Skip navigation

Monthly Archives: November 2011

Sergio Marchionne, chief executive of Chrysler Group LLC and Fiat SpA, told business leaders Tuesday they have a “moral responsibility” to address the growing income disparity between the rich and poor that is at the heart of the current Occupy Wall Street movement by curtailing excessive executive compensation and corporate greed.

At the same time, he said he would be seeking concessions in 2012 from his own workers during Chrysler’s coming round oflabour negotiations with the Canadian Auto Workers.

While Mr. Marchionne acknowledged the Occupy Wall Street movement itself was at times incoherent, its central tenants of addressing the wealth gap and corporate greed need to be addressed, something he has witnessed himself at a board level over the years.

“I have seen an incredible amount of corporate greed sitting on these boards,” he said after a speech at the Canadian Institute of Chartered Accountants in Toronto. “Things that I never thought were possible. I have seen the most inane displays of greed for the last 10 years, and I think that must stop.”

“If it doesn’t stop, the movement will continue. It will continue to get stronger.”

Mr. Marchionne said he didn’t believe this needed to be addressed by government intervention, but rather at the board level. In fact, he said U.S. President Barack Obama’s support of the Occupy movement was “somewhat unhelpful:’

“As much as you may agree with the ideological level, you cannot agree with the form of the protest. Not if you’re the president of the United States,” the high profile Italian-Canadian executive said.
That is why he encouraged business leaders to address the “root” of the issue at the board level or risk having legislation forced upon them.
“One of the things that also has to be looked at is the whole issue of executive compensation:’ he said. “It’s very, very difficult to have discussions with organized labour about pay packages when you have fundamental inequalities in the system.
Despite Mr. Marchionne eloquently quoting Pierre Trudeau, Leo Tolstoy and Nelson Mandela in his speech in Toronto, he is hardly the everyman himself. He made roughly €3.47-million [$4.9-million] as the head of Fiat SpA, Fiat Industrial and Chrysler in 2010.

At the same time, Mr. Marchionne said he would be looking for concessions from the CAW in their upcoming round of labour negotiations in 2012. He has also been on the record saying he does not support the two tier wage system adopted by Chrysler workers in the U.S., and would like to see a single wage that is lower than the top tier.

“I don’t like the notion of entitlement either:’ he said. “If we’re all in the same boat, then if I’m doing well I will pay you much more than you would have gotten as a tier one. But if we’re in the sewers, don’t expect your role preserved when everyone else is drowning:’

He said that might come in the form of incentives, or profit sharing. But he said the Canadian workers would have to be at least as competitive as their counterparts south of the border if they wanted to continue to win new work, especially now that the dollar is not providing a buffer for manufacturers here.

While he thanked the Canadian and Ontario governments for the $2.9-billion bailout package they gave Chrysler in 2009 during its restructuring, he said Chrysler would be making product decisions based on economics going forward and that Canadian operations needed to be as competitive as the U.S. operations, where wages are substantially lower, to win work. “You cannot have all things. You cannot have a strong currency, cannot have an uncompetitive wage rate and expect Chrysler or all the other car makers to keep on making cars in the country,” he said.

But Ken Lewenza, CAW president, said Mr. Marchionne had better get “concessions” out of his vocabulary heading into the negotiations next year.

”When he makes those kind of comments, then I have to obviously educate him on the productivity of our workforce, and the quality of our workforce, because when it comes to compensation, there is a correlation between good productivity and our compensation:’ he said. “I was always told by the Chrysler management team that as long as you’re productive, wages aren’t on the radar screen.”


Scott Deveau
Financial Post
Nov. 23, 2011
While regulators ponder the complexities of  new rules, investor advocates focus on a quicker solution

IN THE WAKE OF THE GLOBAL financial crisis and assorted financial services-related scandals around the world, the question of imposing fiduciary duties on retail financial advisors has become a hot topic in various countries.

In Canada, the call to hold advisors to a fiduciary duty also has been growing louder. And the Ontario Securities Commission is now studying the issue.

Yet, while requiring advisors to act in the best interests of their clients seems like a logical and appealing concept, actually enshrining this fiduciary duty in law may be no easy task. Experience shows that it often takes years for Canadian securities regulators to agree on seemingly basic reforms; and when this involves possible legislative changes, the pro¬cess is even more prolonged. So, even though the issue has finally reached the regulators’ attention, that doesn’t mean such a duty is likely to be imposed soon.

It may be that regulators could effectively achieve the same result as adopting a statutory fiduciary duty by tightening the existing suitability regime without requiring specific statutory change.

