Financial services firms across Canada are wooing advisors who formerly worked at Toronto-based ScotiaMcLeod Inc. and were let go in late April as part of a significant restructuring at Bank of Nova Scotia’s brokerage arm, with one major independent brokerage firm already picking up several of the affected advisors.
Raymond James Ltd., a Toronto-based independent brokerage, reports that it has hired 11 former ScotiaMcLeod advisors and was in active negotiations in mid-May with several others who were let go as part of the restructuring at ScotiaMcLeod. In fact, Raymond James put together a conference call within days of the ScotiaMcLeod restructuring so that senior executives at Raymond James could make their pitch to the affected advisors.
“We thought it was really important to reach out to as many of those advisors as possible,” says Peter Kahnert, senior vice president of corporate communications and marketing with Raymond James, “because they were in a situation in which they had to find a place quickly if they were to continue in the business.”
Meanwhile, London, Ont.-based insurance agency Freedom 55 Financial took to social media to invite former ScotiaMcLeod advisors to contact Freedom 55 should they be interested in joining.
Toronto-based Wealthsimple Financial Inc. also chose the social media route to reach out to former ScotiaMcLeod advisors who might be interested in joining the Wealthsimple for Advisors robo-advisor platform, which was expected to launch later in May.
“We sure did get some inquiries about it,” says Jason Goldlist, chief marketing officer with Wealthsimple, when asked about his firm’s pitch. However, Goldlist declines to comment on the number of former ScotiaMcLeod advisors from whom Wealthsimple received inquiries.
In April, ScotiaMcLeod parted ways with several advisors that the bank-owned firm believed no longer fit with the brokerage’s new approach to transform the bank’s wealth-management business. Scotiabank stated that it made the decision about the departures as part of a broader ongoing strategy “to provide more integrated and tailored advice to our clients.”
Scotiabank has been in cost-cutting mode, following a trend in the Canadian banking industry overall. The bank’s statement also mentioned that the number of advisors with whom Scotiabank had parted ways couldn’t be provided, as “transition plans are still being worked through” on an individual basis with some advisors. However, media reports in April suggested that at least 7% of ScotiaMcLeod’s 750-advisor roster had been let go.
“All people decisions,” according to the Scotiabank statement, “were carefully based on a number of metrics, such as alignment with Scotia Wealth Management’s customer-focused strategy, the advisor’s focus on growth, quality of client servicing and commitment to ensuring that the entire breadth of the client’s needs are being considered.”
Scotiabank has been undergoing an organizational restructuring of its wealth-management business following a trend in the brokerage industry to provide integrated, seamless service to high net-worth (HNW) clients. In December, Scotiabank management decided to rebrand the bank’s full range of wealth-management services – including financial planning, investment management, private banking, insurance and business succession planning – under the Scotia Wealth Management banner.
Scotia Wealth Management, which began as a pilot project in branches in key markets, now is reshaping its branch network to create teams consisting of investment advisors, private bankers, and trust and estate specialists, as well as other wealth advice professionals who are able to provide clients with a full range of services without having to shift clients from one arm of the bank to another as their needs evolve.
“This isn’t just a model that we want to do in a few locations,” said Glen Gowland, senior vice president of Canadian wealth management with Scotiabank, in an interview last December. “It’s something that we believe we can bring to bear in a very fulsome way across the organization.”
ScotiaMcLeod is not the only bank-owned brokerage rethinking the role of its brokerage arm within the bank’s wealth-management division, says Dan Richards, CEO of advisor consultancy firm Clientinsights. The trend toward providing HNW clients with specialized wealth-management services in an integrated manner has been going on for many years, leading these brokerages “to take a hard look at the role of mid-level producers,” Richards says.
“[All the banks] have been incrementally reducing the payout for not just small producers, but even mid-level producers,” Richards adds. “If somebody is stuck in terms of the growth of their book, and it’s not a significant book, [management] will have a conversation with them about whether they have a future at that firm.”
The only aspect that might be unique about the ScotiaMcLeod restructuring is that several advisors apparently were let go at once, Richards says: “You don’t normally see this kind of decision in one fell swoop. That’s unusual.”
Although the Raymond James’ conference call was intended primarily for former ScotiaMcLeod advisors, the campaign attracted broader interest from advisors with other bank-owned firms. “We’ve had a surge of advisors [contact Raymond James] who are at bank-owned dealers now who might see themselves in the same [revenue] range [as the former ScotiaMcLeod advisors],” Kahnert says, “who may be feeling a little uneasy with the direction that some banks are going in.”
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