The Fee-based Winter 2014 Semi-annual Report

As we have written before, notably in the 2013 Household Balance Sheet Report, we are living in a time when flows are unlikely to significantly boost the fortunes of wealth managers. Rather, prosperity for clients and shareholders alike, is more likely to come from inflation in the value of financial assets. Given the fact that market effect will remain critical, and that interest rates are unlikely to fall further, all eyes have been focused on the opportunity for further growth in global equity markets. 2013 was generally a good year for global equity markets and the data in the various sections of this edition of The Fee-based Report attests to that. The numbers suggest that a global approach to investing may prove to be a wiser approach than a Canadian dollar-dependant strategy. If there is one industry in Canada that has been a pioneer in global investing, albeit mainly for the growth of its own business, it is the insurance industry, with firms like Manulife and Sun Life charting courses in regions beyond the comfort zone of many investors. While Canadian insurers are busy developing business in many different geographic regions they are also moving into brand new areas of business in Canada. For a number of years, the only link between the insurers and the affluent was through complex insurance products. In the last few years, however, the insurance companies have been moving aggressively into the broader reaches of wealth management and, most recently, into the mahogany-panelled realm of private wealth management. Our lead story in this edition of The Fee-based Report looks at the efforts of the insurers to meet the challenge represented by the major banks and leading independent firms as the tussle for the dollars of the wealthiest households becomes both more crowded and more intense. This edition of the report also documents the ongoing success of fee-based discretionary brokerage services and the continued growth in influence of branch based advisors at the major banks. But it’s not all about the success of the banks as, for the first time in a number of years, the bank-owned PIC firms have given back some share to the independents. With the insurers in the mix, the banks will face even more challenges in the next few years. We hope this edition of the The Fee-based Report provides our growing base of clients with a detailed backdrop to help them reflect on the year just passed and to develop new strategies for 2014 and beyond.