News about the sale of MD Financial Management to Scotiabank^®

The CMA, as the ultimate owner of the MD Group of Companies, made the decision to sell MD Financial Management.

MD has been proudly—and successfully—serving the financial needs of Canada’s physicians for close to 50 years and has been an industry leader on many fronts, but the financial landscape is changing. We’re successful today, but we must look forward and think about where we need to be in the next three to five years. We need mobile apps, a complete digital offering and the ability to digitalize some of our processes if we’re to avoid being at an increasing competitive disadvantage. The truth is that MD must change if we’re to stay ahead of the curve and ensure our clients are set up for long-term financial success. While the advice and support we provide to clients has always been of the highest quality, we were also hearing from MD clients and CMA members alike that they wanted access to a broader range of financial products, including banking products that MD does not currently offer. The sale to Scotiabank® is about finding the best way to give MD clients more of what they want and need, while maintaining the core MD values they rely on. The sale also means that we’ve gone from being owned by a medical association that depended on us to provide it with funds to being owned by a financial institution that can invest in us.

Unfortunately, it was not possible for them to consult CMA members or MD clients ahead of time because Scotiabank^® is a publicly traded company and the nature of the transaction required confidentiality. Additionally, public consultations ahead of time would likely have unnecessarily destabilized MD and its clients, with potentially devastating results.

The CMA was the ultimate owner of the MD Group of Companies and, as such, had the authority to negotiate and approve the sale. Please direct any specific questions you might have about the sale, the decision-making behind it and the proceeds from it to the CMA by emailing memberservicecentre@cma.ca.

MD was sold for $2.585 billion.

All proceeds of the sale go to the CMA.

The CMA will be will be working closely with members to map out how the funds can best be used to effect change and create programs that support physicians and better health. More information about the sale and the CMA’s decision-making process can be found by emailing the CMA at memberservicecentre@cma.ca.

No financial incentive from Scotiabank^® was paid to MD Financial Management executive officers or Board members.

No. MD Financial Management is a strong and successful business, which was why there was such a high level of interest in the company and the CMA received several competitive offers for MD from leading Canadian financial institutions.

A comprehensive process was undertaken to identify the best and most suitable acquirer for MD. In selecting Scotiabank^®, the CMA Board was focused on securing a strong future for MD and its clients, and prioritized wealth-management performance, client service, alignment of vision, respect for employees, and ongoing support for the CMA’s future direction.

Scotiabank^® admires and respects MD’s values and philosophy. They understand that it’s our culture that makes us successful and they have no intention of changing it. In fact, maintaining the integrity of MD is so vitally important to Scotiabank that they have made it their contractual obligation to do so. Scotiabank is firmly committed to preserving our unique physician-specific approach to financial services because they believe it’s the right thing to do. They have also contractually agreed with the CMA to continue to operate MD as a separate, distinct wealth-management program with unique branding and a distinct identity.

A comprehensive process was undertaken to identify the best and most suitable acquirer for MD. In selecting Scotiabank^®, the CMA Board was focused on securing a strong future for MD and its clients, and prioritized wealth-management performance, client service, alignment of vision, respect for employees, and ongoing support for the CMA’s future direction. More information can be found by emailing the CMA at memberservicecentre@cma.ca.

Several competitive offers were received for MD from leading Canadian financial institutions. However, due to the confidential nature of the process, we cannot disclose any details.

Due to the confidential nature of the process, we cannot disclose the details of the other bids. We can tell you that a fair offer price was only one of many considerations in the selection process. In selecting Scotiabank^®, the CMA Board was focused on securing a strong future for MD and its clients, and prioritized wealth-management performance, client service, alignment of vision, respect for employees, and ongoing support for the CMA’s future direction.

