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Do your clients need help meeting their retirement income needs? With inflation taking a bite out of savings, accessing cashflow can be a real challenge. That’s why many Canadians are turning to one of their biggest assets – their homes – to supplement their income in retirement. A home equity line of credit (HELOC) and a reverse mortgage are two of the most popular ways for Canadians to tap into their home equity and boost cashflow.

The benefits of a HELOC

With a HELOC, homeowners can access up to 65% of the value in their homes and are only charged interest on the amounts they draw from their credit line. Unlike a mortgage, there are no scheduled payments on the loan’s principal, and homeowners can pay off their line of credit when it’s convenient for them. However, they must make minimum monthly interest payments on any amounts drawn.

• HELOC rates are usually lower than other lines of credit because the loan is secured by your client’s home 
• Once approved for their HELOC,  clients can access cash as they need it
• When they start to pay down the principal, the amount they can borrow increases to their original credit limit, providing ongoing access to cashflow

The reverse mortgage advantage

The other way for homeowners to access the equity in their homes is through a reverse mortgage. The CHIP Reverse Mortgage by HomeEquity Bank allows Canadian homeowners age 55+ to access up to 55% of their home’s value and turn it into tax-free cash. Your clients can receive the funds from a reverse mortgage as a lump sum or in regular monthly deposits. Clients can use the money for any of their financial needs, including health care costs, debt consolidation or lifestyle expenses.

A big advantage of the CHIP Reverse Mortgage is that monthly mortgage payments are not required – the full amount of the loan only becomes due when clients move or sell their home or through their estate if they pass away. Some of the other benefits of a reverse mortgage include:

• No income requirements. Reverse mortgages are specifically designed for Canadians 55+ who may have difficulties qualifying for a HELOC and other loans. 
• No need to requalify. A regular HELOC from a bank may subject the borrower to credit score checks over time, which can affect their ability to access the line of credit down the road. 

Interest rates converging

Until recently, one of the major advantages of a HELOC compared to a reverse mortgage was its lower interest rate. At the end of last year, the average HELOC rate was about 2% less than the average reverse mortgage rate. But the difference today is slim. In fact, the CHIP Reverse Mortgage 5-year Special Rate was slightly lower than the average HELOC rate in early April 2023.

To learn more about helping your clients tap into their home equity with the CHIP Reverse Mortgage, visit us online or contact a Business Development Manager today.

As inflation reduces the value of savings and financial markets continue to experience volatility, it can be challenging for retired Canadians to access the cashflow they need to live their desired lifestyle. And while the good news is that Canadians are living longer than ever before – those who retire at 65 can expect to live an additional 20 years or longer when you factor in advances in health care – these financial challenges they may face may start to tarnish their golden years.

Traditional sources of retirement income

A combination of registered savings, government, and company pensions are typically relied upon by Canadians for retirement income. If an individual begins collecting government pensions (such as Old Age Security and Canada Pension Plan) at age 65, they may currently receive less than $2,000 per month. Additionally, four in 10 Canadians do not have company pension plans to fall back on, and recent figures show that the average amount saved in registered plans for those aged 55-64 is about $100,000. As a result, some clients approaching or already in retirement may experience an income deficit, particularly with today’s inflation rate of 6%. 

Access home equity with a reverse mortgage

One advantage older Canadians do possess is home ownership, with more than 65% owning their homes. That’s why the CHIP Reverse Mortgage by HomeEquity Bank has become such an essential cashflow option. This unique income alternative allows Canadian homeowners 55+ to access up to 55% of their home’s value and turn it into tax-free cash without moving or selling their home. Plus, there are no monthly mortgage payments while retirees live in their homes; the total amount becomes due only when the house is sold, if they move, or through their estate if they pass away.

With the CHIP Reverse Mortgage, homeowners can choose to receive the funds as a lump sum or in regular monthly deposits. They can use the funds for a range of financial needs, including, but not limited to, health care costs, home renovations, debt consolidation, or lifestyle expenses.

Advantages of tax-free retirement income

Having access to tax-free cashflow provides many financial planning benefits to your clients.

• Because they are unlocking home equity, the funds are not added to their taxable income and do not affect government benefits such as Old Age Security (OAS)
• Your clients won’t need to liquidate their investments, potentially losing out on investment income during a down market
• Tapping into their home equity allows more of your clients’ registered investments to grow tax-free (and helps you maintain hard-won client portfolios)

Help your clients take a holistic look at their retirement income options with the CHIP Reverse Mortgage by HomeEquity Bank. Visit us online or contact a Business Development Manager to learn how to make CHIP part of your financial toolkit.