Take, for example, the latest effort to tighten suitability rules by the Mutual Fund Dealers Association of Canada. The MFDA has proposed amendments to its “know your client” rules in order to clarify that suit¬ability obligations do apply to strategies involving leverage, and to set minimum standards for firms and reps in assessing the suitability of leveraging.

The proposed amendments raise the bar on suitability with specific requirements that re¬late to the use ofleveraging strategies, including a requirement that leverage suitability must be assessed when certain “trigger events” occur, such as a change in the rep responsible for a client’s account or when a client transfers assets acquired with borrowed funds into an account.

This is in line with the latest version of the Investment Industry Regulatory Organization of Canada’s proposed client rela!ionship model, which would also require that suitability be reassessed in response to trigger events, and that the obligations apply not just to orders and recommendations but also to overall trading strategies and financing methods.

As regulators take these steps to increase suitability requirements gradually, they are also demanding more from firms.

“Assessing suitability where leverage is involved is more complex,” notes Karen McGuinness, vice president of compliance at the MFDA, “as the [dealer] is responsible for not only assessing the suitability of the investment advice but also the suitability of the leverage strategy. This com¬plexity adds additional compliance risk, given the need for additional supervisory requirements.”

But the Canadian Foundation for Advancement of Investor Rights argues that regulators should be going even further. FAIR Canada’s submission on the MFDA’s proposed amendments says the proposed minimum criteria for leverage suitability is still too low. It recommends the amendments he toughened.

The FAIR Canada submission also recommends: there be a pre¬sumption that leverage is unsuit: able for retail investors, and that the onus to prove that leverage is suitable for a particular client be placed on the rep that is recommending it; that investors be required to meet a minimum level of investment knowledge before they are allowed to use leverage to invest, and that both reps and clients be required to certify that the client has a proper understanding of the risks; and added disclosure of any compensation generated by the use of client leverage.

Pushing the envelope of what is required to ensure suitability in this way would enhance investor protection, and drive firms and reps incrementally closer to that holy grail of investor protection – fiduciary duty. FAIR Canada’s submission suggests that regulators go one step further and implement what it refers to as a “clients first” model, which would “require that all client recommendations be in the best interests of the client ratter than simply requiring that they be suitable.”

As the FAIR Canada submission goes on to explain: “The fundamental principle of the [“clients first”l model would be a general rule Slating thal, in all aspects of their dealings with their retail investor clients, including recommendations, compensation practices. disclosure. management of conflicts of interest and all ongoing aspects of the client relationship (such as performance reporting). financial service providers must put the interests of clients foremost.”

Adopting this sort of rule would better protect investors from inappropriate uses of leverage, the submission continues, and it “could be introduced as an element of suitability, which could reduce the amount of time it would take to implement such a standard.” As well, this method also would be free of the legal baggage that would come with imposing a statutory fiduciary duty.

Pushing the suitability rules in this direction also could help close the gap between the sort of relationship that many clients believe they have with their advisors and the regulatory reality. FAIR Canada’s submission says this sort of change is “essential to remedying the imbalance and misalignment of interests and expectations in current registrant/client relationships.”

Resetting that balance by statute could be very demanding. But regulators may find it’s possible to accomplish it by stealth. IE 


November 2011
 Only 58% of Canadians are either preparing, or are currently prepared financially in case they get sick. 
Despite making the connection between health and personal finances, many Canadians are unprepared financially to deal with a serious illness, according to a recent study from Sun Life Financial Inc.

The second annual Sun Life Canadian Health Index found that 90% Canadians anticipate a financial impact if they were to experience a major or chronic illness, with 53% saying that impact would be significant or perhaps permanent.

Despite these high awareness levels, only 58% of Canadians are either preparing, or are currently prepared financially in case they get sick. And only eight per cent of Canadians have a written financial plan that includes insurance and risk management — two elements that address the economic impact that could come with a major health issue.

“Canadians’ understanding of the connections between health and personal finances are hard-earned,” says Kevin Strain, senior vice president, individual insurance and investments, Sun Life Financial Canada. “We found the majority of Canadians have either personally experienced or have had someone close to them suffer a serious health issue. However, fewer than one in five said they had evaluated or re-visited their finances following the experience.”

Overall, many Canadians expect a long life. The average respondent anticipates living 81.5 years, almost a year more than the Statistics Canada reported average of 80.7 years1. Eighty-six per cent of Canadians agree that they will need to purchase health insurance to help fund their health care needs, as the public system will not be able to maintain current funding levels as the population ages and costs rise. Seven out of 10 respondents think they will probably need some form of long-term care as they age.

