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How investment firms are tackling the adoption of the client-focused reforms – The Globe and Mail



Mark Kent, president and CEO of Portfolio Strategies Corp. in Calgary, says the firm will only need to make minor changes as a result of the client-focused reforms, mostly around advisor training and updating documentation. Photo by Todd Korol/Globe & Mail

Todd Korol/The Globe and Mail

This article is the third in an ongoing series on the client-focused reforms, which will place investors’ interests first in their dealings with financial advisors and dealer firms and have a consequential impact on advisors and the investment industry.

The pandemic-driven shift to remote work has been both a help and a hindrance to investment industry firms working on updating their client relationship policies and procedures to meet new investor-protection rules that come into effect fully by the end of this year.

For many firms, the acceleration of technology adoption amid the pandemic has been the push needed to update client relationship management (CRM) technology in line with the new client-focused reforms (CFRs). However, the changes also come at a time when firms have been challenged to adapt to the work-from-home environment while also updating their policies and procedures to meet the new requirements alongside other regulatory changes.

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“There’s a lot coming at wealth managers this year,” says Chris Farkas, partner and national asset management leader in management consulting at KPMG LLP (Canada) in Toronto.

For most firms, Mr. Farkas says the new reforms won’t mean an overhaul of their business models but will require them to update, better define and document their products, policies and procedures.

“The requirements are much more explicit,” says Mr. Farkas, whose organization is helping some firms design their programs and put the proper tools and technologies in place.

Firms across Canada have until June 30 to comply with the new conflict-of-interest provisions and until Dec. 31 to meet other changes as part of the next phase of the CFRs brought in by the Canadian Securities Administrators (CSA). Firms have been forced to review and update their policies and procedures on everything from client-facing documentation and record-keeping to training and disclosure. The CFRs also increase the amount of information compiled for the know-your-client (KYC) and know-your-product (KYP) documents.

Many firms were already doing this type of work with clients, but the new reforms formalize the process and ensure it’s well documented, says Élise Renaud, partner and member of the investment management group at Fasken Martineau DuMoulin LLP in Montreal.

“The challenge for firms is to apply these broad concepts the CSA has developed – ensuring that firms [and advisors] will act in the best interests of their clients when it comes to addressing material conflicts of interest – to their own business models,” she says. “The CSA is providing guidance to the firms, but many are still finding it difficult to implement the proper processes considering the specificities of each firm’s business model.”

Ms. Renaud says she’s getting a lot of questions from clients about ensuring their employee and advisor training, books, records, other documentation, and internal procedures and protocols are aligned with the changes by the deadlines.

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Sara Gilbert, a business strategist and certified coach with Strategist Business Development in Montreal, says many firms are also updating their technology to comply with the rules.

“For a lot of firms, they say it’s painful, but once the process is done, they’re looking forward to it because it’s going to be easier from a client-management and a remote-work perspective,” she says. “So, while it might be chaos for a lot for the firms now – and a lot of technology change at once – they really see it as a good thing … that will make their lives a lot easier in future.”

She likes that many companies are using CRM software and customizing it to their operations and client needs. “What makes the advisors stand out isn’t the product; it’s the experience.”

Jamie Murray, portfolio manager and head of research at Murray Wealth Group Inc. in Toronto, says the firm – a portfolio manager, exempt-market dealer and investment fund manager – isn’t affected greatly by the changes. Nevertheless, Murray Wealth is updating its technology to meet client communication and documentation as well as KYC and KYP requirements better.

“As a product-led firm, we’ve always had to find clients who are suitable for our products,” he says. “The upcoming changes deepen the requirements to ensure the suitability of the products and proactive monitoring of that suitability as clients go through changes to their life circumstances.”

For example, the firm plans to put a new CRM system in place to collect and keep track of clients’ information, including changes that may affect their investment profiles and product suitability.

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Mr. Murray says the firm was already looking at implementing this type of software, but the CFRs sped up the timeline. “It will be better for the client,” he says, making it easier for them to access information and stay on top of their investments.

“It will also open up other client-service possibilities,” for the firm, Mr. Murray adds.

Wayne Bolton, general partner and chief compliance officer at Edward Jones in Mississauga, says his firm has been planning and preparing for the new reforms steadily, taking the client and branch experience, and regulatory requirements, into consideration. He says the firm is beginning to execute on the plans to have the changes implemented fully within the regulatory timeframes.

“While the changes may seem subtle, they can be significant and will make a big difference in terms of the client experience,” he says.