Yes. The sale was subject to regulatory approvals and customary conditions. The key regulators were:

1. The Competition Bureau, which is responsible for the administration and enforcement of the Competition Act. The sale required the approval of the Commissioner of Competition to ensure it did not prevent or lessen competition in particular markets. You can find more information about the Competition Bureau at www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/00157.html#infocentre.
2. The Office of the Superintendent of Financial Institutions (OSFI). Because MD Private Trust Company and MD Life Insurance Company are both regulated by OSFI, governing legislation mandates that a change in control of these companies requires the approval of the Superintendent of OSFI. You can find out more about OSFI at www.osfi-bsif.gc.ca/Eng/osfi-bsif/Pages/default.aspx.
3. The Minister of Finance. The legislation that governs MD Private Trust and MD Life Insurance Company mandates that the sale required the approval of the Minister of Finance because OSFI reports to Parliament through the Minister of Finance. You can find out more about the Minister of Finance at www.canada.ca/en/department-finance.html.
4. The Canadian Investment Regulatory Organization (CIRO) District Council. MD Management Limited is regulated by CIRO and, before the sale could close, MD and Scotiabank^® were required to obtain Ontario CIRO District Council approval to permit Scotiabank to own securities of the holding company of MD Management Limited.
5. The Ontario Securities Commission (OSC). MD Financial Management Inc. is governed by the OSC. A Notice was filed with the OSC and approval was obtained to allow the change of control of MD Financial Management Inc. You can find out more about the OSC at www.osc.gov.on.ca/en/contactus_index.htm.

Scotiabank^® is a world-class organization with scale, resources and capital that we didn’t previously have. With Scotiabank behind us, we can benefit from their tools, technologies and strategic partnerships to provide a better client experience and make it easier for you to do business with your Advisor.

Although we are now owned by Scotiabank, we are still very much the same MD—and we have no intention of changing. We’ve been operating in the best interests of physicians for nearly half a century, and we’ll continue to give you the objective advice you’ve always trusted. Our fees have not changed since MD’s acquisition by Scotiabank. In fact, your fees are—and will continue to be—among the most competitive on the market.¹

Our Advisors are still paid a salary, not commission, and their primary focus remains on delivering the objective, physician-centred advice you need to achieve your financial goals. Our Advisors are not required or incentivized to sell any specific investment products—including Scotiabank’s—that they don’t truly believe are best suited to meet your unique financial needs. Our primary objective—always—is to build a portfolio for you that meets your unique financial needs. The sale also means that we’ve gone from being owned by a medical association that depended on us to provide it with funds to being owned by a financial institution that can invest in us.

As the world—and financial services in particular—becomes more complex, businesses like ours are under increasing pressure to keep up. We have always vowed to manage your investments conservatively and to avoid unnecessary risk; Scotiabank will help us continue to meet those obligations as regulatory requirements continue to evolve.

Now that we’re part of the Scotiabank family, you have access to exclusive banking benefits —including lines of credit with preferred interest rates; medical student and resident lines of credit; and mortgage solutions that offer convenience, flexibility and even rewards—tailored to your specific needs as a physician, from medical school through retirement. Additionally, through our partnership with Scotiabank, MD now offers a registered disability savings plan (RDSP). An RDSP is a savings plan that helps parents and others save for the long-term financial security of a person who is eligible for the disability tax credit. Also, Private Banking options are coming soon.²

No. Your investments in MD funds and MD Private Investment Counsel (MDPIC) pools are still managed by MD Financial Management as they were before the sale to Scotiabank^®. MD will continue to operate as a separate Canadian Investment Regulatory Organization (CIRO)-member firm and be a member of the Canadian Investor Protection Fund (CIPF). More information can be found at www.ciro.ca and www.cipf.ca.

Nothing has changed in terms of the safety and security of your information. We are still subject to the same rules and regulations with regard to your assets and private information as we were before the sale, and MD and Scotiabank ^® rigorously comply with all privacy legislation requirements.

All financial institutions have a privacy policy that clients must agree to. MD’s privacy policy has always allowed information sharing with affiliates, which is standard practice among corporate groups. When the sale of MD closed, Scotiabank became an MD affiliate.

