Briefly:

Previous Brieflies this week: | MON | TUE | WED | THU |

(May 29, 2008) Assuris has elected two new members and re-elected two members to its board of directors.

The two new members are James M. Farley, Q.C., senior counsel to McCarthy Tétrault LLP and former supervising judge of the Commercial List in Toronto and Greg Traversy, recently retired president of the Canadian Life and Health Insurance Association (CLHIA).

• • •

U.S.–Canadian regulators close to process agreement

(May 29, 2008) The chairmen of four Canadian securities regulators and the chairman of the U.S. Securities and Exchange Commission, announced a schedule for the completion of a process agreement that would open the way for discussions of a potential U.S.–Canada mutual recognition arrangement.

Under the schedule announced today, the process agreement would be concluded in mid-June 2008.

The process agreement, once concluded, would open the way for substantive discussions between the CSA and the SEC on the subject of mutual recognition. Mutual recognition could provide Canadian securities exchanges and certain other Canadian financial service providers with greater freedom to operate in the United States under Canadian regulatory oversight, while U.S. securities markets and certain other U.S. financial service firms could gain greater freedom to operate in Canada under SEC oversight. In this manner, dual regulation, redundancy, and regulatory overlap could be eliminated.

• • •

New supplementary pension plan needed to fill gap

(May 29, 2008) Shortcomings in workplace pensions and individual retirement saving plans mean millions of Canadians face large declines in living standards when they retire.

The answer, according to the C.D. Howe Institute, is a major new supplementary pension plan for Canadians. In the study, The Canada Supplementary Pension Plan (CSPP): Towards an Adequate, Affordable Pension for All Canadians, author Keith Ambachtsheer outlines the factors that jeopardize the ability of Canadians to put away adequate retirement savings and proposes a practical solution to the problem — the CSPP.

The existing shortcomings are twofold, he says. First, an estimated 3.5 million Canadian workers have no workplace pension plan, and are not accumulating sufficient retirement savings to maintain a decent post-work standard of living. The second shortcoming relates to the 5.5 million Canadian households who currently have their retirement assets invested in retail products with high sales and management costs. These costs make it difficult for many of the 5.5 million households to generate adequate pension income at affordable saving rates.

Ambachtsheer argues that the first two “pillars” of Canada’s retirement income system — the universal tax-funded Guaranteed Income Supplement and Old Age Security systems on the one hand and the payroll-deduction-funded Canada and Quebec Pension Plans (CPP/QPP) on the other — should replace 30&3150;40% of working income at the national median wage. Pillar 3 arrangements — private retirement saving through work-place, RPPs and individual RRSPs — should lift the total income replacement rate to at least 50&3150;70% of pre-retirement income, and preferably higher yet. For many Canadians, however, low saving and high costs mean Pillar 3 will fall well short of this goal.

To address this inadequacy, the CSPP would have automatic enrolment, investment and annuitization features. As Ambachtsheer points, out, the CSPP would ideally be nation-wide, but can also work on a subnational or provincial level.

• • •

Canadian private equity report shows increase in activity

(May 29, 2008) McKinsey & Company released its sixth annual report on private equity that reviews the year’s early record-breaking activity in fundraising and investments, the dramatic collapse in debt markets in the second half of the year, and the growing importance of sovereign wealth funds.

The capital managed by Canadian private equity funds in 2007 was $76 billion, up 16% from 2006. Most of the growth was captured in the buyout segment, which managed $47.5 billion.

The total merger and acquisition activity reached $370 billion, a 44% increase.

Canada’s private equity market has consistently outperformed the U.S. over the past five years.

Senior Canadian private equity managers interviewed believe the pace of deal activity will be slower in 2008, reviving only when fundamental issues in global debt and public equity markets are resolved.

• • •

Fees, other problems drive decline in retail bank satisfaction

(May 29, 2008) Poor problem resolution, long wait times and additional fees all contribute to an overall decline in customer satisfaction with retail banks, according to the recent J.D. Power and Associates 2008 Retail Banking Satisfaction Study.

The U.S. study, now in its third year, finds that overall satisfaction with the retail banking experience has decreased considerably since 2007 — down 26 index points on a 1,000-point scale to 737 in 2008.

In particular, dissatisfaction with fees is the most commonly reported problem by customers, as well as the second-most common reason for switching financial institutions. In addition, a rise in the number of problems experienced and problems that go unresolved, increases in wait times to see tellers or speak to phone representatives, and declines in the ease of accessing branches all contribute to the drop in satisfaction.

The study also finds that retail banks that provide high levels of customer satisfaction have more highly committed customers, which are essential to financial growth. Increasing by even 5% the number of customers who are highly committed can lead to incremental deposit growth of 3% annually.

• • •

Affluent unsure of investment fees: study

(May 29, 2008) A large percentage of affluent investors don’t know what fees they are paying for two of today’s most popular investment vehicles, wrap accounts and managed accounts.

However, when asked if they have a good understanding of fees in general, nearly three-quarters (72%) responded that they do, according to a new report, Perception and Understanding of Fees, released today by Spectrem Group, a strategic consulting firm specializing in the affluent and retirement markets.

Specifically, 46% of affluent investors who own mutual fund wrap accounts say they do not know what percentage of their account’s asset value they pay in fees. Similarly, 42% of affluent managed-account owners do not know what percentage of assets they pay in fees for this managed investment vehicle.

The report is based on a survey conducted in February and March 2008 of 500 affluent investors, defined as those with $500,000 or more in investable assets. The data have a margin of error of plus or minus 4.3%.

(05/29/08)