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    professional development
  Ever since Scotiabank paid $2.6 billion for MD Financial in 2018, the Queen’s Park subway station in Toronto has been a useful expression of the wealth management indus- try’s preoccupations. The station’s traffic
includes doctors and other medical professionals headed to the nearby hospitals, university and physician’s college. Sensing an opening, the bank brokerages competing for the coveted high-net-worth (HNW) demographic have taken turns plastering the station’s tunnels with wall-to- wall ads courting healthcare workers.
It’s not just banks and doctors. As regulators demand greater transparency, and robos and online brokerages put pressure on advisor fees, the industry has rushed to win wealthy clients from all walks of life whose complex needs justify the fees they pay. Where does that leave advice for clients who are less well-off?
There are trillions of reasons for the obsession with the HNW segment. According to Investor Economics’ Household Balance Sheet Report 2019, only about 10% of Canadian households had investable assets of more
than $500,000 — but this small group held almost 87% of the country’s $4.4 trillion in financial wealth.
Fee compression has pushed advisors to wealthy clients, but the pressure is coming from both sides, says Paul Morford, CEO at online dealer platform Agora Dealer Services Holding Corp. in Toronto. Multi-family offices and brokerage firms have been lowering limits for HNW clients as new technology makes it easier to serve them. He expects this trend to continue, cutting into the high end of the mass affluent market while robo-advisors are “nibbling at [advisors’] heels” on smaller accounts.
“The space is really getting squeezed,” he says.
Very few investors are equipped to be self-directed through an online brokerage, says Kendra Thompson, consulting partner at Deloitte in Toronto. This leaves most Canadians in the mass segment in a kind of no man’s land for advice.
“They’re often getting fairly generic or repetitive advice at a high fee, or they’re getting almost no advice and kind of out in the wilderness for a low fee. That’s the binary tension,” she says.
JUNE 2020
    With regulatory changes and fee compression,
advisors must get creative to profitably
serve clients with fewer assets
by Mark Burgess

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