A barrage of billboard and newspaper ads, TV commercials and radio spots were launched this winter by HSBC Bank Canada as the global banking superpower cozies up to Canadians with the image of an old-fashioned, local financial institution.

Now, the bank’s brokerage arm is also raising its profile. HSBC Securities (Canada) Inc. , first known as Hong Kong Bank Discount Trading Inc. when it was launched in Canada in 1995, has been creeping into the forefront of the brokerage industry. With 26 offices across Canada and another opening in Halifax this month, HSBC Securities is aiming to make a name for itself in an industry dominated by the brokerage arms of the big banks and larger independents.

Although its own ad campaign isn’t nearly as rigorous as the parent’s blitz, the firm says there is a definitive effort underway to “build a general awareness” among Canadian investors of its services.

HSBC Securities has a major advantage over other players on the Street, says Simon Edwards, president and CEO, who stepped into the leading role at the firm in late 2002. “One of the major battles of our competitors is to protect market share, to protect revenue, to protect profits. Whereas we’re in growth mode,” he says. “ We’re not always looking over our shoulders.”

The growth hasn’t translated into a boom in its advisory network — at least, not yet. The firm has added only a dozen or so brokers in the past three years. There are about 148 advisors across Canada, the vast majority of whom are based in Toronto and Vancouver. The firm did, however, double assets under management in the same time period, indicative of a sales force that is eagerly pursuing Canada’s high net-worth individuals.

HSBC Securities currently has about $15.5 billion in AUM, $3.5 billion-$4 billion of which is held in InvestDirect Inc. , its online investing subsidiary.

The growth pattern has been purposeful, Edwards says. “We’ve had a deliberate policy right from the beginning that we are not expecting to grow in gross terms but in net terms,” he says.

The firm has recruited 54 new advisors in the past three years, but has “upgraded” its sales force because of advisors leaving to retire or go to another firm. New advisors have come from competing brokerages and a series of acquisitions, most notably the 1998 absorption of Moss Lawson and Co. Ltd.

Edwards wouldn’t go into detail about the minimum book value new advisors are required to have, but says: “We focus exclusively on first- and second-quintile investment advisors when recruiting. Our aim is to become the industry leader in average assets per IA.”

The average HSBC Securities advisor is in his or her mid-40s, has about $78 million in assets under administration and has been in the business for more than 10 years. The firm doesn’t readily target rookies, but it is not ignoring them, either, Edwards says. It is developing a training program aimed at new advisors, although there’s no launch date as yet.

“We felt the need to grow to a certain size and achieve a certain degree of critical mass and market presence before we embark on this program,” says Edwards. “There is no question that this is something we have long wanted to do, primarily because you get to inculcate that culture from Day 1 rather than dealing with the inevitable cultural differences that come with hiring a recruit.”

It’s also a good way to ramp up growth, says Lorne Harper, executive vice president and national director in Toronto: “When we look at the different elements of growing the business, there is a great opportunity to do so through brand new advisors, albeit at a much slower pace because you are starting at zero,” he says. “Still, we feel that there are quite a few folks out there who can fit into the HSBC culture.”

The word “culture” pops up often in conversation with Edwards and Harper. They use it to describe everything from the HSBC brand to the firm’s diverse client base. In fact, they say, the HSBC culture is one of the biggest pulls in bringing new advisors aboard.

“Ninety-five per cent of the people we wind up talking to come to us through word of mouth,” says Harper. “They are curious about what we can offer. When they meet people in the organization, they are impressed with our quality. Quality people want to work with quality people.”

@page_break@The HSBC brand is another pull. The self-branding that happens at other firms, such as Raymond James Ltd. , in which independent advisors can operate under their own names, will never happen at HSBC, Edwards says.

“We’re very conscious that this is an HSBC proposition, and the values of the bank are being integrated in the group as a whole,” he says. “Advisors feel they have voice, while at the same time they are backed by the second-largest bank in the world.”

Gripes about the limitations of bank-owned brokerages — lack of freedom and independence, and hesitation of potential clients to do business with a large financial institution — don’t appear to be a sore spot for this firm’s advisors, Edward says. Brokers enjoy a steady stream of referrals from the bank, and several have had careers in HSBC’s banking division.

“We probably have the best bank/broker relationship on the Street, and it’s a relationship we continue to work on because it has so much potential,” says Edwards.

Most of the brokers work in the same buildings as the bank branches, although in a separate space as 65% of the brokerage’s advisors are licensed to sell insurance. Having ties to a bank with global reach also offers the advantage of being able to satisfy clients’ appetite for international investments, Harper says. High net-worth clients, in particular, are expressing a need for more sophisticated products that can’t always be found domestically.

Other firms boast about their size, but HSBC Securities is quite the opposite. True, it is interested in acquiring new advisors, but not at the expense of advisors losing their influence.

“Our focus has never been to compete with other firms in terms of the number of advisors,” says Harper. “We have an absolutely intense focus on the quality of our people and the quality of our overall business. We have that. Our next focus is not only to stay there but to widen the gap between us and the following players.”

Instead of trying to be everything to everyone, HSBC Securities’ focus continues to be on the retail business, with two-thirds of its business coming from its full-service channel and the rest from its self-directed brokerage. Retail remains the firm’s major source of revenue, but its investment-banking business is also growing. It has been increasingly active in the new-issues business and is ramping up its cross-border mergers-and-acquisition proposition. Again, HSBC’s global presence has been a coup.

“We’re not trying to be a leading domestic player taking on the big boys head-on,” says Edwards. “But we have a niche market, and we’ve leveraged a platform that’s being built around HSBC globally — in the U.S., in Britain, in Europe, in Asia.”

Edwards’ 25 years with HSBC have taken him around the world, with posts in London, Hong Kong, Singapore, Taiwan and New Zealand. He’s now eager to make his mark in Canada.

“We aim to be very much best in class, to excel at what we do and be client-focused,” he says. “There’s so much potential.” IE