Briefly:

(May 5, 2006) The Bank of Canada’s deputy governor says Canada’s regulatory regime must be guided by principles that are at least as good as, if not better, than other countries. But David Longworth says that doesn’t mean Canada should “blindly import any and all flavours of the month in terms of innovations, not even those originating with its principal trading partner.”

In a speech on Friday in Montreal, Longworth said Canada’s regulatory framework must be adapted to domestic requirements and reflect the diversity of our publicly-traded companies.

“So “yes!” to regulatory requirements that vary with size, but “no!” to regulatory requirements that vary by province,” he said, adding that he welcomed and encouraged ongoing harmonization efforts among provincial securities commissions.

On the issue of enforcement, Longworth said that the Portus, Norshield, and Norbourg affairs “force us to look at ways to strengthen the application of the law in Canada,” adding that developing a culture of compliance and appropriate internal controls within financial institutions isn’t always enough.

“Thus, it is necessary that the behaviour of market operators be monitored and that violators be prosecuted and appropriately punished. A regulatory framework that ensures strict application of the law and that punishes dishonest players will reinforce the credibility of markets and investor confidence.”

• • •

IGM’s Q1 earnings rise

(May 5, 2006) IGM Financial has released its latest earnings report, racking up $185.3 million in the first quarter of the year, up 15.3% from the same period in 2005.

Mutual fund assets under management at March 31, 2006 totaled $99.8 billion, up from $85.2 billion a year earlier, while total AUM increased 19.3% to $107.2 billion.

The Mackenzie division recorded fund sales of $2.8 billion for the first quarter, up from $2.3 billion in the prior year, while Investors Group sold $2 billion in funds, compared to $1.7 billion in Q1 2005.

“Investor confidence remained high through the quarter and sales through the advice channels remained strong. Mackenzie’s mutual fund sales were up 25.2% this quarter compared to the same period in the prior year,” said Charles R. Sims, president and CEO of Mackenzie Financial Corporation. “We continue to benefit from strong relationships with the financial advisors we service.”

The board of IGM has declared a dividend of 37 cents per share on the company’s common shares payable on July 28, 2006 to shareholders of record on June 26, 2006.

• • •

Jovian buys Fairway Asset Management

(May 5, 2006) Jovian Asset Management has announced it is “partnering” with Toronto’s Fairway Asset Management in a deal that will bring $600 million in fresh assets under the Jovian name.

“We are excited to welcome Fairway and its management team to the Jovian community,” said Philip Armstrong, president and CEO of Jovian. “I have a long-standing relationship with Fairway’s management and we have a shared approach to business and a dedication to developing innovative financial solutions for investors.”

Jovian will pay about $23 million in cash, stock and convertible debentures for 100% of Fairway’s Class ‘A’ shares and 49% of Class ‘C’ shares.

Fairway’s key officers and directors will remain with Fairway and Jovian intends to transfer a number of its current product brands into the Fairway business.

• • •

Flaherty names new CDIC chair

(May 5, 2006) Shortly on the heels of his inaugural budget, Finance Minister Jim Flaherty has proposed the appointment of a new chair of the Canada Deposit Insurance Corporation. His choice is Bryan P. Davies of Toronto, Ontario, former Superintendent of the Financial Services Commission of Ontario from 2002 to 2005

“I am delighted to recommend Mr. Davies for the position,” Flaherty said. “He has in-depth financial sector experience in both the public and private sectors. His extensive experience in the financial sector will serve CDIC very well in the coming years.”

Davies’ appointment faces review by the House of Commons Standing Committee on Finance. Ronald Robertson is the CDIC’s current chair.

• • •

Manulife posts massive quarterly profit

(May 4, 2006) Manulife Financial has announced a record first-quarter profit, tallying up net income of $956 million in the first three months of 2006. The $1.20 per share profit marks a 21% increase over the first quarter of 2005, with a 16.3% rate of return on common equity.

“The first quarter results represent an exceptional start to the year. Manulife has again reported record top and bottom line results and all segments contributed to the strong results,” said Dominic D’Alessandro, president and CEO of Manulife Financial. “I am particularly pleased by the exceptional sales levels achieved across the organization in both our wealth management and insurance businesses.”

While the company said earnings were broadly based, some divisions posted massive gains: John Hancock Life Insurance sales were up 78%, to $185 million US ; John Hancock Variable Annuities sales rose up 61% to $2.4 billion US ; and John Hancock Mutual Funds deposits rose 49% to $2.1 billion US.