The 2011 Sun Life Canadian Health Index™ measures the attitudes, perceptions and behaviours of Canadians relating to their personal health. It’s based on an Ipsos Reid poll conducted between July 27 and September 12 on behalf of Sun Life Financial. For this survey, a sample of 3,233 Canadians aged 18 to 80 years old from Ipsos’ Canadian online panel was interviewed online.
By IE Staff
Nov 16, 2011

In these unsettled economic times, investors may be legitimately asking themselves about the value that a financial advisor brings to the table or, conversely, whether they would be better off trying to invest on their own.”We have been looking at that very question for a couple of years now,” says Joanne De Laurentiis, president and CEO of the Investment Funds Institute of Canada (IFIC).To find out whether people indeed do better with an advisor than they do without, IFIC consulted an exist¬ing Ipsos Reid study of 3,000 households that proved conclusively that yes, you are better off financially when you seek out and heed professional investing advice.

“In terms of experience of those households with advisors, they were in a better financial situation, they had a higher level of savings and investible assets;’ she says.

“It basically cut across all demographic levels: If you were young, under 25 or over 65, if the household had an advisor they were in a better financial position:’ she explains.

The same advisor-led improvement was found regardless of the , original income or wealth position of those using advisors to guide their savings and investments.

The study also found that advisor guided households also typically had more money saved in RRSPs, RESPs and even new investment vehicles such as the TFSA.

“These millions of advisor-client conversations, whether they be short or long, are really helping with the creation of a savings culture;'” Ms. De Laurentiis says.

The IFIC study conducted by Ipsos Reid in 2010 also found that households with advisors were more confident about the future and more comfortable about investing generally. “So the conclusion from that study was that advised households do better than non-advised households:’

Financial advisors are proving more valuable to Canadians as investment products get more complicated and markets seem even more unpredictable than in prior years.

“The complexity of products, the fact that you are making financial decisions really throughout your life, [means investment strategy] is not just about retirement or buying a house;’ says the IFIC president. “You pretty much make financial decisions all your life. When you are making those decisions you have to have thought about whether you are going to use credit or savings, whether you are overextending yourself, and it isn’t something that most of us are really trained to do.”

The decisions people are faced with and would do better making every day include whether to get in the market and what investment products to buy, what types of insurance to buy and how much to save for retirement to ensure that you do not outlive your savings.

IFIC statistics show that more than 85% of mutual funds are purchased through advisors, and annual surveys conducted for IFIC show that investors prefer to buy such funds through an advisor rather than selecting the best funds on their own.

IFIC’s 2011 Canadian Investors’ Perceptions of Mu¬tual Funds and the Mutual Fund Industry 2011 study found that the accumulation of wealth does not precede the process of seeking out professional financial advice. More than one half of respondents had less than $25,000 to invest when they first sought out advice, and fully one-third had less than $10,000.

he survey also found that once mutual fund investors started working with an advisor, that relationship typically lasted 18 years and the relationship grew to including consultation in other financial areas such as budgeting and planning for the future.

Ian Russell, president and CEO of the Investment Industry Association of Canada, says that the upheavals in the markets and the deep and lasting recession in parts of the developed world have made it tougher on investors and made financial advisors and the advice they provide more valuable than ever.

”You really see the value of something when you really need it,” Mr. Russell says. “We are in an environment where there is a great deal of uncertainty, investor angst and stress among all investors:’

“Investors have been impacted by low interest rates, stock markets that are far more turbulent and un¬predictable than ever before and which have affected portfolio values. The … unsettled environment is hitting Baby Boomers particularly hard as they are nearing retirement and are seeking safe and stable returns – exactly the opposite of what markets are delivering,” Mr. Russell says.

“People traditionally would turn to things like government bonds and annuities, which are safe and secure and provide an income stream for them,” he says.

“Of course, the returns on those products have really evaporated and that provides a challenge for them in finding adequate investment products.

“So people are being challenged to compensate for these lower returns by ad¬justing either their portfolio asset mix to generate higher returns or change your standard of living,” he adds.

“These factors are all putting more pressure on Canadians and more and more people are turning to their financial advisors to cope with these unprecedented pressures.”

Paul Brent
National Post

A Sister’s Eulogy for Steve JobsThen, Steve became ill and we watched his life compress into a smaller circle. Once, he’d loved walking through Paris. He’d discovered a small handmade soba shop in Kyoto. He downhill skied gracefully. He cross-country skied clumsily. No more.