For example, he says the firm plans to refresh its disclosure documents for clients, adding that “it’s an opportunity to look at our disclosure documents from a blank perspective. We are looking at the documents with a fresh set of eyes to make them more impactful and meaningful to clients.”

Edward Jones is also coming up with an additional disclosure document regarding conflicts of interest to supplement the relationship disclosure document, which also discloses potential conflicts of interest.

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“It will give clients an even better understanding of their accounts and their relationship [with advisors],” he says. “It brings even greater alignment and transparency between firms and clients … and how the investment action puts clients first.”

Mr. Bolton says the changes should reinforce client-advisor relationships at his firm and across the industry.

”It’s not just about how your client is doing from an investment perspective, it’s about how your client is doing, overall. [Financial advice is] more holistic today,” he says.

Mark Kent, president and chief executive officer at Portfolio Strategies Corp., a Calgary-based mutual fund and exempt-market dealer, says his firm will only need to make minor changes as a result of the CFRs, mostly around advisor training and updating documentation.

Namely, he says the company’s relationship disclosure information documents will be reviewed and updated, as needed, to encompass additional information required to determine product suitability, including risk profile and risk capacity for individual clients.

Portfolio Strategies also plans to update its advisor training and will look to providers such as Learnedly, a digital training platform for Canada’s financial services industry, to be ready for the end-of-year deadline.

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“As a large independent dealer, these will be minor changes, overall, for us, compared to firms selling proprietary funds,” Mr. Kent says

Mr. Farkas of KPMG says the updates that firms are doing now will help them meet and in many cases exceed the requirements for the new reforms. The changes will also have the potential to position firms better for future changes that are inevitable as client relationships evolve.

“It’s enabling advisors to better understand their clients and actually collect more data points and, from there, do better data analytics and better predict what clients may want in order to serve them better,” he says.

“It’s around digitizing the experience but also improving the human advice channel. That’s where we’re looking for [firms] wanting to exceed by automating the process and controls around it so they can spend more time speaking to clients and less time complying with regulations in a manual way,” he adds.

Clients should also notice a difference, Mr. Farkas says, including more engagement with their advisors and more questions about their financial and personal circumstances.

“It’s going to make the process of advice much more transparent to clients,” he says. “Over time, people are going to learn a lot more about their portfolios and the products that are being recommended to them just because the rules are forcing more transparency around risk, performance, and costs of those types of products. The information is there now, but this is really institutionalizing the communication of that and documenting and evidencing of that communication to clients.”

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British Columbia tackles innovation investment gap – The Globe and Mail



Lt.- Gov. Janet Austin delivers the Throne Speech at Legislature in Victoria, B.C., April 12, 2021.

CHAD HIPOLITO/The Canadian Press

The B.C. government will create its own investment fund to help promising B.C. companies scale up and keep jobs here at home, as part of its post-pandemic recovery plan.

The InBC strategic investment fund, announced in Monday’s Throne Speech, will be administered by a new Crown corporation. The initiative is designed to respond to concerns that the province’s world-leading innovations in sectors such as life sciences are consistently flowing to other jurisdictions with better investment climates.

The Throne Speech, read by Lieutenant-Governor Janet Austin, offers a self-congratulatory account of the government’s response to the health and economic challenges brought by COVID-19 over the past year, and acknowledges that the province is still in the grips of the pandemic. But it also focuses on plans to rebuild the economy.

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“We open this sitting of the legislature at a turning point in our fight to end the pandemic,” she read. “The threat of new variants means we cannot relax, even as your government accelerates the largest mass-immunization program in B.C.’s history.”

Ms. Austin cited the province’s contributions to the global effort to fight COVID-19, noting that its life-sciences companies have helped develop a vaccine and a treatment for the virus, as well as the development of an ICU ventilator for use in Canadian hospitals.

“Their work will not only help bring us out of the pandemic, it will position our province for success in the years ahead,” she said.

The speech predicts the province will find continued growth in trade. “Global markets are changing in ways that offer significant opportunities for B.C.’s goods and services. Prices are expected to continue to reflect environmental, social and governance aspects of production,” it states. “British Columbia firms will be able to take advantage of a premium paid for inclusive and sustainable products.”

But leaders in health sciences and the high-tech sectors have noted that B.C., while it excels in research and development, fails to foster a business environment where those innovations can stay and grow.

Quebec and Ontario have helped secure life sciences investments by partnering with Ottawa to offer incentives. Most recently, the global pharmaceutical giant Sanofi unveiled its plans to build an influenza vaccine manufacturing facility in Toronto, after the federal government and the province of Ontario committed to invest close to half a billion dollars in the project.

