Financial advisors in Canada could soon find it much easier to work independently of large brokerage firms amid changing regulations and advances in investment-management technology that make going it alone more convenient and cost-effective.
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The financial services industry was already facing disruption from various directions prior to the arrival of COVID-19, but the pandemic presented novel challenges and opened the door to even more significant changes.
From more diverse and inclusive advisory teams, to new rules affecting many financial professionals, to even greater adoption of technology among both advisors and their firms, to an increasing shift toward advisor independence and greater levels of stress among advisors, these themes are likely to persist well into 2021 and beyond.
Here are 10 key trends that advisors and the investment industry were focusing on in 2020:
Women remain a significant minority in Canada’s advisor population. So, while female-centric teams are still a rarity in the industry, they bring a distinct perspective that clients appreciate. For Candice Dziedziejko and Teri Cook, investment advisors with the Dziedziejko Cook Investment Advisory Group at BMO Nesbitt Burns Inc. in Waterloo, Ont., it was their shared work ethic and investment philosophy that led them to launch their all-female team six years ago, which now includes four women.
Advisors have been busy amid the COVID-19 pandemic addressing investors’ growing list of concerns, including one that often ends up on the back-burner during normal times: life insurance. But while broaching the subject with clients can be tricky for advisors as they run the risk of appearing opportunistic, discussing life insurance has more merit than ever before.
Advisors in Canada could soon find it much easier to work independently of large brokerage firms – a rapidly growing trend in the United States – amid changing regulations and advances in investment-management technology that make going it alone more convenient and cost-effective. A turnkey asset management program ecosystem is being developed in Canada, providing advisors with the technology and tools to become an independent investment counsellor portfolio manager.
The COVID-19 crisis is inspiring more advisors to consider going it alone. The interest comes as advisors discover that managing client relationships from home works well and question their current ties to traditional firms. As a result, wealth management technology firms, which are providing tools that are empowering advisors to run their own shops, are reporting a surge in inbound calls from prospective clients looking for information on how they can support independent advisors.
A recent amendment to Canada’s securities regulation that makes it easier to hire portfolio managers in certain client-facing roles could be a game-changer for wealth and asset management firms looking to add to their ranks. Regulation for registration of advising representatives used to require portfolio managers to have at least two years of experience in securities selection and research, regardless of their role. But the addition of new terms and conditions to the registration requirement to the rule in June eliminated that requirement for portfolio managers who deal exclusively with clients, creating a new role defined as client relationship manager advising representatives.
Advisors may be feeling even more stress than the individuals for whom they manage money amid the COVID-19 pandemic. A recent report from Toronto-based human resources services and technology provider Morneau Shepell Inc. revealed that workers in Canada’s financial services industry trailed only those in accommodation and food services, arts, entertainment and recreation, and real estate, rental and leasing for the lowest mental health scores. What’s notable is that these people were all affected deeply by the COVID-19 stay-at-home recommendations in the spring as these industries were virtually shut down completely at the time. In contrast, financial services workers were considered essential in most provinces.
Although the investment industry is in favour of an Ontario government proposal to tighten the rules around who can use the titles “financial planner” or “financial advisor,” it’s seeking clarity and some changes before they’re finalized. For example, Michelle Alexander, vice-president and corporate secretary at the Investment Industry Association of Canada, says the organization is looking to ensure there’s no duplication in credentialing oversight.
David O’Leary of Kind Wealth wanted to do something constructive as the COVID-19 pandemic began to disrupt people’s lives. So, as businesses closed their doors and layoffs spread across the country, he launched the Coronavirus Relief Effort to offer free personal finance consultations for anyone struggling with the economic impact of the pandemic. Soon after, about 20 advisors stepped forward, able and willing to dedicate at least half a day a week to this initiative.
Advisors in Ontario who have been working from home during the COVID-19 pandemic received a little help from the provincial government, which changed the rules around a cumbersome barrier that had slowed down the client onboarding process. In effect, Bill 190 explicitly allows clients to designate beneficiaries for a range of registered accounts – including registered retirement savings plans, registered retirement income funds, locked-in retirement accounts, life income funds and tax-free savings accounts – with e-signatures.
Before COVID-19 , some of Canada’s largest independent investment dealers had been recruiting advisors actively and aggressively. Although the onset of the pandemic has had little impact on the level of this activity, how firms are recruiting advisors – and, in some cases, whom they’re targeting – has been affected significantly.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
