Canadian economist gloomy, but "sunshine and lollipops" compared to Marc Faber

"My presentation is sunshine and lollipops compared to [Marc Faber's]," said Patricia Croft, chief economist, Philips Hagar & North Investment Management, a Canadian firm. Both spoke at the Refining Wealth Management Conference in Edmonton, Alberta, on April 24. (Read my comments on Faber's presentation). Croft's focus was "Outlook 2008/09--Life in the Aftermath of the Great Global Credit Crisis."

One of Croft's key points: the Canadian dollar is overvalued, so the U.S. dollar will head up.

Over the next nine months to one year, the Canadian dollar is likely to trade vs. the U.S. dollar in the range of 95 cents to $1.10, said Croft. But, "longer-term, the Canadian dollar at parity is significantly overvalued." Based on the OECD's purchasing power statistics, 85 cents to the dollar is more realistic.

Croft expects the U.S. dollar to end 2008 stronger than it is today. Why? It's like the accounting concept of FIFO, "first-in, first-out." The U.S., which was the first to enter recession, will be the first out, she said. She also reckons that an Obama presidency could boost the U.S.

Other observations:

• The Canadian housing market isn't likely to follow the U.S. example because Canada's mortgage market is more conservative (less than 5% of mortgages are subprime) and Canada is one of only two undervalued real estate markets (the other is Austria).
• Food price inflation has staying power
• We're near a major inflection pont for inflation and real interest rates will also rise
• Good buying opportunities for Canadian investors include Canadian financial debt, Canadian bank stocks, and U.S. stocks

You can view a webcast of Croft's outlook for the second quarter of 2008.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Buy farmland, not NYC real estate, says Marc Faber

Buy farm land, said Marc Faber on April 24 in his presentation to the Refining Wealth Management Conference sponsored by the CFA Society of Edmonton. For one thing, as investment managers, the audience members should diversify out of financial assets. Plus, if war breaks out over scarce commodities, where’s a more likely target—Wall Street or a far away farm in Canada where you can grow your own food?

The farm land suggestion was just one tiny part of a presentation on "Will the first synchronised global economic boom in the 200-year old history of capitalism also lead to a synchronised bust?" by Faber, the publisher of The Gloom, Boom & Doom Report. Faber said "a colossal bust" is likely.

Faber was quite critical of Ben Bernanke and the Fed. "Expansionary monetary policies, which caused the current credit crisis in the first place, are the wrong medicine to solve the current problems.... But what options does the Fed have with debt to GDP at 350%?"

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

How financial advisors use LinkedIn to boost their visibility

"Boosting my visibility" is the number one reason why financial advisors are participating in LinkedIn (LI). LI profiles and answers both deliver benefits. But tread carefully, or your compliance department—or even the SEC—could nail you.

LinkedIn profile makes you easier to find—and track

You’ll be easier to find in a Google search if you have an LI profile. "By adding connections, you increase the likelihood that people will see your profile first when they’re searching for someone to hire or do business with. In addition to appearing at the top of search results (which is a major plus if you’re one of the 52,000 product managers on LinkedIn), people would much rather work with people who their friends know and trust." as Guy Kawasaki said in "Ten Ways to Use LinkedIn." With more people looking online for services, that’s critical. At a minimum, your profile should include your name, title, and location, but you can beef it up with details, including a link to your website.

Rob Schmansky, a Detroit, Mich.-based wealth manager, likes that LI shares his profile updates with potential clients, friends, and family who are his LI connections. This may put his name in front of them when they can make a referral or need financial advice themselves. He makes it easy for his network to find his profile by providing a link in his email signature.

LinkedIn Answers let you display your expertise—and learn

LI Answers let you respond to questions posed by others and ask your own. The “personal finance” category will probably interest the greatest number of financial advisors. However, check out other categories , too.

Carlton Johnson, an independent advisor in the Charlotte, N.C. area, says “As I provide answers to questions, potential clients are always reading answers. ‘Best answers’ are great testimonies to technical prowess; however, even good and unrated answers can clue a potential client on how you are currently viewing finance world and particular situations relevant to them.”

Some financial advisors would submit answers even if there were no prospect of gaining clients. One advisor, who asked to remain anonymous, said he gives answers to help prevent individuals from making common mistakes.

Andrew Baechler of PWL Capital in the Ottawa, Canada area likes Answers “as a gauge to see what issues are currently top-of-mind with investors.” Johnson also sees Answers as an educational resource. “LI serves as a platform to exchange ideas and find solutions to questions that my clients and others may have about difficult financial situations.”

As an occasional writer for financial magazines, I see another benefit for advisors. You can connect with reporters. Journalists are increasingly using Answers to find sources to interview for stories. Being quoted in articles can enhance your credibility.

Watch out for compliance!

Pay attention to your organization’s compliance rules. One advisor told me that even something as basic as her LI profile had to be approved by the compliance department. Your firm may be more flexible. “My compliance department allows me to post on LinkedIn without their approval, so long as I don’t provide specific investment guidance,” says Baechler.

