The desire to consolidate investment services is among the most notable trends that Meghan Meger and Geoff Newton, co-heads of BMO Private Wealth Canada, have seen over the past 30 years.
Clients no longer want to spread their business over several institutions, Meger said.
“Clients are looking for a quarterback,” she explained. “They’re looking for somebody who can assemble a team that has a variety of solutions and knowledge.”
Meger and Newton became co-heads on June 1, replacing longtime BMO executive Andrew Auerbach, who had been with the firm for 21 years. The hand-off came amid a brutal market sell-off that’s affected the firm’s assets.
BMO Wealth Management Inc.’s assets under management dropped by 41% to $312.5 billion in the second quarter from $525.2 billion in Q2 2021 “due to the impact of divestitures and attrition of low-yielding assets,” the firm stated. BMO declined to provide AUM for or share its AUM targets for the private wealth division specifically.
As if to underscore the challenges of the moment, Meger and Newton’s first day coincided with the Bank of Canada’s second consecutive half-point hike in its policy rate, the first back-to-back increases of that magnitude since 2000.
Market volatility has sparked deeper and more frequent conversations with clients, who were not only worried about their investments but also how interest rates would affect their retirement plans and their growing debt loads, Newton said.
“That really has become a ‘vogue’ conversation,” he said. “For generations now, [the cost of carrying debt] has really not been top of mind because of where rates had been compressed to. Those types of conversations are definitely top of mind for clients at this time.”
Newton said BMO Private Wealth advisors work closely with the firm’s private banking division to answer questions about things such as mortgage renewal timing and repayment plans. Advisors also can utilize digital planning tools to address debt concerns and bring in tax specialists to construct retirement strategies.
“We’ve evolved from being an investment management-only, transaction-based business to introducing fee-based opportunities and consistent investment management solutions,” Newton said. “That spawned into client demand for a much more holistic approach to the relationship with their advisory team through financial planning and now through banking.”
Aside from added resources for the firm’s business support program, BMO Private Wealth said it will invest between $5 million and $7 million in its dedicated financial planning and estate planning teams as well as in dedicated banking support for its top teams.
“It’ll be a differentiator versus our competitors,” Newton said.
The one-stop shopping is not the only trend Meger and Newton have noticed in recent years. Another is the rising average age of financial advisors and the growing need to attract new talent to the industry.
According to Investment Executive’s 2022 Brokerage Report Card, the average age of an investment advisor in Canada is 50.6, up from 49.2 in 2014.
“It’s important that we get ahead of this,” Meger said.
She said BMO Private Wealth has begun discussing early succession with advisory teams to determine what their advisors’ time horizons are and to shore up practice management.
“It’s about finding out what these advisors need to complement their existing practice,” Meger said, “and how do we garner the talent to fill the need currently, and what makes sense for that transitional time.”
Already the firm has discovered that advisors who work in a team are likely to experience lower advisor attrition when one of the advisors leaves. Pairing new advisors with seasoned professionals also helps with recruitment.
Meger said the competition for talent has heated up and shows no sign of abating, with competition for support staff particularly fierce.
“The financial services industry has evolved, and the intersect ion with technology and innovation also means we are no longer just competing within the industry,” Meger said. “The skills and experience that makes for a successful advisor are now sought after by large tech firms and startups, all competing with financial firms in terms of offering progressive benefits, competitive compensation and an energetic corporate culture.”
BMO Private Wealth has more than 1,000 investment advisors and 90 investment counsellors. A BMO spokesperson said its compensation programs for both new and existing advisors are “competitive” and designed to enhance retention, but declined to provide further details.
Retention wasn’t an issue for either Newton or Meger. Newton joined BMO Nesbitt Burns in 1997 as an investment advisor. Meger joined BMO Private Wealth as vice-president and senior banker in 2004. She got her start in the industry in 1988 at RBC Royal Trust, which she described as the first step in her “segue into private banking.”
For Newton, the investment industry has been a family calling for generations.
“The opportunity to be involved in capital markets, in some capacity, was always something that was discussed around the dinner table, between dinner and puck drop for Hockey Night in Canada,” he said. “It was something I naturally migrated to.”
Newton particularly enjoys the client-facing aspects of the job, marrying his natural affinity for investing with his people skills.