Advisors find the freedom to make choices: Includes chart

Although advisors say pressure to move more managed products has declined slightly, the trend toward selling managed products is increasing. “The area that’s growing the most is the fee-based approach,” says Tom Monahan, head of CIBC Wood Gundy in Toronto.

Advisors see the industry adjusting. “Managers are still focused on the transactional model, but that’s changing,” says an Alberta advisor at Raymond James Ltd.

But not everyone is happy with this development. “I am very transactional, and the industry trend is toward managed products. The direction seems to be to squeeze out the transactional guys,” says a ScotiaMcLeod Inc. advisor in Toronto.

Those in charge seem to disagree. Every investment dealer says there is no push to include more managed products in a broker’s book. Conversely, some brokerages have set goals in this area. Both Wellington West Capital Inc. and National Bank Financial Ltd. , for example, would like to see 40% of their business eventually come from the sale of managed products. Currently, they make up 16%-17% of Wellington West’s business. (Figures for National Bank Financial were unavailable.)

Wellington West aims to reach its goal in three years. CEO and chairman Charlie Spiring says the firm will “have some brokers who are 100% and some who are at 0%. We don’t require a broker to be in managed money, although our firm’s bias will be more toward that.”

National Bank Financial is also moving in that direction. Although the firm has advisors who will never sell managed products, it has the 40% goal, says Montreal-based Gordon Gibson, senior vice president and managing director. However, he says, “We don’t necessarily drill that down to the individual advisor. We don’t look for a percentage in managed money.”

Blackmont Capital Inc. has a different perspective. The firm would like a broker’s ideal book to consist of one-third to one-half of assets in managed products (instead of the current 15%), according to Bruce Kagan, executive vice president and head of wealth management in Toronto. Although this is what’s expected of brokers, he says, it’s not the top priority. Rather, the firm wants advisors who are good at both managed products and equities.

Monahan says his firm’s move toward offering more managed products has been client-driven. “If we want to grow our business, we have to access high net-worth clients and serve them appropriately,” he says. “And these are services they’re demanding.”

Although it is turning more toward managed products, Wood Gundy does not require each advisor to have a certain percentage of his or her book in managed products. “For one advisor, it may be one way; for another advisor, it may be another. But we see fee-based numbers growing faster than transactional business,” says Monahan.

Mike Reilly, president and national sales manager of TD Waterhouse in Toronto, agrees: “The trend we’re seeing, on the Street and in our book, is more and more fee-based.”

Even though his firm isn’t pushing advisors to sell managed products, that is the direction in which the industry is heading, Reilly says: “There’s a tendency toward it if you look at managing money on a fee basis, whether discretionary or third-party product,” he says.

ScotiaMcLeod is trying to evolve with the trend. Hamish Angus, head of the full-service brokerage, says its “client commitment” service works well with managed products. “We feel comfortable going to a fee-based environment,” he says.

The firm wants to have 30%-35% of its business coming from managed products; currently, the figure is slightly less than 20%. IE