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Monthly Archives: January 2015

 

 

HERE IS THE BACKGROUND TO THE FOLLOWING ARTICLE IN THE NATIONAL POST ON JANUARY 31, 2015 BY DAVID PETT:

 

Prior to 1981 companies controlled the ‘captive’ agents who sold life insurance, annuities and segregated funds investment products. Agents could sell only the proprietary products offered by their company – and no other.

In 1981 a new life insurance product (Universal Life) became available that had a variety of market driven investment options.  It required professional advice – including advice on alternative products which captive agents could not sell.  

Over time agents left the captive agency distribution system to become independent agents/advisors/brokers. 

Today most independent agents are sole proprietors.

Today there are very few life insurance companies (5% to 10%) that employ ‘captive’ agents.

Today’s environment requires a professional fiduciary based advisory team format – that cannot exist within a sole proprietorship i.e. one advisor. It provides a generalist approach in a specialist market environment.

Captive agents are paid continuing commissions.

Fiduciary based advisors are paid a fee-for-service.

The new legislation is moving toward fee-for-service only as exists in the UK.

The current advisor will have great difficulty making the necessary transitions.

Most sole practitioners are ill prepared for succession.

The elimination of trailer commissions will make a sale very difficult.

Hence the title of the following column in the National Post by David Pett.

 

WHY YOU MAY BE SAYING GOODBYE TO YOUR FINANCIAL ADVISOR.

By David Pett

FP INVESTING

THE NATIONAL POST

JANUARY 31, 2015

 

Greg Newman doesn’t regret becoming a financial adviser instead of a lawyer.  Since graduating from law school in the mid-’90s, he’s carved out a comfortable life as an associate portfolio manager and director of The Newman Group,  a Toronto based affiliate of Scotia McLeod, and still feels good going to work most days.

But if he had to do it all over again starting now, he’s not entirely sure he’d make the same career choice. Many others likely share that thought.

New industry regulations, shifting demographics and ongoing product and technology innovations are threaten­ing the status quo of what was once one of the country’s most secure, if not sure­ thing, professions.

”When I made the call 18 years ago, I knew I had a good chance to be success­ful;’Mr. Newman said. “But the business is changing. It’s so much harder to start from scratch now than it was back then:’

Sweeping reforms being both enacted and contemplated by the country’s regula­tors in order to establish greater transpar­ency between advisers and their clients are one big reason for that.

Advisers are especially bracing for the second part of the Customer Relationship Model project (CRM2), which has already begun and will continue to be phased in over the next two years.

The new rules call for advisers to show more clearly how much clients are paying for investment advice, and also how their adviser receives that compensation, wheth­er directly from the client in a fee-for-ser­vice model or indirectly through trailing commissions paid by the fund makers, but ultimately passed on to clients.

Many are also anxious about the pos­sibility of a future outright ban on trailer fees as a form of compensation.

“We think such a ban is coming, and sooner than many think,” said Robert Sedran and Paul Holden, equity analysts at CIBC World Markets, in a report pub­lished last fall.

They believe the combination of in­creased disclosure and an elimination of trailer fees will undoubtedly shake the in­dustry and lead to structural changes in terms of fee levels, the products investors purchase, and the manner in which they make those purchases.

“That is not to say that there will be a massive loss of assets for the mutual fund industry or for advice channels. Both will remain in demand;’ they said. “Rather, it is more likely to result in    potentially sig­nificant customer churn that creates win­ners and losers:’

Advocis, the Financial Advisors Asso­ciation of Canada, said new regulations will have a particularly profound effect on small and medium-sized advisers, many of whom may be forced out of busi­ness as a result. It commissioned a study by PricewaterhouseCoopers last year that found the number of advisers in the United Kingdom fell by 25% when com­missions on retail investment products were banned and new professional edu­cation requirements were introduced.

But Andrew Kriegler, chief executive of the Investment Industry Regulatory Industry of Canada, believes advisers and investors alike are largely ready to adjust and will continue adapting as long as they have the flexibility to do so in a way that makes as much sense as possible.

“You have to be cautious. The process of evolution is something that is continuous and positive over time;’ he said. “There are obviously individual circumstances that don’t work as well as they did in the world that preceded this and many will have to change and in some cases those circumstances may no longer be viable:’

It’s already expected that adviser head­ counts due to retirement alone will dra­matically fall in the years ahead. The aver­age age of U.S. financial advisers is over 50 and roughly one-third are expected to retire within 10 years.

Reg Jackson, a senior investment ad­viser and portfolio manager with the JMRD Wealth Management Team, a Na­tional Bank Financial affiliate, said a sim­ilar trend is playing out here in Canada.

Many of the country’s older advisers, for example, may just decide to retire ear­ly due to the burden and cost of comply­ing with the new regulations.

A recent adviser study by BlackRock Inc. found that 41% of those polled list­ed regulatory change as a primary focus over the next 12 months.

“We’re seeing a shift in business mod­el,”  said Warren Collier, the new head of iShares in Canada.

In particular, he’s noticed a move to­ward fee-based structure versus trans­action-based models dependent on com­missions. Advisers also want to keep costs down so they are looking at exchange­ traded funds as an alternative to higher­ cost mutual funds and other investments.

“Advisers need to streamline their prac­tices,” said Mark Yamada, chief execu­tive of Pur Investing Inc.”They can’t add much value managing money for the time they spend trying:’

As a result, many experienced brokers are turning to low-cost model portfolios created by ETF providers, while others are contemplating alliances with Canada’s growing throng of robo-advisers that can provide cheap web-based portfolios.

“There are independent advisers that would love to work with us;’ said Michael Katchen, founder and chief executive of Wealthsimple Financial Inc. in Toronto. “They see advice as being the value they provide clients, not necessarily invest­ment management:’

Robo-advisers are also likely to benefit when investors finally see what they’re paying for advice as well as from the growth in passive investing over active management and even the rise of the               mil­lennial generation.

“We believe this channel appeals to the millennials, a group that is growing in both affluence and in its appetite for investment products;’ CIBC’s Mr. Sedran and Mr. Holden said in their report. “This group is web-savvy and is set to become more affluent, both as their careers de­velop and as their parents age:’

The changing landscape is also be­ coming increasingly difficult for an indi­vidual adviser to navigate, said JMRD’s Mr. Jackson.

He started in the business 20 years ago when he estimates 90% of advisers were independent stock brokers doing mostly transactional work and who “maybe had an assistant.

Today, Mr. Jackson believes 90% of ad­visers are working in teams, if not mega teams, to provide a whole range of prod­ucts and services.

“I know standalone advisers who do an exceptional job, but it is a dying breed without question;’he said. “You cannot be all things to all people on your own:‘

His team consists of 10 people spread out over three Ontario offices in Toronto, London and Waterloo. It includes four portfolio managers, two investment advis­ers and four client service representative, all of whom share financial planning and business development duties.

But Mr. Jackson said they almost need to hire a technology officer to monitor and keep the team’s website up to date and help improve online access for cli­ents. That person would also be in charge of social media and the new apps and smartphone features that are needed to service their clients.

“It really is a long list and a huge time commitment when you start to think about it;” he said.

Mr. Newman agrees that scale is para­mount  to  success  going forward.  It used to be possible to make a living from a $40 million book of business, but that may not be enough anymore.

”It’s a tough road for everyone, but the demands of the business today may lead to smaller guys with smaller platforms giving up;” he said.

Financial Post

dpett@nationalpost.com

 

 

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WHY YOU MAY BE SAYING GOODBYE TO YOUR FINANCIAL ADVISOR

By David Pett

FP INVESTING

THE NATIONAL POST

JANUARY 31, 2015

 

Greg Newman doesn’t regret becoming a financial adviser instead of a lawyer.  Since graduating from law school in the mid-’90s, he’s carved out a comfortable life as an associate portfolio manager and director of The Newman Group,  a Toronto based affiliate of Scotia McLeod, and still feels good going to work most days.

