Page 22 - Newcom

MAY 2020
PAGE 22
EDITORIAL
A position of exceptional strength
In the midst of a global pandemic, time seems distorted. Conditions that prevailed just a few weeks ago now feel eons away. Given how dramatically things have changed, it’s important to remember
where we began, and that we’ll probably get back there — eventually. While the research for this year’s Brokerage Report Card essentially was carried out in a different world, the results nevertheless reveal that the retail brokerage sector began this crisis from a position of exceptional strength. Research for the Report Card found that finan- cial advisors’ average assets under management reached record levels
in early 2020 and average productivity has soared.
Some of these gains were driven by rising markets, which have since
fallen sharply, but much was attributable to advisors streamlining their businesses and tightening their focus on their most lucrative clients.
These trends all put brokerage advisors in a good position to endure this incomparable storm. To start, the average brokerage advisor had an obliging cushion of client assets at the beginning of the pandemic. The Report Card’s results indicate advisors’ revenue is overwhelmingly
OTTAWA
generated from recurring fees rather than commissions. This bodes well at a time when trading may be tricky.
Smaller client bases also mean fewer hands to hold, which should make the challenge of shepherding nervous charges through rocky mar- ket conditions a bit more manageable.
That’s not to say that this crisis is easy for the brokerage sector to navi- gate. A recent survey by the Investment Industry Association of Canada found that while the investment industry has adapted well to remote working arrangements in general, there are concerns about employee morale and the loss of connection inflicted by physical distancing requirements. This period of heightened fear, fraud and uncertainty will take its toll. Financial advisors are having their share of struggles.
But advisors were in a position of strength at the beginning of this crisis and, by all accounts, they are weathering it relatively well. So, while a return to “normal” looks likely to be a prolonged process, most advisors should be poised to help restore their clients, and themselves, to their pre-pandemic glory.
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The pandemic has changed Trudeau’s world
Watch for new foreign policy and an election in 2021
BY GORD McINTOSH
for a hint of how we’ll change
once Covid-19 is finally over, looking back 100 years is a worthwhile exercise.
The great influenza pandemic contrib- uted to the growth of the modern hospi- tal. Pre-pandemic, many Canadian cities, including Ottawa, did not have a hospital as we know it. The now decrepit Ottawa Civic Hospital was hastily built in a drive led by the mayor because so many citizens were dying from the flu.
Watch for widespread change stem- ming from the current crisis as well.
Ontario and B.C. now permit doc- tors to do video assessments using newly developed medical apps — this in a system that still depends on fax machines and has resisted electronic health records. Covid-19 will mean growth for digital health care, just as kids stuck at home are probably in the vanguard of growth of online learning.
The Canadian Institute for Health Information says that on average, hospi- tals in this country have 15% of their beds unavailable for admissions because those beds are occupied by dementia patients who should be in long-term care but are stuck on waiting lists.
This is why Canadian hospitals, strug- gling with ancient equipment, are routinely over capacity. Hallway medicine is the new normal, and hospital-borne infections are
health hazards in their own right.
Once this pandemic is over, health care is going to become a government priority after decades of neglect. Former Alberta premier Ralph Klein once called health care the “third-rail issue of politics.” Now governments will have to open that
Pandora’s box.
Expect a building boom in retirement
homes and acceleration in development of digital hospitals.
On the financial side, when a govern- ment begins to measure its fiscal stimu- lus packages as a percentage of GDP, you know we won’t be seeing a balanced budget anytime soon. Interest rates have been cut to almost nothing, so Ottawa won’t be able to stimulate the economy with monetary policy.
And because most of the G7 countries have been stimulating their economies non-stop since the global financial crisis of 2008-09, expect free-spending fiscal policy long after Covid-19 has become his- tory. Canadians may hate paying taxes, but they love government services.
As for globalization, its future has been debatable for almost a decade as populism gained traction, the administration of U.S. president Donald Trump embraced pro- tectionism and the U.S. border has been increasingly difficult to cross.
Now Trump is pressuring the private sector to bring manufacturing back to the U.S. from China, especially phar- maceuticals and medical supplies. “Buy American” won’t be going away.
Whether Covid-19 will take globaliza- tion as a victim may be too early to predict, but certainly won’t advance the trend.
When this crisis is over and the Canada/ U.S. border reopens, Prime Minister Justin Trudeau should seek negotiations of a cus- toms treaty as a companion to the revised Canada-United States-Mexico Agreement to ensure Canadians and their exports can cross the border free of red tape.
Canada also needs new foreign policy. Trump’s effort to prevent medical sup- plies from being exported to Canada in early April ended more than a century of policy built on the assumption the U.S. is our trusted ally under Pax Americana. China cannot be trusted either.
The Covid-19 crisis also has changed how Canadians view their leadership. At the end of February, almost 60% of Canadians were dissatisfied with how Trudeau handled the Coastal GasLink pipeline blockades. By the second week of April, almost 75% approved of how he was handling the Covid-19 crisis.
If Trudeau can maintain this recovery in the polls with his daily press conferen- ces and high visibility of his star ministers, the Liberals will begin thinking a govern- ment majority is within their grasp.
As Winston Churchill once said: “Never let a good crisis go to waste.” So be pre- pared for an election in 2021. With millions receiving emergency income support, uni- versal basic income will be a major issue during the election campaign. IE
Ottawa won’t be able to stimulate the economy with monetary policy