There was an interesting nugget buried in the discussion of the IAG purchase of Hollis Wealth from Scotia:
Clients with less than $500,000 in investable assets are now often referred to bank branches for investment advice.
The Globe and Mail was the first to report on the sale talks between the two firms. Following the reports, Scotiabank chief financial officer Sean McGuckin was asked about a potential HollisWealth sale on a conference call. The CFO declined to comment, but added that in wealth management, “a lot of the value comes through our branch distribution,” suggesting an independent adviser network is less desirable to the bank.
So, a lot of the value in investment management, as far as the banks are concerned, is having branch level chimpanzees put mom and pop into the banks’ own products … and trailer fees are not an issue because it’s the bank taking a big cut off the top in the first place.
Don’t say I didn’t tell you!
An additional benefit the self-proclaimed investor advocates have brought us is a reduction in investment options:
Peter Moulson, head of wealth management compliance at Canadian Imperial Bank of Commerce, told an OSC roundtable event in Toronto it is unclear how financial firms would be expected to apply a more stringent regulatory standard in practical terms, and said it could even jeopardize the existence of the traditional advice model in which financial advisers work largely on commission and receive fees from companies whose financial products they sell.
Mr. Moulson said big financial firms could end up narrowing their business lines to provide just discount brokerage operations that simply fill orders without providing advice, as well as full-service advice for which clients pay a flat fee. Those are the safest ways to ensure no possible conflicts of interest arise in how advisers are paid, he said.
Mr. Moulson is, of course, talking through his hat. Huge conflicts of interest arise from the treatment of new issues. It is surprisingly difficult nowadays to get statistics on new issue revenue in the brokerage industry, but I can assure you … it’s a lot.
As long as a firm is both advising clients and getting new issue revenue … there’s a conflict. Somebody has to sell these new issues and therefore somebody’s got to get paid.
| HIMIPref™ Preferred Indices These values reflect the December 2008 revision of the HIMIPref™ Indices Values are provisional and are finalized monthly |
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| Index | Mean Current Yield (at bid) |
Median YTW |
Median Average Trading Value |
Median Mod Dur (YTW) |
Issues | Day’s Perf. | Index Value |
| Ratchet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2481 % | 1,762.7 |
| FixedFloater | 0.00 % | 0.00 % | 0 | 0.00 | 0 | 0.2481 % | 3,220.0 |
| Floater | 4.25 % | 4.39 % | 48,512 | 16.54 | 4 | 0.2481 % | 1,855.7 |
| OpRet | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0265 % | 2,925.5 |
| SplitShare | 4.83 % | 4.54 % | 52,969 | 4.32 | 6 | -0.0265 % | 3,493.7 |
| Interest-Bearing | 0.00 % | 0.00 % | 0 | 0.00 | 0 | -0.0265 % | 2,725.9 |
| Perpetual-Premium | 5.45 % | 5.25 % | 82,731 | 14.41 | 23 | 0.0577 % | 2,652.1 |
| Perpetual-Discount | 5.46 % | 5.47 % | 94,198 | 14.65 | 15 | -0.0993 % | 2,743.4 |
| FixedReset | 4.86 % | 4.65 % | 209,418 | 6.80 | 96 | -0.0773 % | 2,103.9 |
| Deemed-Retractible | 5.20 % | 5.23 % | 136,557 | 4.57 | 32 | -0.1960 % | 2,735.1 |
| FloatingReset | 2.82 % | 3.78 % | 44,827 | 4.83 | 12 | 0.3059 % | 2,315.2 |
| Performance Highlights | |||
| Issue | Index | Change | Notes |
| BAM.PR.T | FixedReset | -1.63 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-12-06 Maturity Price : 16.92 Evaluated at bid price : 16.92 Bid-YTW : 5.10 % |
| IFC.PR.A | FixedReset | -1.44 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 16.37 Bid-YTW : 9.34 % |
| FTS.PR.K | FixedReset | -1.37 % | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-12-06 Maturity Price : 17.34 Evaluated at bid price : 17.34 Bid-YTW : 4.64 % |
| CCS.PR.C | Deemed-Retractible | -1.30 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 22.75 Bid-YTW : 6.42 % |
| SLF.PR.I | FixedReset | -1.28 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.04 Bid-YTW : 7.00 % |
| MFC.PR.C | Deemed-Retractible | -1.28 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.82 Bid-YTW : 7.27 % |
| MFC.PR.B | Deemed-Retractible | -1.19 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 21.65 Bid-YTW : 6.84 % |
| SLF.PR.D | Deemed-Retractible | -1.05 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 20.77 Bid-YTW : 7.22 % |
| IFC.PR.D | FloatingReset | 1.02 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 19.80 Bid-YTW : 6.56 % |
| TD.PR.T | FloatingReset | 1.27 % | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2022-01-31 Maturity Price : 25.00 Evaluated at bid price : 23.20 Bid-YTW : 3.57 % |
| Volume Highlights | |||
| Issue | Index | Shares Traded |
Notes |
| TD.PF.H | FixedReset | 314,525 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-10-31 Maturity Price : 25.00 Evaluated at bid price : 25.58 Bid-YTW : 4.48 % |
| TRP.PR.J | FixedReset | 149,005 | YTW SCENARIO Maturity Type : Call Maturity Date : 2021-05-31 Maturity Price : 25.00 Evaluated at bid price : 26.00 Bid-YTW : 4.55 % |
| MFC.PR.R | FixedReset | 138,275 | YTW SCENARIO Maturity Type : Hard Maturity Maturity Date : 2025-01-31 Maturity Price : 25.00 Evaluated at bid price : 24.90 Bid-YTW : 4.97 % |
| TRP.PR.K | FixedReset | 127,594 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-12-06 Maturity Price : 23.10 Evaluated at bid price : 24.90 Bid-YTW : 4.85 % |
| RY.PR.J | FixedReset | 87,176 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-12-06 Maturity Price : 20.56 Evaluated at bid price : 20.56 Bid-YTW : 4.59 % |
| BMO.PR.S | FixedReset | 60,223 | YTW SCENARIO Maturity Type : Limit Maturity Maturity Date : 2046-12-06 Maturity Price : 19.49 Evaluated at bid price : 19.49 Bid-YTW : 4.46 % |
| There were 52 other index-included issues trading in excess of 10,000 shares. | |||
| Wide Spread Highlights | ||
| Issue | Index | Quote Data and Yield Notes |
| IFC.PR.D | FloatingReset | Quote: 19.80 – 22.50 Spot Rate : 2.7000 Average : 2.1902 YTW SCENARIO |
| CGI.PR.D | SplitShare | Quote: 25.08 – 25.35 Spot Rate : 0.2700 Average : 0.1848 YTW SCENARIO |
| CU.PR.C | FixedReset | Quote: 19.50 – 19.80 Spot Rate : 0.3000 Average : 0.2149 YTW SCENARIO |
| TRP.PR.E | FixedReset | Quote: 18.58 – 18.82 Spot Rate : 0.2400 Average : 0.1627 YTW SCENARIO |
| BMO.PR.B | FixedReset | Quote: 25.51 – 25.72 Spot Rate : 0.2100 Average : 0.1437 YTW SCENARIO |
| GWO.PR.H | Deemed-Retractible | Quote: 22.32 – 22.49 Spot Rate : 0.1700 Average : 0.1076 YTW SCENARIO |