But if he had to do it all over again starting now, he’s not entirely sure he’d make the same career choice. Many others likely share that thought.

New industry regulations, shifting demographics and ongoing product and technology innovations are threaten­ ing the status quo of what was once one of the country’s most secure, if not sure­ thing, professions.

”When I made the call 18 years ago, I knew I had a good chance to be success­ ful;’Mr. Newman said. “Butthe business is changing. It’s so much harder to startfrom scratch now than itwas back then:’

Sweeping reforms being both enacted and contemplated by the country’s regula­ tors in order to establish greater transpar­ encybetween advisers and their clients are onebig reason for that.

Advisers are especially bracing for the second part of the Customer Relationship Model project (CRM2), which has already begun and will continue to be phased in over the next two years.

The new rules call for advisers to show more clearly how much clients are paying for investment advice, and also how their adviser receives that compensation, wheth­ er directly from the client in a fee-for-ser­ vice model or indirectly through trailing commissions paid by the fund makers, but ultimately passed on to clients.

Many are also anxious about the pos­ sibility of a future outright ban on trailer fees as aform of compensation.

“We think such a ban is coming, and sooner than many think,” said Robert Sedran and Paul Holden, equity analysts at CIBC World Markets, in a report pub­ lished last fall.

They believe the combination of in­ creased disclosure and an elimination of trailer fees will undoubtedly shake the in­ dustry and lead to structural changes in terms of fee levels, the products investors purchase, and the manner in which they make those purchases.

“That is not to say that there will be a massive loss of assets for the mutual fund industry or for advice channels. Both will remain in demand;’ they said. “Rather, it is more likely to result in potentially sig­ nificant customer churn that creates win­ ners and losers:’

Advocis, the Financial Advisors Asso­ ciation of Canada, said new regulations will have a particularly profound effect on small and medium-sized advisers, many of whom may be forced out of busi­ ness as a result. It commissioned a study by PricewaterhouseCoopers last year that found the number of advisers in the United Kingdom fell by 25% when com­ missions on retail investment products were banned and new professional edu­ cation requirements were introduced.

But Andrew Kriegler, chief executive of the Investment Industry Regulatory Industry of Canada, believes advisers and investors alike are largely ready to adjust and will continue adapting as long as they have the flexibility to do so in a way that makes as much sense as possible.

“You have to be cautious. The process of evolution is something that is continuous and positive over time;’ he said. “There are obviously individual circumstances that don’t work as well as they did in the world that preceded this and many will have to change and in some cases those circumstances may no longer be viable:’

It’s already expected that adviser head­ counts due to retirement alone will dra­ matically fall in the years ahead. The aver­ age age of U.S. financial advisers is over 50 and roughly one-third are expected to retire within 10years.

Reg Jackson, a senior investment ad­ viser and portfolio manager with the JMRD Wealth Management Team, a Na­ tional Bank Financial affiliate, said a sim­ ilar trend is playing out here in Canada.

Many of the country’s older advisers, for example, mayjust decide to retire ear­ ly due to the burden and cost of comply­ ingwith the new regulations.

A recent adviser study by BlackRock Inc. found that 41% of those polled list­ ed regulatory change as a primary focus over the next 12months.

“We’re seeing a shift in business mod­el,”  said Warren Collier, the new head of iShares in Canada.

In particular, he’s noticed a move to­ ward fee-based structure versus trans­ action-based models dependent on com­ missions. Advisers also want to keep costs down so they are looking at exchange­ traded funds as an alternative to higher­ cost mutual funds and other investments.

“Advisers need to streamline their prac­ tices,” said Mark Yamada, chief execu­ tive of Pur Investing Inc.”They can’t add much value managing money for the time they spend trying:’

As a result, many experienced brokers are turning to low-cost model portfolios created by ETF providers, while others are contemplating alliances with Canada’s growing throng of robo-advisers that can provide cheap web-based portfolios.

“There are independent advisers that would love to work with us;’ said Michael Katchen, founder and chief executive of Wealthsimple Financial Inc. in Toronto. “They see advice as being the value they provide clients, not necessarily invest­ ment management:’

Robo-advisers are also likely to benefit when investors finally see what they’re paying for advice as well as from the growth in passive investing over active management and even the rise of the mil­ lennial generation.

“We believe this channel appeals to the millennials, a group that is growing in both affluence and in its appetite for investment products;’ CIBC’s Mr. Sedran and Mr. Holden said in their report. “This group is web-savvy and is set to become more affluent, both as their careers de­ velop and as their parents age:’

The changing landscape is also be­ coming increasingly difficult for an indi­ vidual adviser to navigate, said JMRD’s Mr. Jackson.

He started in the business 20 years ago when he estimates 90% of advisers were independent stock brokers doing mostly transactional work and who “maybe had an assistant

Today, Mr. Jackson believes 90% of ad­visers are working in teams, if not mega teams, to provide a whole range of prod­ ucts and services.

“I know standalone advisers who do an exceptional job, but it is a dying breed without question;’he said. “You cannot be all things to all people on your own:

His team consists of 10 people spread out over three Ontario offices in Toronto, London and Waterloo. It includes four portfolio managers, two investment advis­ ers and four client service representative, all of whom share financial planning and business development duties.

But Mr. Jackson said they almost need to hire a technology officer to monitor and keep the team’s website up to date and help improve online access for .cli­ ents. That person would also be in charge of social media and the new apps and smartphone features that are needed to service their clients.

“It really is a long list and a huge time commitment when you start to think about it;’ he said.

Mr. Newman agrees that scale is para­ mount  to  success  going forward. It used to be possible to make aliving from a $40 million book of business, but that may not be enough anymore.

”It’s a tough road for everyone, but the demands of the business today may lead to smaller guys with smaller platforms giving up;’ he said.

Financial Post

dpett@nationalpost.com

T’witter.com/davidpett1

 

THE BOTTOM LINE

CANADIANS MUST TAKE MORE RESPONSIBILITY FOR A FINANCIALLY SECURE RETIREMENT

CANADIANS ARE ILL PREPARED TO FUND THEIR INCOME REQUIREMENTS

DURING THEIR  2ND  30 – 40 YEARS I.E. FROM AGE 55 OR AGE 65 TO AGE 95

 

 

As Canadians live longer, they will need to be savvy about their finances to enjoy security in their golden years, a recent Fidelity Investments retirement survey suggests.

Noting that at the start of 2015 we are now half-way to the start of a new decade, Fidelity Investments has shared some trends gleaned from a survey of 1,380 Canadians age 45 and older, which it main­tains will shape the remainder of this decade.

Peter Drake, Fidelity’s Toronto­ based vice-president , retirement and economic research, cited a number of risks to a financially se­cure retirement , with longevity at the top of the list. “With an       aver­age retirement age  of  62  today,” he said, “many Canadian face re­tirements as long as their working lives.”

The effects of inflation was  found to be a major concern among those surveyed . “Inflation is a huge problem for people in retirement ,” Drake  said.  “Even  a  relatively low inflation rate of 2 % each year would wipe out 40% of a retiree ‘s purchasing power  over 25 years.”

And he noted  that  the  cost of health care, especially in the final years, could also severely under­mine  retirement  savings.

The bottom line is that Canadians must now take greater responsibil­ity for their retirement.  The  sur­vey found that 47 % of those who haven’t yet retired plan to work in their “retirement ” years. But plan­ning to work in retirement , Drake said, is not a valid retirement plan. The survey found  that although one in five retirees said they would like to work if they could, 38% cited health problems that pre­vented  them  from  working;  23% said  employers  are  not  interested  In employing retirees; 15% said they couldn’t find jobs; and 12% said caring for a family member prevented them from working.

