Office buildings in Toronto’s financial district

Winnipeg-based Investors Group Inc., well known as a mutual fund dealer, is expanding its securities arm amid growing demand from both financial advisors – current and new recruits alike – and clients looking for a broader range of products.

“The demographics of our clients definitely are the mass affluent and high net-worth, and we want to be able to offer them a full suite of products,” says Esther Bast, senior vice president, financial services with Investors Group, and president of the firm’s securities arm, Investors Group Securities Inc. (IGS). “For that [to happen], we know we need to broaden our perspectives [and] our ability to make sure we have that choice for our clients.”

Looking at specific numbers, Investors Group currently has 75 advisors and $5.7 billion in assets under administration (AUA) under the IGS banner. The parent firm has plans to grow its securities business to between 350 and 400 advisors, with $25 billion-$35 billion in AUA, by 2020.

Regarding products, Investors Group advisors licensed by the Mutual Fund Dealers Association of Canada (MFDA) can access securities for high net-worth clients indirectly through the firm’s wealth-planning specialists. Advisors licensed with the Investment Industry Regulatory Organization of Canada (IIROC), however, can access these investments directly, as well as through Azure Managed Investments (a platform for separately managed accounts) and a fee-based platform, both of which were launched in 2016.

Growing demand for various products, particularly ETFs, and interest in fee-based and portfolio-management business models may be motivating MFDA-licensed advisors to take another look at IIROC, says Dan Hallett, vice president and principal with HighView Financial Group in Oakville, Ont.

Discretionary portfolio management is a topic of particular interest for Toronto-based Assante Wealth Management (Canada) Ltd., a full-service dealer that intends to launch a platform for this business in 2018.

“It’s a major initiative for us,” says Bob Dorrell, senior vice president, distribution sales and service, and chief operating officer with Assante. “The objective is to have a market-competitive platform in place by the end of the year so that we can begin to recruit discretionary portfolio manager-licensed advisors in 2019.”

Almost 50% of Assante’s 800 advisors comprise its IIROC division, Assante Capital Management Ltd. These advisors are responsible for 59% of the dealer’s overall AUA and produced 56% of the firm’s sales in 2017.

At Montreal-based Peak Financial Group, another full-service dealer, most AUA remains in mutual funds, but the firm has seen significant growth on its IIROC platform in recent years. For example, Peak Securities Inc., the dealer’s IIROC-licensed arm, has $1.9 billion in AUA, up from $700 million in 2013. In total, the company has $9.8 billion in AUA.

At Oakville, Ont.-based Manulife Securities, 56% of the firm’s 1,200 advisors are on the IIROC-licensed platform and the rest are on the MFDA-licensed side. Furthermore, AUA on the IIROC platform comprises about 65% of Manulife Securities’ total AUA, and the rest is held on the MFDA platform.

For Rick Annaert, president and CEO of Manulife Securities, this AUA distribution reflects the fact that MFDA advisors tend to have slightly smaller books than their IIROC counterparts. Looking to the future, Annaert says, the firm is ambivalent about which platform its advisors choose.

“We allow our advisors to choose which platform best suits their needs, their interests and their ability to service their clients,” he says.

Growth at all of these firms comes from many avenues – from organic growth to new recruits. Sometimes, though, advisors within a firm decide to move to the IIROC-licensed platform from the MFDA arm. Making such a transition can be an intensive process, both for the advisor’s team and for the dealer itself from administrative and training perspectives.

“We not only prepare [advisors], but we suggest that this [shift in platform] is probably going to be the greatest amount of work they’ve done in a long time,” says Bast.

To help with the transition, most firms have procedures in place to make the process as smooth as possible. Often, this means helping to “repaper” the business, including updating and signing all client documentation and streamlining document processing.

Manulife Securities, for example, can move all the clients in a typical book of business over the course of a weekend because of the firm’s integrated systems.

Investors Group, meanwhile, has a team in place who ensure all documents are processed in a timely manner, who meet with the advisor on a weekly basis to make sure all the necessary steps are being met and who help deal with any hiccups that may arise during the transition. In addition, the firm is working on a new education program for MFDA-licensed advisors who wish to move to the IIROC platform.

Compliance training is a key part of the transition process for any firm, as each platform has its own rules and procedures. Frances notes that most of Peak’s transition support focuses on training because many advisors don’t realize how different the two platforms can be.

Says Frances: “I often tell people: ‘Make sure you understand all the differences, so you don’t end up in trouble [by] thinking you’ve done everything properly’.”