{"id":48620,"date":"2017-07-28T11:20:00","date_gmt":"2017-07-28T15:20:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=48620"},"modified":"2025-07-23T11:21:58","modified_gmt":"2025-07-23T15:21:58","slug":"july-28-2017","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=48620","title":{"rendered":"July 28, 2017"},"content":{"rendered":"

I’m always happy when somebody agrees with me<\/a>:<\/p>\n

\n

The report, released Thursday by the School of Public Policy at the University of Calgary1 and authored by Henri-Paul Rousseau, examines the option of banning embedded sales commissions for Canadian financial advisers and the broader, public-interest issues arising from such a ban.
…<\/b>
According to Mr. Rousseau, the ban on these commissions would create a number of public policy issues. Firstly, it would likely create an advice gap in Canada, due to households being averse to paying up front for an advice fee. Secondly, it will likely cause a loss of choice for Canadians who have varying needs and preferences. The report says that smaller and independent product manufacturers and distributors would be squeezed out, creating a market concentration in the hands of the bigger financial-advice players, as well as a loss in pricing transparency for clients.<\/p>\n<\/blockquote>\n

The full report is titled WHY BANNING EMBEDDED SALES COMMISSIONS IS A PUBLIC POLICY ISSUE: A commentary adapted from notes for the concluding panel of \u201cThe New Paradigm of Financial Advice\u201d conference, held in Toronto on March 31, 2017<\/a>:<\/p>\n

\n

The U.K. provides an example which should not be followed. Regulators there have banned embedded commissions, forcing clients to pay directly for financial advice. The result is that modest-income clients have decided not to seek financial advice, even though that decision will likely negatively affect their portfolios.<\/p>\n

The dangers of this \u201cadvice gap\u201d are being downplayed by those who believe that robo-advisors and banks can fill the need instead. In fact, robo-advisors and banks are mostly not equipped to step into the gamma role of coaching their clients.<\/p>\n

A ban would also mean less choice in the market for a service that needs to be competitive and innovative to serve the broad spectrum of clients\u2019 circumstances, risk appetites and needs. In addition, smaller and independent product manufacturers and distributors would be squeezed out, creating a market concentration in the hands of
\nthe bigger players.<\/p>\n<\/blockquote>\n

The second paragraph quoted above is incomplete, it seems to me, with respect to the role of robo-advisors. That channel seems best suited for ‘those who know not and know that they know not’. Those are the guys who earnestly seek out an advisor and are greatly impressed when he repeats that morning’s headlines from the Wall Street Journal, together with commentary on what “Janet” and “Stephen” are going to do with “interest rates” in the next six months, but they’re not really all that interested. ‘Get me invested and don’t bother me’ is their motto and a robo-advisor can scratch that itch really well.<\/p>\n

The problem is with ‘those who know not and know not that they know not’. These are the people with a profound disinterest in financial markets. They’re the people who, unless they happen to know somebody in the business, will go to the bank and ask for something “safe”, so the friendly banker will put them into a grossly unsuitable portfolio of GICs that are immensely profitable for the bank. What we should want, as a matter of public policy, is for them to know that Charlie down at the club ‘does something with stocks and bonds’, so they go to Charlie. I will agree that Charlie is probably not the greatest advisor around, but he knows more than a bank teller and has access to a wider range of investments. Sure, he takes his half-point cut on the deal. It’s worth it. Not because his advice, considered objectively, is so wonderful, but because his advice has given his new clients confidence and because – in most, although certainly not all, cases – the portfolio his clients end up with is reasonable. Not great, not particularly cheap, but reasonable.<\/p>\n

Banks? My attention was drawn recently<\/a> to the RBC Managed Payout Solution<\/a>. My God. How can anybody offer up that marketing strategy without blushing? I just about had a coronary. <\/p>\n

So maybe the economy’s not so good<\/a>:<\/p>\n

\n

Employers created an average of 11,000 new jobs a month for the first five months of the year, according to Statistics Canada\u2019s Survey of Employment, Payrolls and Hours (SEPH) for May, released on Thursday.<\/p>\n

The weak jobs data suggest that \u201cpaid employment creation so far this year is the worst since the 2009 recession,\u201d said Krishen Rangasamy, senior economist with National Bank of Canada.<\/p>\n

The payroll survey results stand in sharp contrast to Statscan\u2019s other labour report, the Labour Force Survey (LFS), which has exceeded expectations for months and paints a much rosier picture of the country\u2019s job market. The difference in the numbers reported by the two employment surveys is not unusual because the SEPH report is based on payroll data from Canada Revenue Agency, while the LFS relies on people providing information about their wages and job status to data collectors. The SEPH numbers are considered more reliable; the labour force survey is volatile and not as dependable given that it has a huge margin of error.<\/p>\n<\/blockquote>\n

