The financial services industry is facing disruption and challenges from every corner these days.
From robo-advisors that offer investment advice at a fraction of the cost – and commercials criticizing financial advisors – to new payment models, the resurgence of the independent dealer model and the persistent drive toward professionalism, there’s no shortage of changes affecting advisors.
Here are 10 key trends that had a big impact on advisors and the industry at large in 2019:
From the new mother who dumps her advisor because she “can’t keep paying a fortune in fees,” or the couple commenting on the “10 minutes, once a year” of expertise they feel they get from their soon-to-be former advisor, Questrade Inc.’s advertisements, which challenge advisors for the fees they charge and services they provide, are having an impact.
Some advisors are adopting a new, innovative subscription-based model for financial advice that sees investors pay a regular monthly or quarterly fee for services such as financial planning. Advisors who have embraced this model say it’s gaining traction as clients seek out advisors who can meet their budgets and accommodate a flexible billing cycle.
Some of Canada’s independent investment dealers are thriving after attracting top investment advisors and experiencing burgeoning client asset levels by being able to leverage new technologies and better cater to advisors, many of whom have been seeking greater independence than the Big Six banks’ brokerage arms provide.
Artificial intelligence (AI) is seen as a game-changing technology across many sectors – including wealth management. How might it reshape the work of advisors? Rather than replacing advisors, as some fear, AI and related technologies stand to make advisors better at their jobs.
As Canada’s population of ultra-wealthy investors continues to increase, advisors are developing specialized practices to serve their needs. Family offices – once rare in Canada – are coming into their own.
For the past two decades, John De Goey has been a thorn in the side to many in the investment industry for being a staunch proponent of eliminating mutual funds with embedded commissions. For much of that time, he has focused the majority of his efforts on persuading fellow advisors and the industry’s regulators that it’s in their best interests to abandon this compensation model. Now, he’s sending the message directly to investors because he’s disappointed his “fellow advisors didn’t heed the clarion call [to action] and didn’t do what the evidence shows they should be doing.”
A new rule from FP Canada that requires candidates looking to earn the certified financial planner designation to have completed a post-secondary degree is stoking division and debate among financial professionals. While some argue this is the first step in raising the financial planner profession to a higher standard, others denounce it as elitist and prohibitive.
The introduction of “open banking,” which would allow Canadians to share their financial data more easily among financial services providers, has the potential to reshape the financial advice business. Namely, open banking would result in fewer barriers for financial services firms and their clients, such as eliminating the often lengthy process of gathering relevant information from many different accounts at various providers.
The rise of fintech – and robo-advisors, in particular – is spurring financial services firms and advisors to embrace client-facing technology. But regulatory hurdles make it harder for them to implement these new tools into their practices. Now, one of the financial services industry’s self-regulatory organizations is making it easier for them to do just that.
The mutual fund dealer space is showing signs of growth after a decade of dealers closing up shop or consolidating with one another. According to data from the Mutual Fund Dealers Association of Canada, the number of mutual fund dealers operating in Canada is on the rise for the first time in a decade as several new member firms have joined the fray during the past 18 months.