Eventually, even ordinary pleasures, like a good peach, no longer appealed to him.Yet, what amazed me, and what I learned from his illness, was how much was still left after so much had been taken away.
I remember my brother learning to walk again, with a chair. After his liver transplant, once a day he would get up on legs that seemed too thin to bear him, arms pitched to the chair back. He’d push that chair down the Memphis hospital corridor towards the nursing station and then he’d sit down on the chair, rest, turn around and walk back again. He counted his steps and, each day, pressed a little farther.

Laurene got down on her knees and looked into his eyes.

“You can do this, Steve,” she said. His eyes widened. His lips pressed into each other.

He tried. He always, always tried, and always with love at the core of that effort. He was an intensely emotional man.

I realized during that terrifying time that Steve was not enduring the pain for himself. He set destinations: his son Reed’s graduation from high school, his daughter Erin’s trip to Kyoto, the launching of a boat he was building on which he planned to take his family around the world and where he hoped he and Laurene would someday retire.

Even ill, his taste, his discrimination and his judgment held. He went through 67 nurses before finding kindred spirits and then he completely trusted the three who stayed with him to the end. Tracy. Arturo. Elham.

One time when Steve had contracted a tenacious pneumonia his doctor forbid everything — even ice. We were in a standard I.C.U. unit. Steve, who generally disliked cutting in line or dropping his own name, confessed that this once, he’d like to be treated a little specially.

I told him: Steve, this is special treatment.

He leaned over to me, and said: “I want it to be a little more special.”

Intubated, when he couldn’t talk, he asked for a notepad. He sketched devices to hold an iPad in a hospital bed. He designed new fluid monitors and x-ray equipment. He redrew that not-quite-special-enough hospital unit. And every time his wife walked into the room, I watched his smile remake itself on his face.

For the really big, big things, you have to trust me, he wrote on his sketchpad. He looked up. You have to.

By that, he meant that we should disobey the doctors and give him a piece of ice.

None of us knows for certain how long we’ll be here. On Steve’s better days, even in the last year, he embarked upon projects and elicited promises from his friends at Apple to finish them. Some boat builders in the Netherlands have a gorgeous stainless steel hull ready to be covered with the finishing wood. His three daughters remain unmarried, his two youngest still girls, and he’d wanted to walk them down the aisle as he’d walked me the day of my wedding.

We all — in the end — die in medias res. In the middle of a story. Of many stories.

I suppose it’s not quite accurate to call the death of someone who lived with cancer for years unexpected, but Steve’s death was unexpected for us.

What I learned from my brother’s death was that character is essential: What he was, was how he died.

Tuesday morning, he called me to ask me to hurry up to Palo Alto. His tone was affectionate, dear, loving, but like someone whose luggage was already strapped onto the vehicle, who was already on the beginning of his journey, even as he was sorry, truly deeply sorry, to be leaving us.

He started his farewell and I stopped him. I said, “Wait. I’m coming. I’m in a taxi to the airport. I’ll be there.”

“I’m telling you now because I’m afraid you won’t make it on time, honey.”

When I arrived, he and his Laurene were joking together like partners who’d lived and worked together every day of their lives. He looked into his children’s eyes as if he couldn’t unlock his gaze.

Until about 2 in the afternoon, his wife could rouse him, to talk to his friends from Apple.

Then, after awhile, it was clear that he would no longer wake to us.

His breathing changed. It became severe, deliberate, purposeful. I could feel him counting his steps again, pushing farther than before.

This is what I learned: he was working at this, too. Death didn’t happen to Steve, he achieved it.

He told me, when he was saying goodbye and telling me he was sorry, so sorry we wouldn’t be able to be old together as we’d always planned, that he was going to a better place.

Dr. Fischer gave him a 50/50 chance of making it through the night.

He made it through the night, Laurene next to him on the bed sometimes jerked up when there was a longer pause between his breaths. She and I looked at each other, then he would heave a deep breath and begin again.

This had to be done. Even now, he had a stern, still handsome profile, the profile of an absolutist, a romantic. His breath indicated an arduous journey, some steep path, altitude.

He seemed to be climbing.

But with that will, that work ethic, that strength, there was also sweet Steve’s capacity for wonderment, the artist’s belief in the ideal, the still more beautiful later.

Steve’s final words, hours earlier, were monosyllables, repeated three times.

Before embarking, he’d looked at his sister Patty, then for a long time at his children, then at his life’s partner, Laurene, and then over their shoulders past them.

Steve’s final words were:


Mona Simpson is a novelist and a professor of English at the University of
California, Los Angeles. She delivered this eulogy for her brother, Steve Jobs,
on Oct. 16 at his memorial service at the Memorial Church of Stanford University.
October 30, 2011