While some of our clients are actively looking for information about new products and services, we’re aware that other clients have concerns and don’t want to receive any marketing materials from Scotiabank. To ensure we continue to respect the wishes of all our clients, we have created a list and will add any clients who indicate that they do not want to receive any marketing materials from Scotiabank. We do not currently have a shared database with Scotiabank.

Nothing changes in terms of the safety and security of your money. All MD clients’ investments in MD funds and MD Private Investment Counsel (MDPIC) pools continue to be managed by MD Financial Management as they were before the sale to Scotiabank^®. This means that your MD investments will be managed completely separately from Scotiabank’s customer deposits. MD Management Limited will continue to operate as a separate Canadian Investment Regulatory Organization (CIRO)-member firm and be a member of the Canadian Investor Protection Fund (CIPF). More information can be found at www.ciro.ca and www.cipf.ca. The CIPF provides protection if securities, cash or other property being held by a member firm on a client’s behalf are not returned to the client following the firm’s insolvency. All MD mutual funds will continue to be covered by the CIPF. Any cash deposits up to $100,000 per account type are insured by the Canada Deposit Insurance Company (www.cdic.ca).

A further layer of protection is provided by State Street, a third-party organization, unrelated to both MD Financial Management and Scotiabank, that holds all investments in MD mutual funds, MD Private Investment Counsel pools and the segregated securities in custody for the funds. All of these investments are held in the name of the fund or in the name of State Street, as custodian, and hence are not in MD’s control. Custodianship of fund assets is required by law and is regulated. State Street is one of the biggest custodial banks in the world and is used by many financial institutions. More information about State Street can be found at www.statestreet.com. On a bankruptcy of MD (as manager) or Scotiabank (as MD’s indirect shareholder), the assets in the funds would continue to be held in custodianship by State Street and would continue to be available to the investors in the funds at their daily market value. Generally speaking, if MD were to go out of business, the funds would be wound up and the assets sold at their current market value, with the proceeds being distributed to the investors.

Our fees have not changed since the acquisition by Scotiabank^®. In fact, your fees are, and will continue to be, among the most competitive on the market. MD already has some of the lowest fees in Canada and we’re proud of the fact that our management expense ratios (MERs) are, on average, 29% lower than others in the industry.¹ Additionally, in November 2017, we actually reduced our fees for portfolios of more than $2 million.

As well, we charge no administrative fees for registered retirement savings plans, have no minimum account size for MD Plus and there are no trading commissions for exchange-traded funds (ETFs) trades in MD Plus accounts. We’ve always been transparent about our fee structure, which Scotiabank has said will stay the same or even decrease.

Our Advisors—the people who know and understand physicians’ finances best—remain dedicated to MD, and our staff turnover rate remains far below the industry average. ¹ Scotiabank^® appreciates the in-depth knowledge of MD’s highly skilled staff, as do we and we have no plans to make any changes to our advisory or management teams, which means you’ll receive the same objective and physician-centric financial advice and outstanding service you’ve come to expect from MD.

It doesn’t change anything. As a client of both MD and Scotiabank^®, you can choose whether you want to continue to deal with your MD Advisor and your Scotiabank representatives, or make changes. Please talk to your MD Advisor to discuss your specific situation.

You’ll continue to be able to choose the banking products you wish to use from the bank(s) of your choice and you can choose to stay with National Bank, if you wish to. However, moving forward, we do expect to be able to deliver even more value to our clients by complementing our existing products and services with the robust suite of category-leading banking products and services delivered by Scotia Wealth Management and Scotiabank^®. We expect to have more details about this soon. If you currently have a SRLOC loan with MD and National Bank, the terms of your SRLOC loan will not change. If you have any specific questions about your National Bank products, please contact your National Bank branch directly.

