One of my regular media gigs is sitting on the Alberta Primetime Monday Money Panel and for our year end show, we were asked to talk about some interesting stories from 2011 or share stories of interest and things we are watching in the new year. 30 seconds is not much time to respond properly to this question so I thought I would share four of my tops stories from 2011.
Pooled Registered Pension Plans (PRPP)
In January 2011, Finance Minister Jim Flaherty introduced the concept of a new PRPP as a means of trying to address the big retirement gap in Canada.
Later on November 17, 2011, the Harper government introduced the Pooled Registered Pension Plans Act(Proposed Act) legislation as the next step to the process of implement the federal portion of the PRPP. The government describes the PRPP as a change to Canada’s pension landscape that will make saving for retirement easier for millions of Canadians.
Being a strong advocate of workplace savings programs and financial education in the workplace, I have followed this story closely and written some articles:
- The Key to Success of the new PRPP
- A year end PRPP update
- How the new PRPP should work?
- PRPPs are the future of pension reform
- Benefits of Pooled Registered Pension Plans
The next steps for the PRPP is the Federal Government needs to pass this Proposed Act and adopt regulations. At the same time, work on provincial legislation and the multilateral agreements will need to be undertaken.
Task force on Financial Literacy in Canada releases their findings report
In the 2009 budget, the federal Minister of Finance announced his intention to establish a national task force dedicated to the issue of financial literacy. The Task Force would provide advice and recommendations to the Minister of Finance on a national strategy to strengthen the financial literacy of Canadians. Appointed in June 2009, the Task Force on Financial Literacy is comprised of 13 members, drawn from the business and education sectors, community organizations and academia.
On February 9, 2011, Canada’s Task Force on Financial Literacy today made public its report to the federal Minister of Finance, recommending urgent action on a national strategy to strengthen Canadians’ financial literacy. I am watching this story to see if this whole process makes an impact on the future financial literacy in Canada.
Vanguard comes to Canada
Back in June, US mutual fund giant Vanguard announced it’s intention to come to Canada with a series of Exchange Traded Funds (ETFs). In December they actually launched 6 ETFs with very low management fees. The management fee for all six Vanguard ETFs averages 0.24 per cent and the Canadian Equity Fund is reported to be 0.09 per cent.
I’m especially interested to see if the Vanguard Canada is able to create more awareness about the high fees being charged by the mutual fund industry. Canada has been reported as having some of the higher mutual fund fees around the world but despite that it remains the investment of choice for Canadians with $775 billion dollars of assets under management. ETFs have significantly less assets with less than $40 billion in assets under management.
Vanguard is targeting their ETFs to investment dealers and fee based advisors because the do-it-yourself market is too small (only 5% of all investors in Canada). Here’s a few articles I wrote on the topic:
- Will Vanguard start the mutual fund price war?
- Investors need to pay attention to their investment fees
- The Ongoing Mutual Fund Fee Debate
- Mutual Fund Fees do matter
Another year of Market Volatility
The last hot topic of 2011 was another tough year with more volatility. The TSX finished the year in negative territory (-8.89%) despite some hopes for a Santa Claus rally. The TSX hit a high of 14,329.50 and a low of 10,848.20 with 8 of 12 months with negative returns. September was the worst month of the year where the TSX lost 8.66% in a single month. October followed with the best month rebounding a 5.61% return.
In my line of work, I see a lot of investors who have accepted the volatility as normal and others who are just sick and tired of all the ups and downs and the market taking away any gains they make the previous weeks, months or years.
To help investors, here’s a few articles I wrote about dealing with market volatility:
- Three consequences of selling in a bear market
- Has the stock market changed your day to day life?
- Strategies to deal with market volatility
- The Five Realities of the Stock Market
- Market Volatility creates opportunity to rebalance
Are there any interesting stories you are watching for 2012?
Best wishes to everyone in 2012.