rothenberg capital management - vanier college€¦ · rothenberg capital management (rcm) and...
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© 2020. This case was prepared by Erin Whittle and is not intended to illustrate either effective or ineffective
handling of a management situation. Some information may have been disguised in the interest of confidentiality.
This case is for educational purposes and is not to be reproduced for other purposes other than the case
competition without the permission from the author and the Scotiabank Vanier College National Marketing Case
Competition.
2020 SCOTIABANK VANIER COLLEGE NATIONAL MARKETING CASE COMPETITION
Prepared by Erin Whittle
Marketing Management Department, British Columbia Institute of Technology
Sunday, February 9, 2020
ENGLISH VERSION
ROTHENBERG CAPITAL MANAGEMENT Managing Growth: The Challenge of Client Acquisition for an
Independent Financial Services Company
Managing Growth: The Challenge of Client Acquisition for an Independent Financial
Services Company (Rothenberg Capital Management) This case was written by Erin Whittle, Instructor, Marketing Management Department British Columbia
Institute of Technology for the 2020 Vanier/Scotiabank National Marketing Case Competition. It is not
intended to illustrate either effective or ineffective handling of a management situation. Some information
may have been disguised in the interest of confidentiality. (This material may not be reproduced without
the express written consent of the author.)
The Rothenberg Group is a family-owned independent financial services company that includes
Rothenberg Capital Management (RCM) and Rothenberg & Rothenberg. i RCM is the wealth
management division of The Rothenberg Group and the focus of this case study.
The Rothenberg Group was founded in 1979 by Jack and Pearl Rothenberg and is now led by their
son, Robert Rothenberg (Chief Executive Officer). The executive team at the Rothenberg Group
have all had considerable tenure with the company: Helen Corrigan, President and Chief
Compliance Officer, has been with the Rothenberg Group since 1988 and has been President since
2002; Maria Ioannou, Chief Financial Officer, started her career with Rothenberg in 1997 and was
appointed CFO in 2017; and Robert Rothenberg joined his parents’ firm in 1993.
Investment advisors (known as Wealth Management Advisors at RCM)—like financial advisors at
many investment firms and major banks—provide planning and asset management to clients,
particularly high net worth individuals (HNWIs). Many clients are planning for their retirement
through the purchase of RRSPs, annuities1, and other investment products. Based on their client’s
investment goals, Wealth Management Advisors monitor, buy, and sell financial assets like stocks,
bonds, and mutual funds as well as provide investment, retirement, and estate planning and
ongoing investment advice and management. Clients can invest in Registered Retirement Savings
Plans (RRSP), Registered Education Savings Plans (RESP), Registered Retirement Income Funds
(RRIF), and Tax-Free Savings Accounts through Rothenberg Capital Management.
The financial advisors at RCM distinguish themselves as specialists with extensive experience and
training. 2 Robert Rothenberg, for example, is a Chartered Financial Analyst (CFA), Certified
International Wealth Manager (CIWM) and holds the Fellow of the Canadian Securities Institute
designation (FCSI). Wealth Management Advisors at RCM typically have a degree, decades of
experience in financial services or the investment industry, and have completed the Canadian
1 An annuity is a contract between you and an insurance company in which you make a lump sum payment or series of payments and, in return, obtain regular payments beginning either immediately or at some point in the future. The goal of annuity is to provide a steady stream of income during retirement. What is an Annuity? (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/ask/answers/12/what-is-an-
annuity.asp 2 “The terms ‘financial advisor’ and ‘financial planner’ are used broadly. These terms don’t always mean that a person has specific qualifications, expertise or certifications. Outside of the province of Quebec, anyone can call themselves a ‘financial advisor’ or ‘financial planner.’” Financial
Consumer Agency of Canada. (2019, April 16). Government of Canada. Retrieved from https://www.canada.ca/en/financial-consumer-agency/services/savings- investments/choose-financial-advisor.html.
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Securities Course, are designated Chartered Financial Analysts, or have other education and
certifications specific to the industry.
RCM has thousands of clients and nearly a billion dollars in investments. The personal work that
financial advisors offer to their clients entails RCM Wealth Management Advisors building close
relationships with the customers they serve. Clients share not just their financial information, but
their life challenges and goals with their advisors; together, they plan for home buying, growing
families, advanced education, retirement, emergencies and crises, and even death. Trust is key.
The high level of service Wealth Management Advisors provide, as well as their expertise, has
created a loyal client base.
