The Evolution Of Wealth Management

I started working in the world of wealth management just before the dotcom bubble burst. I came in full of a desire to help investors manage their risk (after a 20 year career as a bond trader and manager of billions of dollars of risk). I was the oldest (at 40) of all the rookies on the TD Evergreen  advisor training program. What were we all being trained in?

Selling. 

Specifically, TD (but not exclusively) branded mutual funds and TD Asset Management products. They paid the best commissions. The Canadian Securities Institute was responsible for making sure that we all had the proper understanding of financial products (exams to be passed) and the Investment Industry Regulator Of Canada (IIROC) dealt with licensing and compliance.

IIROC was / is still a self-regulating body operated by the financial institutions themselves. As I have suggested in the past, this smacks of the potential for conflicts of interest. 

The problem in Canada is that there is no legal entity that governs the entire securities industry, instead it is within the jurisdiction of each province, so it becomes hard to unite and apply legal responsibility evenly across the country.

Unfortunately the gaps left are pretty easy to squeeze through for some who may wish to take advantage. And so they do. The banks saw an advantage way back in the late 1980's and then started buying up independent investment companies and folding them into their growing financial conglomerations. 

Since then, the banks have run the show. Having worked for a number of them over the years, I have some insight. But in their desire to turn a profit and pay their shareholders, the quality of service and care leaks out. But they resist change at every turn, only reluctantly acquiescing when they need to adjust their strategies to retain market share.

There will always be a more astute client who gets bank fatigue and figures out that there are alternatives and good ones at that.

In their desire to find a better option, they may cross our High Rock path and we get a glimpse of  our competition (sometimes under-supervised) who attempt to woo our prospective clients with tales of great past performance (without the mandatory disclaimer of past performance being no guarantee of future returns) and wonder aloud (out of a sense of frustration) whether we should stop swimming upstream and start swimming with the rest of the overly optimistic sellers of financial products and forget the reality that there is the possibility of risk inherent in the world of investment management.

Of course we won't, but sometimes being honest and forthright in the face of misstated optimism requires a great deal more work.

However, I take heart when I read reports on the state of the global wealth management world such as the 2019 EY Global Wealth Management Research Report that tells me that we (at High Rock) are well ahead of the pack in Canada, where change is happening, although not nearly as fast as the rest of the world, where the client is the focus as opposed to the revenue they generate for the big banks and financial institutions. 

"Wealth Management is in high demand, yet clients are not fully engaged or loyal."

"Clients are switching providers to capture better value."

"Solutions are more important than products or services: clients want more advice and planning."

"Most clients want simple, personalized and connected solutions".

Being at the forefront of this evolution of wealth management is not easy because we have to wait for the client to change their mindset, or at least assist them in seeing it from a different perspective: building, growing and maintaining wealth is well beyond the scope of gambling in the stock market: It is about planning and stewardship, asset allocation strategy, monitoring and review, fiduciary responsibility (without conflicts of interest) and client service.

So we soldier on, continuing to fight the good fight.