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Your clients’ financial planning objectives are continually evolving, and those of your clients aged 55 or better are no exception. They are living longer lives in retirement and want to keep their investment portfolios intact for as long as possible. They also want to maintain their desired lifestyles and seek greater cashflow certainty to realize their retirement dreams. Some clients would like to help their children with a down payment on their first home, while others may want to spruce up and renovate their homes so they can age comfortably in place.

Listening carefully to the goals and needs of your clients can help you provide them with the best advice for their situation. However, a challenge faced by many 55+ Canadians is that persistent inflation and high interest rates make it challenging to plan confidently. One financial solution worth considering is the CHIP Reverse Mortgage by HomeEquity Bank.

The CHIP Reverse Mortgage allows Canadians 55+ to access up to 55% of their home’s value in tax-free cash. Your clients maintain ownership of their homes and don’t have to make mortgage payments until they move or sell. Plus, they don’t have to take the full amount of the reverse mortgage they qualify for; they can access funds whenever the need for cash flow arises. These funds can then be used to meet a variety of objectives, including funding retirement lifestyles, home renovations, or debt consolidation.

Is the CHIP Reverse Mortgage a good fit for your clients? While many scenarios warrant a discussion, here are three that could prompt a discussion about the role of this flexible solution in your client’s financial plans. 

1. Your client wants to consolidate their debt.

Skyrocketing inflation has led many older Canadians to use debt, such as credit cards, to cover their expenses. Debt can be stressful at any stage in life, but in a climate of rising interest rates it can be especially challenging for Canadians 55+ who may not have a regular income and find it difficult to keep up with monthly payments. If you have clients in this situation, the CHIP Reverse Mortgage may be worth considering. Clients can access tax-free funds to consolidate their high-interest-rate debt and gain peace of mind.

2. Your client wants to maintain their desired lifestyle in retirement.

If you have clients who have recently retired, the high cost of living may be having an impact on their anticipated lifestyle. They may be experiencing a shortfall in their cash flow but want to avoid tapping into their nest egg at this early retirement stage. For clients in this situation,  the CHIP Reverse Mortgage can provide the cash flow to help them confidently pursue their retirement dreams.

3. Your client is facing unanticipated expenses.

An urgent roofing job on the house, a vehicle needing major repairs, or a large out-of-pocket medical expense can all play havoc with your client’s finances. If your client is facing a financial setback, a reverse mortgage can be used to cover the necessary costs and alleviate their stress. The flexibility of the CHIP Reverse Mortgage means they can access only the funds they need and are not required to make payments until they move or sell their home.

To learn how the CHIP Reverse Mortgage fits into your client’s financial plans, visit us online or contact a Business Development Manager today.

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Technology stocks hold the promise of exposure to paradigm-changing areas of innovation such as AI, VR and AR, and the metaverse. However, the sector can also be volatile, and it has faced the same headwinds as the rest of the equity market in the past year. As a result, many investors are steering clear of it.

Depending on their risk tolerance, investors may want to reconsider, says James Learmonth, senior portfolio manager at Harvest ETFs. He’s part of the team that manages the Harvest Tech Achievers Growth and Income ETF (HTA:TSX), which invests in 20 equally weighted tech companies with a minimum market capitalization of US$10 billion that trade on a North American exchange. Holdings in HTA must be traded in an active options market, because what sets the HTA ETF apart from a core tech portfolios is that its complemented by an active covered call strategy.

“Writing call options on the portfolio gives investors a way to monetize some of that volatility and generate cash flow to meet their investment objectives from an income perspective—while still remaining invested in large-cap technology companies and exposed to any potential upside in the future,” Learmonth explains. “This kind of environment is where a covered call strategy like ours can provide additional value for investors.”

A challenging year for all stocks

“As all equities came to terms with rising interest rates this year, growth stocks experienced multiple compressions, and investors started to put a higher discount rate on future earnings for growth companies, including those in the tech sector”. says Learmonth.

“As we moved through the year, we started to see pretty dramatic slowing of global economic growth from the general hangover of the pandemic-era monetary and fiscal stimulus. That has started to impact the growth outlook for companies in general,” he adds.