Not all of the big gains were south of the border, as Canada Group Savings and Retirement Solutions sales hit $342 million, up 92%, while Japan Variable Annuities sales were up 25%, to $1.1 billion US.

Manulife announced it would kick out a pile of that cash to shareholders, with the board approving not only a quarterly 35 cents per share dividend, but a stock dividend as well, which have the same effect as a 2-for-1 stock split. The stock dividend will be paid out June 2, 2006, to shareholders of record as of May 25.

• • •

CARP critiques budget

(May 4, 2006) The Conservative budget tabled on Tuesday does help seniors to an extent, but should have gone further, according to Canada’s Association for the Fifty-Plus (CARP).

The group welcomed the GST cut, but pointed out that its members will only benefit from it if they spend money. An increase in the GST rebate would have been preferred, as it would have put more money in seniors’ pockets, CARP said in a press release. The GST cut could also slow increases in OAS and GIS payments, since these are indexed to the cost of living.

The group also point out that the government could have offered income splitting to those living off RIF income. The seniors’ group also questions the wisdom of the 0.5% increase in the tax rate paid by the lowest income bracket.

“With the aging of the population, support for older workers is the right step to take and CARP will be watching closing for details regarding this valuable initiative,” the group said in its release. “CARP will also keep a close eye on the effects that reduced spending will have on quality of life for seniors.”

• • •

Budget proposals not enough say pension experts

(May 4, 2006) The proposals in the federal government’s 2006 budget to provide solvency relief for federally regulated defined benefit pension plans are a good first step, but don’t go far enough according to industry experts.

“We are pleased that they’re taking some first steps at dealing with the funding crisis for defined benefit plans…and it’s also consistent with what we were pushing for in our own funding report, “Back from the Brink”, last August,” says Scott Perkin, president of the Association of Canadian Pension Management (ACPM).

“But we do believe there are other things that need to be addressed…there needs to be a broader review of the funding of defined benefit plans generally,” says Perkin, citing pension surplus issues as the fundamental problem to be dealt with.

The federal budget, announced by Finance Minister Jim Flaherty on Tuesday, proposed four temporary measures to “help re-establish full funding of federally regulated DB pension plans.” Among the proposals were those permitting plan sponsors to extend the period for making solvency payments to 10 years from five years if they obtain buy in from plan members and retirees, and if they secure the difference between the five and 10-year payment levels with a letter of credit.

Steve Bonnar, a principal at Towers Perrin in Toronto, agrees that while the budget proposals are a step in the right direction, they don’t provide enough relief. He says he would have liked to have seen the government mirror proposals made in Alberta to allow the use of letters of credit “to finance solvency contributions as opposed to just finance the extension of solvency contributions from five to 10 years.”

• • •

Dynamic overhauls lineup

(May 4, 2006) Goodman & Company has announced an overhaul of its Dynamic Funds product line-up, including the termination of 12 funds, with assets to be merged into similar funds.

Four of Dynamic’s Strategic Portfolios (Defensive, Conservative, Balanced and High Growth) will be merged into the Dynamic Focus+ Balanced Fund. The Dynamic Technology Fund and the Focus+ American Fund will be merged into the Power American Growth Fund.

Dynamic Strategic All Equity Portfolio will be merged into Dynamic Focus+ Equity Fund, and Dynamic Strategic Growth Portfolio will be merged into Dynamic Power Balanced Fund.

Dynamic Corporate Bond Fund will be merged into the Dynamic World Convertible Debentures Fund, which will be re-launched as Dynamic Advantage Bond Fund. This move will also require a change to the investment objective.

The company also announced that Dynamic Income Fund and Dynamic International Value Fund will change their names to Dynamic Canadian Bond Fund and Dynamic Global Value Fund, respectively, effective June 23, 2006.

The company is also seeking approval to change the performance benchmark for he Dynamic Focus+ Resource Fund, from FTSE World Resources Total Return Index to the Goldman Sachs Natural Resource Index.

Dynamic Canadian Dividend Fund is to be merged with the Dynamic Canadian Dividend Fund; Dynamic QSSP Fund will be folded into Dynamic Power Small Cap Fund; and DMP Canadian Dividend Class will merge with DMP Canadian Value Class. The Dynamic SAMI Fund will be terminated.