Most customers are based in Montreal and Calgary, where RCM has offices, however, they are
considering opening an office in Toronto in the near future. Despite having four offices in the
Montreal area, 95% of its clientele is English-speaking; the brand does not quite resonate with the
Francophone community. Slightly more women (55%) than men (45%) are clients. Most of their
clients have under $250,000 in assets currently invested with RCM (see Appendix 1). Many clients
also have money invested elsewhere, such as with their bank, credit union, or caisses populaire.
Of course, RCM would like clients to consolidate their investments with them.
Unlike private wealth management companies, RCM does not have a minimum investment
threshold, although the ideal client is an individual or household that has in excess of $500,000 of
investable assets. Most of these high net worth individuals (HNWIs) are Canadians between the
ages of 55 and 64—frequently referred to as Baby Boomers, or Boomers—as they have the highest
total net worth (the median net worth of this age group is $669,500). People in this age group are
still working, but beginning to downsize and sell private business, creating sizeable liquid assets.ii
However, the Rothenberg Group’s clients are aging; 70% of their clients are over age 65, and 35%
are 75 or older. In fact, more of RCM’s clients are over 85 than under the age of 55. Many long-
time customers are accessing the assets they have invested with RCM as they retire, while other
client assets are being divested and disbursed upon their death.3 To continue growing as a
company, RCM is looking for a new customer acquisition strategy.
The Financial Services Industry
Financial advising and planning is big business in Canada. As of 2017, this sector managed $1.6
trillion in investment funds.iii Those investments are largely held by a small number of people, as,
like many other developed nations, Canada’s wealth is highly concentrated: 1.5 million households
account for 85% of investable assets.iv
3 Divestment is the process of selling assets (in the case of a will, this would include investments, life insurance policies, and properties); disbursement is paying out those assets to others (in the case of a will, the beneficiaries named in the will are the recipients).
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Figure 1. Financial wealth distribution landscape at the end of 2017 (Canadian Investment Funds Industry: Recent Developments
and Outlook)
Financial advising and planning are typically offered through seven channels (listed in order of
the amount of assets in each channel):
1. Full-service brokerages (like Rothenberg Capital Management, RBC Dominion Securities,
CIBC Wood Gundy, and many others)
2. Banks, credit unions, and caisses populaires branch advice
3. Banks, credit unions, and caisses populaires direct models (bank-owned online brokerages, like Scotiabank’s iTrade platform, BMO’s InvestorLine, and RBC’s RBC Direct Investing)
4. Financial advisors (including independent advisors)
5. Private wealth management (notably, Phillips, Hager & North Investment Management)
6. Online/discount brokerages (also known as “robo-advisors,” like Questrade,
Wealthsimple, and qtrade, for example)v
7. Direct sellers (often mistaken for pyramid schemes—which are illegal in Canada)
The primary competition for RCM are the banks, credit unions, and caisses populaires; in
particular, the “Big Six”: Royal Bank of Canada (RBC), Toronto-Dominion Bank (TD), Bank of Nova
Scotia (Scotiabank), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC),
and National Bank of Canada (NBC).vi Banks, credit unions, and caisses populaires are trusted and
known, offer convenience, and can bundle services to provide incentives for customers to invest
with the bank. As customers move from a focus on debt repayment to setting financial goals, banks
have the customer data on hand to be able to identify prospects and offer personalized and
targeted direct marketing of their financial products and services.
For those seeking value-added expertise, service, and product solutions, brokerages like RCM are
more trusted: recent surveys show Canadians are twice as likely to trust retirement savings
information and advice from a professional financial advisor (30%) than a bank advisor (15%).vii
Financial Services Customers
As Canada’s population of high-net worth investors ages, their needs change, and the focus of
their investing moves from wealth generation to wealth preservation. By 2031, all Boomers will
have reached age 65, and 23% of Canadians will be seniors. Once retired, their assets are sold off
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to finance retirement, then remaining assets are sold and distributed according to their will
(largely to their children) upon their death, resulting in a huge intergenerational wealth transfer—
as well as a significant turnover in RCM’s customer and asset base.
The next wave of HNWI will be Generation X and Millennials, which represent not just different
demographics, but an attitude shift. Mid-career Canadians (aged 35-54) are the most likely to be
saving for retirement and investing (including in their biggest asset, their home), while younger
Canadians (aged 18-34) are more focused on repaying loans (18%) and saving with no specific goal
in mind (19%) or for a house or condo (13%) (see Appendix 2).
