Investment Executive - - CONTENTS - BY FIONA COL­LIE

In­vestors Group is ex­pand­ing its se­cu­ri­ties arm in re­sponse to de­mand from clients.

win­nipeg-based in­vestors Group Inc., well known as a mu­tual fund dealer, is ex­pand­ing its se­cu­ri­ties arm amid grow­ing de­mand from both financial ad­vi­sors — cur­rent and new re­cruits alike — and clients look­ing for a broader range of prod­ucts.

“The de­mo­graph­ics of our clients def­i­nitely are the mass af­flu­ent and high net-worth, and we want to be able to of­fer them a full suite of prod­ucts,” says Es­ther Bast, se­nior vice pres­i­dent, financial ser­vices with In­vestors Group, and pres­i­dent of the firm’s se­cu­ri­ties arm, In­vestors Group Se­cu­ri­ties Inc. (IGS). “For that

[to hap­pen], we know we need to broaden our per­spec­tives [and] our abil­ity to make sure we have that choice for our clients.”

Look­ing at spe­cific num­bers, In­vestors Group cur­rently has 75 ad­vi­sors and $5.7 bil­lion in as­sets un­der ad­min­is­tra­tion (AUA) un­der the IGS ban­ner. The par­ent firm has plans to grow its se­cu­ri­ties busi­ness to be­tween 350 and 400 ad­vi­sors, with $25 bil­lion-$35 bil­lion in AUA, by 2020.

Re­gard­ing prod­ucts, In­vestors Group ad­vi­sors li­censed by the Mu­tual Fund Deal­ers As­so­ci­a­tion of Canada (MFDA) can ac­cess se­cu­ri­ties for high net­worth clients in­di­rectly through the fir m’s wealth-plan­ning spe­cial­ists. Ad­vi­sors li­censed with the In­vest­ment In­dus­try Reg­u­la­tory Or­ga­ni­za­tion of Canada (IIROC), how­ever, can ac­cess these in­vest­ments di­rectly, as well as through Azure Man­aged In­vest­ments (a plat­form for sep­a­rately man­aged ac­counts) and a fee-based plat­form, both of which were launched in 2016.

Grow­ing de­mand for var­i­ous prod­ucts, par­tic­u­larly ETFs, and in­ter­est in fee-based and port­fo­lio-man­age­ment busi­ness mod­els may be mo­ti­vat­ing MFDA-li­censed ad­vi­sors to take an­other look at IIROC, says Dan Hal­lett, vice pres­i­dent and prin­ci­pal with HighView Financial Group in Oakville, Ont.

Dis­cre­tionary port­fo­lio man­age­ment is a topic of par­tic­u­lar in­ter­est for Toronto-based As­sante Wealth Man­age­ment (Canada) Ltd., a full-ser­vice dealer that in­tends to launch a plat­form for this busi­ness in 2018.

“It’s a ma­jor ini­tia­tive for us,” says Bob Dor­rell, se­nior vice pres­i­dent, dis­tri­bu­tion sales and ser­vice, and chief op­er­at­ing of­fi­cer with As­sante. “The ob­jec­tive is to have a mar­ket-com­pet­i­tive plat­form in place by the end of the year so that we can be­gin to re­cruit dis­cre­tionary port­fo­lio man­ager­li­censed ad­vi­sors in 2019.”

Al­most 50% of As­sante’s 800 ad­vi­sors com­prise its IIROC divi­sion, As­sante Cap­i­tal Man­age­ment Ltd. These ad­vi­sors are re­spon­si­ble for 59% of the dealer’s over­all AUA and pro­duced 56% of the firm’s sales in 2017.

At Mon­treal-based Peak Financial Group, an­other full-ser­vice dealer, most AUA re­mains in mu­tual funds, but the firm has seen sig­nif­i­cant growth on its IIROC plat­form in re­cent years. For ex­am­ple, Peak Se­cu­ri­ties Inc., the dealer’s IIROC-li­censed arm, has $1.9 bil­lion in AUA, up from $700 mil­lion i n 2013. In to­tal, the com­pany has $9.8 bil­lion in AUA.

At Oakville, Ont.-based Man­ulife Se­cu­ri­ties, 56% of the firm’s 1,200 ad­vi­sors are on the IIROCli­censed plat­form and the rest are on the MFDA-li­censed side. Fur­ther­more, AUA on the IIROC plat­form com­prises about 65% of Man­ulife Se­cu­ri­ties’ to­tal AUA, and the rest is held on the MFDA plat­form.

For Rick An­naert, pres­i­dent and CEO of Man­ulife Se­cu­ri­ties, this AUA dis­tri­bu­tion re­flects the fact that MFDA ad­vi­sors tend to have slightly smaller books than their IIROC coun­ter­parts. Look­ing to the fu­ture, An­naert says, the firm is am­biva­lent about which plat­form its ad­vi­sors choose.

“We al­low our ad­vi­sors to choose which plat­form best suits their needs, their in­ter­ests and their abil­ity to ser­vice their clients,” he says.

Growth at all of these firms comes from many av­enues — from or­ganic growth to new re­cruits. Some­times, though, ad­vi­sors within a firm de­cide to move to the IIROC-li­censed plat­form from the MFDA arm. Mak­ing such a tran­si­tion can be an in­ten­sive process, both for the ad­vi­sor’s team and for the dealer it­self from ad­min­is­tra­tive and train­ing per­spec­tives.

“We not only pre­pare [ad­vi­sors], but we sug­gest that this [shift in plat­form] is prob­a­bly go­ing to be the great­est amount of work they’ve done in a long time,” says Bast.

To help with the tran­si­tion, most firms have pro­ce­dures in place to make the process as smooth as pos­si­ble. Of­ten, this means help­ing to “repa­per” the busi­ness, in­clud­ing up­dat­ing and sign­ing all client doc­u­men­ta­tion and stream­lin­ing doc­u­ment pro­cess­ing.

Man­ulife Se­cu­ri­ties, for ex­am­ple, can move all the clients in a typ­i­cal book of busi­ness over the course of a week­end be­cause of the firm’s in­te­grated sys­tems.

In­vestors Group, mean­while, has a team in place who en­sure all doc­u­ments are pro­cessed in a timely man­ner, who meet with the ad­vi­sor on a weekly ba­sis to make sure all the nec­es­sary steps are be­ing met and who help deal with any hic­cups that may arise dur­ing the tran­si­tion. In ad­di­tion, the firm is work­ing on a new ed­u­ca­tion pro­gram for MFDAli­censed ad­vi­sors who wish to move to the IIROC plat­form.

Com­pli­ance train­ing is a key part of the tran­si­tion process for any firm, as each plat­form has its own rules and pro­ce­dures. Frances notes that most of Peak’s tran­si­tion sup­port fo­cuses on train­ing be­cause many ad­vi­sors don’t re­al­ize how dif­fer­ent the two plat­forms can be.

Says Frances: “I of­ten tell peo­ple: ‘Make sure you un­der­stand all the dif­fer­ences, so you don’t end up i n trou­ble [by] think­ing you’ve done ev­ery­thing prop­erly’.”

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