Some advisors are making a move now and looking for a new place to be when the markets eventually recover.fizkes/iStockPhoto / Getty Images
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The economic slowdown hasn’t stopped many wealth management firms from trying to find new talent, with some even stepping up their efforts despite the drawn-out market downturn.
Building and maintaining a strong roster of advisors is considered especially important when markets are volatile because concerned investors are hungry for and have a greater need for advice.
And while there have been some layoffs in the sector recently – notably Wealthsimple Technologies Inc. announcing in June that it would let go 13 per cent of its workforce – the move was part of a trend among broader technology companies whose businesses were fuelled by the pandemic restrictions over the past two years.
Wealthsimple said the layoffs are part of its plan to focus on its core businesses, such as investing and banking. In addition, IGM Financial and Canada Life Assurance Co. – subsidiaries of Power Corp. of Canada, which holds a 23-per-cent stake in Wealthsimple – are looking to potentially hire some of the staff affected by the layoffs.
Another sign firms are looking to grow in the current environment is Bank of Montreal’s asset-management business recently bringing on more than a dozen portfolio managers and equity analysts from CI Financial Corp. as part of an aggressive expansion of its Canadian operation.
It’s not just increased demand for advice that’s driving the talent hunt in the wealth management industry but also demographics, experts say.
“A material number of advisors are retiring each year, creating an ongoing point of disruption for wealth management firms,” a recent Cerulli Associates report states.
Although the report focused on the U.S. market, noting about 37 per cent of advisors in that country are set to retire in the next decade, similar demographic trends are playing out across Canada.
“As firms look to incubate and grow new talent, broker/dealers and independent firms will need to enhance recruiting pipelines and provide substantive support to trainees,” the report notes.
Another recent Cerulli report states that more investors are seeking financial advice amid “the first real bear market in 15 years,” adding that it creates an opportunity for advisors to attract new clients and position existing ones for the long term.
“Ultimately, market volatility can be intimidating for investors, especially those who are experiencing it for the first time. This is when they will be looking to advice channels for guidance, even if they do not have their own formal advice relationship,” the consultancy states.
Tom Williams, senior vice president and head of growth and development at Raymond James Ltd. in Toronto, says the brokerage firm is recruiting actively in the current environment.
“In this industry, you have to be growing or you won’t survive,” he says, adding that the current downturn is not the time to slow down the talent hunt.
“You go even harder,” he says. “I’m an advocate of having a strong pipeline because that pipeline [of people] who you’re talking to today might not join for a year or two or three.”
And while it’s more difficult for some advisors to switch shops when markets are down, he says the conversations still need to continue.
“You have to be reaching out now more than ever to make sure that you find those new opportunities because they’re probably going to take a little longer to close,” Mr. Williams says.
Some advisors are making a move now, he adds, looking for a new place to be when the markets eventually recover.
“We have quite a few people very interested right now,” Mr. Williams says.
“So, even though we’re going through some volatile times, some people think, ‘Well, if I was thinking about moving in the next two, or three or four years, maybe I’m better to do it now than later.’”
Kevin Vandermeer, managing director, investment and advisory solutions at Canaccord Genuity Wealth Management in Toronto, says his firm’s recruitment strategy hasn’t changed amid the market downturn.
“It’s really business as usual. … We want to start conversations,” he says.
Mr. Vandermeer says Canaccord is targeting more experienced and “sophisticated” advisors looking to provide investors with more customized portfolios. He says advisors tend to go to the firm because of the flexibility to build their business and the collaborative environment.
“It’s a thoughtful process when someone makes a decision to move,” he says.
“I think about advisors as being our clients and how can we help make them more productive … and win more business.”
Utilizing team effort in recruitment and retention
Advisors are also developed from within by working on teams with more senior advisors.
“Wherever possible, we like to have teams that include people from different generations,” Mr. Vandermeer says.
Craig Meeds, head of investment management practices and insurance at TD Wealth Private Investment Advice in Toronto, says the bank-owned firm has shifted to a team approach for recruitment and retention in recent years and away from the rookie advisor programs of the past.
He adds the move aligns with the wealth management industry’s growing focus on holistic planning, including investing and retirement strategies. It’s also a more effective succession planning strategy, with the aim of mentoring younger advisors and providing them with more experience so they can eventually replace older peers when they retire.
“It gives the experienced advisors peace of mind, knowing they can start to build their transition plan. It also gives the new advisors the opportunity to grow with the safety net of any existing and successful practice,” Mr. Meeds says.
The process also gives clients peace of mind knowing that there’s a long-term, defined structured transition plan when their advisor decides they are looking to retire, he adds.
The team approach also inspires some retirement-age advisors to stay on the job longer. Mr. Meeds says that’s often because mentoring keeps the older advisors engaged in the business and they eventually start to feel more comfortable sharing their workload with younger team members.
“We are excited about the idea of being able to support our advisors to extend their careers,” he says. “Keeping them engaged and working with our clients is an amazing outcome.”
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