As a leading independent investment dealer, Canaccord has built its reputation on the quality of investment ideas that can deliver results. During the past year, we expanded our capabilities in wealth management to better serve the needs of clients with substantial assets.

Our industry leading asset allocation and financial planning software enables our Advisory Teams to create comprehensive investment policy models for complex financial situations. We have also added to the Private Client Services support team by hiring new wealth management services personnel, who provide Advisory Teams and their clients with professional advisory services on sophisticated strategies such as individual pension plans, charitable trusts and risk management. We plan to continue to enhance the skills and services available through our wealth management platform in the coming year.

We recognize that the growing complexity of many clients’ financial circumstances demands experienced advisors who can deliver appropriate ideas. A growing number of our senior IAs have undergone the rigorous study required for advanced industry designations such as Chartered Financial Analyst, Certified Investment Manager and Fellow of CSI. Late in the fiscal year, we increased investment in training and development for a new cohort of IAs that will ensure their skills match the complex needs of wealthy clients.

In the last quarter of fiscal 2008, we changed how we report our IAs. We are now reporting them as Advisory Teams to reflect how the business operates. We have also recategorized IAs still in training, removing them from our total number of Advisory Teams, and have parted company with several advisors who were unable to meet our targets for productivity. As a result, Canaccord had 354 Advisory Teams at year end compared to a restated 368 in the prior year, representing a net decrease of 14 Advisory Teams during fiscal 2008.

Practice management will be an important focus for Private Client Services during fiscal 2009 as we roll out a new generation of strategies to help IAs manage their books more productively.

Assets under administration (AUA) decreased 4.8% in fiscal 2008, to $14.3 billion compared to $15.0 billion in fiscal 2007 due to weaker equity market conditions versus fiscal 2007. Comparatively, the S&P/TSX Composite Index increased 1.4% and the TSX Venture Composite Index decreased 21.0% during fiscal 2008. Over a five-year period, Canaccord has experienced a 15% compounded annual growth rate of AUA.

Assets under management (AUM) in our managed account product line were $730 million in fiscal 2008, a decrease of 9.5% from fiscal 2007. It should also be noted that in Q1/07, AUM was reclassified to include all separately managed accounts, also known as the Alliance Program and advisor managed accounts, also known as Private Investment Management. Prior to this Q1/07 change, AUM only included Canaccord’s internally managed Independence Accounts, part of the Alliance Program.

In fiscal 2008, both the externally managed Alliance Program, to which we added Guardian Capital as a new manager late in the year, and Private Investment Management grew strongly, adding to AUM for the year. AUM decreased in the Independence Accounts for fiscal 2008 due to the value-style investment approach used by the portfolio manager, which is less sought out in bull market conditions. As we come out of turbulent market conditions and see lower valuations, this style of investment management has become more desirable, resulting in an increase in client interest in the Independence Accounts product again. Longer term, our objective is to build our fee-based business from managed products to a greater proportion of assets under administration.

Starting in fiscal 2008, we are reporting our fee-based revenue to include fees earned in separately managed, advisor managed and fee-based accounts, as well as mutual fund and segregated fund trailer revenue. This method of calculating fee-based revenue is more consistent with how other firms in the industry report, and as a result of this change, Canaccord’s fee-based revenue now accounts for 14.7% of Private Client Services revenue, compared to a recalculated 11.9% in fiscal 2007.