The pandemic initially boosted tech sales as people upgraded for remote work. However, the return to in-person work led to decreased demand for home office setups, causing a shift in tech company strategies. They adapted by focusing on hybrid work solutions and innovations to suit evolving needs.

Of course, not all companies have experienced the pullback equally. “A dichotomy exists between established tech companies and earlier-stage technology companies,” says Learmonth. “More of [the latter’s] valuations are dependent on future prospects that, in many cases, they haven’t realized yet.…Established companies with strong operating models are revenue-, earnings-, and cash flow-positive, [and so] you’ve seen more established companies holding up relatively better.”

Established companies well positioned for future growth.

Learmonth adds that established companies, with their strong balance sheets, have been able to invest through the downturn, so they’re well positioned for an upswing. That’s in contrast to earlier-stage companies that are often more dependent on external funding and can’t invest—or can’t invest as much—all the way through the economic cycle.

Looking to the future, Learmonth says a number of macroeconomic trends make tech an attractive place for investors to be. Several themes—digitization of the consumer, the shift to cloud-based infrastructure, AI, VR and AR, and the ubiquitous need for cybersecurity—stand to drive continued investment in technology into the future. Investors who are comfortable with a few ups and downs have an opportunity to participate in significant potential growth.

“We’re looking for companies that have grown to the point where they’re the dominant players or leaders in the end markets they serve,” Learmonth emphasizes. “We want to build a diversified portfolio within the technology sector. Then, from there, we overlay our active covered call strategy to enhance the underlying dividend yield of the portfolio and offer a higher yield to investors.”

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In an environment of rising inflation and volatile financial markets, your affluent, retired clients are looking for solutions to help with their cash-flow needs. But they also have other priorities, such as keeping their investment portfolios intact, maximizing the value of their estate and minimizing taxes. These goals can sometimes conflict, as some of your clients may be tempted to cash out investments to fund more immediate lifestyle needs. Although understandable, selling investments in a volatile market can lock in losses, reduce the value of your client’s estate and lead to taxable events. 

Reverse mortgages: A holistic wealth planning solution

Your affluent clients will look to you for guidance and advice on how to meet all of their wealth planning goals. The good news is there is a way to get in front of your clients’ needs and retain their assets under management: The CHIP Reverse Mortgage by HomeEquity Bank. With this flexible planning tool, Canadians 55+ can access up to 55% of their home’s value in tax-free cash. Monthly mortgage payments aren’t required until they move or sell, which frees up additional cash. In other words, with a reverse mortgage, the client’s home pays them. Plus, they get to stay in the home and community they love.

Your clients don’t have to take the full amount of the reverse mortgage they qualify for; they can tactically access funds whenever the need for tax-efficient cash flow arises. These funds can be used to meet various needs, including funding retirement lifestyles, building investment portfolios, purchasing a property or helping children with a down payment on their home.

Your clients may already be thinking about the advantages of a reverse mortgage – HomeEquity Bank funded $1 billion in new mortgages in 2021, much of that originating directly from individuals.

Help keep client portfolios intact

Even though home prices have dipped recently, many of your clients have probably benefited from substantial home-price appreciation over the past few decades. But this equity can be difficult to access for those who don’t want to sell their homes. With a CHIP Reverse Mortgage, up to 55% of home equity becomes accessible. Clients maintain full ownership of their home and don’t have to make mortgage payments until they move or sell.

Your clients’ investment portfolios are the other major component of their net worth. However, selling non-registered investments to access funds can trigger taxable events, as can increasing withdrawals from registered plans. Helping your clients meet their cash flow needs with a CHIP Reverse Mortgage means that more of their investments continue growing on a tax-deferred basis. This provides stability for clients who are living longer lives and want to enhance their estate for their heirs.

Delivering flexible solutions that provide your clients with tax-free cash flow also helps to preserve your accounts and assets under management. 

To learn more about how the CHIP Reverse Mortgage fits in your clients’ financial plans, visit us online or contact a Business Development Manager today.

Michelle Schriver

News

Michelle is Advisor.ca’s continuing education editor. She has worked with the team since 2015 and been recognized by the National Magazine Awards and SABEW for her reporting. Email her at michelle@newcom.ca.

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Healthcare is vastly underrepresented in Canadian equity markets, comprising just 0.30% of the S&P Composite Index on July 31, 2023.[1] In contrast, healthcare made up 12.79% of the MSCI World Index on the same date.[2] So, Canadian investors have to look outside of our borders to get exposure to a sector with relatively short-term defensive characteristics and long-term growth potential that can add valuable diversification to an equity portfolio.