LIBOR is on its way out<\/a>:<\/p>\n

\n

The U.K. Financial Conduct Authority will phase out the key interest-rate indicator by the end of 2021 after it became clear there wasn\u2019t enough meaningful data to sustain the benchmark that underpins more than $350 trillion in securities, Andrew Bailey, the head of the regulator, said in a speech Thursday at Bloomberg\u2019s London office.
…<\/b>
But the 58-year-old Bailey said the market supporting Libor — where banks provide each other with unsecured lending — was no longer “sufficiently active” to determine a reliable rate and alternatives must be found. For one currency and lending period there were only 15 transactions in 2016, he said.
…<\/b>
The FCA only started regulating Libor in 2013, the same year legislation was passed making it a criminal offense to take any misleading action in relation to financial benchmarks.<\/p>\n<\/blockquote>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
HIMIPref™ Preferred Indices
These values reflect the December 2008 revision of the HIMIPref™ Indices<\/strong>
Values are provisional and are finalized monthly<\/td>\n<\/tr>\n
Index<\/td>\nMean
Current
Yield
(at bid)<\/td>\n		Median
YTW<\/td>\n		Median
Average
Trading
Value<\/td>\n		Median
Mod Dur
(YTW)<\/td>\n		Issues<\/td>\nDay’s Perf.<\/td>\nIndex Value<\/td>\n<\/tr>\n
Ratchet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.5083 %<\/td>\n2,406.8<\/td>\n<\/tr>\n
FixedFloater<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n-0.5083 %<\/td>\n4,416.3<\/td>\n<\/tr>\n
Floater<\/td>\n3.60 %<\/td>\n3.63 %<\/td>\n127,190<\/td>\n18.23<\/td>\n3<\/td>\n-0.5083 %<\/td>\n2,545.1<\/td>\n<\/tr>\n
OpRet<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0864 %<\/td>\n3,057.5<\/td>\n<\/tr>\n
SplitShare<\/td>\n4.71 %<\/td>\n4.43 %<\/td>\n52,317<\/td>\n3.78<\/td>\n5<\/td>\n0.0864 %<\/td>\n3,651.3<\/td>\n<\/tr>\n
Interest-Bearing<\/td>\n0.00 %<\/td>\n0.00 %<\/td>\n0<\/td>\n0.00<\/td>\n0<\/td>\n0.0864 %<\/td>\n2,848.9<\/td>\n<\/tr>\n
Perpetual-Premium<\/td>\n5.39 %<\/td>\n4.71 %<\/td>\n63,188<\/td>\n6.09<\/td>\n21<\/td>\n-0.0278 %<\/td>\n2,777.2<\/td>\n<\/tr>\n
Perpetual-Discount<\/td>\n5.28 %<\/td>\n5.25 %<\/td>\n80,086<\/td>\n14.97<\/td>\n15<\/td>\n0.0607 %<\/td>\n2,926.7<\/td>\n<\/tr>\n
FixedReset<\/td>\n4.32 %<\/td>\n4.32 %<\/td>\n179,116<\/td>\n6.38<\/td>\n98<\/td>\n0.1529 %<\/td>\n2,412.4<\/td>\n<\/tr>\n
Deemed-Retractible<\/td>\n5.07 %<\/td>\n5.42 %<\/td>\n118,276<\/td>\n6.12<\/td>\n30<\/td>\n-0.0595 %<\/td>\n2,863.0<\/td>\n<\/tr>\n
FloatingReset<\/td>\n2.54 %<\/td>\n2.89 %<\/td>\n42,339<\/td>\n4.27<\/td>\n10<\/td>\n-0.1573 %<\/td>\n2,641.9<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
Performance Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nChange<\/td>\nNotes<\/td>\n<\/tr>\n
VNR.PR.A<\/td>\nFixedReset<\/td>\n-1.12 %<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 21.74
\nEvaluated at bid price : 22.15
\nBid-YTW : 4.92 %<\/td>\n<\/tr>\n
SLF.PR.G<\/td>\nFixedReset<\/td>\n1.14 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 17.75
\nBid-YTW : 7.91 %<\/td>\n<\/tr>\n
MFC.PR.K<\/td>\nFixedReset<\/td>\n1.15 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 21.99
\nBid-YTW : 5.86 %<\/td>\n<\/tr>\n
MFC.PR.H<\/td>\nFixedReset<\/td>\n1.38 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.00
\nBid-YTW : 4.78 %<\/td>\n<\/tr>\n
IAG.PR.G<\/td>\nFixedReset<\/td>\n1.45 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 23.10
\nBid-YTW : 5.29 %<\/td>\n<\/tr>\n
MFC.PR.J<\/td>\nFixedReset<\/td>\n1.68 %<\/td>\nYTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 24.24
\nBid-YTW : 4.72 %<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n\n
Volume Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nShares
Traded<\/td>\n		Notes<\/td>\n<\/tr>\n
RY.PR.Z<\/td>\nFixedReset<\/td>\n269,117<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 21.73
\nEvaluated at bid price : 22.19
\nBid-YTW : 4.22 %<\/td>\n<\/tr>\n
TRP.PR.D<\/td>\nFixedReset<\/td>\n166,736<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 22.27
\nEvaluated at bid price : 22.61
\nBid-YTW : 4.34 %<\/td>\n<\/tr>\n
RY.PR.L<\/td>\nFixedReset<\/td>\n128,900<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2019-02-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.20
\nBid-YTW : 3.54 %<\/td>\n<\/tr>\n
RY.PR.J<\/td>\nFixedReset<\/td>\n117,621<\/td>\nYTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 22.93
\nEvaluated at bid price : 23.86
\nBid-YTW : 4.32 %<\/td>\n<\/tr>\n
NA.PR.X<\/td>\nFixedReset<\/td>\n111,178<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-05-15
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.74
\nBid-YTW : 3.56 %<\/td>\n<\/tr>\n
RY.PR.Q<\/td>\nFixedReset<\/td>\n109,410<\/td>\nYTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2021-05-24
\nMaturity Price : 25.00
\nEvaluated at bid price : 26.64
\nBid-YTW : 3.55 %<\/td>\n<\/tr>\n
There were 22 other index-included issues trading in excess of 10,000 shares.<\/td>\n<\/tr>\n<\/table>\n\n\n\n\n\n\n\n\n\n
Wide Spread Highlights<\/strong><\/td>\n<\/tr>\n
Issue<\/td>\nIndex<\/td>\nQuote Data and Yield Notes<\/td>\n<\/tr>\n
NA.PR.W<\/td>\nFixedReset<\/td>\nQuote: 21.64 – 22.05
\nSpot Rate : 0.4100
\nAverage : 0.2733<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 21.33
\nEvaluated at bid price : 21.64
\nBid-YTW : 4.38 %<\/td>\n<\/tr>\n

