Bob Keats quoted in Wall Street Journal article

PRACTICE MANAGEMENT CANADA: More Advisers Keeping Forex In Mind

By Evelyn Juan
A DOW JONES NEWSWIRES COLUMN

TORONTO (Dow Jones)–The recent strength of the Canadian dollar against the US dollar has raised interest among financial advisers in ways to hedge their clients’ investments against future currency moves.

Rahim Madhavji, president of Toronto-based Knightsbridge Foreign Exchange Inc., which caters to retail investors, said they have been partnering recently with more investment advisers, particularly those who run their own independent offices, to offer currency hedging tools.

“Advisers want boutique and personalized service for their clients,” said Madhavji, who spoke at a recent Private Banking and Wealth Management Forum sponsored by Insight Information in Toronto.

Robert Keats, a certified financial planner and president of KeatsConnelly LLC, sees hedging services as an important part of some advisers’ offerings now. “If you don’t put it in your planning, you’ll miss the opportunities,” he said.

With offices in Arizona and Florida, Keats’ firm specializes in clients with cross-border interests in the US and Canada. Many of its clients have at least half of their portfolio locked in at the current exchange rate for several years, to ensure that their Canadian dollar won’t slip in value when they retire or snowbird in Florida for several months. Keats said a fall in the Canadian dollars’ value could mean they will “have to stop travelling or purchasing homes in the US”

“Now is the ideal time to lock in and protect retirement,” said Keats, who wrote a chapter in the book The Trusted Adviser’s Survival Kit.

In recent trading sessions, the US and Canadian dollars have been trading in a tight range of between about C$0.9900 and C$1.000 to the US dollar. On Friday afternoon, the US dollar closed at C$0.9884.

Currency hedging isn’t a staple tool in financials advisers or planners’ practice because it is typically expensive and can involve use of somewhat complex instruments including futures options. Exchange-traded funds can also be used to hedge against currency swings.

Nonetheless, Tony de Thomasis, certified financial planner and president of De Thomas Financial Corp. in Thornhill, Ontario, said some of his clients who hold mutual funds that have exposure to US, international and emerging markets have hedged a portion of their portfolio against the greenback to protect against currency fluctuation.

“The most prudent way would be to hedge half of the funds,” De Thomasis said. “That way, it doesn’t matter what happens–you’re covered.”

(Evelyn Juan writes Dow Jones Newswires columns including Practice Management, which looks at ways financial advisers can build and improve their business. She can be reached at 416-306-2025 or by email at evelyn.juan@dowjones.com.)

–Don Curren contributed in this article.

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