The B.C. government provided no detail on the new investment fund on Monday, and it is unclear how the new agency will assist. “This new strategic fund will help promising B.C. companies scale up, anchor talent – keeping jobs and investment at home in British Columbia,” it reads.

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It also promises additional funding to address the challenges that COVID-19 has exposed for the homeless, for health care and for seniors in long-term care. “In the year ahead, your government will continue to improve care for seniors by hiring thousands of new workers for long-term care and fixing the cracks COVID-19 has exposed.”

The Throne Speech also promises initiatives to assist British Columbians who struggle with the cost of living. The budget, which will be introduced on April 20, will include funds to help get thousands of rental homes built throughout the province, and will expand access to the province’s $10-a-day daycare spaces.

The government is also promising changes to its vehicle insurance rates through the Insurance Corporation of B.C. ICBC will deliver a 20-per-cent cut to car insurance rates, in addition to the COVID-19 rebate that was issued earlier this year.

We have a weekly Western Canada newsletter written by our B.C. and Alberta bureau chiefs, providing a comprehensive package of the news you need to know about the region and its place in the issues facing Canada. Sign up today.

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eBay Is Helping Gen-Y and Gen-Z Get Their Investment Kicks – Forbes



At a time when Sotheby’s is auctioning off rare sneakers, you know the nature of investing has changed. Those changes are coming as Generations Y and Z are looking to invest in what they love, while changing the nature of what investment-grade goods look like.

eBay, for one has been leading the charge and looks to remain the go-to agent for its monetization. And, to combat counterfeiting while supporting the segment’s growth, the online marketplace is innovating. eBay has begun a series of pop-up authentication events, intended to give their collectors and sellers a new source to both authenticate and value their rare kicks, as well as high-end watches, and collector cards.

Sneakers and watches are two of eBays most popular luxury categories. There are more than a half-million sneaker listings on eBay, and over 165,00 luxury watches listed on any given day. And over the past year the marketplace saw a 10 percent increase for high-end time pieces like Rolex, whose sales have jumped 60 percent since 2019.

Authentication Station

The on-site authentication events are an extension of the recently expanded “Authentication Guarantee” services that eBay offers, utilizing an independent team of industry experts. It’s the same group that authenticated a $1 million pair of 1985 Air Jordon 1’s, signed by non-other than the “Air-apparent” himself.  

The program first launched in LA’s Koreatown, back in November 2020 in a vintage, fifties-looking converted gas station. Participants handed the goods off to an attendant, who brought the items in to the inspection teams. The process was in full view via large outside screens, and successful assessments earned an eBay Authentication Guarantee. Participants were able to receive “on the spot” offers or elected to list the items themselves.

The East-Hollywood, LA experiment was successful enough to replicate. And pop-up authentication events took place this past Friday and Saturday in Atlanta. They are expected to again be replicated in Las Vegas, Seattle, Nashville, and Austin in coming weeks. Admissions to the events are free, without an appointment.

Playing A New Card

In a parallel effort, by late April eBay will add an imaging listing tool to its mobile app, designed to facilitate more efficient listings of trading cards. This is another category that has evolved from mere collecting to high-buck investing.

Beginning in late April 2021, eBay plans to launch an image listing tool in its mobile app to initially support Magic the Gathering cards and ultimately Pokémon and Yu-Gi-Oh! as well.  Users will point their camera at the card and hold to scan. A list of possible matches will pop-up, along with details on game name, title, card set, number and rarity. After tapping the closest match, the user can add their details and pricing to post. eBay plans to add other collectable and trading cards to the offering later in 2021.

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Joe Biden tax plan affect US investment in Ireland?




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Wander around Dublin’s Grand Canal Quay and you get a sense of how successful the Republic of Ireland has been in attracting US technology companies.

Google has its international headquarters across a campus of offices and will soon have more space nearby at the Boland’s Mill development.

Just across the canal, Facebook has its international HQ with Tripadvisor and AirBnB close by.

Stripe, the United States-based payments firm, could soon be in the area.

Last month its Irish founders said they’re planning about 1,000 new jobs in Ireland.

The head of the country’s inward investment agency, Martin Shanahan, described the Stripe investment as a “phenomenal signal from Ireland and about Ireland”.

But there’s now a risk that the pipeline of investment from the US could dry up if President Joe Biden can lead a major change to global tax rules.

Irish tax advantage under threat

In among those tech company HQs in Dublin’s docklands, you will also find the offices of the lawyers and accountants who help US firms use Ireland’s tax system to reduce their global tax bills.

