This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you can register for Globe Advisor, then sign up for this newsletter and others on our newsletter sign-up page.
Interprovincial migration has emerged as a nationwide trend as people relocate somewhere where they can buy a house they can afford or cash in on home equity to purchase somewhere cheaper.
Globe Advisor recently spoke with Chris James, wealth advisor with James Financial Advisory Group at CIBC Wood Gundy in Fredericton, who is No. 13 in Atlantic Canada on The Globe and Mail and SHOOK Research’s Canada’s Top Wealth Advisors: Best in Province ranking, about what he’s seen in his city.
Has Fredericton been affected by significant interprovincial migration?
Yes. The people having the most success in the housing market here are people from out of province who sold their house there and were able to purchase a house here for cash.
Despite inflation and higher interest rates, they can still afford to buy a house here because the cost is much less than it is in other provinces.
While housing prices still look attractive, it’s certainly not what it was two years ago at the start of the pandemic.
How has this trend affected local homeowners?
Locals can’t compete with out-of-province buyers. Some locals want to take advantage of their house’s improved value and use it to move up to a bigger house. But while they’ll get more for their house than they could three years ago, the next house they buy is also going to be more expensive.
So, we’ve been running some numbers with clients to see if it really is a good idea to make that move financially. Generally, the numbers didn’t work positively. They would have to take on more debt not just because of the price of the house but the mortgage interest rate.
The numbers don’t work like they did when the interest rates were 2 per cent. They’re at 6 per cent now.
The hot housing market has also caused property taxes to increase significantly, a double-digit increase on average this year.
We were the place to go for the cheaper housing prices. Now, younger locals who don’t have a home already are really getting pinched because where do they come up with that financing? If it’s not the bank or mom and dad, then where do you go? And there are fewer cheaper places to go.
Are there any success stories with local clients being able to move up and afford it?
We did have a couple of clients who did well. They sold their houses and moved in with their kids and grandchildren. They were looking to take advantage of a hot housing market.
This interview has been edited and condensed.
- Deanne Gage, Globe Advisor Reporter
Must-reads from Globe Advisor this week
Economic outlook to create ‘stiff headwinds’ for insurers but dividends are sustainable
It has been a mixed year for Canada’s life and health insurers as slumping stock markets put pressure on their wealth management business, but core insurance operations turned in solid results. Analysts see a challenging year ahead as macroeconomic pressures have varying impacts on their operations. Higher rates mean better yields on their investments, but it also slows economic growth. The good news for investors is that while these forces play out, the companies offer some of the highest and safest dividends and steady growth once conditions improve. Adam Mayers gives an outlook on the sector.
Advisors welcome scrutiny on ESG funds but say there are still many challenges facing investors
The heat is on environmental, social and governance (ESG) investing, with regulatory scrutiny growing over greenwashing and sustainability assurance providers beginning to consolidate. Some advisors say the attention is a welcome development and will make sustainable investing more accessible and less perplexing for investors. However, evaluating the merits of ESG funds can be challenging even for advisors who are well-versed in responsible investing. Kelsey Rolfe reports on developments in the space and what this means for investors.
Use of model portfolios grows alongside demand for comprehensive financial planning
Advisors are turning increasingly to model portfolios as a way to free up time for more comprehensive financial planning work and better client service, according to a recent report from Boston-based research and consulting firm Cerulli Associates Inc. Experts expect the transition to model portfolios to continue as part of the industry-wide shift away from commissions-based revenue and toward a financial advice-based service model. Many advisors also don’t have the scale and resources to justify customized portfolio construction. Kelsey Rolfe looks at the pros and cons of using model portfolios.
Meet a father and son duo who both made the Canada’s Top Wealth Advisors rankings
Jacques Maurice and Guillaume Maurice share more than a last name. The Montreal-based father and son were both recently recognized on The Globe and Mail and SHOOK Research’s annual rankings of Canada’s Top Wealth Advisors. Jacques was No. 26 in the main ranking and No. 5 in Quebec in the Best in Province ranking, and Guillaume was No. 21 in Quebec. Jacques compares working with family to a marriage that requires give and take, and to a hockey team that needs to dedicate specific people to scoring goals and others to defence. Alison MacAlpine speaks to both father and son about how they make it all work.
Also see:
How to handle investors who are overconfident about their financial knowledge
Why people are afraid of ‘financial jargon’ and what advisors can do about it
Merger of two regulators could lower costs and increase innovation
Metaverse storms ETF charts to become industry’s hottest concept
Silicon Valley start-ups race for debt deals in funding crunch
What you and your clients need to know
No-fee trading platforms dominate new brokerage account growth in Canada
No-fee trading platforms are attracting a wave of do-it-yourself investors in Canada, accounting for almost half of all new account openings and almost one-third of all trading activity. A report by ISS Market Intelligence shows online discount brokerages that do not charge a fee for stock trades saw a significant jump in the number of new account openings, as well as in the overall number of trades, over the 12 months ended June 30, 2022. Firms offering zero-commission trading generated 46 per cent of all new accounts opened, as well as 30 per cent of all trades in the industry – higher trading volumes relative to their size than commission-based firms. Clare O’Hara gives more details and analysis.
New Canadian investing rulebook would disqualify new oil and gas projects from ‘green’ tag
A federal advisory body is proposing to disqualify any new oil and gas projects from being classified as green, and award that designation only in a limited and qualified way to projects to reduce pollution from existing fossil-fuel production. The recommendations are included in a framework for a rulebook to define sustainable investments in this country, known as a green taxonomy, a copy of which was obtained by The Globe and Mail. Submitted to Finance Canada this fall by the government-appointed Sustainable Finance Action Council, the 77-page document received sign-off from all of that group’s members – including representatives of most major Canadian financial institutions, insurers and pension funds. Adam Radwanksi and Jeffrey Jones explain what this could mean for investors.
Short sellers gain almost $304-billion after tumble in U.S. stocks
This year’s steep decline in U.S. equities is juicing the returns of short sellers, who are on track for their first yearly gain since 2018 thanks in part to bets against shares of Tesla Inc. TSLA-Q, Amazon.com Inc. AMZN-Q and other mega-cap growth stocks that have led markets higher for years. Short sellers – investors who bet on declines in a company’s share price – are sitting on US$303.7-billion in realized and unrealized gains, a fourfold increase compared with 2018, their last profitable year, data from analytics firm S3 Partners LLC showed. That works out to a 31.2 per cent return on total average short interest of US$973.6-billion throughout the year.
– Globe Advisor Staff