Newsmaker: Growth with a smaller product shelf

“My vision is a product shelf that is much smaller,” Letendre says. “It’s now a bit of a hodgepodge, and defining the key message of the product shelf is hard. We are focused on delivering value and a story, so clients understand why they are doing business with Manulife.”

The decrease in quantity of products does not mean fewer assets under management (AUM), as Letendre is quick to stress. Manulife Investments has AUM of $100 billion, about half of which is held in mutual funds; more than one-third held in segregated funds; and a smaller portion held in guaranteed investment certificates and annuities.

Letendre, age 46, takes on his role as head of Manulife Investments after being vice president and managing director of Manulife Private Wealth, which he launched in 2012 and is the high net-worth arm of Manulife Financial. He has more than 22 years of experience in financial services, including senior positions at Bank of Montreal’s (BMO) private-wealth division, Standard Life Assurance Co. of Canada and Investors Group Inc.

When Letendre first joined Manulife in December 2009, the firm was selling less than $300 million a year in mutual fund units in Canada. Now, it’s on track for net sales of more than $8 billion in 2016, Letendre says, and he hopes to increase the momentum with products sold through a network of in-house and third-party financial advisors.

“The growth has been staggering,” Letendre says. “We have significant expertise in investment strategies, great sales teams and distribution. The safety of a big organization such as Manulife – that it’s trustworthy and has a solid reputation – also helps us.”

Manulife Financial, like other insurers, focuses on building its wealth-management arm as a complement to traditional insurance operations. The steady, fee-based revenue on managed assets complements the revenue derived from the insurance side of the business. The latter includes premiums paid by clients and the returns on invested monies, both of which can be sporadic.

Manulife also has been steadily expanding its asset-management business globally, focusing on North America, Asia, Europe and the Middle East.

The firm’s global AUM totals $934 billion and, Letendre says, Manulife Investments’ Canadian products benefit from the investment expertise and connections of contacts around the world.

“Managing money is a pure fee business; it doesn’t require capital to expand, and there are tremendous benefits from economies of scale,” Letendre says.

Scale enables Manulife to compete on costs, an advantage at a time when regulatory initiatives such as the second phase of the client relationship model (CRM2) are shining the spotlight on product fees and performance, resulting in more informed and demanding clients. Manulife recently announced a tiered pricing structure on Manulife mutual funds and private investment pools that will see fees decline as certain levels of assets are reached in combined household holdings.

“A lot of attention is being paid to fees,” Letendre says. “The industry doesn’t want to be found selling high-[management expense ratio] products with low returns.”

Letendre says the rapid rise in the popularity of low-fee ETFs contributes to competitive pressure on fees throughout the industry. Manulife is in the process of creating a line of ETFs in Canada, which should be available in 2017. These plans for Canada follow the path of Manulife’s U.S. subsidiary, John Hancock Financial Services Inc., which launched a family of ETFs in 2015.

Still, Letendre is a big believer in the value of actively managed funds, which will continue to be an important component of Manulife’s trimmed-down shelf. Actively managed funds can complement passive strategies such as ETFs in portfolios, he says.

Letendre’s strategy is to introduce differentiated products, which cannot be replicated easily by competitors, yet can benefit from scale. For example, he points to the success of the Manulife Strategic Income Fund, which has a global investment strategy and a portfolio that’s diversified across debt issues and currencies. The fund’s mandate has attracted AUM of $8 billion in Canada and US$25 billion globally.

Letendre landed his first job at age 17 as an officer cadet in the Canadian Armed Forces, having persuaded his mother to give the permission needed for him to join before reaching the legal age of 18. His talent for logistics and administration led him to spend two years in the army, where he became a second lieutenant. Then, he attended law school and earned a master’s degree at the University of Montreal. Graduating in 1993, he worked as an attorney at the federal Department of Justice in Montreal, but decided he wasn’t interested in a legal career.

Letendre, casting about for his next move, spotted a newspaper ad that led to his foray into the investment business – as a Montreal-based sales representative for Investors Group. After two years of building his business by making cold calls to lawyers listed in the Quebec Bar Association’s phone book, he decided he would prefer a career in management. He transferred to the firm’s head office in Winnipeg in 1995, where he managed training programs.

Three years later, Letendre was back in Quebec, building up the regional sales force. After subsequent stints at Standard Life and BMO, he found his way to Manulife in 2009 as regional vice president for Eastern Canada, where he oversaw a tenfold increase in fund sales. Next, he moved to Toronto to launch Manulife Private Wealth, rising to senior vice president and head of retail investments in February 2015, then becoming president of Manulife Investments in January 2016, where he was in charge of product and distribution.

“When I was younger, I didn’t know that something couldn’t be done,” says Letendre, who enjoys judo and kayaking. “I got in the habit of trying things. Why put limits on ourselves? It’s amazing what can be achieved if you’re supported by a good team and organization.”

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