Generation X is often typified as the do-it-yourself and skeptical generational cohort, and that
applies to investing as well. They are more than twice as likely than Boomers to say that their
financial choices are influenced by family, but even more likely to trust themselves—almost two
times more than anyone else, including a financial advisor.viii In fact, only 25% trust financial
services. ix Millennials are less skeptical; 53% trust financial services and 70% trust financial
advisors and almost half say they currently consult a financial advisor, but they do so in a different
way than older generations: “The role of the financial advisor as well as client expectations are
changing, depending in part on the investor’s age. While 15% of Boomers consider themselves
‘Delegators’—those who rely on their financial advisors to make all the decisions—only 10% of
Millennials do the same. Meanwhile, 39% of Millennials consider themselves ‘Validators,’ those
who consider their advisor more of a sounding board for their own ideas, vs. just 24% of Boomers.” x xi
Another challenge is financial literacy. Non-investors of all generations seem to have an equally
tough time learning about investing, despite Google and the huge amount of information
available.xii A surprising number of Millennials don’t even know they are paying monthly fees for
their banking, let alone how the MER (management expense ratio) on an investment is calculated
or why it matters.xiii (The average MER in Canada is 2.53%, so if your mutual fund statement
showed that your investment grew by 10%, it actually grew by 12.53%, because the MER is taken
off first—over 20% of your “earnings” from the investment. Similarly, if your mutual fund
statement showed a loss of 2.53%, it actually means that the fund itself showed no growth (0%),
but you have to pay the MER regardless.)
To bridge the financial literacy gap (and, of course, to acquire customers), there is an emerging
Fintech industry. “Fintech refers to the integration of technology into offerings by financial
services companies in order to improve their use and delivery to consumers. It primarily works by
unbundling offerings by such firms and creating new markets for them.”xiv Consumer-oriented
fintech (as opposed to the many B2B fintech offerings), is usually targeted at Millennials, in part
because of their rising earnings and inheritance potential, but also because software often doesn’t
help with the more complicated aspects of investing decisions that older investors need. Overall,
“Canadians tend to place a high degree of trust in financial technologies that have a long history of
operating in Canada, such as online banking, with lower levels of trust for newer services such as
online investment advice (often referred to as “robo-advice”) and peer-to-peer
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lending.” So, despite the hype and the mobile-first strategies of start-ups like Wealthsimple, most
Canadians aren’t ready to embrace online-only financial firms with their investments yet.
RCM’s Marketing Mix
These cautious, self-serve generations are making an impact on the kinds of financial products on
the market, too. In particular, exchange traded funds (ETFs) have grown from 2.9% of total
Canadian investment fund assets in 2008 to 9.3% in 2018.xv ETF is called an exchange-traded fund
since it's traded on an exchange just like stocks, although it’s a selection of stocks from that
exchange. Instead of picking a particular stock, an ETF is like a bucket of stocks, representative
stocks of a sector or of an entire exchange (for example, the SPDR Gold Shares ETF has a selection
of gold stocks, while the iShares Core S&P 500 has a selection of shares representative of the top
500 businesses on the U.S. stock exchanges). ETFs are similar to mutual funds in that way but have
low expense ratios and fewer transaction commissions.
Another product gaining in popularity is fund-based asset allocation solutions (fund wrap
programs) and fee-based accounts: that is, a flat-fee or fixed percentage of asset model. These
account types are popular because the fees are predictable and transparent and provide flexibility
for the brokerage to make decisions to meet the client’s financial goals.
RCM offers both ETFs and fee-based accounts to their clients, as well as “traditional” financial
services products, like mutual funds, bonds, and GICs.4 For some financial products RCM charges, a
percentage based on the value of the investments (MER), while a transaction fee is charged for
some other services. They have a complete price list on their website and charge competitive rates
(see Appendix 3a and 3b). Currently, 55% of RCM’s assets are in fee-based accounts (as opposed
to transactional accounts), and fee-based assets are growing. To provide clarity on investing and
to choose the model and products appropriate to each client, RCM Wealth
4 A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities like stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors. Mutual Fund Definition. (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/m/mutualfund.asp -A bond is a fixed income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments. Bonds are used by companies, municipalities, states, and sovereign governments to finance projects and operations. Understanding Bonds. (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/b/bond.asp -GICs: A guaranteed investment (interest) certificate is a deposit investment security that Canadian banks and trust companies sell. Individuals and investors often purchase these for retirement plans because they provide a low-risk fixed rate of return. Guaranteed Investment (Interest) Certificate (GIC). (2019). Investopedia. Retrieved 9 December 2019, from https://www.investopedia.com/terms/g/gic.asp
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Management Advisors offer prospective clients complimentary meetings, goal setting, and written
overviews.
