* Aging work force, regulatory change driving competition
* Big companies may benefit from high compliance costs
* Arduous process means good fit is key
By Andrea Hopkins
TORONTO, March 31 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
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
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)