Tax management

Tax management is critically important for Canadians who are entering retirement , noted Peter Bowen, Fidelity’s vice-president, tax research and solutions. “The key is maximizing after-tax cash flow,” he said. “Tax-bracket  management can minimize taxes over the retirement timeframe.  Any income above the Old Age Security claw back is subject to a very high tax rate.”

And it is crucial that investment portfolios have the right asset al­location for the retiree’s risk toler­ance,  and  the  appropriate  rate of withdrawal.

The  survey  showed  that  only 10% of retirees have a written plan to transfer wealth to another gen­eration   in  a  tax-efficient way.   Not everyone has a will, but those who do may not be transferring their assets in a tax-efficient way, said Jason Stahl, Fidelity’s market research manager.

Drake  noted  that  succession planning must also take surviving spouses into account. “Generally speaking, two spouses will not die at the same time,” he said.  The second spouse could live decades longer and may require costly care.

Many baby boomers who are entering retirement are still fund­ing their children’s education.  “And the financial pressure doesn’t stop when the children graduate,” Drake said. “Starting salaries are low and adult children may require housing.”  And 29% of the retirees surveyed and 62% of the non-retir­ees said they were providing some assistance to elderly parents.

ROSEMARY MCCRACKEN

The Insurance & Investment Journal

January 2015

The Decision-Making Model

 

Mr. Schulich describes the Decision-Making Model as such:

“If you learn nothing else from this book, the Decision-Maker will be worth the cover price a thousand times over. I learned this tool…more than fifty years ago and have used it for virtually every major decision of my adult life.”

The Decision-Maker really does live up to his hype. It presents a unique twist to the timeless “pro and con” model of decision making, and allows you to objectively strip away the bare facts, until the best course of action is strikingly obvious.

Here, simple listed, is the remarkably uncomplicated procedure that will make decision making, dreaded by many, a simple matter from now on.

  1. Obtain two sheets of paper for each decision to be made, and a pen.

         Think of the positive and negative aspects of the decision impartially.

  1. On one of the sheets of paper, list everything positive you can think about concerning the issue in question.
  2. Assign each positive factor a score of one to ten – with the higher a score, the more important the issue to you.
  3. Repeat 1-2, on the other sheet of paper, and for negative points about the issue to decide (again, with the higher the score, the more important the negative factor is to you).
  4. Add up the scores on each sheet.
  5. If the positive score is double or more of the negative score, then do it. Elsewise, continue to step 6.
  6. If the positive score doesn’t outnumber the negative score by a 2:1 ratio, then don’t do it, or think twice about it.
  7. If the problem has various possibilities (not just if you will do something or not), then repeat steps 1-6 for each distinct possibility.

 

The Decision-Maker forces you to strip away the emotion and really examine the relative importance of each point-which, of course, is why it works so well.

It really is that simple. Decisions that seemed difficult retrospectively can be viewed in the most objective manner possible, and the decision that is ultimately best for you will make itself manifest (at least, as long as you were truthful while listing the positives and negatives and assigning them values). Decision making is one of the most important skills anyone originating from any line of work can use, and such a simple means of making decisions can be invaluable.

To present an example, here’s a fictional account of deciding whether to buy the book Get Smarter:

Positives

– The book allegedly contains important life and business lessons – 5 – My boss, a person whose opinion I respect, has recommended the book to me – 7 – Being 20-40 and in the field of business, the book has direct relevance to me – 7

Total – 19

Negatives

– The book costs ~$30, a reasonable sum of money – 3 – It will take an investment of time to read the book, time that might very well be wasted if I don’t derive value from the life lessons – 6

Total – 9

So, clearly the hypothetical individual should purchase Get Smarter, as the value of the positive factors surpass the value of the negative factors by more than a 2:1 ratio.

Mr. Schulich claims that he has used the Decision-Maker for every major decision in his adult life, and clearly it hasn’t let him down. Try it. You won’t be disappointed

 

 

 

 

 

https://beyondrisk.wordpress.com/2015/01/27/we-have-moved-out-of-transactional-sales-to-professional-fiduciary-advice/

01/27/15

http://www.foradvisorsonly.com

On Monday, January 26, 2015 9:19 PM, Peter Lantos <plantos@rogers.com> wrote:

To Reply to a message or to Post a New Message please go to http://www.foradvisorsonly.com and post from the site. . I was at my bank today today to deposit some cheques. The teller asked me if I contributed to my TFSA because the deadline is approaching soon. I asked her what deadline is that? She told me the deadline to contribute to my TFSA was the end of February. I asked her if she meant the RRSP deadline? She said no, it was the TFSA deadline. I do not blame this teller for knowing nothing about TFSAs or RRSPs. But should she (or any bank employee) not be licensed to even talk to the public about TFSAs, RRSPs, and other financial matters? And this is the kind of advice that our regulators are allowing the banks to get away on the uninformed public with while experienced and qualified advisors are being overburdened with ever growing compliance and paperwork?

Reply to above message 01/27/15

We have moved out of Transactional Sales to Professional Fiduciary Advice

We have moved out of Transactional Sales to Professional Fiduciary Advice – the Banks are in the Transactions/Commodities Business – That is how they get paid.

They get paid when they sell their proprietary products and services.

They do not get paid to sell other Banks’ proprietary products.

Consumers require unbiased Fiduciary based financial advice.

The Banks have a systemic conflict of interest in providing unbiased Fiduciary financial advice.

Their efforts in dealing with this issue through their HNW (High Net Worth) departments is an attempt at dealing with this consumer need.

It is not available at the teller level.

Financial advice should be subject to the same stringent regulatory rules and licensing standards as are found in the traditional disciplines of Law and Medicine.

Next to our personal health there is no aspect of our life that is more critical to us than our lifetime financial well being. The professional advice we receive on this subject should be stringently regulated.

Respectfully,

Daniel H. Zwicker, Principal B.Sc. (Hons.) P.Eng. CFP CLU CH.F.C. CFSB

Professional Engineers Ontario Certified Financial Planner Chartered Life Underwriter Chartered Financial Consultant Chartered Financial Services Broker

Bus: 416-726-2427 Email: danzwicker@rogers.com

Linkedin: http://www.linkedin.com/in/danzwicker

First Financial Consulting Group 4261 Highway Seven Suite 238 Markham , Ontario L3R 9W6

Daniel H. Zwicker, CFP Blog: http://www.dzwicker.blogspot.com FFCG Blog: http://www.dan-zwicker.blogspot.com Beyond Risk Blog: http://www.beyondrisk.blogspot.com

What We Do’

http://beyondrisk.weebly.com/

Capital Risk Management Lifetime Sustainable Income Strategic Wealth Management

Specialists in Advanced Life Insurance Applications and Lifetime Sustainable Retirement Planning Solutions

New clients are accepted by referral only

‘Raising The Bar’ – Slightly Out of Reach

 

 

 

January 21, 2015 President Obama warned Congress Tuesday night that he would veto any new sanctions legislation on Iran, saying it would derail U.S. negotiations in the Middle East. But John Boehner isn’t ready to sit out the battle over Iran’s nuclear program.

“[Obama’s] exact message to us was: ‘Hold your fire.’ He expects us to stand idly by and do nothing while he cuts a bad deal with Iran. Two words: ‘Hell no!'” the House speaker said during his weekly press briefing on Wednesday. “We’re going to do no such thing.”

Instead, Boehner has invited Israeli Prime Minister Benjamin Netanyahu to address Congress next month. He didn’t consult with the White House before extending the invitation, and administration officials are not happy. Press secretary Josh Earnest said Wednesday afternoon that Boehner’s invitation is a breach of normal diplomatic protocol. Typically, a nation’s leader would contact the White House before planning a visit to the United States, he said. The White House heard about the invite from Boehner’s office, not from the Israelis.

