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COMMONWEALTH CONNECTIONS CANADA’S MAGAZINE FOR THE FINANCIAL PROFESSIONAL • SEPTEMBER 2007 • WWW. ADVISOR.CA SCHOOL’S IN 9 6 9 0 1 R 0 3 2 0 7 0 0 4 M P • 6 J 3 P 4 M N O , o t n o r o T , K n o i t a t S , 0 2 7 x o B . O . P , d e t i m i L g n i h s i l b u P s r e g o R STAR SEARCH Don’t fear the new kid. The team’s in control. AE09_OFC.indd 1 08/27/2007 03:02:11 PM SEPTEMBER • 2 0 0 7 • THE VOLUME 10 ON NUMBER 9 ADVISOR Group/Groupe CONSEILLER consists of Advisor’s Edge, Advisor’s Edge Report, COVER Advisor.ca, Advisor Live, Objectif Conseiller, Conseiller.ca and Conseillers En Direct. SEPTEMBER 2007, VOLUME 10, NUMBER 9 8 S tar Search 27 S chool’s In ADVISOR’S EDGE Philip Porado, Editor; Deanne Gage, Consulting Editor 19 C ommonwealth Editor, Advisor Group Conferences Bert Vandermoer, Contributing Editor (416) 764-3802, [email protected] Michael Finley, Production Manager Connections Heidi Staseson, Associate Editor (416) 764-3928, [email protected] (416) 764-3804, [email protected] Marie Atkins, Executive Assistant Aniko Nicholson, Art Director (416) 764-3850, [email protected] 5 SUBSCRIPTIONS ADVISOR.CA CUSTOMER SERVICE Cornerstone, 1-866-236-0608 Cameron Clark, Customer Service Administrator INSIDE EDGE [email protected] (416) 764-3859, [email protected] Handle Scandal SALES Investors are getting ner- Kathleen Murphy (maternity leave) Sophie Bellemare Senior National Account Manager Account Manager, Eastern Canada vous, which means advisors (416) 764-3838, [email protected] (514) 843-2133, [email protected] will be put to the test. André Meurer, National Account Manager Eileen Lasswell (416) 764-3838, [email protected] National Account Manager By Philip Porado Amy Nelson, National Account Manager (416) 764-4164, [email protected] (416) 764-3809, [email protected] CIRCULATION AND RESEARCH 6 Keith Fulford, Circulation Director Tricia Benn, Director of Research FRONT END LOAD Cindy Younan, Circulation Manager (maternity leave) Elizabeth Hall, Research Manager Vice or Virtue? 8 Donna Kerry, Publisher, Advisor’s Edge, Advisor’s Edge Report We can all learn a thing or STAR (416) 764-3805, [email protected] Jean Goulet, Executive Publisher, Financial & Advisor Services Group, Quebec two from moral dilemmas, QUALITY Paul Williams, Vice-President, Financial Publishing, Brand Extension & Online/Development/Services says Heidi Staseson in EDITORIAL ADVISORY BOARD her review of Randy Cohen’s David Wm. Brown Jim Rogers Al G. Brown and Associates Rogers Group Financial The Good, The Bad & David Christianson Kurt Rosentreter The Difference. And, in Wellington West Total Wealth Management Berkshire Securities Kathleen Clough Nancy Shewfelt “How Things Work,” PWL Capital Wellington West Capital Inc. John Horwood Thane Stenner Levi Folk shows us how Richardson Partners Financial Limited Stenner Investment Partners, GMP Private Client Rebecca Horwood Lynne Triffon real-return bonds can help Richardson Partners Financial Limited T.E. Wealth predict inflation. Cynthia J. Kett Terry Zive Stewart & Kett Financial Advisors Ltd. Gordon & Zive ROGERS MEDIA INC. 8 Anthony P. Viner, President and CEO COVER STORY ROGERS PUBLISHING LIMITED Star Search Brian Segal, President and CEO 19 John Milne, Senior Vice-President, Business & Professional Publishing Group Don’t fear the new kid. Marc Blondeau and Michael Fox, Senior Vice-Presidents MONEY Immee Chee Wah and Patrick Renard, Vice-Presidents The team’s in control. MATES By Steven Lamb , established 1998, is published by Rogers Publishing Limited, a division of Rogers Media Inc. Advisor’s Edge subscriptions include 24 issues per year, consisting of 12 issues of Advisor’s Edge in magazine format and 12 issues of Advisor’s Edge Report in tabloid newspaper format. Rogers Publishing Limited, One Mount Pleasant Rd., Toronto, Ontario M4Y 2Y5. Montreal office: 19 33 1200 avenue McGill College, Bureau 800, Montreal, Quebec H3B 4G7. Aussi-Land INSURANCE INSIGHTS Subscription price per year: $70 CDN; outside Canada per year: $144 US; single copy price: $15 CDN. ISSN 0703-7732. Printed in Canada. What’s up Down Under? Why Settle? PM 40070230 R10969. Canada Post: Please return undeliverable address blocks to Advisor’s Edge, P.O. Box 720, Station K, Toronto, ON M4P 3J6. Advisors in Australia say A burgeoning insurance E-mail: [email protected] it’s all ‘super.’ scheme may fly in the face We acknowledge the assistance of the Government of Canada, through the Publications Assistance Program toward our mailing costs. Contents copyright © 2007 by Rogers Publishing Limited, may not be reprinted By Diana Cawfield of industry priorities. without permission. Advisor’s Edge receives unsolicited materials (including letters to the editor, press releases, promotional items By David Wm. Brown and images) from time to time. Advisor’s Edge, its affiliates and assignees may use, reproduce, publish, re-publish, distribute, store and archive such submissions in whole or in part in any form or medium whatsoever, without 27 compensation of any sort. Pop Quiz 34 Strategic coaching is key CLOSING BELL with to a passing grade. Beasley Hawkes By Ron Foran A Cautionary Tale www.advisor.ca ADVISOR’S EDGE | SEPTEMBER 2007 3 AE09_003.indd 3 8/16/07 4:08:24 PM INSIDEEDGE HANDLE SCANDAL Investors are getting nervous, which means advisors will be put to the test. The headlines are screaming advisor from the opportunist is the contingencies and be prepared to move again. Between Bre-X and Lord Black, ability and willingness to work with clients’ money away from firms that your clients are bound to be wondering clients when the picture darkens. As engage in unfair or inappropriate busi- about both the health of their holdings the chits continue to get called in for ness practices. and the fundamental honesty of those the go-go 1990s, the smart advisors Every day, your clients are watching heading the corporations listed on the have tuned in to the fact that clients a stream of embarrassing revelations— publicly traded equity markets. do have worries about corporate gov- security cameras showing documents It doesn’t matter if you don’t have ernance and other seemingly abstract being removed from offices, stories even one thin dime of your clients’ issues related to how companies oper- about questionable contract clauses, money in those stocks. The bad ac- ate. They’re sophisticated enough to tales of e-mails deleted in an effort tions of one or two public companies, have concerns beyond the mere bot- to hamper investigators, and public or the questionable practices of one or tom lines of their monthly statements, hubris displayed toward those looking two funds, can taint the entire invest- and have developed and honed their into wrongdoing. They’re left wonder- ments industry. When scandals break, aversions to those who act as if they’re ing what you’re doing to protect them your clients lose sleep. They wonder to above the law. from that circus. themselves, “Do I own any of that?” Realizing that’s the case, and then Fraud will never go away. Whenever Or, if they know they own it, they’re responding to it, is the hallmark of a lot of money’s at stake, someone, busy asking themselves, “Now what?” a true fiduciary. Such an advisor un- somewhere will take a stab at round- Be prepared to answer either ques- derstands more than just a client’s fi- ing up some ill-gotten gains. What tion. It’s time to get your reassurance nancial needs and retirement expecta- can change, and should, is the method speech ready—along with the necessary tions. He or she also bothers to suss and speed with which you communi- facts and figures to detail the makeup out the client’s moral leanings, as a cate with your clients about the events of client portfolios, and strategies for way to properly prepare for uphold- they’re seeing on the news and how protecting investors from worst-case ing the proxy that’s been delegated. they do—or don’t—affect the content scenarios. And, while you’re at it, keep Some clients will have a real problem and quality of their portfolios. Mak- those talking points handy just in case if they own stock in companies that ing improvements on that front isn’t the predictions of an impending bear are affiliated with a tobacco company just a best practice, it’s your job. market come true. or firearms maker. Others won’t care, Just about anybody can make money but a good advisor knows which clients PHILIP PORADO and keep clients happy in a bull mar- fall into which camp. Keep an eye on EDITOR ket. What separates the committed developments among the issuers, plan [email protected] www.advisor.ca ADVISOR’S EDGE | SEPTEMBER 2007 5 AE09_005.indd 5 08/17/2007 08:03:11 AM FRONT Bo oks , trends, events and analysis ENDLOAD VICE OR VIRTUE? Inflation Nation X Book: The Good, The Bad & The I Current Canadian long-term real-return P Difference, by Randy Cohen. T bond yields are just over 2%, with long-term I The columnist Randy New York Times Magazine N inflation expectations at 2.4%.* “The Ethicist” Cohen, may not hold a doctor- ate in Kantian philosophy but he doesn’t miss a Long-Term Real-Return Bond Yield Long-Term Bond Yield (Nominal) beat when tackling all sides of a moral dilemma. The for- 6 Inflation Expectation mer writer for The Late Show got some of his best training while working on set.