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John De Goey, portfolio manager at Wellington-Altus Private Wealth Inc., said advisors ‘have to sharpen our pencils and deliver the best experience at a reasonable price’ during a virtual panel discussion held on Monday.


Financial advisors need to keep hunting for ways to lower the fees they charge clients while also stepping up their services to stay relevant and stave off the intensifying competition, according to a group of expert advisors who spoke during a panel discussion at the virtual Inside ETFs Canada conference on Monday.

The pressure comes amid a rise in low or even zero-commission trading and robo-advisors offering investors cheaper alternatives to traditional advisors, while low-interest rates and ongoing market volatility are also expected to continue to weigh on portfolio returns, making it more challenging for advisors to prove their worth.

“In a world where expected returns are going to be very low, we advisors have to be extremely mindful of the drag that we ourselves are creating by the fees we charge,” said John De Goey, portfolio manager at Wellington-Altus Private Wealth Inc. during the “Peer to Peer: Strategies For Success” panel discussion, moderated by Pablo Fuchs, editor of Globe Advisor, which was one of the conference’s media partners.

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“We have to be mindful of costs and also be protective of our margins. If you’re not going to lower what you charge, it behooves you as the advisor to find low-cost products,” added Mr. De Goey, who invests in exchange-traded funds for his clients because of their low fees versus mutual funds. “We have to sharpen our pencils and deliver the best experience at a reasonable price.”

Clients are also consumers who are becoming accustomed to receiving better service from companies they do business with, said Grant White, portfolio manager, investment advisor and lead partner of Endeavour Wealth Management at Industrial Alliance Securities Inc. in Winnipeg.

“The Apples and Amazons of the world have already had a huge impact on the wealth management industry as it relates to customer experience,” he said. “There’s a precedent being set for what people are demanding from their service providers, and we need to be up on that as well in what we are delivering. It’s about value. Value needs to be delivered for the price we’re charging.”

An advisor’s value includes managing risk when markets nosedive – as they did in March, when the COVID-19 pandemic wreaked havoc on the global economy – and finding investment opportunities amid the chaos.

Mr. White said his team began allocating assets into market-neutral funds and principal-protected notes toward the end of 2019, believing market valuations were getting “frothy.”

“When the pandemic hit, we were in a really good spot because valuations became really attractive on a lot of high-quality companies,” he said, citing Canadian banks and technology giant Microsoft Corp., in particular. “It was more about valuation and not trying to time the markets.”

Today, Mr. White sees pent-up demand in sectors like travel, which has been hammered by the COVID-19 restrictions.

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“We might see an effect of something like the Roaring 20s, where there’s a lot of that type of money being set aside, waiting to be deployed,” he said. “We might see a boom post-pandemic. We are looking hard at valuations to see if we can get some attractive entry points.”

Linda Shick, senior vice-president and portfolio manager at Raymond James Ltd., said her team shifted some of its portfolio weighting toward global equities and away from Canada before the pandemic hit, while also ensuring cash-flow protection for clients who need it.

“We always want to make sure that clients’ cash flow needs are protected for at least two years,” she said. “Any time the markets have some sort of move, we revisit that and make sure our portfolios are bulletproof for people who need to actually draw cash.”

Ms. Shick expects to buy more equities in the weeks ahead, as opportunities arise.

“There’s a lot of sentiment change happening in the markets,” she said. “We will probably look to add a bit more into technology … and maybe ... in the fixed-income space.”

Mr. De Goey said he sold about 30 to 40 of his equity positions at the start of this year, based on a belief brewing back in 2019 that the market was becoming overvalued. He put some of the funds into inverse notes that go up when the market goes down “as a hedge and opportunity to play defence, in case it was required.”

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While Mr. De Goey realizes the move may appear overly cautious today because of the market rebound, he said he doesn’t “see myself as a market timer; I see myself as a risk manager.”

Still, he anticipates more volatility ahead with COVID-19.

“The question is: How ready are you for what might come down the road? My view is that we haven’t even begun to see the pain that we’re really going to see with regard to coronavirus,” Mr. De Goey said.

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