According to pool reports, Earnest called the invite “interesting,” and when asked if the White House was annoyed because Boehner did not reach out first, he said, “No.”

Earnest said the White House is reserving judgment about the invite until U.S. officials talk to their Israeli counterparts. Boehner’s office confirmed that Netanyahu has accepted, and will give a speech to a joint session of Congress on Feb. 11. The date is significant: It’s the 36th anniversary of the Iranian Revolution.

The Boehner decision may be unprecedented, especially if the bigger breach of protocol is not that the White House didn’t know, but that the White House wasn’t involved in the invitation.

However, this isn’t the first time a House speaker has reached out to a world leader despite a White House request to stay back. In April 2007, then-Speaker Nancy Pelosi traveled to Syria to meet with President Bashar al-Assad despite the Bush administration’s objections. Pelosi wanted to start a dialogue with Syria, as diplomatic relations had broken down in the 1990s; President George W. Bush rejected such negotiation, saying, “Sending delegations doesn’t work.”

The speaker said in a statement Wednesday that he invited Netanyahu “to address Congress on the grave threats radical Islam and Iran pose to our security and way of life.”

A yearlong effort led by Secretary of State John Kerry to reach a deal with Iran to dismantle parts of its nuclear program failed in November, forcing the U.S. and its allies to declare a seven-month extension on negotiations. Republicans say these kinds of concessions—and any future ones—are putting U.S. security at risk, according to a House leadership aide.

Kerry said Wednesday afternoon that Netanyahu is “welcome” to speak in the U.S. any time, but learning of the prime minister’s next visit from Boehner’s office was “unusual,” reports CBS News’ Margaret Brennan.

Boehner’s invite adds fuel to a potential showdown between Congress and the White House over Iran, one that could lead to the first successful veto override of Obama’s tenure as president. Twelve Democrats in the Senate have previously cosponsored legislation to impose sanctions on Iran. If they continue to call for sanctions alongside their Republican colleagues, the Senate may have the two-thirds majority necessary to override an Obama veto.

In future years, Target Canada will serve as a gold standard case study in what retailers should not do when they enter a new market.

From opening too many stores at once to a lack of a sales website, Target took multiple missteps — some of them operational, some strategic — in order to flop as spectacularly as it did in Canada, the sum total of which resulted in a group of highly disenchanted consumers.

“We missed the mark from the beginning by taking on too much too fast,” chief executive Brian Cornell conceded in a company blog post on Thursday as the company announced it is shutting down its 133 Canadian stores just two years after its much-anticipated launch.
We missed the mark from the beginning by taking on too much too fast

As the retailer heralded its fastest-ever retail rollout — 124 stores in the first year alone — the pace was meant to vault the company to the scale of an industry leader capable of competing with Walmart as it had done in the United States.

That strategy skirted the path most retailers take in making their first international forays: opening a few test stores and tweaking them in response to consumer demand. If there is evidence of a good appetite, the company can open more.

“Opening so many stores at once killed the opportunity for figuring out what worked and what didn’t,” said Joe Jackman, chief executive of Jackman Reinvents, a Toronto customer experience consultancy.

“They missed a test-and-learn, which could have been very instrumental to them getting it right for the Canadian market.”
It didn’t help that some of the former Zellers locations were in B-list and C-list malls, he added, with little else on hand to attract customers besides a new Target.
Then Target got into hot water early with customers because of its pricing. Though market studies revealed the retailer’s prices were close to Walmart’s and even beat its prices on a number of household items, Target opened at a time when the Canadian and U.S. dollars were close enough to par for consumers to wonder why pricing was not the same on goods in both markets for like items.

“We were not as sharp on pricing as we should have been, which led to pricing perception issues,” Mr. Cornell said in the blog post. “As a result, we delivered an experience that didn’t meet our guests’ expectations, or our own.” Canadians were also disappointed that some product lines available at Target’s U.S. stores were not being sold in Canada.

But it was the logistical snafus that started when Target’s Canadian stores first opened — ones that arose in part because Target was using an entirely new set of systems, supply chain infrastructure and third-party logistics providers in Canada — that proved to be the retailer’s Achilles’ heel.

Executives, quite naively perhaps, had expected that a handful of Target Canada stores that opened early were sufficient to adequately test the new systems. They were wrong. The ensuing logistical chaos resulted in gaping store shelves and flyer items that were sold out on the first day of advertising.

“The people that I have spoken to in the industry indicated the majority of Target’s issues had to do with a disconnect between the information in the computer system and the information that was on the product,” said Marc Wulfraat, president of MWPVL International, a Quebec-based supply chain and logistics consulting firm.

If a unit of inventory measurement is wrong — if a retailer’s inventory management system believes that a certain product number is tied to an individual product at the warehouse rather than a package of six of the same item, or vice versa — a store might mistakenly order far too few goods or far too many at once.

“If your units of measurement are messed up, you can throw com­puter-assisted ordering into a tail­ spin,” Mr. Wulfraat said. “All hell can break loose:’

“That can really screw you up,” Mr. Wulfraat said.

The irony of the story is what arrived was not like Target U.S.

In retrospect, Target’s two-year lead time from the announcement that it had bought Zellers’ leases in 2011 gave the likes of Walmart, Canadian Tire and Costco ample opportunity to expand or sharpen their businesses in the interim.
At the same time, retail compe­tition in Canada was fierce when Target opened in the spring of 2013, much tougher than Target execu­tives had initially expected it to be, they later admitted.

“What we witnessed was the greatest mobilization of retail competitive improvement to date.”

“Those retailers figured they would have to lift their game to that of Target U.S. The irony of the story is what arrived was not like Target U.S.”

Technology hurdles were not lim­ited to its supply chain and systems. Perhaps the biggest strategic retail lapse Target made in a country with a leading rate of Internet use was to open a new retail chain without
a website to showcase its goods and prices – something all of its rivals had long done.

“Online is the only portion of the retail economy that is growing,”said Doug Stephens, founder of Toronto• based advisory firm Retail Prophet. “Everything else is pretty flat.”

“Each year we are seeing a compounded 12% to 15% year growth in e-commerce sales in Canada. To not have a website serving Canadians at this critical juncture is really a problem. It is not all about the sales you process on your website, it is the degree to which consumers now pre-shop online, deciding what they want and then go to the store and get it or buy online and pick it up in the store.”

After Target failed to live up to customers’ expectations in multiple ways, shoppers became alienated and not enough of them returned, Mr. Cornell said Thursday.

“We delivered an experience that didn’t meet our guests’ expectations, or our own. Unfortunately, the negative guest sentiment became too much to overcome. While we made some recent progress, the changes were not enough to inspire the guest to shop Target. The losses were just too great.”

Financial Post

January 16, 2015

Pride took down a giant: How Target’s corporate hubris was its Canadian undoing

 

Treat us like Americans — or else. That’s what Canadians kept telling U.S. retailer Target Corp., by staying away from its sparsely stocked and overpriced stores for almost two years. But the Minneapolis-based giant, which had staked its celebrated name on its first expansion foray outside the U.S., seemed determined to continue forging ahead with an ill-fated experiment that never gained traction in the diverse Canadian market.

Less than four years after announcing its imminent arrival, and two years after opening its first stores in the northern frontier — a place that should have been the easiest and friendliest market for the second-largest U.S. discount chain to gain a foothold — Target announced it will exit Canada by mid-year.

That the company’s brand, so revered and lauded in the U.S., had been beaten and tarnished in Canada was a given. But just how badly came to light Thursday when the Canadian subsidiary filed for protection from its creditors under the Companies’ Creditors Arrangement Act (CCAA) in Toronto. It showed more than $2 billion in operating losses since 2011, when Target acquired 220 locations from now defunct Zellers Inc., a subsidiary of Hudson’s Bay Co., and announced its expansion into Canada with much fanfare.