Scotiabank^® is a world-class organization with scale, resources and capital that we didn’t previously have. With Scotiabank behind us, we can benefit from their tools, technologies and strategic partnerships to provide a better client experience and make it easier for you to do business with your Advisor. At MD, we believe that the acquisition by Scotiabank brings advantages for MD clients because we will be able to retain all the aspects of our organization that make us unique, while delivering even more value to all of Canada’s physicians and their families. MD will stay true to its core mandate and continue to operate with physicians at the heart of every decision it makes. MD’s staff, advisory and management teams will remain in place, and physicians and their families will continue to enjoy the physician-focused, independent, objective and client-centric financial advice and outstanding service they have come to expect from MD.

Scotiabank is firmly committed to preserving MD’s unique physician-specific approach to financial services and MD Management Limited will continue to operate as a separate Canadian Investment Regulatory Organization (CIRO)-member firm.

Our Advisors are still paid a salary, not commission, and their primary focus remains on delivering the objective, physician-centred advice you need to achieve your financial goals. Our Advisors are not required or incentivized to sell any specific investment products—including Scotiabank’s—that they don’t truly believe are best suited to meet your unique financial needs. Our primary objective—always—is to build a portfolio for you that meets your unique financial needs.

MD has been an industry leader on many fronts and we want to continue to evolve our offer to meet the financial needs and life goals of all physicians and their families. Becoming part of the Scotiabank ^® family will enable us to enhance our full suite of products and services, across multiple channels, while still providing the objective advice to which we’ve always committed. This next phase on our journey will enable us to deliver even more value to all of Canada’s physicians and their families.

1. We’re still the same MD
   Although we are now owned by Scotiabank^®, we are still very much the same MD—and we have no intention of changing. We’ve been operating in the best interests of physicians for nearly half a century and we’ll continue to give you the objective advice you’ve always trusted. Scotiabank is a world-class organization with scale, resources and capital that we didn’t previously have. With Scotiabank behind us, we can benefit from their tools, technologies and strategic partnerships to provide a better client experience and make it easier for you to do business with your Advisor.
   
   Our Advisors are still paid on salary, not commission, and their primary focus remains delivering the physician-centred advice you need to achieve your financial goals. Our Advisors are not required or incentivized to sell any investment products—including Scotiabank’s—that they don’t truly believe are in your best interests. Meeting your financial needs remains their sole purpose.
   
   As the world—and financial services in particular—becomes more complex, businesses like ours are under increasing pressure to keep up. We have always vowed to manage your investments conservatively and to avoid unnecessary risk; Scotiabank will help us continue to meet those obligations as regulatory requirements continue to evolve.
2. Your fees will not increase
   Our fees have not changed since the acquisition by Scotiabank. In fact, your fees are, and will continue to be, among the most competitive on the market. MD already has some of the lowest fees in Canada and we’re proud of the fact that our MERs are, on average, 29% lower than others in the industry.¹ Additionally, in November 2017, we actually reduced our fees for portfolios of more than $2 million.
   
   As well, we charge no administrative fees for registered retirement savings plans, have no minimum account size for MD Plus and there are no trading commissions for exchange-traded funds (ETFs) trades in MD Plus accounts. We’ve always been transparent about our fee structure, which Scotiabank has said will stay the same or even decrease.
3. You’ll continue to have a strong voice at MD
   We fully understand that physicians provide an invaluable perspective that strengthens who we are and what we do—and physicians will continue to have a strong voice at MD. We will continue to actively seek your input and feedback on the products and services we offer through multiple channels, including a physician advisory council.
4. You’re not just "another client of a big bank"
   At MD, we know that each client is unique, with a unique set of challenges and requirements. We believe that you deserve excellent and seamless financial support from people who know physicians—and the specific challenges you face—and who are committed to putting your needs first and foremost.

You’ll continue to have access to the same investment products and services you had before the sale. We’ll continue to offer clients a variety of products, including MD and third-party funds, exchange traded funds (ETFs), high interest savings accounts (HISA), cash and bonds, and can discuss, objectively, the pros and cons of each with clients, enabling us to build portfolios that meet clients’ unique financial needs. MD Private Investment Counsel also meets a variety of client preferences by offering diverse fulfillment options, including alternatives, passive and active.