“Healthcare is a massive global industry that has positive structural long-term tailwinds,” says Paul MacDonald, chief investment officer and portfolio manager at Harvest Portfolios Group. “You’ve got permanent, non-cyclical drivers impacting the long-term growth for the sector.”

Three primary drivers, MacDonald explains, are aging populations, technological innovation, and developing markets. As people age, they spend more on healthcare. Technological innovation is creating rapid advances in areas such as medical devices and both small-molecule and biologic drugs. And healthcare expenditures are rising as wealth increases in developing markets.

Meanwhile, in a macro environment with challenging shorter-term market dynamics, as central banks increase interest rates to rein in high inflation, healthcare may provide partial shelter from the storm. That’s because many of the businesses in the sector often have high margins and low exposure to commodities while producing a “superior good” that’s needed in up and down markets.

Total returns matter more than ever

Cash flow, too, can provide a buffer in the face of a difficult market outlook. In fact, it’s at times like these that cash flow becomes a more important component of total return. This makes a solution such as the Harvest Healthcare Leaders Income ETF attractive to more than just investors seeking exposure to healthcare with a high level of cash flow, MacDonald suggests.

His team chooses 20 equally weighted large-cap healthcare companies for the ETF and then layers on a covered call strategy to enhance cash flow. The options give up a little of the upside of stock performance in return for higher current monthly cash flows. As of July 31, 2023, the ETF’s yield was 8.69%[3].

The companies in the ETF are selected based on a quantitative screen that narrows the universe of global healthcare companies to about 85 U.S.-listed companies offering options.

“We peel back the layers on each one of these companies to build a portfolio of 20, making sure that we’re diversified across each one of the healthcare subsectors,” MacDonald says. “We go through that process quarterly, but turnover tends to be fairly low, just given the front-end analytics we put into picking our 20 companies.”

In the end, investors get access to a sector focused on creating products with real-world applications that change people’s lives. MacDonald points, for example, to exciting developments in robotic-assisted surgery and personalized drugs. He also likes the fact that pharmaceutical firms, in particular, are now pivoting from a pandemic focus back to more normalized business lines and research & development productivity.

At the same time, because of its high yield, the Harvest Healthcare Leaders Income ETF has the potential to generate total returns higher than the broader equity market can deliver right now.

“We provide that monthly, steady cash flow, [and], even if one is not looking specifically for that…given the relative opportunities elsewhere, the covered call strategy can add to that overall total return,” MacDonald says.

¹ www.spglobal.com/spdji/en/indices/equity/sp-tsx-composite-index/#overview (see Factsheet) ² www.msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb ³ https://harvestportfolios.com/etf/hhl/

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Many retirees view Old Age Security (OAS) as a financial benefit they are entitled to – especially today as inflation and the cost-of-living soar. However, if some of your clients increased withdrawals from their registered plans this year to help meet cash-flow needs, they might be in for a shock at tax time when their accountant informs them, they will have to repay some of their OAS benefits. Retirees must pay back all or a portion of their OAS if their annual income exceeds $81,761.

Have a plan going forward

Fortunately, there is a way to help your affluent clients plan and avoid having to repay their OAS benefits for the 2023 taxation year. The CHIP Reverse Mortgage by HomeEquity Bank can solve OAS pain points and generate the tax-free cash flow your clients need. With the CHIP Reverse Mortgage, clients 55+ can access up to 55% of their home’s value and turn it into tax-free cash without having to move or sell. Because the money they receive is a loan, it’s not added to their taxable income and does not affect income-tested government benefits like the OAS.

Did you know? Canadians 55+ are Canada’s largest and fastest-growing demographic and have over $1 trillion locked in their home equity.

Inflation taking a toll

Inflation is taking a toll on the financial health of Canadians. Over half say they are having a tough time keeping pace with the rising cost of living. Retired Canadians are feeling the pinch in many ways. Higher prices are happening while volatile markets are contributing to concerns about retirement savings. And rising interest rates are making it more difficult to carry debt. That’s why the CHIP Reverse Mortgage is such an attractive planning solution. It can help your clients maintain or even improve their standard of living – without impacting their government benefits like OAS. With a reverse mortgage, your clients enjoy the convenience of a lump-sum or monthly payout to help with any of their financial needs, including health care costs, home renovations and debt consolidation. Plus, your clients get to stay in the home they love – a goal shared by more than 90% of Canadians.

