Banks battle it out for doctors’ wealth management business
OMA also developing a pension alternative while some physicians try to go it alone
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 healthcare 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.
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.
Other Canadian banks have also been launching new, specialized products targeting the health-care sector in recent months.
However, even as the playing field grows crowded, Scotiabank said there has not been an increased outflow of investments of MD Financial.
More doctors are also looking at alternatives including selfmanaged 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.”