BAM.PF.I<\/td>\nFixedReset<\/td>\nQuote: 25.75 – 26.00
\nSpot Rate : 0.2500
\nAverage : 0.1441<\/p>\n

YTW SCENARIO
\nMaturity Type : Call
\nMaturity Date\t: 2022-03-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.75
\nBid-YTW : 4.20 %<\/td>\n<\/tr>\n

VNR.PR.A<\/td>\nFixedReset<\/td>\nQuote: 22.15 – 22.47
\nSpot Rate : 0.3200
\nAverage : 0.2318<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 21.74
\nEvaluated at bid price : 22.15
\nBid-YTW : 4.92 %<\/td>\n<\/tr>\n

BAM.PF.F<\/td>\nFixedReset<\/td>\nQuote: 23.87 – 24.27
\nSpot Rate : 0.4000
\nAverage : 0.3172<\/p>\n

YTW SCENARIO
\nMaturity Type : Limit Maturity
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 23.05
\nEvaluated at bid price : 23.87
\nBid-YTW : 4.61 %<\/td>\n<\/tr>\n

POW.PR.G<\/td>\nPerpetual-Premium<\/td>\nQuote: 25.24 – 25.49
\nSpot Rate : 0.2500
\nAverage : 0.1716<\/p>\n

YTW SCENARIO
\nMaturity Type : Option Certainty
\nMaturity Date\t: 2047-07-28
\nMaturity Price : 25.00
\nEvaluated at bid price : 25.24
\nBid-YTW : 5.59 %<\/td>\n<\/tr>\n

GWO.PR.N<\/td>\nFixedReset<\/td>\nQuote: 17.23 – 17.60
\nSpot Rate : 0.3700
\nAverage : 0.2926<\/p>\n

YTW SCENARIO
\nMaturity Type : Hard Maturity
\nMaturity Date\t: 2025-01-31
\nMaturity Price : 25.00
\nEvaluated at bid price : 17.23
\nBid-YTW : 8.15 %<\/td>\n<\/tr>\n<\/table>\n","protected":false},"excerpt":{"rendered":"

I’m always happy when somebody agrees with me: The report, released Thursday by the School of Public Policy at the University of Calgary1 and authored by Henri-Paul Rousseau, examines the option of banning embedded sales …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[],"class_list":["post-48620","post","type-post","status-publish","format-standard","hentry","category-market-action"],"_links":{"self":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48620","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=48620"}],"version-history":[{"count":1,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48620\/revisions"}],"predecessor-version":[{"id":48621,"href":"https:\/\/prefblog.com\/index.php?rest_route=\/wp\/v2\/posts\/48620\/revisions\/48621"}],"wp:attachment":[{"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=48620"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=48620"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/prefblog.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=48620"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}