Banks fight for doc­tors’ dough

The Prince George Citizen - - Money -

The doc­tor’s of­fice has be­come a fierce bat­tle­ground for Canada’s big­gest banks.

But as fi­nan­cial in­sti­tu­tions ex­pand their physi­cian-fo­cused of­fer­ings in a bid to snag the wealthy clien­tele, some health care pro­fes­sion­als are tak­ing their in­vest­ments into their own hands.

The On­tario Med­i­cal As­so­ci­a­tion has been devel­op­ing its own pen­sion-like so­lu­tion tai­lored for physi­cians, which should be up and run­ning by the end of the year, said its pres­i­dent Dr. So­hail Gandhi.

The OMA – which rep­re­sents more than 40,000 physi­cians in the prov­ince – is a non-profit, al­low­ing it to lower man­age­ment costs and in­crease re­tire­ment in­come, he added.

“I’m hope­ful that when physi­cians re­al­ize that this is some­thing that their own as­so­ci­a­tion is spon­sor­ing on their be­half... that most physi­cians, even though they’re given a choice, will come this way,” Gandhi said in an in­ter­view.

Doc­tors are a key mar­ket for wealth man­age­ment providers be­cause physi­cians are largely their own em­ploy­ers, don’t have pen­sions and rely on sav­ing from their own earn­ings.

Com­pe­ti­tion for man­age­ment of physi­cians’ dol­lars has height­ened since the Bank of Nova Sco­tia ac­quired doc­tors’ wealth ser­vices com­pany MD Fi­nan­cial Man­age­ment from the Cana­dian Med­i­cal As­so­ci­a­tion last year. Sco­tia­bank also struck a 10-year deal with the CMA to ex­clu­sively pro­mote the Toronto-based com­pany as the pre­ferred provider to its base.

With the CMA as its owner, MD Fi­nan­cial had been seen as an in­de­pen­dent fi­nan­cial ser­vices provider with physi­cians’ in­ter­ests at heart, but its ac­qui­si­tion by a big bank prompted some to re-ex­am­ine their money man­age­ment op­tions.

In June, Bank of Mon­treal launched a full suite of bank­ing and wealth man­age­ment ser­vices aimed at health-care pro­fes­sion­als, such as fi­nanc­ing op­tions for those look­ing to grow their prac­tice.

While the MD Fi­nan­cial deal shone a light on the health-care in­dus­try, BMO had long looked to launch a more fo­cused ap­proach to the sec­tor, said Ro­mal Bryce, Bank of Mon­treal’s head of health care, North Amer­i­can in­dus­try sec­tors.

He noted that with one-mil­lion health-care pro­fes­sion­als in Canada, in­clud­ing den­tists and oth­ers with higher-than-av­er­age in­comes, it was a seg­ment that could not be ig­nored.

Last July, BMO beefed up its busi­ness bank­ing team fo­cused on this port­fo­lio to roughly 80 peo­ple, many whom came from other in­dus­tries such as phar­ma­ceu­ti­cals, he said.

“We’re go­ing to be ag­gres­sive in this space. We see good things... and our an­nu­al­ized growth rate is about 35 per cent,” Bryce said.

Other Cana­dian banks have also been launch­ing new, spe­cial­ized prod­ucts tar­get­ing the health-care sec­tor in re­cent months.

Cana­dian Im­pe­rial Bank of Com­merce in March an­nounced its new full ser­vice physi­cian pack­age and a new of­fer for med­i­cal and den­tal stu­dents.

In Au­gust, the Royal Bank of Canada launched RBC Health­care Ad­van­tage, a mem­ber­ship pro­gram which of­fers “cus­tom­ized perks and re­wards” and so­lu­tions to help physi­cians to es­tab­lish and run their prac­tices, among other things.

Toronto-Do­min­ion Bank, mean­while, has been strate­gi­cally ad­ver­tis­ing its TD Wealth Man­age­ment for Health Care Prac­ti­tion­ers ser­vice in the vicin­ity of sev­eral large hos­pi­tals in Toronto’s down­town core.

