RISCARIO INSIDER

November 30, 2014

KEEPING PROMISES: CORPORATE GOVERNANCE 2014 IN CANADA

We can’t predict the future but can take steps to put the odds on our side.

Corporate governance is a measure of companies keeping promises. Since life and health insurance is a long term promise that may last decades, isn’t that important?

Unlike car/home insurance, well-designed protection for mortality, morbidity and disability tends to have premiums guaranteed for life. That provides peace of mind since you can’t easily switch insurers: you’re older and your health may have deteriorated. In addition, newer products may fewer options and weaker guarantees. If the government changes the rules governing insurance, old policies may be “grandfathered” (exempt from the changes).

Similarly, financial advice can have lasting implications even when of high quality.

Lucky 13

The Globe and Mail has compared corporate governance for 13 consecutive years. Board Games 2014 includes 247 major companies in a searchable table. Data was prepared by the Clarkson Centre for Business Ethics and Board Effectiveness at the University of Toronto.

Not much changes, as you’ll see by looking at results for 2011 and 2007.

Selected Rankings

Let’s look at the financial sector, which historically ranks low in trust in comparisons like the annual Edelman Trust Barometer. Here are the banks, insurers, mutual fund manufacturers and advice givers. You’ll likely recognize the names.

Rank	Company	Score
1	Bank of Montreal (includes BMO Insurance)	98%
2	Sun Life Financial	97%
3 tie	Bank of Nova Scotia	96%
3 tie	Royal Bank of Canada (includes RBC Insurance)	96%
6	Manulife Financial	95%
8	Intact Financial Corp (belairdirect, Grey Power, Jevco)	94%
13 tie	CIBC / National Bank / TD Bank	93%
30	Industrial Alliance Insurance and Financial Services	89%
62	Western Canadian Bank	81%
69	Laurentian Bank	79%
81	CI Financial Group (CI Investments, Assante Wealth Management, Stonegate Private Counsel)	76%
185	Power Financial Corp (Great-West Lifeco, IGM Financial)	58%
197 tie	Canaccord Genuity Group / Fairfax Holdings Inc	55%
197 tie	IGM Financial Inc (Investors Group, Investment Planning Counsel, Mackenzie Investments)
205	AGF Management	54%
221	Great-West Lifeco (Canada Life, Great-West Life, London Life)	48%
231	Dundee Corp	46%
237	Power Corp of Canada	44%

Look at the range. Some companies are at the very top with near-perfect scores. Others are closer to #247 (Fortuna Silver Mines, scoring 35%).

Missing Companies

You may be dealing with companies which aren’t rated. That doesn’t mean they’re “bad”. How would they score f they were included? That’s very tough to say. You can’t really tell. You can ask them if they are ranked by credible independent parties in a transparent way. You may get measures of financial strength. Maybe that shows they’re great at making money but doesn’t mean they’re great at keeping promises.

As usual, buyer beware!

CAREER ADVICE FOR GRADE 8 STUDENTS

I’ve got a newfound respect for educators after guiding 30 lively Grade 8 students through the Junior Achievement Economics for Success program with Dana Mitchell for Advocis during Financial Literacy Month. Thanks to teacher Maureen Deeney and Principal Julie Aube at Christ The King Catholic School for the opportunity.

Here is career advice for students to consider.

Look For What’s Missing

Spotting what’s missing is more valuable than seeing what’s there. What’s missing leads to opportunities. Searching hones your detective skills and helps you stay curious. You get better at spotting distractions and identifying the real clues. You’re not looking for Waldo. You’re looking for where Waldo isn’t --- and wondering why.

Observe the challenges other people face and look for solutions.

Do they have trouble with deadlines? Learn to meet them. Do they start studying too late? Start earlier. Do they forget assignments? Find a system that works for you. You’re then building skills which are scarce and hence valuable.

Develop The Habit Of Saving

Saving means putting something aside now to have more later. Money is an example but not the only one. What about

saving time: you can do some things more efficiently (which may mean investing time in developing a process) and stop doing some things which don’t need to be done (note: leaving your room untidy may not be an acceptable idea).
saving health: we have only one body for life. Exercising, eating well and sleeping enough build resilience and help preserve what may be your most valuable asset.
saving attention: with all the demands and distractions around us, we’re tempted to multitask and prioritize. Both are exhausting. Cutting out stimuli simplifies life. Maybe you’re too knowledgeable about happenings in sports and music. Entertainment is important but maybe less would do? (extreme example: years ago, I stopped watching TV, listening to the radio and reading the newspaper.)

Be Generous

We can each help others for free. We can give of ourselves, our time, our attention, our caring. You’re then making the world better in your own unique way. You’re also changing yourself. You’re thinking in terms of abundance (giving) rather than scarcity (hoarding).

You’re helping change the world since some of the people you help will follow your leadership and help others too.

Develop Portable Skills

You’re unlikely to stay in the same role forever. You’ll likely advance in your career and might even change careers. The cause might be opportunity or necessity. Either way, you’re better prepared if you keep developing your skills.

A portable skill stays with you and helps regardless of what you do.

For instance, communication is essential. Are you improving your ability to read, write and speak? Are you mastering new media? For instance, you write differently for school assignments, blogs and tweets. Other portable skills include managing your time, getting along with others and finding problems to solve. How can you lose by getting better?

Build Your Network

Success requires willing support from the people you know and — more important — the people they know.

You already have a network. How well do you plant seeds, nurture and prune? Consistent generosity gets noticed and can be free (e.g. the gift of information). Most people feel obligated to give back. Reciprocity is the #1 universal principle of influence.

If you’re in Grade 8 now, you’ve lived your entire life with the Internet. Connecting, sharing and staying in touch is easier than ever via social networks. In-person contact still matters, though.

Market Yourself

You can’t expect the world notice your brilliance without your help. You need to stand out (or at least be good). You need to be remembered. You need to be findable. The Internet makes this easier for those who bother.

Persist

The path to the future includes drudgery. Persist. To quote Zig Ziglar:

When you do the things you ought to do,
When you ought to do them,
The day will come,
When you can do the things want to do,
When you want to do them.

Best wishes for a wonderful future.