. The shift toward uninsured mortgages comes as regulators have tightened rules on mortgage lending, requiring borrowers to meet stricter tests to qualify for mortgage insurance.
Even so, the housing sector as a whole has continued to grow, adding a steady stream of new demand for mortgage insurance, particularly from first-time home buyers. And Brookfield is betting that Genworth can grab a larger share of the market, making full use of Brookfield’s deep relationships with banks that do the lion’s share of Canada’s mortgage lending.
The deal is expected to close before then end of 2019, subject to approvals from Canada’s banking regulator and Minister of Finance.
Brookfield is not currently looking to acquire the 43 per cent of Genworth MI Canada’s shares that are owned by other investors. But Jaeme Gloyn, an analyst at National Bank Financial Inc., said that prospect “is not entirely off the table” and “would likely unfold at a premium” to the price Brookfield is paying for control.
Ratings agency DBRS Ltd. called the deal “positive for Genworth Canada,” which has been more stable than its U.S. parent.
Oceanwide Holdings consented to the transaction and extended the deadline to finalize its own deal with Genworth Financial until Dec. 31.
Source: The Globe and Mail
ROB CARRICK PERSONAL FINANCE COLUMNIST
Two words you never thought you’d say in imagining a brighter future for chequing and savings accounts: Manulife Bank.
A non-factor for years, the banking division of insurance giant Manulife Financial Corp. is upping its game. On Monday, Manulife Bank introduced a package of services designed to claim a share of a market for daily banking that is crowded with big banks, alternative banks, credit unions and upstart financial technology companies.
Manulife’s strategy: Appeal to millennials and other digitally savvy people with a four-part bundle of banking services wrapped in an app for smartphones that helps with saving and budgeting. Manulife’s goal: Compete against the country’s banking heavyweights more than the alternative players. “We’re here to be the best alternative to the big banks,” said Rick Lunny, chief executive of Manulife Bank.
The All-in Banking Package from Manulife Bank is slick enough that it should be studied by other banks looking at how to adapt their accounts for the digital age. The question is whether there’s enough there to offset the so-so economics for customers who believe in paying the least in fees while getting the most interest.
The core of All-in is an unlimited transaction account (e-transfers included) that costs $10 a month, compared to $14 to $16 for similar big bank accounts and zero at an increasing number of alternative online banks. The All-in account goes down to zero in fees in a month where you add $100 or more to a savings account that comes as part of the package.
That savings account pays 1.2 per cent, a disappointment. Several alternative online banks that have savings accounts are paying 2.25 per cent or more to go with their no-fee chequing accounts. Examples: Alterna Bank, Motive Financial and Motusbank, which opened for business in April.
The third part of the All-in package is a no-fee cash-back credit card paying rewards of 2 per cent on groceries and 1 per cent on other expenses. This reward rate is not at all bad, although anyone wanting a no-fee cash-back card should check out the Rogers World Elite MasterCard.
The fourth part of the All-in package is travel interruption insurance offered by Manulife. Finally, as a sweetener, Manulife is offering people who sign up for All-in one year of Amazon Prime, which otherwise costs $79. Amazon Prime offers free delivery of Amazon orders plus access to TV shows and movies.
All-in is most interesting when you look at the way financial technology is deployed to help customers manage their money so they’re able to save more.
Mr. Lunny said the bank partnered with five fintech companies to develop features such as the one that lets you set how much money you want in your chequing account and then sweeps any excess into savings at the end of each day. Other functions show how close you are to saving enough each month to eliminate the $10 account fee and how close you are to your credit-card limit. There’s also what Manulife calls an intelligent virtual assistant, which can answer questions about banking and offer tips on budgeting, saving and such.
The most obvious big bank competition to All-in comes from the online banks Tangerine, owned by Bank of Nova Scotia, and Simplii Financial, owned by Canadian Imperial Bank of Commerce. Both offer no-fee chequing with unlimited transactions and savings accounts with rates of 1.2 per cent.
On fintech specifically, some of the most noteworthy competition to All-in comes from the budgeting apps at a pair of big banks, Toronto-Dominion Bank and Royal Bank of Canada.
Manulife designed All-in to work most effectively on smartphones and expects the bulk of its customers to access their account that way rather than desktop computers. It’s a sign of how much importance the bank is putting on young adult customers as opposed to an older, wealthier demographic targeted by the bank’s Advantage Account.
Mr. Lunny said the bank hopes to attract millennials with the All-in package, then sell them mortgages and investments as they get older and more established. “We feel millennials are our future,” he said.
For millennials, the All-in package scores well on mobile-friendly technology and convenience – four products in one. But having to save $100 a month to make the $10 account fee vanish? That’s old school, and not in a good way.
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