Did you know? 93%  of Canadians want to stay in their current home throughout their retirement.

Wealth planning benefits

Access to tax-free cash flow provides other planning benefits to you and your clients.

• Tapping into their home equity allows a larger portion of your clients’ registered investments to continue growing on a tax-free basis – potentially providing more assets to leave their heirs.
• Preserving client investment portfolios helps you maintain your assets under management.
• Your clients don’t have to sell investments in a volatile market or borrow funds when interest rates rise.

To learn more about the CHIP Reverse Mortgage by HomeEquity Bank, visit us online or contact a Business Development Manager today.

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In 2017, Emil Tarazi and his colleagues saw a gap in the market: exchange-traded fund (ETF) issuers needed a tool to help them better navigate ETF liquidity. So Tarazi co-founded ETFLogic and developed that tool.

Soon after, the team started hearing that wholesalers working for the ETF issuers were using the tool to answer questions from financial advisors. It became clear that advisors wanted access to the data ETFLogic was consolidating to help construct and manage optimized portfolios.

In 2020, LOGICLY—which came to Canada the following year as TMX LOGICLY*—was born.

“I began my career as an ETF market maker and saw the tremendous growth in ETFs. When we started ETFLogic, there were fewer than 2,000 ETFs with about $3 trillion in assets. Today, five years later, there are 3,000-plus ETFs with about $7 trillion in assets,” says Tarazi, now CEO at ETFLogic. “The ETF is a building block. We think of it as an essential, foundational piece of a portfolio. But there are so many different types of these building blocks, so the question is, how do you build better portfolios?”

Also, ETFs aren’t the only building blocks for portfolios. So, while LOGICLY still puts ETFs first, it has expanded to encompass mutual fund and stock analytics as well. And data isn’t the only thing advisors needed from what started as a robust research platform. The tool now incorporates workflows for fund screening and portfolio construction.

“[LOGICLY] is a place where you can get very deep into fund comparisons [and] find similar funds, and then, once you’ve done that initial research, move towards understanding how those building blocks fit together in a portfolio,” Tarazi explains.

Emil Tarazi, CEO and Co-Founder of ETFLogic

An evolving tool

Tarazi describes the journey to build LOGICLY as client-driven and iterative. The team started by asking the advisors in its network what they needed from a fund research tool. Then the team developed and tested, responded to feedback and tested, enhanced further and tested—always focused on their customers’ requirements.

In a platform that relies on data, the timeliness and quality of that data were paramount. Since ETFs have daily transparency, LOGICLY had to incorporate daily updates. And since advisors wanted quality data, the team arranged for as much information as possible to come directly from the source instead of passing through third parties or vendors.

Repositioning LOGICLY for the Canadian market as TMX LOGICLY required further tweaks. Canada has different fund categories and different ways of handling expense ratios for funds. The team was also able to capitalize on the potential to exploit the powerful advanced analytical capabilities of TMX Grapevine™.

“It’s never a finished product,” Tarazi says. “The markets are constantly evolving. New products come to market and old products get retired….The platform has to evolve with the markets—[and with] the way people build portfolios, which is also changing.”

Adding value with interface, data, and tools

As TMX LOGICLY establishes itself among Canadian advisors, Tarazi says the feedback has been positive. The first thing advisors notice, he suggests, is the intuitive, easy-to-use interface. That interface provides user-friendly access to a tremendous depth of data that helps cut through marketing to reveal facts, as well as workflow tools that are intended to make it seamless for advisors to perform complex back-testing and generate compelling client presentations, for example.

“We have a unique set of data points. When it comes to Canadian funds, we have TMX market data that sets us apart from other platforms. So we have very good high-quality views on volumes and spreads for Canadian securities,” Tarazi says, emphasizing that it’s the combination of interface, data, and tools coming together that creates value for users.

One tool Tarazi highlights is the Portfolio Coach, an “autopilot for portfolios” powered by artificial intelligence. Tarazi believes the tool makes it easier to comply with Canadian client-focused reform and know-your-client requirements by allowing advisors to set objectives on accounts and keep an audit trail of their research. It can also monitor portfolios and alert advisors when they stray from factors or investment policies.