The company was hemorrhaging millions daily, enough that it would have taken until 2021 to earn a loonie in profits. The bottom line: 133 stores across the country are closing; 17,600 employees will be out of work. And the cost of the Canadian misadventure to the U.S. parent? A cool $5.4-billion write down.

Such a needless waste. Rarely has there been a company to enter this country with more brand recognition than Target had. Canadian shoppers accustomed to cross-border shopping waited with great anticipation for its arrival in March 2013. All we wanted were U.S.-style Target stores in Canada, slightly retrofitted to adapt to our national idiosyncrasies, namely frugality and politeness. Instead, what we got were empty shelves, higher prices, sketchy customer service, and apologies.

“You can’t think of a retailer that had a more positive image even before it was launched in Canada than Target. If you can’t expand into Canada, where can you?” asks David Soberman, professor of marketing at the Joseph L. Rotman School of Management at the University of Toronto.

Was Target’s demise in Canada an extreme example of internal mismanagement? Did the brain trust in Minneapolis vastly underestimate what it takes to create and build a new business in a new country? Those were clearly part of the problem.

But it’s likely the bigger culprit was hubris. After all, excessive self-confidence and pride has forced the retreat of many corporations from markets before Target — and will afterward.

Mighty Walmart, the world’s largest retailer, was forced to exit the German market US$1 billion poorer in 2006, despite the fact that — being Europe’s largest market, with more than 80 million people earning high incomes, robust spending, and excellent infrastructure — Germany looked like a no-brainer on paper.

But apparently, Walmart’s mistake was thinking Germans liked to shop just the same way Americans do. By the time executives figured out that the one-size-fits-all business model doesn’t always, it was too late to fix the damage. After eight years, the Arkansas-based chain waved the white flag and beat a retreat.

Home Depot learned its own hard lessons in China in 2012. After six years, the home-improvement giant gave up trying to replicate its winning formula in the world’s second-largest consumer market, citing cultural differences.

And Canadian Tire, a national retail institution here, had a disastrous foray into the U.S. in the 1980s that left the company on shaky financial ground for decades. Expanding into the hyper-competitive U.S. market is tough enough, but the retailer didn’t stand a chance selling hockey sticks and snow tires in its Texas-based Whites stores.

In Target’s case, the warm and fuzzy goodwill Canadians felt for the retailer before it opened shop here was its undoing, once shoppers grew annoyed that they were being given far less than what they had come to expect from outlets across the border.

“I don’t think they brought their ‘A game’ to Canada,” said Michael Mulvey, assistant professor of marketing research at the University of Ottawa. “They compromised who they were. Canadian shoppers figured it out and punished them for it.”

Even before Thursday’s announcement, Target’s protracted woes here were already having a chilling effect for other U.S. retailers planning moves into Canada. Nordstrom Inc. had announced it was delaying the debut of its discount chain Nordstrom Rack until 2017 to “ensure we understand how to best serve Canadians.” But that part’s easy: Just treat us as well as you do the Americans.

Financial Post

January 16, 2015

PROFESSIONAL ENGINEERS ARE ‘STRAIGHT ARROWS

– HIGHLY TRAINED – DISCIPLINED -TRANSPARENT APPLIED SCIENTISTS –

WHAT YOU SEE IS WHAT YOU GET –

A  FOCUSED SOCIALLY COMMITTED MINDSET

 

Check it out

 

PEO’S ENGINEERING EXPERIENCE REQUIREMENTS

http://www.peo.on.ca/index.php/ci_id/22929/la_id/1.htm

 

1  –  Introduction

 

Professional Engineers Ontario (PEO) is empowered under the

Professional Engineers Act to establish the standards for admission

and to regulate the practice of engineering in the province. The

association is mandated to ensure public safety and welfare where

engineering is concerned. In addition, PEO provides leadership to

the profession and promotes professional engineers’ contribution

to, and facility in, the application of science and technology to benefit

humankind. The establishment of similar standards for entry

into the profession, in each jurisdiction across the country, permits

mobility of Ontario professional engineers from one province (or

territory) to the other. Furthermore, Ontario professional engineers

have gained greater recognition within a world of technology without

boundaries and with instant communications.

This Experience Requirements Guide aims to assist engineering

graduates, their supervisors, referees, and employers gain an

understanding of the quality-based requirements for licensing

associated with these standards. The profession relies on individuals

and firms that provide the experience opportunities to

engineering graduates and act as referees in the licensure process.

Indeed, this Experience Requirements Guide has as much significance

for the sponsors of licence applicants, their employers and the

applicants themselves. The suitability of an applicant’s experience

for licensure is assessed against five quality-based experience criteria

that specifically define acceptable engineering experience and are

described in Section 2.2 of this Experience Requirements Guide.

 

They are:

  • Application of Theory;
  • Practical Experience;
  • Management of Engineering;
  • Communication Skills;
  • Social Implications of Engineering.

 

It is the responsibility of the applicant to demonstrate that the

engineering experience requirements have been met to the satisfaction

of the association.

 

This Experience Requirements Guide refers only to the engineering

experience requirements for the professional engineer licence.

 

For information concerning satisfying other requirements, such as

those for a Certificate of Authorization for those offering engineering

services to the public, please contact PEO.

 

  • PEO’s Engineering Experience Requirements

 

  1.  

Applicants who satisfy the requirements described in this Experience

Requirements Guide will have confirmed that they have

the ability to exercise sound engineering judgment, function on

multidisciplinary teams, and communicate effectively in the work

environment and with society at large. The experience that has

been acquired, however, should be considered simply a first step

in the lifelong process of continued learning, to ensure continuing

competence as a professional engineer is maintained.

 

  • Internship

 

    1.  

The period of supervised engineering experience serves as an internship

for individuals who have the necessary academic qualifications

to apply for a professional engineer licence. During this

period, such individuals will benefit by being enrolled as engineering

interns (please refer to section 4 of this Guide) with PEO, and

participating in opportunities for their professional development.

The profession, as represented by practising professional engineers

and their employers, supports prospective professional engineers

by providing them with the opportunity to enter full professional

practice, all the while maintaining professional responsibility and

safeguarding the public interest.

 

PEO examines the nature, quality, duration and currency of each

applicant’s experience with one or more employers, and evaluates

this experience against prescribed criteria. Individuals and firms are

expected to provide experience opportunities, act as referees in the

licensing process, or serve as mentors where required.

 

Engineering experience should be compatible with the applicant’s

particular area of academic qualification. If there is incompatibility

between the academic and experience qualifications (for

example, a mechanical engineering graduate whose experience has

been acquired working mainly in a civil engineering domain),

additional experience, perhaps complemented by relevant studies,

will be required.

 

  • Criteria for Acceptable Engineering Experience

 

    1.  

Experience is a major component in forming the engineering

graduate on his or her way to achieving licensing as a professional

engineer. The responsibility of providing the appropriate

environment, opportunity, range and progression of activities to

meet the experience criteria rests with the firms that provide the

working environment and the individuals who provide supervision

during the internship period.

 

Two mandatory components of acceptable engineering experience–

application of theory and practical experience–must be

demonstrated over a substantial part (but not necessarily all) of

the internship period. They must be supplemented by exposure to,

or experience in, the broad areas of management of engineering,

communication skills and the social implications of engineering.

Without at least some appropriate exposure to each of these other

components, an applicant will be ineligible for licensing.

 

  • Application of Theory

 

      1.  