• • •

AGF names new Harmony U.S. equity manager

(May 4, 2006) AGF Funds has announced a new manager for the U.S. equity pool in its Harmony wrap program. Systematic Financial Management, based in Teaneck, New Jersey, will take over that portion of the pool, effective May 4, 2006.

“Systematic was chosen for their disciplined investment style that has provided consistent above benchmark results over the long-term,” said Larry Herscu, senior vice-president, product management and marketing, AGF Funds Inc. “Systematic’s investment philosophy focuses on identifying companies exhibiting a combination of attractive valuation and a positive earnings catalyst.”

Systematic’s team approach will be led by its CEO Kevin McCreesh, with six more portfolio managers and six equity analysts working on the value side of the Harmony U.S. Equity Pool.

• • •

Standard offers risk analysis on group plans

(May 4, 2006) Standard Life has announced the launch of Portfolio Risk Management, a new range of online tools and services for group retirement plan members. The system advises plan members of the risks their portfolio faces — using an “R-meter” — and allows them to maintain their preferred risk/return position.

“Some of us accept greater risk with the expectation of higher returns, while others aren’t as comfortable with market fluctuations and opt for a more moderate approach,” said Anthony Cardone, senior vice president, group savings and retirement. “Portfolio Risk Management helps maintain mixes that fit members’ personal comfort levels and goals.”

The R-meter shows the aggressive, moderate or conservative risk/return positions for a member’s investments, along with analysis and suggestions for keeping them aligned.

• • •

Mitchell takes the helm at Worldsource Financial

(May 3, 2006) Worldsource Financial Management has named industry veteran Andy Mitchell as its new president and COO. Mitchell was president of Performa until that firm was taken over by Desjardins Financial Security last month. Before Performa, Mitchell was vice-president of sales at GGOF.

Based in Markham, Mitchell will be responsible for the strategic direction and overall operations of the mutual fund dealer. “Our mission has always been to be the dealer of choice amongst advisors by offering them a diversified suite of products and services,” the company said in a statement. “In this role, Mr. Mitchell will work closely with senior management to maintain Worldsource’s position of service excellence and continued growth.”

Mitchell will also work closely with the heads of Worldsource Securities and Worldsource Insurance, the other subsidiaries of Worldsource Wealth Management.

• • •

Foreign banks increase share of Canadian market

(May 3, 2006) Foreign banks have made significant inroads into Canada’s deposit-taking sector, but domestic banks continue to dominate the market, according to Statistics Canada.

From 1997 to 2004, foreign banks’ share of the Canadian market increased from 5.7% to 7.9%. “The fastest growing foreign bank institutions in Canada offered credit card and other electronic financial services or specialized in corporate and institutional finance,” StatsCan says. “Mergers and acquisitions have helped others to grow.”

In 1999, the federal government allowed foreign-owned banks to establish full service branches in Canada, rather than restricting them to forming subsidiary companies.

Although domestic banks have suffered “relatively small losses” due to the increased competition, Canadian financial institutions have also been going global, StatsCan notes, and their share of activities abroad has been increasing along with foreign direct investment in other countries.

Between 1997 and 2004, the total real value of services produced by the domestic banks rose at an annual average rate of 1.8% in Canada. Worldwide, however, the gain was more than double that pace at 4.8%.

• • •

RBC sets up private banking office in Montreal

(May 3, 2006) RBC is expanding its presence in Montreal, opening a Global Private Banking division to meet the growing demand from internationally-based clients with family or business interests in Canada.

Sixteen financial professionals will provide customized financial services for high-net-worth individuals and select institutions with international interests.

“We are responding to our client needs by leveraging our roots in Montreal,” said Michael Lagopoulos, president and CEO, Global Private Banking. “We have provided domestic financial services here for more than a century. Now, with a growing number of our clients based in Europe, the Middle East, Asia and South America, we face a demand for greater access to our services through Montreal. Establishing an internationally focused team reflects the diversity and international sophistication of our client base in this city.”

The Montreal office will be managed by Scott MacKenzie, who has 15 years of experience in foreign exchange, equities, insurance, commercial banking and research.

RBC Global Private Banking has been increasing its presence in Canada over the past year with the expansion of its international centres in Vancouver and Toronto. Around the world, Global Private Banking now has 30 offices in 21 countries.

