The doctor’s office has become a fierce battleground for Canada’s biggest banks.
But as financial institutions expand their physician-focused offerings in a bid to snag the wealthy clientele, some health care professionals are taking their investments into their own hands.
The Ontario Medical Association has been developing its own pension-like solution tailored for physicians, which should be up and running by the end of the year, said its president Dr. Sohail Gandhi.
The OMA — which represents more than 40,000 physicians in the province — is a non-profit, allowing it to lower management costs and increase retirement income, he added.
“I’m hopeful that when physicians realize that this is something that their own association is sponsoring on their behalf… that most physicians, even though they’re given a choice, will come this way,” Gandhi said in an interview.
Doctors are a key market for wealth management providers because physicians are largely their own employers, don’t have pensions and rely on saving from their own earnings.
Competition for management of physicians’ dollars has heightened since the Bank of Nova Scotia acquired doctors’ wealth services company MD Financial Management from the Canadian Medical Association last year. Scotiabank also struck a 10-year deal with the CMA to exclusively promote the Toronto-based company as the preferred provider to its base.
With the CMA as its owner, MD Financial had been seen as an independent financial services provider with physicians’ interests at heart, but its acquisition by a big bank prompted some to re-examine their money management options.
In June, Bank of Montreal launched a full suite of banking and wealth management services aimed at healthcare professionals, such as financing options for those looking to grow their practice.
While the MD Financial deal shone a light on the healthcare industry, BMO had long looked to launch a more focused approach to the sector, said Romal Bryce, Bank of Montreal’s head of healthcare, North American industry sectors.
He noted that with one-million healthcare professionals in Canada, including dentists and others with higher-than-average incomes, it was a segment that could not be ignored.
Last July, BMO beefed up its business banking team focused on this portfolio to roughly 80 people, many whom came from other industries such as pharmaceuticals, he said.
“We’re going to be aggressive in this space. We see good things… and our annualized growth rate is about 35%,” Bryce said in an interview.
Other Canadian banks have also been launching new, specialized products targeting the healthcare sector in recent months.
Canadian Imperial Bank of Commerce in March announced its new full service physician package and a new offer for medical and dental students.
In August, the Royal Bank of Canada launched RBC Healthcare Advantage, a membership program which offers “customized perks and rewards” and solutions to help physicians to establish and run their practices, among other things.
Toronto-Dominion Bank, meanwhile, has been strategically advertising its TD Wealth Management for Health Care Practitioners service in the vicinity of several large hospitals in Toronto’s downtown core.
The bank has placed prominent advertising in one of the underground pedestrian walkways connected to a key subway station, which brings commuters to the Hospital for Sick Children and Toronto General Hospital, among others.
Dave Kelly, senior vice-president of TD Wealth Private Wealth Management, said MD Financial’s acquisition didn’t prompt the launch but encouraged the bank to move quickly with its new service, which was launched in December 2018.
“It was clear there was an opportunity in the marketplace,” he said in an interview.
The bank already has about 20 dedicated private bankers in 20 markets, from Halifax to Victoria, but hopes to add 10 more, particularly on the West Coast and Quebec, Kelly said.
TD had already been catering to roughly 60,000 medical professionals, he said, but since the launch of the new service he estimates they have added another 1,500 to their clientele.
Meanwhile, in July, TD and the Canadian Urological Association announced an agreement to become the exclusive financial service sponsor of the organization. Kelly said sponsorships are effective in increasing visibility among association members, and there are more of these in the pipeline.
However, even as the playing field grows crowded, Scotiabank said there has not been an increased outflow of investments of MD Financial.
Assets continue to grow at record levels and have surpassed $50 billion for the first time, said Glen Gowland, Scotiabank’s executive vice-president of global wealth management.
After the acquisition, Scotiabank looked to retain the features that were popular with physicians but also looked for ways add more value for their clientele, added Gowland.
“We actually lowered fees across the board, and that’s been very popular,” he said. “And MD was already a low cost [provider].”
It also launched the MD Physician Council, with more than 1,000 applicants from which nine were chosen, to allow for doctors to weigh in.
And in March, Scotiabank launched its Healthcare+ Physician Banking Program developed with MD Financial.
“We’re seeing tremendous interest from physicians across the board,” Gowland said. “We’ve just actually done 15 exclusive partnerships with medical groups.”
More doctors are also looking at alternatives including self-managed or passive online investment options, said Paul Healey, an emergency room physician who also manages a Facebook discussion group where doctors discuss personal finances.
“They are doing different things, depending on their needs,” he said. “A lot of them are moving to low-cost investing, which means opening a brokerage account … and then they are buying ETFs.”
Wealthsimple, which has both a commission-free trading platform and robo-adviser service, has also been a beneficiary and has seen an increase in physician clients, said portfolio manager Michael Allen in an emailed statement.
Questrade’s chief operating officer Stephen Graham said the Toronto-based online brokerage has seen a “more than a doubling to tripling of that segment, interested in our products coming over the last year,” he said.