By Grant McIntyre
(September 30 – 16:00 ET) – Properly packaging financial services is the key to the future of financial service delivery, say a panel of prominent players from the investment industry this morning at the Investment Funds Institute of Canada’s annual conference in Toronto.
The business of a family of funds is “out the window,” said Paul Bates, president and CEO of Charles Schwab Canada Inc. Instead, he said, companies will launch brands that match their clients’ objectives.
“You have to think about what your product stands for specifically in the eyes of the client,” Bates said. Successful financial services companies of the future will be either boutiques or “global powerhouse” companies, with no middle ground. The “middle” companies will be out of business, he said.
The panelists are not worried about an American fund giant such as Vanguard Group coming into the Canadian market. Canadians are more interested in service than in performance and fees, they concurred.
Trevor Matthews, executive vice-president of Canadian operations at Manulife Financial, said customers are more demanding and less loyal than in previous years. But, he said, planners and advisors can simplify clients’ financial demands by offering an integrated approach to financial services.
Joe Canavan, president and CEO of Synergy Asset Management Inc., recounted the problems posed by deferred service charges (DSC). Many mutual fund investors were shocked to learn that they were being charged 5% redemption fees, and vowed never to buy a fund on a DSC basis again. He predicted DSC will become a “dinosaur” in the next three to five years. Wrap accounts and similar programs will have a strong future, he said. Branding will be important in developing those financial products.
Canavan and Bates predicted banks will sell increasing amounts of third-party products. Canavan added power will shift from Canadian mutual fund manufacturers to global manufacturers.