We’ve seen a number of big deals recently within the money management industry—most notably, the $1.4-billion acquisition of Phillips, Hager & North (PH&N) by the Royal Bank of Canada (RBC).

Pending regulatory approval, PH&N will become part of the newly created RBC Wealth Management. The deal would put RBC within striking distance of becoming the country’s largest mutual fund manager. RBC and PH&N’s total combined assets under management exceed $160 billion.

PH&N was attracted to RBC’s resources to leverage its strengths with institutional, private and mutual fund clients. “We’ve chosen to join forces with RBC because of the many benefits it affords PH&N clients, especially with respect to the kinds of investment opportunities they will need to be successful over the long term,” said John Montalbano, president of PH&N.

For RBC, the deal was about aligning competitive strengths. “Together, our vision is to be a clear leader among Canadian-based asset management companies and to continue to grow our global capabilities in investment management for institutional, retail and high net worth clients,” said George Lewis, group head of RBC Wealth Management and currently chief executive officer of RBC Asset Management.

In addition, The Co-Operators Group has reached a deal to purchase investment management firm Addenda Capital for $306.5 million. Montreal-based Addenda specializes in the active management of fixed-income portfolios, primarily for institutional clients, and has about $29 billion in assets under management.

Retaining the Addenda name, the combined business of Co-Operators Investment Counselling Limited and Addenda will manage approximately $40 billion in assets. “The two companies complement each other well, and this acquisition supports The Co-Operators’ strategic goal of significantly growing our presence in Quebec,” says Kathy Bardswick, president and chief executive officer of The Co-Operators.

What does all of this activity mean for the industry on the whole? It could be evidence of a larger trend. “It’s not difficult to connect the dots,” says Peter Arnold, national practice leader, investment and DC consulting, with Buck Consultants. “Canada is a large market for retirement assets, within the top five globally. This is evidence of the globalization of the pension industry.” Greg Malone, partner at Eckler Ltd., agrees. “This is probably a continuation of existing conditions,” he says. “There’s been lots of activity in the field with foreign firms coming in, and the market requires more in the way of specialized services.” — Deanne Gage, Jody White and Craig Sebastiano

Budget 2008 Highlights

• A new savings vehicle, the Tax-Free Savings Account (TFSA ), will be introduced in 2009. Up to $5,000 can be contributed every year to a registered account, and unused room can be carried forward to future years. Investment income earned will be tax-exempt even when withdrawn. Withdrawals will be allowed at any time without restriction, and the full amount may be re-contributed in the future.

• Life Income Fund (LIF) holders will have increased flexibility. Those 55 and older with holdings of up to $22,450 will be able to wind up their accounts with the option to convert to a taxdeferred savings vehicle. Those 55 and older will be entitled to a one-time conversion of up to 50% of LIF holdings into a tax-deferred savings vehicle with no maximum withdrawal limits. Anyone facing financial hardship will be entitled to unlock up to $22,450.

• The Targeted Initiative for Older Workers will be extended through to 2012. It’s a new $90-million investment in capable, experienced workers aged 55 to 64 to help them to remain productive participants in the workforce and alleviate labour shortages.

• The Guaranteed Income Supplement exemption will increase to $3,500 from the current $500 maximum, benefiting low- and modest-income seniors who choose to continue working.



Heartfelt Benefits

Breaking up may be hard to do, but employees at a marketing company in Japan get paid time off to mend their broken hearts. Heartache leave is granted to the staff at Hime & Company. Employees under the age of 24 get one day off per year, 25- to 29-year-olds get two days off, and those older get three days of paid leave. The time off allows workers to cry themselves out and return to work refreshed, chief executive officer Miki Hiradate tells Reuters.

Thank You for Smoking

We’re told that prevention is the best way to control healthcare costs, but a study by The Netherlands National Institute for Public Health and the Environment finds that it’s actually cheaper to take care of smokers and those who are overweight. Healthier people tend to live longer and cost the healthcare system more in the long run. “The underlying mechanism is that there is a substitution of inexpensive, lethal diseases toward less lethal, and therefore more costly, diseases,” notes the study. Researchers say the cost of care for smokers was about US$326,000, $371,000 for those who are obese and $417,000 for healthy people.

Working to Death

A study published in the European Heart Journal finds that work stress is linked to the biological mechanisms involved in the onset of heart disease. Stress can lead to the disease directly or indirectly via its association with unhealthy lifestyles. The association between chronic work stress and coronary heart disease was stronger among both men and women under the age of 50—an average of 68% more than for people who reported no stress at work.


Getting the Mental Message Out

Yet another mental health report lands on a manager’s desk. That makes two this week. Will the latest literature from Wilson Banwell Human Solutions Inc., A Quiet Crisis: The Business Case for Managing Employee Mental Health, simply be tossed on to what seems an ever-growing pile of mental health data? Judith Plotkin, national director, business development, at Wilson Banwell, doesn’t think so. “I feel [mental health] is an issue whose day has come,” she says. “A lot of people will look at this report and say, ‘I understand the cost burden.’”

That cost burden reflects some staggering numbers. In terms of employee absence, one study cited in the report found that bipolar disorder was associated with 66 lost workdays per employee per year and major depression with 27 lost workdays. Another study indicated that employees who reported being depressed had medical costs that were 70% higher than their non-depressed co-workers. The burden is exacerbated further when mental illness extends into the realm of short- or long-term disability. Mental illness accounts for almost one-third of the number of all of these claims in Canada.

But where cost impact is one thing, overcoming the stigma associated with mental illness (which often causes those who need help to avoid it) is quite another. Organizations such as the University of Alberta, however, are making an effort. Last September, the university launched a new program called Facing Facts, its 18-month anti-stigma mental health campaign targeted at faculty, support staff, students and their families. “We started off by providing information on the data, trying to ‘normalize’ the situation,” says Melanie Goroniuk, manager, health promotion and worklife services. For example, informing the university populace that one in five people will experience mental illness in their lifetimes and that mental illness also affects children.

The university is currently in the next phase of the campaign: early problem recognition. “We’re talking about resources where people can go for help, either within the organization or outside of the organization,” says Goroniuk.

Yet even with all kinds of campaigns, both Goroniuk and Plotkin remain skeptical, suggesting that society as a whole still has further to go down the mental health road. “I don’t think we’re quite where we need to be in terms of really helping today’s workforce get mental health help [versus] the way we’ve figured out some physical health conditions,” says Plotkin. “There’s more conversation and more dialogue,” says Goroniuk, “but there’s still definitely a stigma.” And, along with the stigma, fear and disbelief may also keep employees silent when they should speak up. “Part of it, too, is ‘I don’t believe it can happen to me,’” she says. “That’s why we focused the early part of the campaign on just getting the message out.” — Brooke Smith



In the 2008 Custodial Directory (February 2008), assets for CIBC Mellon Global Securities Services Company were reported in millions, instead of billions. Benefits Canada regrets the error.

For a PDF version of this article, click here.

© Copyright 2008 Rogers Publishing Ltd. This article first appeared in the March 2008 edition of BENEFITS CANADA magazine.