A new report estimates about 367,500 high-net-worth individuals, including millionaires, centimillionaires and billionaires, were living in Canada in 2022.kate_sept2004/AFP/Getty Images
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Canada is attracting more high-net-worth newcomers than previously forecasted as wealthy immigrants seek an open and stable place to grow and diversify their businesses and investments, a new report shows.
The influx of new Canadians, which hit record levels in 2022, should also bring a welcome injection of capital to the country amid ongoing economic uncertainty. Wealth management industry experts say it’s also an opportunity for advisors to expand their client base.
Canada welcomed 1,200 high-net-worth individuals (HNWIs) in 2022 – a 20-per-cent jump from projections last year – according to the Henley Private Wealth Migration Report 2023 released on June 13. HNWIs are those with investible wealth of more than US$1-million.
The country had the seventh-highest net inflows of private wealth migration worldwide in 2022, behind the United Arab Emirates (UAE), which was in the top spot, followed by Australia, Singapore, Switzerland, the U.S. and Portugal.
Canada is set to welcome another 1,600 HNWIs from other countries this year, the report states, putting it in sixth place, overtaking Portugal. The top five countries in 2023 are expected to be Australia, the UAE, Singapore, the U.S. and Switzerland.
The report says the affluent who are expected to come to Canada are mainly from the U.S., U.K., France, Vietnam, India, China, Brazil and Hong Kong. It also forecasts HNWI growth to rise 35 per cent by 2032 from 2022, up from its previous prediction of 30-per-cent growth over the 10-year time frame.
“The face of wealth in Canada is changing and evolving,” says Yannick Archambault, partner and national family office leader at KPMG LLP in Toronto and a contributor to the Henley report.
Canada is seen as a stable place to invest
Growth of HNWIs in Canada comes despite ongoing economic concerns and market volatility caused by runaway inflation and rapidly rising interest rates. Mr. Archambault says Canada remains an attractive destination to live, work and invest in and is relatively stable compared with other parts of the world.
“Canada may not be perfect for everyone, but we have a lot to offer newcomers,” he says.
The rise in affluent newcomers comes as Ottawa seeks to attract more immigrants to help broaden the workforce and drive economic growth. In 2022, Canada welcomed 437,180 immigrants, and the number of non-permanent residents increased by a net of 607,782. Both figures are the highest levels on record and reflect “higher immigration targets and a record-breaking year for the processing of immigration applications,” according to Statistics Canada.
The Henley report estimates about 367,500 HNWIs, including millionaires, centimillionaires and billionaires, were living in Canada in 2022.
Toronto was the highest-ranking Canadian city by wealth concentration, landing in 12th spot among 97 cities globally, up from 14th last year. Vancouver was the second highest-ranking Canadian city in the 29th position (up from 36th last year), followed by Montreal at 48 (up from 59) and Calgary at 55 (up from 81).
Ottawa’s family sponsorship program plays a huge role in attracting, retaining, and integrating newcomers to the country, Mr. Archambault says, while many entrepreneurs are lured by the popular Start-up Visa Program that offers permanent residence to those who want to set up a business in Canada.
How to attract and retain newcomer clients
The newcomers and influx of capital will generate more demand for wealth management services. Mr. Archambault says advisors should be strategic about what services to offer and consider broadening their expertise and partnerships to include international tax, estate planning and legal, as well as real estate and business services.
Some advisors will also need to develop cultural skills to communicate with newcomers from specific countries.
“Make sure that you have the language capabilities and understand the culture and values of the population you’re looking to target,” he says.
Paul Harris, partner and portfolio manager at Harris Douglas Asset Management Inc. in Toronto, says advisors will need to be more patient with newcomer clients and provide extra education on Canada’s financial services landscape.
“You need to be more understanding and educate them on things such as registered retirement savings plans and tax-free savings accounts,” which he says are structured differently than similar vehicles in the countries they’re from.
They may also have a lower risk tolerance, at least initially, Mr. Harris adds.
Maili Wong, senior wealth advisor and senior portfolio manager with The Wong Group at Wellington-Altus Private Wealth Inc. in Vancouver, has taken on several newcomers over the years from countries such as the U.S. and Hong Kong, among others.
Some are entrepreneurs or executives looking to work or set up companies in Canada, while others are retirees looking to live here and be closer to family and friends.
“One of the first things we try to understand is where they’re coming from, how developed the markets are there, and how sophisticated their financial investments are,” she says, adding that most countries have different tax and investment rules.
For example, U.S. persons who move to Canada and maintain their U.S. citizenship still need to report their worldwide income to the Internal Revenue Service. Ms. Wong says her firm works with cross-border and other international tax and legal specialists to design investment plans for newcomers. She also ensures newcomers have the proper estate planning documents here such as a will and power of attorney.
“The financial planning aspect is super important for clients immigrating here,” she says.
Nader Tadros, senior financial planner at IG Wealth Management in Toronto, says his team provides newcomers with a checklist to help them establish a new life in Canada, which includes information on Canadian tax laws and advice on transferring assets from other countries.
His team is seeing a lot of newcomers from China, and Mr. Tadros receives referrals from people in Toronto’s Egyptian community regularly. His family came to Canada from Egypt in 1990 when Mr. Tadros was a newborn.
“We have a diverse team and try to pair ourselves with people from similar situations or backgrounds. It provides some additional peace of mind and comfort for clients,” he says.
“The key is to try to put yourself in their shoes. It can be scary to move neighbourhoods, let alone countries. We as advisors need to be understanding and empathetic about their needs.”
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