Moving forward, we expect to be able to deliver even more value to our clients. Over time, Scotiabank^® intends to grow our suite of services and expand the breadth and depth of the specialized financial advice offered by MD, enabling us to meet more of the needs of physicians and their families at all stages of their lives and careers.

No. Our Advisors are still paid on salary, not commission, and their primary focus remains delivering the objective physician-centred advice you need to achieve your financial goals. Our Advisors are not required or incentivized to sell any investment products—including Scotiabank’s—that they don’t truly believe are in your best interests. Meeting your financial needs remains their sole purpose. This means that you’ll continue to receive the financial advice and outstanding service you need to meet your unique financial goals.

We do not anticipate any immediate changes to the MD Funds or MDPIM pools. We will continue to use a combination of internal and external experts to manage our funds and portfolios, which enables us to cover the world and scale our expertise in a way most firms cannot compete with. We have a highly skilled internal team with deep knowledge and expertise and an enviable process for identifying external talent and combining it with our own team to maximize the potential for success. Our sub-advisory relationships give us access to hundreds of investment professionals and, through the acquisition by Scotiabank ^®, we now also have in-house access to some of the top money management names in Canada.

Most fund companies hire a "star manager" and then build a list of funds for that person to manage. At MD, we use an "institutional" approach to fund management, in which our internal experts develop very specific return and risk parameters for each fund and then identify the best people in the world to help us achieve the results we've identified. We combine the expertise of several investment professionals in a single fund, and always in an overall portfolio. This enables our internal portfolio managers to construct portfolios using the best research available and make adjustments, manage risk and adapt to the ever-changing world.

Our experienced, research-driven in-house investment team combines fundamental and quantitative analysis to develop investment views across equities, fixed income, currencies, commodities, sectors and alternative investments. We use these views to develop highly customized solutions and design portfolios that are dynamically positioned to benefit from bull markets and protect in bear markets. We believe that prudent portfolio construction and risk management are key to delivering superior risk-adjusted returns.

Over time, we will look to leverage the capabilities of Scotiabank, where appropriate, while continuing to maintain an objective approach to managing MD Funds and Pools.

The acquisition by Scotiabank^® does not change the nature of your MD Platinum Global Private Equity Pool investment. BlackRock will continue to support the Pool and MD’s staff, advisory and management teams will remain in place. You’ll continue to receive the objective, physician-centric financial advice and outstanding service you need to meet your unique financial needs.

At MD, it remains business as usual. Scotiabank^® is firmly committed to preserving MD’s unique physician-specific approach to financial services and appreciates the in-depth knowledge of our highly skilled staff. Scotiabank admires and respects our values and philosophy. They understand that it’s our culture that makes us successful and they have no intention of changing it. In fact, maintaining the integrity of MD is so vitally important to Scotiabank that they have made it their contractual obligation to do so. Scotiabank is firmly committed to preserving our unique physician-specific approach to financial services because they believe it’s the right thing to do. They have also contractually agreed with the CMA to continue to operate MD as a separate, distinct wealth-management program with unique branding and a distinct identity.

We expect MD’s staff, advisory and management teams—including the MD Signature Private Wealth Strategy Team—to remain in place and your MD Advisor, Portfolio Manager, Specialists and other members of your financial support team to stay the same. This means that you’ll continue to enjoy an enhanced level of comprehensive advice and customized service that simplifies your financial affairs, along with the expertise and support of the MD Signature Private Wealth Strategy Team.

We do not anticipate any immediate changes to MD’s fund managers. We will continue to use a combination of internal and external experts to manage our funds and portfolios, which enables us to cover the world and scale our expertise in a way most firms cannot compete with. We have a highly skilled internal team with deep knowledge and expertise and an enviable process for identifying external talent and combining it with our own team to maximize the potential for success. Our sub-advisory relationships give us access to hundreds of investment professionals and, through the acquisition by Scotiabank ^®, we now also have in-house access to some of the top money management names in Canada.

