A forgotten cabinet minister, the attractiveness of a tax deduction and the prospect of feel-good treatment have combined to boost the Advocis Century Initiative to nearly $3 million in pledges in its quest to raise $5 million in voluntary contributions from members.

The Century Initiative (CI) begins 2009 with over $2,919,679.05 in pledges, and $1,640,130.48 of those pledges paid to date. Organizers hope to pull in more of the amount pledged and to increase pledges to the $5 million target by the end of 2009.

Several Advocis members conceived the program in fall 2004, recalls Dale Ens, ex-chair of the CI and president of Calgary-based Blaeberry Estate Planning Inc. They wanted to re-capitalize Advocis and solve its ongoing financial problems, which first emerged in 1999. The group wanted a solid financial foundation and believed that intense member loyalty would form the linchpin of its appeal.

“It was an awful period,” Ens recalls, referring to the years leading up to the 2004 meeting. “I was certainly very conscious of the fact that the organization was just absolutely in the throes of financial purgatory (since) memberships were in decline.”

Ens and his colleagues set up a governance model including a decision to keep cash in the CI account separate from Advocis’s operational funds, a move designed to telegraph the commitment as “one that would not result in people feeling that they were throwing good money after bad.”

The CI provides gold memberships for $5,000 and platinum memberships for $12,500, in both cases over and above regular membership fees and payable over five years at times of the member’s choosing.

Ens says that the CI board of stewards would use the money to deal with a “significant opportunity” or “significant threat,” pointing as an example to the 1981 federal budget. Then-finance minister Allan MacEachen proposed changes to regulations that included taxation on the inside build-up of the cash value of permanent life insurance. Advocis members believe that one of its predecessor organizations, the Life Underwriters of Canada, deserves credit for convincing the government to change its plans. (Some of MacEachen’s other proposed changes also died.)

That kind of crisis or a resurgence of the controversy over banks’ looking to sell insurance through their branch networks would qualify as a “significant threat” and, therefore, a possible reason to use the funds gathered through the CI, Ens explains, conceding that neither threat nor opportunity has been identified to date.

Ens also concedes that the benefits enjoyed by Century Initiative members are more philosophical than tangible. “The benefit that accrues to a CI member is more psychic than it is practical. We try to treat our CI members as being special,” he says, explaining that special treatment includes public recognition. “What more can we offer but that public recognition, lots of ‘attaboys’ and as much information as we can supply them in respect of the organization?”

Asked whether the stock market meltdown and its impact on advisor revenues will impede the CI from reaching its target, Ens argues that member loyalty will win the day. “My gut tells me that the commitment that our crew, that our members, have to Advocis, to the industry, to its consumers is unwavering even in these tough times.”

Perhaps, but the CI faces other obstacles. Some members decided to withhold contributions before the meltdown. Some members with partially fulfilled pledges reached by Advisor.ca during the Christmas holidays suggested other reasons for reluctance to make further contributions, such as dissatisfaction with Advocis’s financial performance, including the seemingly low amount of unrestricted funds in its consolidated net surplus at year-end 2007. The dissatisfaction extends to late reporting of 2007 financial results, not reported until late 2008, and uneasiness over an auditor’s note accompanying the figures, cautioning that “These summarized financial statements do not contain all the disclosures required by Canadian generally accepted accounting principles. Readers are cautioned that these statements may not be appropriate for their purposes.”

The misgivings also include the timing of the 2007 annual general meeting, held in December 2008. “A meeting that’s 11 months after the year end is not very effective,” said one longtime Advocis loyalist and CI member.

“I’ve put my (pledge) on hold until I get a little more satisfied with what’s going on,” he said. “It’s on hold for now, waiting to see.”

Al Emid, a Toronto-based financial journalist, covers insurance, investing and banking.

(12/31/08)