Category: PrefLetter

I’ve written about PrefLetter a few times in the past two months and I’m pleased to say that next week it will be going live.

The April edition will be produced in accordance with the announced schedule: recommendations will be based on market conditions as of the close on the second Friday of the month (that’s this coming Friday, the 13th) and will be transmitted to subscribers prior to the opening on Monday 16th.

Except, of course, that there are no subscribers as yet! The website is just going through a few final modifications and until everything is perfect, I’m not going to unveil it. If you have received a sample issue in the past and you want to assure me that you will subscribe as soon as I’ve opened the ticket window, I’ll send you a copy as if you had signed up already.

Credit cards are accepted via secure hosting by Bell Canada with a certificate issued by Network Solutions. Credit Card processing will be handled by Chase Paymentech.

Note that subscribers must either be residents of Ontario or be registered with the Quebec Securities Commission.

Early next week, I’ll be unveiling the website, issuing a press release, commencing Internet advertising and accepting subscriptions. I’ll link to the press release in a post on this blog … so watch this space!

Subscribers may choose any of the following options:

– receive the prior issue immediately for $29 + tax

– receive the next issue upon publication for $29 + tax

– subscribe for a full year of twelve monthly issues commencing with next issue, and receive the prior issue immediately as a bonus, for $185 + tax.

Note that by “immediately”, I mean “immediately”. Prior issues will be sent automatically by eMail upon payment. I will accept cheques, but only for full year subscriptions.

There has been a lot of interest expressed in this venture, and my “practice” issues have been well received. Next week is going to be fun!

I have just had the disclaimer of PrefLetter (Coming Soon!) prepared. Everybody will be familiar with these things – I needed to ensure that the work was clearly labelled as generic and that there were prohibitions against redistribution or other abuse.

Very disappointing. Not only did counsel cross out EVERY SINGLE MENTION of “thumbscrews” in the prohibition, but I am advised that “evisceration” is no longer considered a legal remedy. Hell.

And I’ve learnt about the subscription restrictions. As I am licensed in Ontario, I am able to sell subscriptions to any Ontario resident; there are also exemptions in place such that I can sell subscriptions to Quebec residents who are registered in Quebec. But nobody else, not unless I get registered in other provinces. I will, however, maintain a list of the business I’m losing due to these restrictions and will apply for registration anywhere I think I can at least break even.

The various levels of restriction seem a little strange to me:

• I can accept investments in Malachite Aggressive Preferred Fund across Canada, provided the investor either meets the accreditation rules, or invests $150,000+.
• I can offer segregated account management to Ontario residents only.
• I can licence my software to anybody in Ontario, or to locally registered entities anywhere else in Canada.
• I can sell subscriptions to PrefLetter to anybody in Ontario and registered entities in Quebec (there are a few other exemptions in Quebec, but listing them takes up a LOT of space).

I find it most peculiar, really. Especially the part about being able to offer a registered financial advisor in, say, Saskatchewan, a license for my software but not a subscription to my newsletter.

The March issue of PrefLetter has just been sent to those who have previously indicated that they would like to see a copy.

I am still on schedule for an official launch in April, but it might be tight! Not everything is under my control and there’s a lot of waiting around to do when starting a new venture.

If any other readers would like to see a free copy of the March prototype, please eMail me. Comments will be greatly appreciated, but are not compulsory.

In my last PrefLetter update I indicated:

The other legal issue is where I can sell it. I know I can offer this product for sale to Ontario residents – my existing registrations (corporate and personal) with the OSC allow me to do that. I’m not licensed in other provinces, however, so I’ve asked counsel to determine how to get the newsletter class of registration in other provinces. If it’s easy and doesn’t cost too much, I’ll do it as a speculation. Otherwise, I’ll have to get a better idea of the demand for the product before doing this.

Counsel advises that getting newsletter-eligible registration status has the same cost and headache quotient as getting Investment Counsellor / Portfolio Manager (ICPM) status. So I’m not going to do it! It seems that I can offer my fund nationally, but not my newsletter. Anybody who thinks this is ridiculous red tape and “Gotcha Regulation” is welcome to contact their local regulator and say so.

As always, I will be very happy to apply for registration in any province as soon as I have some kind of reasonable expectation of breaking even on the venture … just covering my regulatory & legal fees will be enough to start with! So I’ll be accepting expressions of interest from those Canadians not fortunate enough to live in Ontario, in the hopes of accumulating enough requests to make the headaches worthwhile.

I previously indicated that I was considering a monthly preferred share newsletter and I have decided that it will officially launch in the near future.

My test production was prepared as of the close on February 9 and has been very well received by those who looked at it. I am very grateful for all the feedback – especially the one dedicated soul whose comments came close to exceeding the length of the letter itself!

There seem to be a lot of people out there who want quick, actionable, independent preferred share advice … so I’ll roll out this product and see how many of them want it enough to pay for it!

I am aiming to have one more “practice” issue, using data as of the close on March 9. I anticipate a monthly schedule of preparation as of the close on the second Friday of each month with electronic delivery to subscribers prior to the next market opening (which will almost always be the following Monday morning, of course).

Pricing will be $185 for twelve issues, with single issues available for $29.00. Plus tax!

I want to launch in April, but there are a number of issues that are out of my hands. On-line credit card shopping is certainly supposed to be easy, but I won’t believe it until I’ve built the system, connected to the payments centre,  purchased a subscription for myself and seen the money in my bank account! I am negotiating with a salesman for a major third party credit card payment processor and, with luck, will be in a position to commence testing next week.

For those who are interested – when I say “built the system”, I really just mean “plugging into the software available”. Web hosting for all my sites is supplied by Bell Canada and I plan to use their “EasyStore” software. I am assuming, but have not yet confirmed, that Bell’s security and software will be acceptable to the credit card payment processor; hopefully I’ll have all that sorted out next week.

There are also, as always, legal issues. My legal counsel is preparing the verbiage involving prohibitions on redistribution and standard disclaimers. That part’s easy! The other legal issue is where I can sell it. I know I can offer this product for sale to Ontario residents – my existing registrations (corporate and personal) with the OSC allow me to do that. I’m not licensed in other provinces, however, so I’ve asked counsel to determine how to get the newsletter class of registration in other provinces. If it’s easy and doesn’t cost too much, I’ll do it as a speculation. Otherwise, I’ll have to get a better idea of the demand for the product before doing this.

There are some proposed new rules, I am told, that would make such an extension of registration automatic, but these new rules have been released for comment only and won’t be enacted until late this year, if ever.

Two administrative items that seem reasonably easy are the website and the advertising. I’m building the website now – it is, naturally, largely an extended advertisement for the product, but there is a certain amount of reference material there as well. I will try to avoid technical terms in the newsletter (those who are intimately familiar with fixed income analysis should be subscribing to the software!) but there are some that I can’t avoid including if the risks and rewards of each issue are to be adequately described. So it is the website’s job to provide explanations of these terms, and to present information regarding the philosophy behind the selection of recommended issues. Advertising – well, that’s easy! Google has made the act of purchasing their services very simple and straightforward!

However, administrative headaches aside, I’m very pleased with the response to my first effort and with the wonderful job my graphic artist did to produce a good-looking, clearly labelled report. As noted my second practice issue will be prepared as of next Friday’s close – I will send a free copy to almost anybody who wants one and sends an eMail to me. You’re not obliged to comment, but it sure would be appreciated! What I’m looking for is an understanding of what it would take for you to subscribe to the letter and recommend it to your friends.

The newsletter is intended to be distributed to retail investors and to retail advisors.