* Head count at independent firms has sagged for years
* Big firms with big training budgets lure most prospects
* Average age of advisers has increased
By John McCrank
TORONTO, June 23 (Reuters) - Attrition is thinning the ranks of independent financial advisers in Canada, a seemingly inexorable trend that’s forcing many firms to find and retain star performers to make up for a smaller head count.
On average, financial advisers are getting older and new entrants to the profession are ending up almost exclusively at big, global firms, said William Holland, CEO of CI Financial (CIX.TO), the only one of Canada’s top five fund companies that is not a global player.
“Whatever the high water mark for independent financial planners was, I don’t think that that will ever get hit again, but I think the ones that are left will be more successful, with bigger books and more professionalism,” said Holland, whose firm owns Assante Wealth Management.
“Let’s say we started out at 1,000 financial planners,” he said, “and let’s say we have 800 and change now because advisers have merged together and formed teams and stuff like that. My guess is we could have slightly fewer advisers again a few years out but have materially more assets under administration.”
While CI has the resources to cherry-pick top advisers, many smaller firms do not, said Sam Albanese, program coordinator of the Financial Services Practitioner program at Toronto’s Seneca College.
In the past 10 to 15 years, the number of people joining those firms has shrunk, he said, while many are facing serious succession problems.
Many say the impending retirement of the baby-boomer generation means that financial advice is needed more than ever, but it also means that most advisers are nearing the end of their careers.
The average insurance agent in Canada is 58 years old and the average wealth manager is 53, said Albanese.
Part of the reason he sold his insurance brokerage firm in 2004 was because he was getting older and he saw the need to get more people into the industry.
“We saw an opportunity, basically, to try to reverse the trend,” he said of the four-year-old Seneca program.
The advisers that come out of the program “are already licensed and they’ve already got a number of the courses, so we give them a well-trained individual.”
Still, most fledgling advisers seek the security that the big firms have to offer. Even if they have the training, they might not have the street smarts to start off on their own.
The Seneca students are also snapped up by aggressive recruitment campaigns by big industry players before their eight months of classes are even finished.
Firms that have been really ramping up their recruiting efforts include Royal Bank of Canada (RY.TO), the country’s biggest bank; BMO Nesbitt Burns (BMO.TO); Investors Group, a member of IGM Financial Inc’s (IGM.TO) group of companies; Desjardins; London Life; and Sun Life Financial (SLF.TO), Albanese said.
The allure of those companies for new entrants is that they often foot the bill for further training, which some smaller and medium-sized firms don’t have the resources to support.
“It’s big bucks,” said Albanese. “It all depends on the company you go to, but I have heard of anywhere between C$60,000 to C$80,000 a year to train one person, so it’s a fairly expensive proposition.”
At CI, Holland said he will focus getting and keeping more experienced advisers and helping them grow their books.
He said banks will dominate the distribution side of the business and increasingly, asset management -- the same way they do mortgages, wholesale banking, retail banking, and other services. That said, Holland likes where CI is positioned.
“I just wish we were 1997 again and you didn’t have banks as competitors. You had tons of financial planners and more financial planners coming into the business, but it’s a different world.”
$1=$1.02 Canadian Reporting by John McCrank; Editing by Frank McGurty