RCM’s Wealth Management advisors operate out of their four locations, three in Montreal
(Westmount, West Island, and South Shore) and one in Calgary. There are plans to open a new
office in Toronto in the near future. Each office has investment advisors, administrators, portfolio
managers, and a branch manager, as well as insurance advisor.
For website visitors and prospects, the rothenberg.ca site offers an overview of services supported
by testimonials, blog posts, financial calculators, and other resources. The primary call to action is
to book an appointment. The website is available in French (see Appendix 4a) and English (see
Appendix 4b).
Their website allows clients to login and see their accounts, view the account value, individual
holdings, and transactions as of the previous business day’s close. Clients have the option of
getting their statements, confirmations, and tax slips in hard copy or electronically. RCM does not
have an online trading platform at this time.
RCM has a solid search engine presence, in part due to their My Business profile on Google
(although they don’t currently have any reviews), ensuring top ranking for branded search on
Google in Canada (see Appendix 5). Unfortunately, an old article (from 2000) related to a fine paid
for record-keeping issue in 1998 appears in the first few results as well. They haven’t engaged in
search engine optimization (SEO) for other search queries, like “financial advisors,” as it is
extremely competitive and dominated by media (CBC.ca, Investopedia, Wikipedia, etc.), the
Canadian government (Canada.ca), and large firms.
RCM maintains an active presence in traditional and online media through ongoing and seasonal
campaigns. They do not have an internal marketing department, so most is based on a do-it-
yourself approach. Email newsletters, for example, are created in-house by the office managers.
The exception is social media, where they have hired a small company to post on their behalf to
LinkedIn and Facebook and to write blog posts. The company allocates between 3-6% of revenues
to their integrated marketing communications.
On LinkedIn, RCM’s social media agency shares relevant news posts as well as promotes their blog
posts to 269 followers (see Appendices 6 & 7). They share similar content to the 1,249 people who
“like” their page and the 1,237 people who follow the page (Appendix 8).
Robert Rothenberg also has an active LinkedIn profile, as well as maintaining the Twitter account
and website links (see Appendix 9). His LinkedIn profile has 1,144 followers. He reposts
Rothenberg LinkedIn posts along with other industry-relevant content, in addition to actively
engaging with others’ posts. The Twitter account has 171 followers and consists of reposts from
LinkedIn (see Appendix 10).
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New blog posts are published on the second Friday of every month to rothenberg.ca and then
promoted across Facebook, LinkedIn, and (via Robert Rothenberg’s account) Twitter (see
Appendix 11). Posts often feature prominently in email marketing as well. Posts are typically
informative, related to the products and services offered by RCM (see a sample in Appendix 12).
For existing clients and prospects, they have an email newsletter, using Mailchimp to manage
subscriptions and preferences. E-newsletters (see Appendix 13) are sent monthly, and e-blasts
(see Appendix 14) are sent periodically (based on current events or promotions).
RCM is a long-time advertiser in newspapers, and still runs ads in the Montreal Gazette and the
Calgary Herald, but the print audience has declined, and they are unsure if their ads are working
(see recent ad samples in Appendix 15). Radio ads are used periodically, if there’s a new product
or significant changes. In the past they advertised on local television as well, but it was very
expensive, and they couldn’t see the return on marketing investment.
Of course, they ask all prospective clients how they heard about RCM. Most new clients are
referrals, followed by general brand recognition and passing trade (people who see an office by
chance as they walk past it). Every time an investment advisor meets with a client, they ask for a
referral, and offer gift cards for referrals.
The Challenge
Rothenberg Capital Management would like to not just maintain their strong and trusted financial
planning legacy, but to grow their client and asset base in the shifting personal investing
landscape. How can a company like RCM leverage their experience, their capabilities, and their
loyal client base to attract the next generation of investors? How can they appeal to the cynical
Gen-Xers and anxious Millennials in an age of information overload and poor financial literacy? Do
they continue with their traditional media (newspapers and radios), since they have been
successful in building the brand to date? How can they leverage the reach of online channels to
make the most of their limited marketing capacity? How can they compete with the mega-
campaigns and reach of the Big Six and the tech-savvy approach of financial services apps? How
can RCM create a customer acquisition strategy that builds on their successes and creates a solid
foundation for future growth?
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Appendix 1: Current Client Assets
Appendix 1: Current Client Assets
Appendix 2: Financial Goals
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Appendix 3a: RCM Fees
Appendix 3a: RCM Fees
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Appendix 3b: RCM fees (cont.)
