Sponsors Lack Confidence In CAP Products

Canadian plan sponsors are dissatisfied with the capital accumulation plan (CAP) products currently available and not very confident that their participants will have the income they require throughout retirement, says a survey by Schroders. Less than one quarter (22 per cent) of respondents were satisfied with the products available and just over half (53 per cent) think most Canadian retirement products will not provide enough income to last through retirement. As well, 29 per cent thought most products were not tailored to the specific needs of Canadians. “Although risk needs to be considered and adjusted when approaching retirement, it is important to remember that participants need to double their retirement savings from age 55 to 65,” says Neil Walton, head of investment solutions at Schroders. “In today’s low interest rate environment, following a typical glidepath isn’t enough. Canadians nearing retirement need products that will protect their savings while continuing to grow their income and capitalize on positive market conditions.” Earlier this year, it launched its MyRetirement target date funds designed specifically to meet the needs of Canadians saving for retirement. These funds aim to deliver a predictable income stream in retirement years by delivering better outcomes based on member needs throughout their lifetime including beyond retirement; enhance returns and reduce risk by incorporating dynamic asset allocation and explicit risk management; and provide a high level of sustainable retirement income through continued allocation to growth assets underpinned by a bond portfolio structured to deliver essential income.

Asset Managers Confident They Can Adapt

Canadian asset managers are not immune to the evolving changes impacting the financial services sector, says a national poll by RBC Investor & Treasury Services. While increased regulation remains the top challenge, an overwhelming number of respondents also believe that proper data management can benefit their firm and 94 per cent are confident they can adapt to the changing environment. Managers selected increased regulation as their top near-term challenge, garnering 16 per cent of choices. Greater transparency requirements and enhanced protection for investors, as well as additional oversight for the asset management sector, are potential reasons behind the focus on regulation. Increased regulatory obligations have also created a heightened sense of awareness of reputational risk among managers. “With the business environment continuing to evolve, managers must ensure they remain competitive while addressing continued regulatory shifts. We believe that asset managers today are looking for more than commoditized custody services. They are looking for a true partner that understands the benefits of new technology and can successfully apply it to provide rapid access to meaningful data that helps them with their business decisions,” says David Linds, managing director and head of asset servicing Canada at RBC Investor & Treasury Services.

Canada Attractive For U.S. PE Investors

Sustained growth in the Canadian economy and heightened competition for deal flow amongst private equity (PE) and other institutional investors continue to make Canada an attractive destination for U.S.-based PE investors, says a study commissioned by Bennett Jones. ‘Due North: U.S. Private Equity Sets Sights on Canada’ says U.S. investment firms will continue to dedicate resources to sourcing opportunities in Canada, drawn by a perception of lower valuations and the opportunity to deploy meaningful capital, all while remaining relatively close to home. It finds the top sectors for investment in Canada are consumer goods (24 per cent), industrials and chemicals (22 per cent), oil and gas (14 per cent), and technology (14 per cent). “Canada remains an attractive destination for U.S. investors, notwithstanding certain challenges facing the Canadian economy. The total value of private equity deals continues to reach new heights,” says John Mercury, vice-chair, clients and industries, at Bennett Jones.

Benefits Cost Decision Risks Loss Of Employees

While many employers have become accustomed to selecting benefits and compensation packages based on cost alone, they risk losing their most valuable employees as a result, says Leslie Lemenager, regional president of Gallagher’s employee benefits consulting and brokerage. Its ‘2018 Human Capital Insights Report’ shares best practices on ways to strengthen the key aspects of workplace wellbeing: physical and emotional, career, financial,; and organizational. In terms of employees’ physical and emotional wellbeing, it says this drives improved business outcomes. For employers, there are many cost-conscious ways to address their teams’ physical and emotional wellbeing, but knowing which levers to pull depends on the makeup of the workforce. Conducting a cultural assessment will allow decision makers to pinpoint existing resources and determine gaps and opportunities. The workforce’s perception of job security, possibilities for career growth, and their connection to the organization’s values and mission are predictors of employee turnover. Employers that invest in their employees’ career wellbeing improve their chances to retain top-performing employees and attract new ones.

Good, But Not Great, Returns Ahead

Relatively steady economic growth, controlled inflation, and accommodative monetary policy will combine to drive “good-but-not-great” risk asset returns and “low-but-mostly-positive” fixed income returns, says the Northern Trust capital market assumptions working group five-year capital market forecast. Mixing optimism and a temperate outlook, Northern Trust suggests that global equity returns will remain below long-term averages, but they should also be higher than current valuations suggest. On the fixed income side, the expectation is that mild growth and relatively tame inflation will keep interest rates low and yield curves flat globally. For real assets, it expects performance in line with equities that also provides additional diversification benefits. Similarly, alternative assets such as private equity and hedge funds are anticipated to continue to add some value by enhancing risk-adjusted returns. The report suggests six per cent is a reasonable prediction for one-year developed market equity returns for the foreseeable future. As well, moderate growth and lower valuations should benefit emerging market equities, which are expected to return 8.3 per cent per annum.

Northleaf Raises New Capital

Northleaf Capital Partners has raised US$2.2 billion in new capital across its global private equity program. It now manages more than US$11 billion in private equity, private credit, and infrastructure commitments on behalf of institutional investors in Canada, Europe, and the United States.

Edwards Joins Sionna

Simone Edwards is director, relationship management, at Sionna Investment Managers. She brings more than 20 years of experience working with institutional clients at both investment management firms and a large insurance company. She was also a consultant to both defined benefit and defined contribution clients at Aon Hewitt. Most recently, she was director, institutional business development, at Scotia Institutional Asset Management.

Gosselin With Total Health Management Team

Virginie Gosselin is a principal consultant with Mercer Canada’s total health management team. With over 15 years of benefits consulting experience, she has expertise in the strategic development and implementation of workplace health and wellness programs.

HRPA Pension Program Offered

In partnership with the HRPA, the Canadian Pension and Benefits Institute is offering ‘The HRPA Pension Certificate Program.’ Attendees will gain an understanding of the legal and regulatory framework that applies to pension and other retirement savings plans, learn tips on best practices in plan administration and governance, and get strategies to reduce risk and liability in plan administration. It takes place October 30 to November 1 in Toronto, ON. For information, visit Pension Certificate