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A pedestrian walks past a Scotia Capital sign at Scotia Plaza in this file photo.

Louie Palu/The Globe and Mail

Bank of Nova Scotia's latest restructuring efforts have spread to its wealth management arm, with major changes to the ScotiaMcLeod retail adviser network announced this week.

In mid-April, the bank announced a review that "advances strategic measures to further position the bank for long-term success," citing "significant ongoing shifts in consumer behaviours, particularly digital banking adoption."

Rival Big Six banks face similar threats and have been cutting costs as Canadians increasingly opt for digital banking.

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This week, Scotiabank's wealth management unit was also targeted by the review, with at least 7 per cent of ScotiaMcLeod's brokers let go, as well as their assistants, according to people familiar with the decision. Scotiabank would not confirm the exact number affected.

The nature of the job losses represents a shift in the lender's long-term wealth management strategy.

When cost control is a top priority, there is little surprise when underperforming staff are dismissed. But the latest cuts targeted brokers who brought in as much as $650,000 in annual fee-based revenue, a source said, including those with assets under management ranging from $75-million to $100-million – a level that previously allowed advisers to qualify for bonuses.

Now, the bank seems focused on serving the wealthiest clients and employing brokers with megabooks of business – the most assets under management – a burgeoning trend across the industry.

"As part of our total wealth strategy to provide more integrated and tailored advice to our clients, we are making some changes to better align all of our wealth management services and operate more efficiently in each of our markets," a spokesperson wrote in an e-mail.

The wealth management changes come amid what one competitor has referred to as a "seismic shift" in the industry. Across North America there is a growing fear of so-called robo-advisers, which help clients manage their investment savings using online platforms. The worry is that they will disrupt the traditional means of delivering wealth management advice.

In Canada, regulators have promised to crack down on mutual fund fees, and this year new fee disclosure rules, known as CRM2, will start being enforced, putting pressure on advisers to prove their worth to clients.

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Amid these changes, Canadian banks have quietly been updating their "grids," or payout schedules, for retail advisers – something Scotiabank has also done. Following such grids, advisers typically get paid a bigger cut of fees they bring in when they have larger books, or assets under management.

The biggest producers, bringing in more than $1-million in fees a year, may get to keep 51 per cent of their revenue – the exact percentages change from bank to bank – but someone bringing in $450,000 may only get to keep 35 per cent.

Through such revisions, banks are clearly favouring their top brokers who serve the wealthiest clients, and are showing a willingness for anyone below them to leave – or be let go. The growing emphasis on fees and book size has also raised questions about the quality of advice offered to clients and whether advisers are rewarded for looking out for their best interests.

Scotiabank had been revamping its wealth arm leading up to the ScotiaMcLeod cuts. The changes started when wealth management was wrapped into Canadian banking, which meant the two divisions would report as a single unit now run by James O'Sullivan. In December, the bank also rebranded its investment services under the Scotia Wealth Management banner, meaning brands such as ScotiaMcLeod and Private Investment Counsel would eventually disappear from consumer signage.

Rival banks have also been retooling. In January, Toronto-Dominion Bank rebranded its wealth business as TD Wealth Private Wealth Management, with an explicit goal to chase more affluent investors.

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