Investment industry association changes course as it aims to become the home of independents – The Globe and Mail

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The Federation of Mutual Fund Dealers (FMFD) is rebranding and changing its mission to become the home of independent dealers.

The rechristened Federation of Independent Dealers (FID) will now be a lobbyist and a collaboration forum for independent investment and mutual fund dealers. Previously, the organization worked as a representative body for mutual fund dealers exclusively.

The major catalyst for this change is the paradigm shift currently taking place in the investment industry. An increasing number of dealers are looking to obtain dual registration to operate both as an investment dealer and a mutual fund dealer. That includes many of the FMFD’s existing members.

“Broadening [our focus] lets us expand our services to our existing membership base as they go through the evolution of becoming dual-platform dealers,” says Matthew Latimer, executive director of FID in Toronto.

Prior to the early 2023 debut of the Canadian Investment Regulatory Organization (CIRO) – the resulting merger between the investment industry’s two self-regulatory organizations – investment firms operated in silos. They were either licensed as mutual fund dealers by the Mutual Fund Dealers Association of Canada (MFDA) or as investment dealers by the Investment Industry Regulatory Organization of Canada (IIROC).

“Our board has keyed in on a very important shift in the industry, which is moving toward a post-product, post-channel world,” says Robert Smuk, chairman of the Federation’s board, as well as president and chief executive officer of Agora Dealer Services Corp. in Toronto. “Then, on top of that, you layer in the consolidated regulator, and you can see the change we hope to create, which is a fusion of all the independent distribution channels.”

As such, FID is looking to become the home for any independent dealer, regardless of size and how they operated traditionally. Any independent firm that’s under CIRO’s mandate is welcome to become a member.

“For us, independence isn’t related to assets under management,” Mr. Latimer says. “We consider the term ‘independent’ to be more inclusive rather than exclusive – and we’re looking to welcome as many firms that feel they’re independent to our group.”

That would include some of the big independent brokerages that compete against the bank-owned investment dealers, Mr. Smuk notes.

“We’d be pleased and honoured to have them a part of the group because we have some very small independent dealer members that don’t always have the capability to work through all of the changes to the regulatory framework and even to fully get a grasp on everything that’s happening [in the regulatory space],” he says. “Our focus is to understand and to bring a clear and focused spotlight on the collective needs of the independent dealers, not a subsection of that group.”

Despite the goal of becoming the home for all independent dealers, FID is prioritizing making the transition to its new mandate in the year ahead rather than on a big recruitment push for new investment dealer members.

“We’re looking to make sure current members see the benefit of this change and potential new members will see the reasons for coming together,” Mr. Smuk says. “We know it’s not going to be easy. There were reasons why the independent mutual fund and investment dealers didn’t always come together in a single association or single forum. So, we have to create the structure and a broad enough mandate to be able to have all firms see the value of a single association representing them.”

To do that, FID will rely on some lessons from the former FMFD, which was home to more than 50 members, including approximately 30 dealers. Advocacy work will be one key area of concentration. To that end, FID’s goal is to understand the concerns of the entire independent channel and create a single voice that will work with the regulators to represent the needs of these dealers.

“To increase our impact, we’re aiming to be a single stop for regulators to get that independent dealer input and perspective from coast to coast. [The regulators have] known us for 28 years,” Mr. Latimer says. “They utilize our perspective now – and we will continue to be a reliable source of perspective and input for them even more so as we grow.”

Building a community of like-minded leaders will be another area of attention for FID. The ability for members to meet and learn from one another through webinars, an annual conference or dinner will also be critical.

FID’s shift to serving the needs of all independents comes at a time when CIRO is expected to release its revised rulebook. The new Federation believes it’s in a position to represent them all given its history and experience under the previous regime.

“We’ve come through our strategic review refocused, recharged and reinvigorated with a new mandate. At the same time, we’re a grassroots, member-driven association that’s been there and worked through every issue and hurdle that dealers have faced for almost 30 years,” Mr. Latimer says.

“We’ve been at the front row of advocacy and working with regulatory bodies for years, and we support our members. As the environments change, we’ve always changed and adapted and we’re excited for this new chapter,” he adds.

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