March 31, 2014 / 8:24 PM / 5 years ago

Canadian wealth managers jockey to recruit advisers

TORONTO (Reuters) - An aging workforce and looming regulatory change are driving stiff competition between Canada’s top wealth managers to recruit new advisers, a costly and arduous process that makes finding the right fit crucial for both sides.

Buildings are seen in the financial district in Toronto, January 28, 2013. REUTERS/Mark Blinch

With the average age of advisers at full-service investment companies nearing 50 and compliance demands rising, top-tier firms say the next few years may bring the stiffest competition yet as advisers and employers jockey to find a permanent match.

“There are a lot of things going on in the industry over the next few years, and that’s spurring a lot of advisers to think about where they’re practicing, and ask, ‘Is it the right place for them for the long term?’” said George Garner, head of national sales at Manulife Securities.

As Canadian regulators demand more in transparency and compliance with what is known as a Client Relationship Model, advisers are facing more arduous documentation requirements, from client suitability surveys to performance reporting and cost and compensation explanations.

For some, the looming regulatory increase may mean it is time to jump from a small independent wealth manager, or a firm that isn’t technologically savvy, to one that is ahead of the curve and ready to help them with the hard lifting so they can focus on the client, not the paperwork.

“Clients are looking for advisers whom they can trust, because the equation is no longer ‘Which fund to pick?’ It is ‘What is the path forward, how can you meet the goals for my family?’” said Dave Kelly, president of TD Wealth Private Investment Advice. “You need a lot of tools to be successful in this environment.”

The scale and strength of their front- and back-office systems to meet both the compliance needs and the demands of customers are being trumpeted by TD Wealth, Manulife, and BMO Nesbitt Burns as they seek to recruit the best advisers to their full-service shops, which target high-net-worth clients.

“The fact that large firms like ours have the scale to invest in the technology to provide the oversight, from a compliance standpoint, is one of the things advisers are definitely seeking out there,” said Mike Malloy, senior vice president and managing director at BMO Nesbitt Burns.

But regulatory hurdles may also, by contrast, chase top-performing advisers away from a one-size-fits-all approach to compliance. That’s a scenario smaller but wealthy shops like GMP Richardson believes may work to their advantage.

“What that does is frustrate the higher-end people who feel they are being managed to lowest common denominator,” said Richardson GMP Chief Executive Andrew Marsh.

“We can take a much more entrepreneurial approach, while still holding to the highest professional standards, and I think that will create opportunities as the regulatory environment becomes more reactive ... and top advisers see how much more flexible a boutique approach is.”


Increased compliance costs also makes it harder than ever for advisers to change firms, and the risks they take to make such a leap in mid-career - when they are at their most valuable - is something that looms large for both sides.

“Moving a book of business in our industry is a very complex, cumbersome and somewhat risky thing for an adviser to do,” said Manulife’s Garner. “It takes a lot of time, it involves an awful lot of paperwork ... and there’s always a period of uncertainty in an adviser’s mind as to whether that client is going to agree to come.”

The fit becomes crucial. While the recruitment process may take anywhere from three months to 18 months, it can take three or four years before an experienced adviser becomes accretive to a new firm’s bottom line.

The huge investment in time means the ideal recruit is going to be experienced enough to have a strong book of business, but young enough to have years of value-adding work ahead.

Recruiters are also looking for a little something extra to ensure their new team member fits the company culture.

GMP Richardson’s Marsh is looking for someone who not only talks about putting the client first, but walks the walk.

“The nice book is a pre-qualifier. In the early days, the first two or three times I sit down with somebody, I keep track of how many questions they ask that are client driven, and how many are personally driven,” he said.

“The great questions are: ‘Explain to me how my clients are better off at Richardson GMP,’ ... (not) ‘How big is your check?’” Marsh said.

BMO’s Malloy also has an eye on Canada’s changing demographics, aware that women and minorities are making more and more financial decisions. Manulife’s Garner likes someone who is well-rounded and involved in the community, even as he or she builds their book.

Garner said the vast majority of advisers taken on by Manulife over the last three years have been aged 35 to 50, though he doesn’t rule out an older adviser who has a few years left before retirement and is concerned about a succession plan.

More than anything, recruiters are concerned the pool of talent may narrow as the baby boom generation of advisers retires, just as the baby boom generation of wealthy clients needs real financial advice in retirement.

“I think it is more competition today than several years ago, and I would say it is going to continue,” said Malloy.

Manulife’s Garner agrees.

“Today the talent pool is pretty big, but I do think it will start to diminish ... the lack of new talent coming into the industry is not a good thing.”

Reporting by Andrea Hopkins; Editing by Dan Grebler

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