Some advisors may be crossing the line that forbids testimonials for registered investment advisors. Check with compliance before you accept a Recommendation through LI.

Are you an advisor who’s leveraging LinkedIn? Leave a comment about how it’s working for you.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Your privacy policy can become a marketing document

ING Direct's e-mail about their privacy policy made me feel good about being their customer. Why? Because they made me feel they value communicating clearly with me.

Here's how the e-mail started:

"Below is some important information that we're required to send you each year. It seems like a lot of legal stuff, but we promise, it will only take a few minutes. Give it a look."

Also, their opt-in policy made me feel that they care about me more than they care about cross-selling.

"Did you know our Privacy Policy EXCEEDS government standards? In 1999, Congress passed a law requiring financial institutions to give Customers the ability to "Opt-out" of information sharing. At ING DIRECT we went the extra mile to provide you with an "Opt-in" Privacy Policy, which means we won't share your information with any other company or partner unless you ask us to."

Are you missing marketing opportunities by writing your legally required disclosures in legalese?
_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Do your performance reports send the wrong message?

You tell your clients to think long-term. But are you sending them the opposite message?

Here's one manager's take on the topic.

"...we realized that we lectured our clients about long-term performance and investing to meet their goals; however, our reporting focused their attention on short-term returns and market performance. Today, we do not provide any performance for periods less than one year, and we benchmark against CPI, not the S&P 500, to better frame our clients’ understanding."

That's according to Harold Evensky in"The Rational Wealth Manager" (CFA Institute membership may be required to access this article).

Would you consider following Evensky's lead?

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.

Mindmapping for financial advisors

"Mind Mapping: Some financial advisors find mind mapping software helpful in analyzing issues," an article by Joel Bruckenstein in Financial Advisor (April 2008) caught my eye because I recommend using mind mapping to help organize your articles in my presentations on "How to Write Investment Commentary that People Will Read."

I draw my mind maps using pencil and paper. Bruckenstein says mind mapping can be even better if you use software. He particularly likes Mind Manager Pro 7, which offers a 21-day free trial.

In addition to Bruckenstein's article, you can check out Joyce Wycoff's book, Mindmapping: Your Personal Guide to Exploring Creativity and Problem-Solving, which I was introduced to by presentation coach Cheryl Dolan.

"Weathering the Downturn—with Good Communication"

I agree with the communications advice offered below. Thank you, Beverly Flaxington of The Collaborative for giving me permission to reproduce your article here.

Yes, it seems we are officially in a recession. Portfolios are shrinking—and fast. One never knows what the next day will bring in terms of rate cuts, market performance or the political climate.

What's a financial firm to do? Most people think they need to "batten down the hatches" right now. They hunker down and wish and wait for things to change. They worry about getting client calls. They worry about cutting the budget and they worry about shrinking fees tied to portfolio assets.

We've been through this before. What goes up, must come down and once it comes down, it usually goes back up again. We have historical perspective that says "this too shall pass." So, how to behave when the market isn't?

If it isn't your style to communicate when things are going well—now is not the time to stay in your style. Find reasons to reach out to your clients. Help them understand what's going on. If you are feeling concerned about market turbulence, think about the less informed client—it's a real scare to think you won’t be able to retire on time or send your kid to college next year.

If it is your style to communicate, make sure it is largely educational. Don't feel you have to justify your market-related poor returns. Explain to clients what is happening—in historical context explain what you are seeing in the market and what you are doing. Explain why you are making the investments you are and what you think clients can expect as a result. Show the clients you do have a plan and an approach. Clients know you can't control the markets, but they need to know you have a plan to deal with the volatility.

If your style performs well in a down market—tout it, loudly! We all like upside and seeing our portfolios grow, but firms that manage downside risk well look great in a down market. If you are one of them, take advantage of the timing!

Help clients think through timing. Is now the best time to begin retirement? Should they wait a bit longer? Should they look for the second home right now and take advantage of the market earlier than they planned? Should they put some other major purchases on hold? Be their partner—work with them to figure out how to manage in this environment. The down markets certainly shrink portfolios but they also provide opportunities for those willing to act on them!

CFA Institute: Consider annuities, even variable annuities

Fee-only advisors hate variable annuities.

That's the stereotype in my head. It was reinforced several years ago when I contacted advisors for an article on variable annuities that appeared in Advising Boomers.

So, it was interesting to read the following statement by Stephen M. Horan, head of private-wealth and investor education at the CFA Institute, "Variable annuities can also manage the problem effectively." This was part of an opinion piece called, "Managing Risk in Retirement Portfolios: Using annuities and other techniques can address market volatility early on," which appeared in the Feb. 25 issue of Investment News.

In his article, Horan refers to the Financial Analysts Journal article about longevity annuities that I've blogged about.

_________________
Susan B. Weiner, CFA
Investment Writing
Writing that's an investment in your success

Check out my website at www.InvestmentWriting.com or sign up for my free monthly e-newsletter.