The financial services industry was already facing disruption from various directions prior to the arrival of COVID-19, but the pandemic presented novel challenges and opened the door to even more significant changes.
From more diverse and inclusive advisory teams, to new rules affecting many financial professionals, to even greater adoption of technology among both advisors and their firms, to an increasing shift toward advisor independence and greater levels of stress among advisors, these themes are likely to persist well into 2021 and beyond.
Here are 10 key trends that advisors and the investment industry were focusing on in 2020:
Women remain a significant minority in Canada’s advisor population. So, while female-centric teams are still a rarity in the industry, they bring a distinct perspective that clients appreciate. For Candice Dziedziejko and Teri Cook, investment advisors with the Dziedziejko Cook Investment Advisory Group at BMO Nesbitt Burns Inc. in Waterloo, Ont., it was their shared work ethic and investment philosophy that led them to launch their all-female team six years ago, which now includes four women.
Advisors have been busy amid the COVID-19 pandemic addressing investors’ growing list of concerns, including one that often ends up on the back-burner during normal times: life insurance. But while broaching the subject with clients can be tricky for advisors as they run the risk of appearing opportunistic, discussing life insurance has more merit than ever before.
Advisors in Canada could soon find it much easier to work independently of large brokerage firms – a rapidly growing trend in the United States – amid changing regulations and advances in investment-management technology that make going it alone more convenient and cost-effective. A turnkey asset management program ecosystem is being developed in Canada, providing advisors with the technology and tools to become an independent investment counsellor portfolio manager.
The COVID-19 crisis is inspiring more advisors to consider going it alone. The interest comes as advisors discover that managing client relationships from home works well and question their current ties to traditional firms. As a result, wealth management technology firms, which are providing tools that are empowering advisors to run their own shops, are reporting a surge in inbound calls from prospective clients looking for information on how they can support independent advisors.
A recent amendment to Canada’s securities regulation that makes it easier to hire portfolio managers in certain client-facing roles could be a game-changer for wealth and asset management firms looking to add to their ranks. Regulation for registration of advising representatives used to require portfolio managers to have at least two years of experience in securities selection and research, regardless of their role. But the addition of new terms and conditions to the registration requirement to the rule in June eliminated that requirement for portfolio managers who deal exclusively with clients, creating a new role defined as client relationship manager advising representatives.
Advisors may be feeling even more stress than the individuals for whom they manage money amid the COVID-19 pandemic. A recent report from Toronto-based human resources services and technology provider Morneau Shepell Inc. revealed that workers in Canada’s financial services industry trailed only those in accommodation and food services, arts, entertainment and recreation, and real estate, rental and leasing for the lowest mental health scores. What’s notable is that these people were all affected deeply by the COVID-19 stay-at-home recommendations in the spring as these industries were virtually shut down completely at the time. In contrast, financial services workers were considered essential in most provinces.
Although the investment industry is in favour of an Ontario government proposal to tighten the rules around who can use the titles “financial planner” or “financial advisor,” it’s seeking clarity and some changes before they’re finalized. For example, Michelle Alexander, vice-president and corporate secretary at the Investment Industry Association of Canada, says the organization is looking to ensure there’s no duplication in credentialing oversight.
David O’Leary of Kind Wealth wanted to do something constructive as the COVID-19 pandemic began to disrupt people’s lives. So, as businesses closed their doors and layoffs spread across the country, he launched the Coronavirus Relief Effort to offer free personal finance consultations for anyone struggling with the economic impact of the pandemic. Soon after, about 20 advisors stepped forward, able and willing to dedicate at least half a day a week to this initiative.
Advisors in Ontario who have been working from home during the COVID-19 pandemic received a little help from the provincial government, which changed the rules around a cumbersome barrier that had slowed down the client onboarding process. In effect, Bill 190 explicitly allows clients to designate beneficiaries for a range of registered accounts – including registered retirement savings plans, registered retirement income funds, locked-in retirement accounts, life income funds and tax-free savings accounts – with e-signatures.
Before COVID-19 , some of Canada’s largest independent investment dealers had been recruiting advisors actively and aggressively. Although the onset of the pandemic has had little impact on the level of this activity, how firms are recruiting advisors – and, in some cases, whom they’re targeting – has been affected significantly.