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(November 25, 2008) Canada has not yet felt the full force of the world financial crisis, but it will soon, according to reports from the Organization for Economic Co-operation and Development, which has earmarked Canada to have a full-blown recession in 2009.

The OECD has predicted Canada’s gross domestic product will decline by 1.6% in the fourth quarter, 1.4% in the first quarter of 2009 and 0.3% in the second quarter before returning to growth, for a total 0.5% decline on the year.

In its biannual economic outlook, the OECD writes that Canada “has been contracting since August 2008, and slack is projected to grow until the global financial crisis has run its course and external demand bounces back in 2010. The domestic banking and housing sectors are in relatively good shape, however, and no government bail-outs have taken place.”

The good news is the OECD expects a full recovery by 2010 and expects Canadian GDP to grow by 2.1% that year.

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RBC tweaks wealth management team

(November 25, 2008) The country’s largest wealth management company has reorganized its senior management.

RBC has appointed Brenda Vince as the head of Wealth Management Strategy. Doug Coulter has been appointed president of the new RBC Asset Management, and Damon Williams has been appointed president of subsidiary fund company Phillips, Hager & North. The new appointments are effective February 1, 2009.

Vince, who currently helms RBC Asset Management, the largest fund company in Canada, will now oversee the wealth management strategy for the entire wealth management division of RBC.

“Brenda has been tremendously successful in building RBC Asset Management into an industry leader in Canada,” says George Lewis, group head, RBC Wealth Management. “With her exceptional strategic insight, client focus, experience and commitment to operational excellence, Brenda will now be a great asset to all of our wealth management businesses as we continue to execute our strategy to extend our lead in Canada, expand in the U.S. and internationally, and attract and retain experienced professionals across all of our businesses.”

Darrell Oswald and Patrick Keeley, co-heads of the combined discretionary wealth management business of RBC and Phillips, Hager & North (PH&N), will continue to report to Vince.

Doug Coulter, who is replacing Vince, is currently president and CEO of RBC Direct Investing.

“Doug has what it takes to maintain and build RBC AM’s leadership among Canadian asset management companies, to continue to serve the investment needs of all of our clients and to grow our global investment capabilities,” says John Montalbano, chief executive officer, RBC Global Asset Management and the departing president of PH&N. “His proven ability to manage a dynamic organization in a highly competitive marketplace will be valuable as RBC Asset Management continues its growth strategy.”

Williams is being appointed president of Phillips, Hager & North (PH&N), in addition to an expansion of his current role as head of institutional management for PH&N to include RBC Asset Management.

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BC’ers most likely to open a TFSA: Survey

(November 25, 2008) New research from Fidelity Investments shows that interest in the upcoming tax-free savings account is not evenly distributed across the country.

According to the fourth annual Fidelity Canada Retirement Survey, close to half (44%) of British Columbians who are aware of TFSAs plan on opening this new account, compared to 36% of Ontarians and 35% of Quebecers. Only one out of three (30%) from the Prairie provinces and less than one in four (24%) Atlantic Canadians are likely to open a TFSA.

Fidelity, which is set to offer its own tax-free savings accounts, also examined what type of investments Canadians are intending to deploy. A little more than a third (38%) indicated they will hold equity-driven investments, including mutual funds and individual stocks, to help grow their savings. Guaranteed income certificates (GICs) were even more popular, with 41% opting to put those in their TFSAs. Twenty-six per cent plan to have plain cash in their TFSAs, and 15% intend to invest in bonds.

“Whether investors choose investments for their TFSA that aim to produce interest income, capital gains or a combination of both, they can achieve their objectives with mutual funds,” said Darren Farkas, vice-president of product solutions for Fidelity Investments Canada. “Investors should work with their financial advisors to assess what type of TFSA investment will help them meet their individual financial goals.”

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Pension Investment Association calls for pension reform

(November 25, 2008) The Pension Investment Association of Canada (PIAC) has written to all of the finance ministers across the country asking them to take action to ensure the stability of Canada’s retirement system.

PIAC says the recent market events and worldwide credit crunch have the potential to put severe strain on Canada’s pension system and urgent action is required to ensure that pension plans and, in the case of private-sector plans, the employer sponsors behind them are able to weather the current financial crisis.

In the short term, PIAC is calling on all governments to provide temporary relief for a five-year period to plan sponsors in the currently unstable and fragile market environment. First, it wants the governments to extend the amortization of solvency deficits to 10 years for all pension plans. It also wants governments to provide a solvency discount rate based on AA-rated corporate bond yields that have a similar duration to that of the pension plan liabilities.

(11/25/08)