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Advisors defend Big Five salaries

This article was originally published January 3rd, 2014 at WealthProfessional.ca  To see the article online click HERE.

by  Sophie Nicholls |  3 Jan 2014 | Wealthprofessional.ca

The leaders of Canada’s top five banks may rate amongst the highest paid CEOs in the country, according to a report released last week, but one B.C. advisor suggests the value they add overrules the cost to employ them.

“We tend to look at the numbers as big numbers, and they are big numbers, but you have to attempt to quantify the value that the executive is providing,” says investment advisor Luke Kratz. “I think it’s a necessary cost that shareholders must bear and I think there’s some extraordinary (talent) across Canada’s top firms.”

The report, All in a Day’s Work: CEO Pay in Canada, by the Canadian Centre for Policy Alternatives, provides a snapshot of the 240 publicly listed Canadian corporations on the TSX index, ranking the top 100 highest paid CEOs in the country and determining their average total compensation. One key finding is that these CEOs make an average Canadian salary in just two days of work.

Amongst the top 30 are: Gordon M. Nixon of the Royal Bank of Canada ($13,731,877), Richard E. Waugh of the Bank of Nova Scotia ($11,101,196), Edmund Clark of the Toronto-Dominion Bank ($10,884,239), Gerald T. McCaughey of CIBC ($9,931,000) and William A. Downe of the Bank of Montreal ($9,600,553).

Other financial services top dogs include: Donald Guloien of Manulife Financial Corp. ($10,878,678), R. Jeffrey Orr of Power Financial Corp. ($10,077,501), Dean A. Connor of Sun Life Financial Inc. ($7,970,689), Louis Vachon of National Bank of Canada ($7,677,015), Ned Goodman of Dundee Corp. ($4,514,966) and D. Allen Loney of Great-West Lifeco Inc. ($4,485,386).

Another Ontario advisor says enough with the Big Wig salary bashing. These executives work hard for their money and should be compensated accordingly.

“The rich earned what they deserve and rather than criticizing them, we should embrace what they have done, and learn from them rather that casting them out as evil,” writes Kevin Cahill in his latest Canadian Legacy Builder blog. “Life is like a long game consisting of a lot of educational values. The people that work hard within it get rewards in return.”

Conversely, Ottawa-based advisor, Marc Lamontagne, believes it is this small clique of well-paid leaders that prevent the financial services industry from moving forward and implementing necessary reforms.

“I think the financial industry management – the banks, the brokerages, the mutual fund dealers – hold too much sway over the regulators. They’re almost like a small club,” says Lamontagne. “They don’t see a need for change. As opposed to the small consumer groups... They are the lowly voice in the wind.”

Lamontagne, an industry veteran, reflects upon a meeting he attended more than two decades ago discussing the same issues – mandatory fiduciary and the banning of commission fees – that are on the table today.

“Do I believe there is going to be fiduciary standards put in place? No. Do I believe they are going to ban commission fees like they have in the UK and Australia? No,” he says. “I don’t think these things will ever happen.”