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A new American poll indicates that there will be a contraction of up to 26% of the market for financial advisors, as their clients choose to hold off on investing.

Americans will be investing significantly less in the future, according to the survey released by AlixPartners, a global business advisory firm. AlixPartners says the survey indicates that the financial crisis is likely to have a significant impact on investor behaviour over the next several years.

A staggering 49% of people surveyed (identifying themselves as “previous investors”) reported having either stopped or reduced investing in stocks or mutual funds, and 26% said they had no intention of investing in these bedrock financial vehicles in the next three years.

The survey also found that among higher-income households, those earning more than $75,000 per annum, 21% of previous investors reported having stopped investing altogether in stocks or mutual funds.

“Investors who had placed their trust in the investment industry are cross, cautious and confused,” says Clarence Hahn, AlixPartners’ financial services practice co-lead.

“While the collective loss of wealth in the past year has had a deep impact psychologically as well as financially, the irony is that the lost wealth can be rebuilt only through participation in the markets. Financial advisory firms, therefore, have two key challenges: to figure out who really is going to start investing again and to win back trust by building into their offerings a level of oversight, due diligence and risk management that will eradicate the possibility of similar meltdowns in the future.”

The survey data also indicate the possibility that financial services companies are misspending up to half of their marketing dollars.

“Given that a quarter of people say they won’t invest at all, another quarter are saying they’re unsure at best. In this kind of market, it would behoove financial services companies of all kinds to figure out for sure what part of their marketing is waste and how to focus on finding and pleasing the true investors out there,” Hahn says.

One way forward, he noted, could be to look at the gender gap right now in investing. In the AlixPartners survey, female investors said they are about 50% more likely not to invest over the next three years than male investors — 32% for women versus only 21% for men.

“In general,” Hahn says, “financial institutions should be focused on further tailoring messages, products and channels to real investors only. Rifle shots, not scattershot, are what’s needed right now.”

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M&A players lag bull market: Towers Perrin

Companies that completed deals during the third quarter of 2009, when the MSCI World Index reported a 13.5% return for the quarter, lagged the performance of their deal-avoiding peers by 2.8%, according to data from the first Towers Perrin Quarterly Deal Performance Monitor.

In the second quarter of the year, by contrast, when the market was down overall, the deal-making group outperformed the MSCI World Index by 8.5%. Year to date, deal-makers that have completed transactions since January are outperforming the market by 2.6%.

The Quarterly Deal Performance Monitor, based on an analysis by the U.K.’s Cass Business School, examines the performance of all global transactions with a value greater than $100 million against the MCSI World Index on a quarterly basis.

“The findings underscore the level of volatility in the market and in deal-making broadly, as well as the gap between perception and reality in this area. In our data from the second quarter — when conventional wisdom suggested deals would be problematic — deal-makers reaped some rewards for their courage, relative to the market overall, says Eric D’Amours, Towers Perrin’s head of M&A and restructuring in Canada. “Bargain hunters in early 2009 were able to capitalize on good assets at reduced prices. But as confidence returned to the market, buyers needed to choose targets where they could really add value.”

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Dexia Asset Management appoints Canadian head

Dexia Asset Management has appointed Christophe Vandewiele as head of its Canadian office.

Vandewiele has more than 16 years of international experience in the financial, banking and insurance industries. Prior to joining Dexia in 2005, he held a number of senior positions with several renowned financial organizations in Canada and the Benelux.

“We are delighted to announce the appointment of Christophe Vandewiele to this integral leadership role in our Canadian office,” said Vincent Hamelink, member of the executive committee of Dexia Asset Management in charge of client relations and solutions. “His specialized expertise and leadership experience will serve as valuable assets to Dexia Asset Management Canada’s institutional clients and our organization.”

With C$124 billion in assets under management, Dexia Asset Management is a first-tier European asset manager offering a full range of investment vehicles to institutional investors, including traditional, alternative and structured management, sustainable and responsible investment, and micro-credit funds. The company announced the official opening of its Canadian representative office in September 2009.

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Transamerica tweaks GLWB product, launches new seg funds

Transamerica Life Canada has made changes to its Five for Life guaranteed lifetime withdrawal product, including an enhanced 5% Future Income Escalator (FIE) Bonus. Previously available for just 15 years, the FIE Bonus is now available in any given year, where no withdrawals are made until the end of the year in which the annuitant turns 94.

Transamerica says the change will make Five for Life more appealing to younger investors and will be applied to all existing policies. The Guaranteed Lifetime Withdrawal Benefit (GLWB) fee will increase for new policies, but it will not affect existing policies.

“Five for Life has always been a great solution for mature Canadians who want to accumulate assets and supplement their retirement income. Now the enhanced bonus feature makes it a great accumulation product for younger investors too,” says Geraldo Ferreira, vice president, Investment Products Development at Transamerica Life Canada

With the new extended bonus, investors can purchase a Five for Life contract as early as they want and receive a bonus every year — as long as they don’t make a withdrawal — regardless of market performance.

The rationale behind the GLWB fee increase is put into perspective by Ferreira: “In light of today’s volatile markets, and in order to stay competitive and continue offering this popular product, we have had to follow most of our competitors by applying an increase to the GLWB fee. This increase will apply to new policies only.”

Transamerica also announced the launch of the new Transamerica Guaranteed Investment Funds (GIFs) contract, which can be used on 50 investment choices (including 15 pure equity options), and several distinct asset allocation portfolio solutions.

Along with a significantly expanded lineup, Transamerica GIF contracts provide a 100% Death Guarantee with an annual automatic Reset of the Death Guarantee, 75% Contract Maturity Guarantee, and all of the structural benefits that come with investing in a segregated funds contract.

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Faircourt merges funds

Faircourt Asset Management is proposing that the Faircourt Global Income Advantage Class mutual fund merge with Faircourt Gold Income Corp., a closed-end fund that trades on the Toronto Stock Exchange with the symbol “FGX.”

Upon obtaining shareholder approval and any applicable regulatory requirements, all of the outstanding shares of the mutual fund will be exchanged for shares of FGX, whereupon the fund will be terminated.

“We are focused on creating new value-added solutions for retail investors,” says Charles Taerk, president of Faircourt Asset Management. “We also understand that not all investments garner the same appeal. When it comes to all of our investment options, we do not see appropriate returns or market potential for this specific offering in the marketplace.”

All shareholders remaining on the termination date will receive FGX shares in the amount equivalent to the net asset value per fund share multiplied by the number of shares of the fund held by such shareholders. Shareholders may also redeem their holdings prior to the termination date (and in such circumstances may incur a transaction fee from their financial advisor).

(10/13/09)