Skilful application of theory is the hallmark of quality engineering

work. Experience must therefore include meaningful participation

in at least one aspect of the following applications of theory:

  • analysis, including scope and operating conditions, performance

assessment, safety and environmental issues, technology assessment,

economic assessment, reliability analysis;

  • design and synthesis, including functionality or product specification,

component selection, integration of components and

sub-systems into larger systems, reliability and maintenance

factors, environmental and societal implications of the product

or process, quality improvements;

  • testing methods, including devising testing methodology and

techniques, verifying functional specifications, new product or

technology commissioning and assessment;

  • implementation methods, including applying technology,

engineering cost studies, optimization techniques, process flow

and time studies, cost/benefit analysis, safety and environmental

issues and recommendations, maintenance and replacement

evaluation.

 

  • Practical Experience

 

      1.  

Practical experience provides applicants with an appreciation of the

fundamental roles of function, time, cost, reliability, reparability,

safety and environmental impact in their work. Practical experience

should include such components as:

 

  • the function of components as part of the larger system, including,

for example, opportunities to experience the merits of reliability,

the role of computer software, or the relationship of the end product

to the equipment and to the equipment control systems;

 

  • opportunities to experience and understand the limitations of

practical engineering and related human systems in achieving

desired goals, including, for example, limitations of production

methods, manufacturing tolerances, operating and maintenance

philosophies, ergonomics;

 

  • opportunities to experience the significance of time in the engineering

process, including difficulties of work flow, scheduling,

equipment wear out, corrosion rates and replacement scheduling;

 

  • opportunities to acquire knowledge and understanding of codes,

standards, regulations and laws that govern applicable engineering

activities.

 

 

  • Management of Engineering

 

      1.  

Management of engineering projects includes supervising staff,

managing projects, being exposed generally to an engineering

business environment, and managing technology from a societal

perspective. Acceptable management components involve:

 

  • planning, from identifying requirements, developing concepts,

evaluating alternative methods and assessing required resources,

to planning for the social ramifications;

 

  • scheduling, from establishing interactions and constraints,

developing activity or task schedules, allocating resources, and

assessing the impact of delays, to determining and assessing

projects’ interactions with other projects and the marketplace;

 

  • budgeting, from developing conceptual and detailed budgets

identifying labour, materials and overhead, to assessing risk of

cost escalation, and reviewing budgets in light of change;

  • supervision, including leadership and professional conduct,

organizing human resources, motivating teams, and managing

technology;

 

  • project control, requiring understanding of the elements of a

greater whole, coordinating phases of project work, and monitoring

expenditures and schedules and taking corrective action;

 

  • risk assessment, relating to operating equipment and system performance,

technological risk, product performance and social

and environmental impacts.

 

  • Communication Skills

 

      1.  

An opportunity to develop communication skills is an important

experience requirement. This applies to all areas of the work environment,

including communication with supervisors, co-workers,

government regulators, clients and the general public. For an applicant’s

experience in this area to be acceptable, the applicant should

have regular opportunities to participate in:

 

  • preparing written work, including day-to-day correspondence,

design briefs, and participating in preparing major reports;

 

  • making oral reports or presentations to co-workers, supervisors

and senior management, and to clients or regulatory authorities;

 

  • making presentations to the general public as such opportunities

arise.

 

  • Social Implications of Engineering

 

      1.  

As emphasized in many of the experience components associated

with the four quality-based criteria described above, the social

implications of engineering are an important aspect of engineering

practice. A professional engineering work environment is one that

heightens an applicant’s awareness of any social consequences, both

positive and negative, of an engineering activity undertaken. While

not every project or activity will have direct or immediate social

consequences, an applicant’s work experience should, nevertheless,

instill an awareness of:

 

  • the value or benefits of engineering works to the public;
  • the safeguards in place to protect the employees and the

public and mitigate adverse impacts;

  • the relationship between engineering activity and the public

at large;

  • the significant role of regulatory agencies on the practice of

engineering.

 

Experience in this area should foster an awareness of an engineer’s

professional responsibility to guard against conditions dangerous

or threatening to life, limb, property, or the environment,

and to call such conditions to the attention of those responsible.

 

  • Length of Experience

 

    1.  

All applicants for licensure will be required to demonstrate at least

four years of verifiable acceptable engineering experience before

licensing can be obtained. At least one year of all applicants’ experience

must be acquired in a Canadian jurisdiction, under the direction

of a professional engineer licensed in Canada.

 

2.4 Credits for Pregraduation Experience and

Postgraduate Studies

 

Applicants who have graduated from a Canadian Engineering Accreditation

Board (CEAB)-accredited engineering program may be

granted up to 12 months’ credit for experience acquired prior to

the completion of their undergraduate degree. The quality of the

pregraduation experience (co-op, sandwich year, summer engineering

employment) will be measured against the five quality-based

criteria. Only pregraduation experience acquired after the applicant

has successfully completed one-half of the classroom component of

the undergraduate degree is eligible for credit. The balance must be

acquired after the degree is obtained.

 

If an applicant successfully completes a “Confirmatory Examination

Program,” all engineering experience acquired from the

date the applicant’s engineering degree was awarded is eligible for

credit toward PEO’s experience requirement. The quality of the

applicant’s pregraduation experience (co-op, sandwich year, summer

engineering employment) will be measured against the five

quality-based criteria. Only pregraduation experience acquired

after the applicant has successfully completed the academic

equivalent of the Basic Studies and Group A sections of the applicable

syllabus is eligible for up to 12 months of pregraduation

engineering experience credit. The balance must be acquired after

the degree is obtained.

 

If an applicant has satisfied PEO’s academic requirements by

completing specific (non-confirmatory) examinations, only experience

acquired after the applicant has successfully completed the

academic equivalent of the Basic Studies and Group A sections

of the applicable syllabus is eligible for the equivalent of up to

12 months of pregraduation engineering experience credit. The

balance must be acquired after all of the assigned examinations are

successfully completed.

 

In addition, applicants normally receive a one-year experience

credit for successful completion of a postgraduate degree in

engineering in the same discipline as their undergraduate degree.

They may receive additional work experience credits for postgraduate

degree(s)-related industrially applied research work following

an assessment against the five quality-based experience criteria.

The maximum credit for this research may not exceed 12 months

for a doctoral degree and six months for a master’s degree. However,

total experience credits awarded for postgraduate studies and

postgraduate degree(s)-related industrially applied research cannot

exceed the time spent achieving the postgraduate degrees. If the

postgraduate studies and postgraduate degree(s)-related industrially

applied research work are performed while concurrently holding

a paid engineering job outside the university, the total experience

credit for the university-related activities and the non-universityrelated

engineering job cannot exceed the total number of months

elapsed. No additional experience credit is given for overtime work.

 

All applicants, including those whose experience has been

gained in other countries, must acquire at least 12 months’ experience

in a Canadian jurisdiction, under the direction of a professional

engineer licensed in Canada. This professional engineer

may act as a supervisor, monitor or collaborator with regard to

this experience. The purpose of this requirement is to safeguard

life, health, property, economic interests, the public welfare and

the environment by ensuring the applicant is qualified to practise

in Canada. The applicant must be knowledgeable of Canadian

conditions, notably with regard to legislation, standards, codes,

economy, climate, resources and technology

 

  • Roles of Referees and Supervisors

 

    1.  

Individuals who serve as referees in support of a candidate’s application

are a vital component of the licensing process. Three

references from individuals who are familiar with the details of the

applicant’s work are required. It is strongly recommended that two

of these references come from licensed professional engineers and

at least one should be from a person in authority at the applicant’s

place of employment or at a client firm. The applicant’s present

and past direct supervisors are the most suitable referees. If an

applicant is claiming experience from multiple work situations,

additional referees may be required.