• • •

Desjardins introduces CI insurance for children

(May 3, 2006) Desjardins Financial Security is launching a new product for parents of children with a critical illness.

Harmony New Generation will pay a lump sum amount to the parents of a child who has been diagnosed with one of the critical illnesses covered under the contract to allow them to stay with their child.

“Besides wanting to get better, a sick child’s greatest wish is to have their parents nearby. With Harmony New Generation, now more than ever before, parents will be able to stay by their child’s side and support them through the illness,” says Nathalie Tremblay, health products manager, individual insurance.

In addition to the 25 illnesses covered by the Harmony critical illness insurance for adults, the new product covers three childhood diseases: cystic fibrosis, autism and Rett syndrome. Coverage for type 1 diabetes, cerebral palsy and muscular dystrophy is optional.

• • •

Group savings plan members missing out, Fidelity says

(May 2, 2006) Nearly half of group savings plan members are not taking full advantage of matching contributions from their employers, according to an analysis of plans administered by Fidelity Investments.

In some instances, employees are forgoing as much as $1,600 a year in matching contributions from their employer, Fidelity says. According to the study, more than 37% of members eligible for a matching contribution were not contributing anything to their group savings plan. And 12% who were contributing to the plan were not maximizing those contributions.

“Increasingly, the responsibility of saving for retirement is being shouldered by individuals. Yet when presented with what amounts to free money from their employer, almost half of Canadian group savings plan members are simply choosing to not take full advantage of this benefit,” said Fidelity’s Stuart Graham, executive vice-president, retirement services. “The biggest challenge that employers face today is that many plan members lack the interest, knowledge, time or skills to make the most appropriate choices when it comes to their group plan.”

Fidelity is introducing a new online tool in Canada next month, called NetBenefits, intended to help employees enroll in their company plan, maximize their contributions, and make appropriate investment choices.

In 2005, the U.S. NetBenefits site was accessed more than 160 million times by the 18 million U.S employees and retirees in plans serviced by Fidelity.

• • •

Former mutual fund rep banned, fined

(May 2, 2006) The MFDA has permanently banned former mutual fund salesperson Scott Stevens for misappropriating funds from clients. The total sum involved was $77,500, which Stevens’ firm, PFSL Investments, reimbursed to the four clients involved.

Stevens worked for PFSL for 10 years before he was terminated in March 2005 for stealing $30,000 from a client couple, $30,000 from another client, and $17,500 from a fourth client, a retiree.

Stevens has failed to pay back the missing funds or co-operate with the MFDA’s investigation. He was also fined $61,000 and $2,000 in costs, though the MFDA does not have the legal power to collect fines from reps who have left the industry.

• • •

Mackenzie announces changes to mortgage fund

(May 2, 2006) Mackenzie Investments has appointed a new in-house portfolio manager for the Mackenzie Sentinel Mortgage Fund, effective immediately.

Chris Kresic, senior vice president, investments, heads Mackenzie’s fixed income team and is primarily responsible for the Sentinel Group of Funds, which includes most of Mackenzie income products.

Kresic, who has been with Mackenzie since 1997, also manages the Sentinel Bond Fund, Sentinel Real Return Bond Fund and co-manages the Sentinel Income Fund.

M.R.S. Trust Company, the fund’s previous sub-advisor, will continue to act as mortgage administrator for the fund’s mortgage investments.

• • •

Don’t ignore tax filing deadline, expert warns

(May 1, 2006) May 1 is the deadline for filing personal income tax returns and there are plenty of good reasons to not to miss the midnight cut-off, says tax expert Evelyn Jacks.

Failing to file could lead to tax evasion penalties on top of interest and late filing charges, says Jacks, president of The Knowledge Bureau.

CRA’s late filing charge is 5% of unpaid taxes plus 1% per month, to a maximum of 12 months. For repeat offenders (subsequent failure to file on time within a three-year period), the penalty is 10% of unpaid taxes plus 2% per month, to a maximum of 20 months.

Jacks says even for those expecting a refund, it makes sense to file on time.

“Why would you continue to give the government an interest-free loan for the use of your money, which is being eroded by inflation?,” she asks. “Why would you put yourself at risk for expensive late filing penalties if you’re wrong and do owe additional taxes?”

• • •

Budget could mean millions for Canadian charities

(May 1, 2006) Community Foundations of Canada says eliminating the capital gains tax on donations of stock could put millions of dollars into the hands of Canadian community foundations and the communities they support.

