Week in review: December 8-12, 2008

In case you missed it, the BCE takeover bid is officially toast, after accounting firm KPMG ruled that BCE wouldn’t pass a solvency test, a key condition of the agreement; the feds unveiled details about tax rates and deductions that will be in effect for 2009 (the complete details are available here); and the Office of the Superintendent of Financial Institutions Canada (OSFI) released new outsourcing guidelines. Although the guidelines only affect business operations for federally regulated entities (these are encouraged to provide their comments by January 16, 2009), Draft Guideline B-10 is practically a how-to business manual for managing outsourced business activities, functions and processes that could be of interest to others as well.

The economy and your clients

The financial crisis and capital markets have moved professional opinion about Canadian household debt levels. The Bank of Canada’s financial system review says the decline in stock markets and home prices caused by the global financial crisis has decreased the debt-to-asset level of Canadian households, and that household balance sheets are beginning to show strain. In a separate release, the BoC cut its key overnight lending rate by 75 basis points, to 1.5%. The Bank rate has been adjusted accordingly, to 1.75%.

Consumer confidence numbers, meanwhile, are coming in lower this year – not surprising given current conditions, but troubling given that retailers can usually count on an increase in consumer spending as the holidays approach.

Markets, products and investing

If there’s one good thing about how drastic the market declines have been, it’s that there are unlikely to be many more unpleasant surprises, and that the bottom could beclose at hand, according to a panel of experts assembled by the CFA Institute this week. That said, they add that there are still a few problem areas to watch out for.

CIBC World Markets also weighed in this week, saying investors may want to hold their cash and watch for an entry point before jumping back into the equity markets, adding that there may yet be another slide before markets firm up in the second half of 2009. The research department trimmed 1,000 points off its 2009 year-end target for the S&P/TSX Composite Index, but says the market should still manage to post a total return of more than 20% on the year.

On the investment front, the British Columbia Securities Commission is warning investors about unregistered companies contacting B.C. residents to open investment accounts or trying to sell them unqualified investments. The regulator plans to publish an Investment Caution List in the near future.

Products

Mackenzie Financial is launching a new Ivy-branded U.S. equity, the Mackenzie Ivy American Class, which will invest mainly in high-quality U.S. companies. The portfolio will be managed by Jerry Javasky.

BetaPro Management announced Thursday it will either split or consolidate the units of some of its exchange-traded funds (ETFs); Manulife Financial received approval to merge a number of funds – changes are in effect as of today; bond manager Michael Locke resigned from Capital International Asset Management (Canada), Inc. after 12 years with the company; and Invesco Trimark announced it is promoting three investment analysts – Erin Greenfield, Mark Uptigrove and Lauree Wheatley – to portfolio manager positions.

Directors of the VenGrowth Investment Fund and VenGrowth II Investment Fund, meanwhile, announced that the funds will no longer offer weekly redemptions, in an effort to preserve shareholder value. Investors will now receive annual distributions, derived from the disposition of portfolio companies.

Finally, Mackenzie Financial and TD Asset Management both rolled out new fund offerings this week – Mackenzie announced it will launch a new line up of segregated funds, while TD launched its new wrap program, called TD Comfort Portfolios.

REGULATION

In regulatory news, Sextant Capital Management says it will "vigorously defend" allegations made by the Ontario Securities Commission on Wednesday that it has "illegally" inflated returns onits Sextant Strategic Opportunities Hedge Fund derived from ownership rights of glaciers.

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Quick links: Advisor.ca news, December 8-12, 2008.

BCE deal kaput "Feds unveil tax brackets" and more of Tuesday’s news Outsourcing tasks, not risk Household balance sheets showing strain: BoC Consumer confidence falters during 2008 holiday season Pondering the next "shoe to drop" Bank of Canada chops rate Canadian housing slowing, not crashing Sunk by an iceberg? Sextant hits back at OSC allegations CIBC trims TSX outlook Market likely near bottom: Experts

BCSC offers Investment Caution List Gold holds its value in 2008: PwC Mackenzie fund goes bargain hunting in U.S. Horizon’s BetaPro repackages ETFs Manulife merges funds Invesco Trimark names three new managers Bond manager quits Capital International VenGrowth ends weekly redemptions Mackenzie launches new line of seg funds TD rolls out new wrap program RBC issue to raise $2 billion

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New columns and features this week:

John Page: Investment performance is obviously part of the financial planning equation, but it’s the part that we least control. Fortunately, more advisors are recognizing that there is a way to keep clients happy with the services they provide, despite erratic investment performance. It’s about changing the benchmark by which you are measured. Read more.

Michelle Munro: While the new tax-free savings account is a boon for investors, it can complicate retirement planning. Should your clients save for the future in an RRSP? How does a TFSA compare? These are the big questions that advisors will have to figure out come January. Read more.

Features:

From LMD to EMD under NI 31-103: The way business is done in the exempt securities market will change if National Instrument 31-103 is implemented as proposed. Read more.

Transitioning your business, part 3: The deal with the buyer or seller of your business has been signed. Now comes the hard part: letting clients know about the changes and ensuring continuity. What’s the best way to approach these nuances? Advisor.ca ventured to find out. This special report is the last of our three-part series on buying and selling a book of business. Read more .

Last chance — read this article, earn free CE credits: If you’re still a few credits short of meeting your continuing education requirements this cycle, a relatively simple place to turn is Advisor.ca’s new continuing education section and the Advisor’s Edge CE Corner. Read more.

Regulators require justification for fee-based accounts: IIROC has indicated it will ask questions about why clients are placed into fee-for-service arrangements, which it generally defines as any account in which advisor compensation is derived from fees based on a percentage of client assets as opposed to commissions. Read more.

(12/12/08)