In the end, Tarazi says, all the workflow tools integrated within TMX LOGICLY are intended to simplify the investment research process for advisors so they can build and manage portfolios more efficiently. That frees up time to spend with clients. After all, shifting several hours every week toward client meetings and outreach can strengthen relationships, uncover new opportunities, and enable advisors to better meet their clients’ long-term financial needs. “Ultimately, that’s what all advisors want.”

This information is provided for information purposes only. Neither TMX Group Limited nor any of its affiliated companies guarantees the completeness of the information contained in this publication, and we are not responsible for any errors or omissions in or your use of, or reliance on, the information. The views, opinions and advice provided in this article reflect those of the individual author. This publication is not intended to provide legal, accounting, tax, investment, financial or other advice and should not be relied upon for such advice. TMX, the TMX design, TMX Grapevine, TMX Group, The Future is Yours to See., and Voir le futur. Réaliser l’avenir. are the trademarks of TSX Inc. 

* TMX is the trademark of TSX Inc. and LOGICLY is the trademark of SigmaLogic Inc. and is used under license.

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For more information on how to prevent ransomware in your business, download this free whitepaper: Protect from Ransomware Attacks in 10 Steps.

Ransomware is one of the most devastating forms of cyber crime. Victims range from single-person offices to multinational corporations. It leaves businesses facing legal consequences, reputational damage, and even crippling financial loss. With thousands of cyber attacks happening daily in Canada, doing nothing is no longer an option. Learn here why preventing a ransomware attack is much easier and cheaper than recovering from one.

Personal identifiable information (PII) is of tremendous value to cyber criminals and access to it makes financial advisors targets for cyber attacks. According to a report by Boston Consulting Group, financial services firms are 300 times more likely to be targeted by cyber attacks than businesses in any other industry. No matter the size of your business, a financial services professional that is unprepared or under-protected is vulnerable to a cyber threat like ransomware.

When a ransomware attack occurs, it uses powerful encryption to lock the data of the affected system(s) and only the attackers have the key to unlock it. These cyber criminals then demand a ransom payment in exchange for the key to unlock the data. In some instances, they copy data and threaten to publish it online or to the victim’s clients unless payment is made. It is not just corporate data that the attackers are after, but your client data — a successful attack could lead to attacks on or exploitation of your clients directly.

According to the Sophos State of Ransomware 2021 report —only 8% of companies who surrendered and paid the ransom got all of their data back undamaged. Even if your data is fully restored, you have no guarantee that your systems have not been otherwise compromised, which could give attackers another way into your system in the future.

Backing up company data is always an important practice, and it is especially useful to reduce damage from a ransomware attack; post-incident recovery is easier, and it eliminates some of the attacker’s leverage because you have a copy of the data that they have locked for ransom. Keep your backup physically separate (such as a secure cloud environment) so that infected files are not backed up and ransomware does not spread.

While it is a controversial issue, it is strongly recommended that you do not give into the ransom demands of cyber criminals. Doing so funds their operation, allowing them to continue and contributing to funding other forms of crime and exploitation around the world.

The cost of a ransomware attack is more than financial, as you would likely also suffer reputational damage, not to mention the damage to your clients from the loss of their personal information. It is becoming more common in the financial services industry for new clients to ask about the security of their data before they agree to do business with an Advisor.

The risk of being targeted for a ransomware attack is not only for enterprise organizations. While large companies store more data, and their breaches are more newsworthy, small businesses are statistically more likely suffer a successful penetration. Large organizations also have more experience and resources dedicated to improving cybersecurity and recovering from a cyber attack. While still serious, their superior level of resources can minimize their financial and reputational damage. SMBs are easier targets in the eyes of the cyber criminals.

Ransomware attacks are often initiated when you click on an infected email or website link. Cyber criminals use a variety of techniques, both technological and psychological, to try to manipulate you to reveal, send, download, or click on something that you should not.

Emails with infectious attachments or links are the leading delivery methods of ransomware. As our working world has become more interconnected, attacks have become more sophisticated. We all have experience with identifying overtly suspicious activity, but the “tradecraft,” or the quality of the tools and methods of the attack, of some of these threat actors has become so good that it is hard to tell what is legitimate.

Some attack methods attempt to circumvent the user and gain access to the data directly. Improperly secured Wi-Fi networks and smart devices are causes of ransomware penetrations because their default passwords aren’t updated or can be easily bypassed due to unpatched devices. Similarly, supply chain attacks allow cyber criminals to compromise a system, especially software, not by attacking it directly, but by first compromising a vendor, supplier, or other partner that has access to the software prior to installation or during maintenance.

