Four industry groups have formed a new alliance aimed at supporting innovation in Canada’s asset management industry as it faces stiff global competition, rising operational costs and increasing consolidation.
The Canadian Asset Management Entrepreneurship Alliance (CAMEA) will engage in regulatory and policy advocacy within the public and private sectors in an effort to direct more capital and talent toward homegrown asset managers, said Claire Van Wyk-Allan, managing director and head of Canada with Alternative Investment Management Association (AIMA).
“Today marks just the new beginning as we look to elevate our advocacy together to create lasting, positive outcomes for the Canadian asset management industry and entrepreneurs within it of all sizes,” she said at a CAMEA launch event held in Toronto on Wednesday.
Van Wyk-Allan was among several speakers at the CAMEA event. The alliance includes AIMA, CFA Societies Canada, the Emerging Manager Board and Portfolio Management Association of Canada.
Policy wishlist
Also on Wednesday, CAMEA released a series of policy recommendations that it hopes will unlock growth, create jobs and strengthen Canada’s position in the global asset management industry.
It’s calling for an asset management sector-focused economic development strategy that features a dedicated economic development agency, targeted tax incentives and the establishment of a more streamlined and harmonized regulatory framework for the financial services industry inside and outside Canada.
Michael Thom, managing director of CFA Societies Canada, said securities regulators in the country should be inspired by provinces such as Nova Scotia and Ontario, which have made dropping interprovincial trade barriers amid the ongoing Canada-U.S. trade war “a key priority.”
He also said there are regulatory harmonization efforts that should be reviewed cross-border and globally “to bring certain business models into Canada that are currently blocked by regulatory measures.”
These recommendations come amid what Thom called “troubling declines in entrepreneurship across multiple sectors in Canada, not just in finance and asset management,” as well as a wave of mergers and acquisition announcements which have led to significant consolidation in the financial services.
He pointed to a 2023 study from PwC, which estimated that by 2027, half of all global mutual fund assets under management will be managed by just 10 firms globally — none of which are expected to be based in Canada. One in six asset and wealth managers globally are expected to be swallowed up or fall by the wayside by then.
Despite these challenges, Thom said CAMEA’s goal is to “put Canada firmly on the map as an ideal place to launch an asset management business as an entrepreneur, and then to grow those businesses into global champions.”
“Our policy solutions are intentionally designed to broadly inspire conversation and action across a multitude of stakeholders, government regulators, institutional investors, financial sector organizations and economic development bodies,” he added.
Reflecting on the current geopolitical climate and market backdrop, Jamie Wise, co-founder and CEO of Periscope Capital, said spurring more entrepreneurship in Canada would help attract human capital, especially since some experienced Canadian industry professionals may look to return home from the U.S. as tensions between the countries intensify.
“If you can have a healthy, thriving asset management industry that isn’t just a bunch of small firms and a Bloomberg terminal, but really 20, 30, 40, 50, hundreds of people, large organizations, that helps the entire ecosystem,” Wise said.
“In my opinion, it helps the banks, because it keeps more talent in the country, and that talent can explore opportunities across different parts of finance and asset management as growth occurs, right?”
Emerging asset managers
Other policy recommendations include targeted government funding and investments in areas such as filling skills training and education gaps in investment management, as well as the creation of emerging asset manager investment programs like the existing Quebec Emerging Managers Program (QEMP), which launched in 2016.
The QEMP had nearly $600 million invested across 13 asset managers in Quebec as of Nov. 30, 2024. About half of these asset managers did not exist before the QEMP launched, “so the fact that this program exists is pushing entrepreneurs to get up there,” said Caroline Bergeron, head of QEMP and global head, sustainability and impact solutions with Innocap Investment Management Inc.
Francis Lau, who recently founded the Toronto-based alternative asset management firm Lucida Capital Inc., said having more emerging manager programs in Canada would be impactful. He said it would give emerging asset managers access to capital to “build way better institutional-grade systems, whether it’s risk management systems, whether it’s broker access, whether it’s access to management teams,” among other benefits.
“That would allow the firm to scale up way faster to an institutional grade [so] that you can now get down to the nitty gritty of investing,” Lau said. “That will go a long way to helping the industry become more vibrant than it already is.”
Wise said access to capital was also a challenge he faced when he launched his Toronto-based multi-strategy alternative asset management firm in 2009. Periscope Capital partnered with an organization in New York in its formative years, due to the lack of funding available in Canada.
Coming out of the financial crisis, he heard a lot of naysaying. “‘Why are you doing this? You’re crazy. This is not going to succeed in this marketplace.’ And the only real resource we had was grit,” he said.
Wise said he wished there had been more resources for asset managers back then, but expressed optimism about the future of Canada’s asset management industry. “When we launched, I wish some of this discussion, any of this discussion, was around the ecosystem.”