Independent wealth managers in Canada are seeing an influx of new clients as do-it-yourself investors and small business owners seek professional advice during volatile times. File photo shows the S&P TSX Composite Index screen at the TMX Broadcast Centre in downtown Toronto on March 12, 2020.Fred Lum/the Globe and Mail
Independent wealth managers in Canada are seeing an influx of new clients and assets as do-it-yourself investors and small business owners search for professional advice during volatile times.
Last month, Canaccord Genuity Wealth Management opened 2,593 client accounts as stock markets plunged amid the novel coronavirus outbreak. That was up from 1,995 account openings in February.
Despite the market volatility, the surge in new account openings contributed to the firm’s net new assets growing by 127 per cent for the year to date, compared to the same period in 2019.
Stuart Raftus, president of Canaccord Genuity Wealth Management – Canada, said the flow of new money, which does not include assets brought in by clients of advisers recruited to join the firm, comes from several sources including DIY investors, robo-adviser clients and existing clients consolidating more of their assets under one roof. The firm has $20-billion in assets under administration in Canada.
“From the outside looking in, people may think things have ground to a halt in the wealth channel but our activity level remains quite high and our new account openings are up quite significantly,” said Mr. Raftus, who is also the chief administrative officer at Canaccord Genuity Group Inc.
The shift towards advice comes at a time when Canadian mutual fund managers saw more than $14-billion in net redemptions in March, as the novel coronavirus clobbered global equity markets and panicked investors began to sell.
“There is a lot of fear out there during these uncertain times and it forces clients to start asking questions,” said Greg Pollock, CEO of Advocis, an industry association for financial advisers in Canada. “Once they take a closer look at their own situation they begin to realize they want to add or enhance certain aspects to their financial plan.”
Surprisingly, Mr. Pollock said, many clients still have an appetite for risky products. Advisers are also dealing with investors looking for advice on buying opportunities as markets trade well below all-time highs.
For Assante Wealth Management, a subsidiary of CI Financial Inc. with $43-billion in assets under administration, a recent increase in client referrals has come from small business owners looking for financial advice during the economic standstill brought on by COVID-19.
“Referrals tend to spike in periods of market volatility when clients flock to advice channels, particularly when they don’t have trusted advice in the marketplace,” said Sean Etherington, president of Assante.
While Assante’s overall AUA dropped by approximately 12 per cent at the end of March, mainly due to market volatility, the firm has continued to bring in new investment dollars and clients, Mr. Etherington said.
Net sales were up 44 per cent for the first quarter, ending March 31, momentum that Mr. Etherington said has continued throughout April.
The increase in account openings is similar to a surge advisers saw after the 2008 credit crisis, he added, when the company experienced the most account openings in its history.
“I suspect we will see the same type of result coming out of this crisis,” he said. “We are keenly aware that there are many Canadians who are not well advised or who have been severely affected by the economic impact of this pandemic.”
In addition to business owners who are seeking information on how to navigate government relief programs, the firm has also received calls from individuals wanting to review or set up financial plans. This group includes people looking for advice on investments, RRIF payments, and will and estate planning. Some also have questions about how to support international and local pandemic efforts.
Along with an increase in new clients, wealth managers continue to see strong recruitment activity, resulting in advisers jumping firms and moving over millions of dollars in client assets during the crisis.
Winnipeg-based Wellington-Altus Private Wealth Inc. has been aggressively recruiting since it first opened its doors four years ago. When co-founders Charlie Spiring and Shaun Hauser launched the independent wealth manager, they announced plans to hit $10-billion in assets by the spring of 2020.
The company, which recently hired a full-time recruiter in Ontario, has been poaching high-end adviser teams from competitors and added more than $350-million in new assets in the first three months of 2020.
As a result, Mr. Spiring and Mr. Hauser’s ambitious plans hit target ahead of schedule -- just before the coronavirus pandemic hit North America. Assets under management grew to $12.4-billion in mid-February. Now, after March’s market downturn, the total is just above $10-billion.
As the country went into lockdown last month, the firm added another $200-million adviser team, and has an additional $3-billion worth of teams in the “pipeline” ready to join later this year, said Mr. Hauser, who’s president of Wellington-Altus.
“Some advisers have pushed back the date they move because they want to have stability in their books right now,” he said. “But the smoke is starting to rise on the recruiting front again and soon that will turn into fire.”
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