 

Referees should provide information regarding the applicant’s

technical ability in the application of theoretical engineering principles,

ability to clearly communicate orally and in writing, ability

to work on a team and to exercise professional judgment. Referees

should also attest whether the applicant is of good character, as demonstrated

through such personal attributes as honesty and integrity.

 

All applicants must attain at least 12 months experience in a

Canadian jurisdiction. This experience should be acquired under

the supervision of one or more people legally authorized to engage

in the practice of professional engineering in Canada. PEO may

also recognize 12 months of experience in a Canadian jurisdiction

without direct supervision of a licence holder where:

 

  1. A professional engineer is identified to monitor an engineering

intern or provisional licence holder who is employed in an

organization that does not have a licence holder to supervise the

engineering intern or confirm to the suitability of the experience;

or

 

  1. The applicant is the holder of a temporary licence and has

gained 12 months of experience working with a professional

engineer who is acting as a collaborator.

 

2.5.1 Role of Supervisor as Referee

 

Professional engineers who serve as supervisors and referees are

obliged to:

 

  1. Provide guidance, encouragement and support to the applicant

during the internship period;

 

  1. Provide the applicant with a working environment that offers

the opportunities to receive acceptable experience;

 

  1. Be sufficiently familiar with the details of the applicant’s work,

either through direct supervision or ongoing direct contact, to

be able to attest that each portion of the work experience qualifies

within the context of this Experience Requirements Guide.

 

2.5.2 Role of the Monitor as Referee

 

An engineering intern or provisional licence holder must be appropriately

supervised, adequately assigned tasks and have the opportunity

for regular reviews.

 

Where an engineering intern or provisional licence holder is

not being supervised by a professional engineer, the following

guidelines may assist the applicant in arranging for a professional

engineer monitor who may be acceptable to PEO.

 

Responsibilities of the intern or provisional licence holder

 

  1. Demonstrate a desire for professional development.
  2. Discuss the situation with his/her direct supervisor and seek assistance

of the supervisor in arranging for a monitor.

  1. Find a professional engineer willing to act as a monitor.
  2. Develop a schedule/meeting arrangements with the monitor

with input from the supervisor.

  1. Sign a declaration that includes that he/she will not practise

professional engineering unless a professional engineer has assumed

responsibility in accordance with section 12.3(b) of the

Professional Engineers Act.

 

Responsibilities of monitor

 

  1. Meet with the applicant as agreed.
  2. Ensure the projects assigned to the intern are within a level that provides

the intern with engineering experience sufficient for licensing.

  1. Provide guidance to the intern as necessary.
  2. Become familiar with the five quality-based criteria for licensing.

At the end of the monitoring period, the monitor should be able

to answer, with assurance, questions about the applicant’s suitability

for licensure.

  1. Sign a declaration that:
  2. i) he/she is a professional engineer who assumes responsibility

for the services within the practice of professional engineering

that the engineering intern or provisional licence holder

is undertaking in accordance with section 12.3(b) of the

Professional Engineers Act;

  1. ii) he/she will comply with PEO’s professional standard related

to assuming responsibility for the services within the practice

of professional engineering once set out in regulations; and

iii) he/she will commit to being in the work location of the EIT

at least 30 hours each month.

All parties (including the applicant, supervisor, senior officer(s) of

the applicant’s company and the P.Eng. monitor) should participate

in developing a monitoring agreement and must be clear about matters

of liability and disclosing of confidential company information.

In a case where an applicant seeking a monitor is not registered

in PEO’s EIT program, he or she must become registered as an engineering

intern or provisional licence holder for the experience to

qualify. Participation in these programs provides greater assurance

that the candidate will remain on track for licensing.

 

2.5.3 Role of Collaborator as Referee

 

It is a requirement that the holder of a temporary licence must

collaborate with a member in the practice of professional engineering

with respect of work undertaken under the temporary licence.

The professional engineer collaborator is required to work with

the temporary licence holder to enhance the holder’s experience

and knowledge of codes, standards and practices while respecting

the professional expertise of the temporary licence holder.

By virtue of this arrangement, a temporary licence collaborator

may act as a referee for the 12 months of Canadian experience.

 

  • Role of the Employer

 

    1.  

Providing a working environment that will enable engineering

graduates to enter full professional practice is in the best interests

of an employer. Employees seeking licensure are demonstrating to

their employers that they embrace the concept of professionalism,

and are willing to be bound by the profession’s Code of Ethics

requiring fairness and loyalty to employers, colleagues and clients.

As part of providing a working environment that is conducive to

licensure, employers are encouraged to instill an appreciation of the

need for prospective professional engineers to commit to lifelong

learning, to join technical societies, and to enroll as engineering

interns (Section 4). PEO provides them with periodic experience

assessments aimed to help ensure they achieve licensure within the

prescribed period.

 

Employers of prospective professional engineers should be aware

of PEO’s licensing requirements, particularly the five quality-based

criteria against which the experience of their employees will be

evaluated (Section 2.2). Where an applicant is involved in sales

or marketing activities, construction management, supervision, or

maintenance, particular attention should be paid to Section 3 for

an interpretation of the experience requirements relative to these

activities.

 

The working environment that provides, to the

greatest extent possible, opportunities for licence applicants to

obtain appropriate and acceptable experience is one in which the

employer provides that:

 

  • the applicant has sufficient exposure to a significant majority of

the components described in Section 2.2 of this Guide;

  • progression of these activities and experiences will lead to the

applicant’s increased involvement and responsibility with time;

  • the applicant is directly supervised by, or at least has on-going

contact with, a professional engineer during the various components

of the experience.

 

  1. Interpretation of Engineering Experience

Requirements in Specific Areas of Practice

 

3.1 University Teaching

 

Applicants whose engineering experience consists of, either in whole or

in part, university teaching will be evaluated to ascertain if the teaching

experience complies with the criteria for acceptable engineering experience.

To be considered acceptable engineering experience, the teaching

of upper-year engineering science courses, analysis or design courses

needs to be supplemented by such activities as providing specialized

advice to industry or conducting or supervising applied research.

However, the teaching of basic courses to students in the early years

of their degrees may not constitute acceptable engineering experience.

Also, teaching outside of an engineering faculty does not fall within

the definition of the practice of engineering. PEO will assess the actual

tasks performed by these applicants to delineate those portions of their

tasks that are acceptable engineering experience for licensing purposes.

 

3.2 Community College and Technical Institute

Teaching

 

Under normal circumstances, community college and technical

institute teaching falls outside the definition of acceptable engineering

experience. However, industry consultations and employment

undertaken during sabbaticals or of a part-time nature may be

considered, and will be evaluated against the experience criteria.

 

3.3 Sales and Marketing Activities

 

Sales and marketing activities can vary immensely from position

to position and can similarly vary from tasks that have little or no

requirement for engineering expertise, and thus little engineering

experience gained, to positions where a high level of engineering

competence is necessary. Applicants whose experience has been entirely

or partially in the areas of sales and marketing will be evaluated

carefully, having due regard to the actual tasks that have been

performed, the degree to which the mandatory experience component

of “application of theory” has been achieved, and whether

the applicant’s work has required the supervision of a professional

engineer. In most circumstances, an applicant whose sole employment

has been in the area of sales and marketing will require

employment for more than the minimum experience requirement

of four years, to obtain suitable engineering experience.

Consideration will be given to the following types of experience:

 

  • providing professional advice and guidance in the selection of

equipment, a product or service;

  • providing technical assistance during the application of a process

or installation of equipment;

  • conducting technical seminars for engineers as part of the marketing

of specialized materials, equipment or processes;

  • design work associated with the marketing and sale of materials,

equipment or processes.

Suitable experience will not be gained from doing clerical tasks,

routine administration, or the simple act of persuading a customer

to purchase a product or service.