In short, threat actors will use any available method to try and gain access to your information that is not carefully and securely monitored and managed. Nothing in the tools or systems in your company should be left to chance.

Outdated hardware and software may contain known vulnerabilities that can be exploited by cyber criminals. Up-to-date technologies will be better equipped to defend against new threats. It is important to perform software updates as soon as they are available as these often contain security patches that will further reduce risk.

Data privacy compliance requirements can be complicated as they are often technical and evolving, but the overarching guidelines require PII to be kept safe and secure. It is your responsibility to meet compliance requirements and, in doing so, you will be protecting your own business.

Any data breach that poses a “real risk of significant harm” to an individual must be reported and disclosed to the federal or provincial privacy commission (depending on the province or territory of the breach), and to the affected individual. The risk of harm to affected individuals can be related to financial loss, identity theft, impacts to credit rating, damage to reputation or relationships, and loss of employment, business, or professional opportunities.

The best defense against ransomware attacks is to be aware of the risks and take steps to prevent them. There are changes you can make in your own business to improve cybersecurity and reduce your risk of falling victim to a cyber attack. Key among these activities are the fundamentals of good Risk Governance: Policy, Training, and Technology.

Every Advisor office, big or small, should have clear policies on the handling and protection of client data. Your E&O and cyber insurance providers will be asking for these details. Above all, and at the minimum, you need an Incident Response Plan (IRP) for your business. Whether it is five pages or fifty, this is your most essential plan to minimize damage in the event of a successful attack and creating it will help you assess your current cybersecurity resources and needs. Developing policies will help you review how your company already handles sensitive data and reveal any vulnerabilities before they become liabilities.

Larry Keating President

For more information on how to prevent ransomware in your business, download this free whitepaper: Protect from Ransomware Attacks in 10 Steps. This white paper, written by NPC for the SMB financial professional, will provide you with the checklist of the 10 most important steps to protect your business. From the setup and security of your computer, to understanding the importance of disabling features in Word and Excel that could make you vulnerable, this guide could save you thousands, and prevent a financial professional’s worst day, having to advise their clients they lost their personal financial information.

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It hasn’t been easy to generate cash flow from investments lately. Rising interest rates have had an impact on fixed income assets, while inflationary pressures have compressed real returns. At the same time, volatility has hit equities, including those paying dividends.

Paul MacDonald oversees an approach that has been providing investors with a relatively high level of income through these challenging markets. MacDonald is chief investment officer and a portfolio manager at Harvest ETFs, and his team runs eight sector-specific equity income exchange-traded funds (ETFs), plus the Harvest Diversified Monthly Income ETF (HDIF), which holds seven of the others with no additional management fee.

Each of these equity income ETFs benefits from a focus on areas of the market with a record of long-term growth. Within sectors, the team seeks out good-quality businesses that have proven they can adapt to changing environments. Meanwhile, security selection is complemented by an actively managed covered call strategy applied to up to 33% of each portfolio. Current yields, as at July 31, 2023, ranged between 7.38% and 9.06%.

“With covered calls, there’s a trade-off. You forego some of the upside in favour of current high cash flow,” MacDonald explains. “We’re participating in the longer-term growth of our underlying businesses…and, at the same time, we’re able to generate really consistent, steady, tax-efficient monthly cash flows.”

Covered calls capitalize on volatility

Covered calls generate income by selling options on positions in the portfolio. They’re best applied to holdings that are unlikely to move up or down very much during the life of the option. Harvest’s active approach examines every portfolio, and every security within it, on a monthly basis to determine what and how much to write within the 33% limit.

MacDonald emphasizes that this active overlay is critical when markets are volatile. After all, one of the key drivers of option pricing is volatility, so it is precisely in this type of environment that his team can monetize more cash flows.

To enhance its distribution yield, Harvest’s multi-sector ETF HDIF incorporates 25% leverage. As of July 31, it had attracted more than $344.5 million in assets.

“The leverage used in HDIF allows us to enhance the income generation of the underlying ETFs it holds by 25%…for those who are looking for a little bit more torque on their income, over and above the core ETF,” MacDonald says. “For every $100 invested, this ETF is generating cash flow on $125.”

HDIF provides advisors with an additional option to deliver the regular stream of inflation-beating monthly income their clients need.

Source: https://harvestportfolios.com/wp-content/uploads/why_invest/Harvest_investment_products_web_pdf.pdf