Appendix 3b: RCM Fees (cont.)
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Appendix 4a: rothenberg.ca (français)
Appendix 4a: rothenberg.ca (français)
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Appendix 4b: rothenberg.ca (English)
Appendix 4b: rothenberg.ca (English)
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Appendix 5: RCM Search Engine Results Page
Appendix 5: RCM Search Engine Results Page
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Appendix 6: LinkedIn Company Page
Appendix 6: LinkedIn Company Page
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Appendix 7: LinkedIn content sample
Appendix 7: LinkedIn Content Sample
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Appendix 8: Facebook Page
Appendix 8: Facebook Page
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Appendix 9: Robert Rothenberg’s LinkedIn posts
Appendix 9: Robert Rothenberg’s LinkedIn Posts
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Appendix 10: Robert Rothenberg’s Twitter profile
Appendix 10: Robert Rothenberg’s Twitter Profile
Appendix 11: Blog Page
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Appendix 12: Sample blog post
Appendix 12: Sample Blog Post
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Appendix 13: Email newsletter
Appendix 13: Email Newsletter
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Appendix 14: E-blast
Appendix 14: E-blast
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Appendix 15: Newspaper advertisements
Appendix 15: Newspaper Advertisements
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i Rothenberg & Rothenberg is the Rothenberg Group’s Guaranteed Investment Certificate (GIC) and insurance brokerage division. They represent more than 40 banks and trusts across Canada to provide extremely competitive GIC rates to clients as well as a multitude of insurance companies, offering competitive quotes on products such as life insurance, disability insurance, and critical illness insurance. Because of licensing requirements, it operates under a different name than Rothenberg Capital Management. ii Total and median net worth by age and family type. (2017). Www150.statcan.gc.ca. Retrieved 10 November 2019, from https://www150.statcan.gc.ca/n1/daily-quotidien/171207/t001b-eng.htm iii (2019). Ific.ca. Retrieved 10 November 2019, from https://www.ific.ca/wp- content/uploads/2019/06/Strategic_Insight_Canadian_Investment_Funds_Industry_Recent_Developments_and_Outl ook-2019.pdf/22469/ iv What aging HNW clients mean for wealth management. (2019). Advisor.ca. Retrieved 10 November 2019, from https://www.advisor.ca/investments/market-insights/what-aging-hnw-clients-mean-for-wealth-management/
v Robo-advisors (also spelled robo-adviser or roboadvisor) are digital platforms that provide automated, algorithm- driven financial planning services with little to no human supervision. A typical robo-advisor collects information from clients about their financial situation and future goals through an online survey and then uses the data to offer advice and automatically invest client assets. What Is a Robo-Advisor?. (2019). Investopedia. Retrieved 9 December 2019, from
https://www.investopedia.com/terms/r/roboadvisor-roboadviser.asp vi Along with more than 400 other investment firms in Canada, RCM outsources statements and common reporting to National Bank Independent Network (NBIN), a fully owned subsidiary of National Bank of Canada vii High net worth Millennials: Savvy with high expectations. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-millennials- savvy-with-high-expectations.html viii High net worth Gen Xers: "Do-it-yourself" generation. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-gen-xers-do-it- yourself-generation.html ix ibid. x High net worth Millennials: Savvy with high expectations. (2019). Capital Group. Retrieved 10 November 2019, from https://www.capitalgroup.com/ria/practice-excellence-center/wealth-perspectives/high-net-worth-millennials-savvy- with-high-expectations.html xi 2018 Canadian Full Service Investor Satisfaction Study | J.D. POWER. (2019). Jdpower.com. Retrieved 10 November 2019, from https://www.jdpower.com/business/press-releases/2018-canadian-full-service-investor- satisfaction-study xii Here's how your generation affects your attitude to money. (2019). World Economic Forum. Retrieved 10 November 2019, from https://www.weforum.org/agenda/2019/08/attitudes-investing-vary-according-age-group/ xiii Banks changing the way they do business to cater to young people loaded down with debt | CBC News. (2019). CBC. Retrieved 10 November 2019, from https://www.cbc.ca/news/business/millennials-debt-financial-literacy- 1.5254516 xiv Financial Technology – FintechDefinition. (2019). Investopedia. Retrieved 9 December 2019, from
https://www.investopedia.com/terms/f/fintech.asp#fintech-landscape xv Exchange-Traded Fund – ETFs. (2019). Investopedia. Retrieved 10 November 2019, from https://www.investopedia.com/terms/e/etf.asp
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