 

3.4 Military Experience

 

Graduates in the armed forces sometimes find themselves in line

positions that may provide command experience of great value to

personal development, but may sometimes also provide limited

acceptable engineering experience. The experience of these applicants

will be treated the same as that of those working in civilian

occupations.

 

It is important that applicants provide a complete description of

activities in order that they can be evaluated against the criteria for

acceptable engineering experience.

 

3.5 Project Management and Supervision

 

Applicants whose sole experience has been in the field of project

management or supervision will be evaluated carefully to ascertain

if the requirements for “application of theory” have been adequately

met. Under normal circumstances, if an applicant’s sole engineering

experience has been in construction management, it is unlikely

that this experience criterion will have been satisfied. The applicant

may be advised to take a position for a period of time in a role that

involves application of theory, in order to supplement the experience

gained in a construction management or supervisory role.

 

Well-documented evidence of field experience in “problem solving”

and development of sound engineering judgment may satisfy

the “application of theory” criterion.

 

Consideration will be given to the following types of experience:

  • scheduling and cost control of large, highly-technical projects,

utilizing sophisticated scheduling and control techniques;

  • technical supervision of the construction and installation of

materials and equipment where engineering analysis and/or

calculation are applied;

  • problem-solving and component design.

 

It is unlikely that suitable experience will be gained from duties

involving preparing bids not requiring engineering evaluation, or

from ordering materials.

 

3.6 Operations and Maintenance

 

With the increasing complexity of industrial processes, it is possible

that there will be applicants whose entire employment, after

graduation, has been in the area of operations and maintenance.

Again, as in many of the classifications above, the applicant will be

carefully evaluated for “application of theory.”

An evaluation of the applicant’s actual work history, responsibilities,

and the degree of involvement in analysis and design will be

performed. Work experience exclusively in the area of operations

and maintenance will frequently fall short of the requirements for

licensing and the applicant will be advised to obtain experience in a

position involving the application of theory.

Consideration will be given to the following types of

experience:

 

  • designing, developing, and upgrading product or production

systems specifications;

  • providing technical assistance during commissioning of

structures, equipment, processes or systems;

  • designing, developing, managing, and upgrading maintenance

programs;

  • developing, managing, and upgrading methodologies for production

planning and scheduling, inventory management, process,

quality and cost control;

  • developing and upgrading production standards and analyzing

production problems;

  • analyzing equipment failures and applying non-destructive

evaluation methods.

Suitable experience will not be gained from duties involving

purchasing materials, equipment and supplies of a non-technical

nature, collective bargaining or the administration of collective

agreements, or from supervising workers on a day-to-day basis in

the performance of routine maintenance.

 

3.7 Quality Control and Quality Assurance

 

The quality engineering function is a very important one in many enterprises.

It is very common for some applicants’ entire employment

after graduation to be in the area of quality control and quality assurance.

Again, as in many of the classifications above, such applicants

will be carefully evaluated for “application of engineering theory.” An

evaluation of the applicant’s actual work history, responsibilities and

the degree of involvement in engineering analysis and design will be

performed. Work consisting exclusively of inspection or implementation

of prescribed testing procedures with the sole purpose of finding

out whether a particular product’s dimensions/composition/performance

meets a pre-established standard will frequently fall short of the

requirements for licensing and the applicant will be advised to obtain

experience involving the application of “engineering theory” to any

phase of the life cycle of systems, structures and/or components.

In general, consideration will be given to the following types of

experience:

 

  • developing plans and technical procedures to ensure that critical

attributes of a product are identified, monitored and controlled

during any phase of a product life cycle;

  • engineering analysis and investigation to find the root cause of

a deviation from engineering specifications, failure of a product,

or any other deficiency identified during the life cycle of a

product;

  • addressing an identified root cause for a non-conformance

by recommending/applying modifications to the engineering

design and/or fabrication process;

  • analysis of engineering design requirements of a product against

technical specifications and applicable regulations/codes/standards

to assess the degree of compliance with such requirements.

 

  • The Engineering Intern (EIT) Program

 

  1.  

If applicants have satisfied PEO’s academic requirements and have

not yet completed the experience requirement, they should apply

for registration in the Engineering Intern (EIT) program.

 

It:

 

  • helps applicants assess the acceptability of their experience. PEO

will review an engineering intern’s experience and advise of any

apparent deficiencies;

  • demonstrates to employers that the applicant is serious about being

licensed as a professional engineer;

  • allows the applicant to join a chapter and attend chapter meetings;
  • allows the applicant to participate in Engineers Canada–

sponsored group insurance plans and the Ontario Society of

Professional Engineers’ (OSPE) Career Centre program;

  • entitles the applicant to receive PEO’s award-winning journal

Engineering Dimensions and other publications.

 

  • Engineering Experience Record

 

  1.  

The final section of this Experience Requirements Guide covers

the format that should be used when submitting your experience

record for evaluation by PEO. An applicant should prepare this

summary carefully, and complete it only after becoming familiar

with the contents of this Experience Requirements Guide. PEO

will then advise on areas in which the experience may not yet meet

the necessary criteria. Applicants who are being offered the opportunity

to attend an Experience Requirements Committee interview

should follow the specific guideline provided at that time.

 

You must give a clear summary of your engineering experience in

a reverse chronological format by month and year. Include names

and addresses of all employers and a technical outline of the nature

of the duties and responsibilities associated with each position. Periods

of absence from employment (travelling, unemployed) should

also be listed with dates.

 

Satisfactory engineering experience is that which complements

your academic engineering training. Activities should involve

engineering, design, analysis and synthesis, and should provide for

the development of responsibility, judgment, communication skills

and self-confidence.

 

The elements of satisfactory engineering experience for licensing

purposes are described in Section 2.2 of this guide. Substantial exposure

to the first two, “Application of Theory” and “Practical Experience,”

are mandatory while reasonable exposure to the remaining

three elements is sufficient. A complete lack of exposure to any one

of these elements may render the applicant unsuitable for licensure.

Some quality aspects to be assessed include: increasing work

complexity; increasing responsibility; the effect of employment

interruptions or changing assignments on the applicant’s retention

of, and ability to build upon, the experience gained; employment

responsibilities that are not of an engineering nature; whether the

engineering work performed was in the discipline of graduation;

and the degree of supervision by, and guidance of, professional

engineer(s). All of the above-noted factors are taken into account

when assessing the final Experience Record. The simple passage of

time is not sufficient.

 

To assist with PEO’s review and help you ensure that your

Experience Record provides adequate information, it is suggested

that your Record be organized as follows:

 

  • For each position about which you are reporting give the dates

(day, month and year), position title, company name and a

paragraph describing your job responsibilities with an emphasis

on the engineering duties. Clearly indicate what you did, HOW

you did it and WHY you did it; and

 

  • Describe how the work experience obtained in that position

meets each of the five criteria (application of theory, practical

experience, management of engineering, communication skills

and social implications of engineering) paying particular attention

to the “application of theory”.

 

Applicants are reminded that this Experience Record is not a

résumé for use in applying for employment. It is a record of your

engineering experience and as such must inform us as to what specific

engineering work you have personally performed. Please avoid

the use of the third person. Terms such as “manage”, “review” or

“direct” are imprecise and should be avoided when discussing your

experience under the application of theory.

 

A guide to preparing your experience summary, with a template

that can be used, is available on PEO’s website at http://www.peo.on.ca.

Questions concerning the engineering experience required for

licensing, or the licensing process, should be directed to PEO’s

Licensing and Finance Department at (416) 224-1100 or (800)

339-3716, or write to us at PEO, 40 Sheppard Avenue West,

Suite 101, Toronto ON M2N 6K9. We can also be reached by

fax at (416) 224-8168 or (800) 268-0496.

 

Visit PEO’s website for updates concerning PEO’s experience

requirements. The URL is http://www.peo.on.ca.