The bank has placed prom­i­nent ad­ver­tis­ing in one of the un­der­ground pedes­trian walk­ways con­nected to a key sub­way sta­tion, which brings com­muters to the Hos­pi­tal for Sick Chil­dren and Toronto Gen­eral Hos­pi­tal, among oth­ers.

Dave Kelly, se­nior vice-pres­i­dent of TD Wealth Pri­vate Wealth Man­age­ment, said MD Fi­nan­cial’s ac­qui­si­tion didn’t prompt the launch but en­cour­aged the bank to move quickly with its new ser­vice, which was launched in De­cem­ber 2018.

“It was clear there was an op­por­tu­nity in the mar­ket­place,” he said.

The bank al­ready has about 20 ded­i­cated pri­vate bankers in 20 mar­kets, from Hal­i­fax to Vic­to­ria, but hopes to add 10 more, par­tic­u­larly on the West Coast and Que­bec, Kelly said.

TD had al­ready been cater­ing to roughly 60,000 med­i­cal pro­fes­sion­als, he said, but since the launch of the new ser­vice he es­ti­mates they have added an­other 1,500 to their clien­tele.

Mean­while, in July, TD and the Cana­dian Uro­log­i­cal As­so­ci­a­tion an­nounced an agree­ment to be­come the ex­clu­sive fi­nan­cial ser­vice spon­sor of the or­ga­ni­za­tion. Kelly said spon­sor­ships are ef­fec­tive in in­creas­ing vis­i­bil­ity among as­so­ci­a­tion mem­bers, and there are more of these in the pipe­line.

How­ever, even as the play­ing field grows crowded, Sco­tia­bank said there has not been an in­creased out­flow of in­vest­ments of MD Fi­nan­cial.

As­sets con­tinue to grow at record lev­els and have sur­passed $50 bil­lion for the first time, said Glen Gow­land, Sco­tia­bank’s ex­ec­u­tive vice-pres­i­dent of global wealth man­age­ment.

Af­ter the ac­qui­si­tion, Sco­tia­bank looked to re­tain the fea­tures that were pop­u­lar with physi­cians but also looked for ways add more value for their clien­tele, added Gow­land.

“We ac­tu­ally low­ered fees across the board, and that’s been very pop­u­lar,” he said. “And MD was al­ready a low cost (provider).”

It also launched the MD Physi­cian Coun­cil, with more than 1,000 ap­pli­cants from which nine were cho­sen, to al­low for doc­tors to weigh in. And in March, Sco­tia­bank launched its Health­care+ Physi­cian Bank­ing Pro­gram de­vel­oped with MD Fi­nan­cial.

“We’re see­ing tremen­dous in­ter­est from physi­cians across the board,” Gow­land said. “We’ve just ac­tu­ally done 15 ex­clu­sive part­ner­ships with med­i­cal groups.”

More doc­tors are also look­ing at al­ter­na­tives in­clud­ing self-man­aged or pas­sive on­line in­vest­ment op­tions, said Paul Healey, an emer­gency room physi­cian who also man­ages a Face­book dis­cus­sion group where doc­tors dis­cuss per­sonal fi­nances.

“They are do­ing dif­fer­ent things, de­pend­ing on their needs,” he said. “A lot of them are mov­ing to low-cost in­vest­ing, which means open­ing a bro­ker­age ac­count ... and then they are buy­ing ETFs.”

Wealth­sim­ple, which has both a com­mis­sion-free trad­ing plat­form and robo-ad­viser ser­vice, has also been a ben­e­fi­ciary and has seen an in­crease in physi­cian clients, said port­fo­lio man­ager Michael Allen in an emailed state­ment.

Questrade’s chief op­er­at­ing of­fi­cer Stephen Gra­ham said the Toronto-based on­line bro­ker­age has seen a “more than a dou­bling to tripling of that seg­ment, in­ter­ested in our prod­ucts com­ing over the last year,” he said.

CP PHOTO

Pedes­tri­ans walk past a TD Bank ad­ver­tise­ment for wealth man­age­ment ser­vices for health care prac­ti­tion­ers on dis­play at the Queen’s Park tun­nel in Toronto on Wed­nes­day.

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