For the last 20 years Ireland has had a simple message: invest here and you will pay just 12.5% tax on your Irish profits.

That compares favourably to headline corporation tax rates of 19% in the UK, 30% in Germany and 26.5% in Canada.

It is an article of faith in Irish politics that the 12.5% rate has been vital to attracting US investment.

But that tax advantage could be seriously undermined if President Biden gets his way.


Google head office Dublin


The most striking of his proposals – and the one of most consequence for Ireland – is for a global minimum corporate tax rate.

The US Treasury Secretary Janet Yellen has suggested a 21% minimum rate.

“We are working with G20 nations to agree to a global minimum corporate tax rate that can stop the race to the bottom,” she said in a speech last week.

“Together we can use a global minimum tax to make sure the global economy thrives based on a more level playing field in the taxation of multinational corporations.”

What would it mean for Ireland’s economy?

Essentially that would mean if a company paid tax at the lower Irish rate, then the US (or other countries) could top up that company’s tax in their jurisdiction to get it to the global minimum.

So if a US company had a presence in Ireland primarily for the tax advantage, that advantage would disappear.

This is a matter of urgency for the Biden administration because it is planning to raise corporate taxes at home and would prefer not to see more tax revenues leaking to other countries.

Peter Vale, tax partner with accounting firm Grant Thornton in Dublin, thinks a global minimum rate is now an inevitability.

“If you’d asked me six months ago I’d have been quite sceptical, there was a lot of opposition,” he said.

“But it’s now moving by the day and, with the US behind it with its plans, I think we’re going to arrive at some sort of global consensus.”

He said the key issue for Ireland becomes the level at which the rate is set.

“I don’t think 21% is where it will land, I suspect it will be somewhere in the teens.”



Niall Carson/PA

Other details will be important too: “Exactly how will you work out what the rate is a company is paying in Ireland and what does that mean in terms of any top up? The detail becomes pretty critical.”

The Biden proposals have reinvigorated work which is being led by the OECD (Organisation for Economic Co-operation and Development), an intergovernmental economic organisation.

It began a project known as Base Erosion and Profit Shifting (BEPS) in 2013, which aims to mitigate tax loopholes which currently allow companies to shift profits from higher tax countries to lower tax countries like Ireland.

‘Intention to target Ireland’

Perhaps ironically Ireland appears to have been a major beneficiary of some of the early outcomes of the BEPS project.

The country’s corporation tax receipts have soared from about €4bn (£3.5bn) in 2013 to around €12bn (£10.5bn) in 2020.

That is the principle that companies should declare their profits in the location where they have real operations or activities.

“Countries like Ireland have been a huge winner from BEPS mark one,” he said.

“The objective was to align profit with substance and we actually are one of the countries where these companies have substance, whether it be pharmaceuticals, computer chips, medical devices and the ICT companies.

“I think when countries in the G7 looked at this they thought ‘that’s not quite what we wanted’ – maybe the intention was to target countries like Ireland, not benefit them.”

When could we see an impact?

In the next round of BEPS, with the US on board, those other rich countries are more likely to get what they want at Ireland’s expense.

But even if President Biden can agree the reforms at home and abroad, how quickly would that have an impact in Ireland?

Mr Coffey thinks any negative effects would not be instant because tax is not everything.

“Are the ICT companies likely to head off around the world, scattering their headquarters to various different cities?” he said.

“There are benefits to being co-located. At least in the medium term we are not likely to see a huge shock.”

That is echoed by the IDA (Industrial Development Authority), the inward investment agency, which points to Ireland’s workforce and significant clusters of specialisation in areas like medical technology and pharmaceuticals.

The IDA also sees the Brexit angle, pointing out that Ireland, unlike its UK neighbour, is part of the EU’s single market.

In a statement, it said: “Ireland is at the heart of Europe. Ireland’s continued commitment to the EU is a core part of Ireland’s value proposition to foreign investors, offering a base to access the European Single Market and to grow their business.

“Ireland also benefits from free movement of people within the EU, giving businesses located in Ireland access to a European labour market.”

The Irish government has been engaged in the BEPS process, though in a speech last year the Finance Minister, Pascal Donohoe, said he remained to be convinced of the need for minimum taxation, beyond the specific challenges relating to the digital economy.

This week a government spokesman said: “Ireland is aware of the US proposals.

“We are constructively engaging in these discussions, and will consider any proposals carefully noting that political level discussions on these issues have not yet taken place with the 139 countries involved in this process.”

Source: – BBC News

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