In 1997 the federal government reduced capital gains tax on donations of stock by 50%. The result was a three fold increase in gifts of publicly traded securities to charities, from $69.1 million to $200.3 million between 1997 and 2000. Donations of stock jumped from 1.6% to 3.9% of all donations.

“Some of the largest charitable donations in Canadian history were the result of donations of shares,” says Monica Patten, president and CEO of the community foundation network. “If a reduction in capital gains tax can unleash that kind of giving, imagine what could happen if it were eliminated entirely.”

Last year community foundations received more than $40 million in gifts of appreciated securities. “The prime minister reiterated his commitment to the capital gains tax change in a recent speech. We’re hoping that signals it will be part of tomorrow’s budget.”

• • •

New wealth management firm starts up in Winnipeg

(May 1, 2006) Two Manitoba advisors have launched Blackwood Wealth Planning in Winnipeg. Founded by Patrick O’Connor and Mike Couture, the firm focuses on specific processes to address the complete financial picture of incorporated individuals, including business owners, doctors, dentists and other professionals.

“Our proprietary planning process is unique in that it offers our clients the opportunity to truly gain clarity around their key goals, before they begin the complex task of selecting the tactics and tools to put their plan into action,” says O’Connor. “Our planning process starts at a different place.”

O’Connor says business owners and incorporated individuals are in a unique position because their personal and business financial situations are closely related which leads to complex tax and financial issues. Blackwood plans to address use in-house expertise in all areas of financial management, including group benefits, investment planning, living benefits and wealth and estate planning.

• • •

Advisor’s Edge, Knowledge Bureau to present conferences

(May 1, 2006) Advisor’s Edge and The Knowledge Bureau are teaming up to produce a series of one-day continuing education conferences for advisors across Canada.

The first in the series, Take This Case and Solve It, will focus on retirement income planning for business owners and executives. Delegates will analyze a detailed case study from different perspectives. This conference will take place in Calgary in December.

“We are very excited to leverage The Knowledge Bureau’s top notch speakers to bring high-quality conferences to the advisor market that we serve,” says Garth Thomas, publisher of the Advisor Group.

Evelyn Jacks, president of The Knowledge Bureau, says she looks forward to “delivering relevant and issues-focused educational content that maximizes audience participation and peer-to-peer strategic thinking.”

• • •

Investors Group adds funds, changes mandates

(May 1, 2006) Investors Group has launched two new actively managed Canadian equity funds and announced mergers and changes to several others.

The new Investors Canadian Growth and the new IG Mackenzie Maxxum Canadian Equity Growth funds will replace the Investors Summa Fund and IG Mackenzie Select Managers Canada Fund in the company’s Alto and Allegro portfolios. The growth oriented funds will be available for investment on a stand-alone basis by the end of the summer.

Among the list of other changes, Investors Group says it plans to add the Investors Global Dividend Fund to the Alto Monthly Income and Growth Portfolio and the Alto Monthly Income and Enhanced Growth Portfolio, and assume day-to-day management responsibilities on the Investors Tactical Asset Allocation Fund, formerly managed by Pasadena, California based First Quadrant LP.

The Winnipeg-based company plans to change the name of the Investors Mortgage Fund to Investors Mortgage and Short Term Income Fund and broaden the fund’s mandate by reducing its mortgage content and increasing investments in fixed-term and liquid debt securities. IG also intends to merge the IG AGF International Bond and IG Templeton World Bond funds into the Investors Global Bond Fund, saying the original investments had similar or identical investment objectives and strategies were specifically structured to meet foreign content rules.

• • •

New Brunswick regulator fines advisor

(May 1, 2006) The New Brunswick Securities Commission has approved a settlement agreement with former Investors Group advisor Alain Brien, who has been ordered to pay a $10,000 penalty for trading without being registered in the province.

The regulator says Brien was trading on behalf of 16 New Brunswick residents between March 2003 and March 2005, even though he was working with Investors Group in Quebec at the time. None of Brien’s clients reported financial suffering while working with the respondent but the commission says he misled investigators about his business dealings in the province.

Investors Group was ordered to pay an administrative penalty in February for trading securities and permitting its sales staff to trade in securities without being registered. The settlement also bans Brien from trading securities in New Brunswick for 10 years.

• • •