Our experienced, research-driven in-house investment team combines fundamental and quantitative analysis to develop investment views across equities, fixed income, currencies, commodities, sectors and alternative investments. We use these views to develop highly customized solutions and design portfolios that are dynamically positioned to benefit from bull markets and protect in bear markets. We believe that prudent portfolio construction and risk management are key to delivering superior risk-adjusted returns.

Yes. MD will continue to support the MD Donor Advised Funds.

At MD Management Limited, it’s business as usual. Although we’re now owned by Scotiabank^®, we’ll continue to operate as a separate Canadian Investment Regulatory Organization (CIRO)-member firm and our staff, advisory and management teams will remain in place. We’re still the same MD—and we have no intention of changing. We’ve been operating in the best interests of physicians for nearly half a century and we’ll continue to give you the objective advice you’ve always trusted.

We’ve made four specific commitments that you can hold us to:

1. You’ll continue to enjoy the objective, expert and physician-centred advice you’ve always trusted
   • Our Advisors are not required or incentivized to sell any specific investment products—including Scotiabank’s—that they don’t truly believe are best suited to meet your financial requirements. We’ll continue to put your needs first and foremost—always.
   • Scotiabank is firmly committed to preserving our unique physician-specific approach to financial services because they believe it’s the right thing to do. In fact, maintaining the integrity of MD is so vitally important to Scotiabank that they have made it their contractual obligation to do so. They have also contractually agreed with the CMA to continue to operate MD as a separate, distinct wealth-management program with unique branding and a distinct identity.
   • Our Advisors—the people who know and understand physicians’ finances best—remain dedicated to MD, and our staff turnover rate remains far below the industry average. ³
2. The same fees—or lower
   • Our fees, which have not changed since the acquisition, are some of the lowest in Canada and continue to be among the most competitive on the market.¹ Additionally, in November 2017, we actually reduced our fees for portfolios of more than $2 million.
   • Our MERs are, on average, 29% lower than others in the industry.¹ As well, we charge no administrative fees for registered retirement savings plans, have no minimum account size for MD Plus and there are no trading commissions for exchange-traded funds (ETFs) trades in MD Plus accounts.
   • Scotiabank has committed to keeping our fees the same—or even decreasing them.
3. The same strong physician voice
   • We fully understand that physicians provide an invaluable perspective that strengthens who we are and what we do. That’s why we’ll continue to actively seek your input and feedback through multiple channels, including a physician advisory council.
4. Broader and more innovative choices
   • We now offer access to exclusive banking benefits¹ —including a registered disability savings plan (RDSP); lines of credit with preferred interest rates; medical student and resident lines of credit; and mortgage solutions that offer convenience, flexibility and even rewards.
   • Private Banking⁴ options are coming soon.

MD’s Board and senior leadership believe that the acquisition by Scotiabank^® brings advantages for MD clients as we will be able to retain all the aspects of our organization that make us unique, while delivering even more value to all of Canada’s physicians and their families.

There are no plans to merge the two advisory teams. Scotiabank^® is firmly committed to preserving MD’s unique physician-specific approach to financial services and appreciates the in-depth knowledge of our highly skilled staff.

MD will continue to be managed by its current management team led by Brian Peters, MD’s President and CEO. Brian will report to Alex Besharat, Senior Vice President of Scotia Wealth Management ^®.

No. In fact, our attractive approach to compensation and one of the finest work cultures in the industry enables us to not only attract the finest people, but also keep them. That’s why our staff turnover rate is less than half the industry average.⁴

Partnerships with the PTMAs remain of utmost importance. MD office space will not immediately be changing and where we currently co-locate with a PTMA, we will continue to do so. The MD head office will remain in Ottawa.