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Three Big Elephants in the Room Nominee & Client Name Embedded & Exposed Fees MFDA & IIROC.

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Presentation on theme: "Three Big Elephants in the Room Nominee & Client Name Embedded & Exposed Fees MFDA & IIROC."— Presentation transcript:

1 Three Big Elephants in the Room Nominee & Client Name Embedded & Exposed Fees MFDA & IIROC

2 Three Big Elephants in the Room Nominee & Client Name Embedded & Exposed Fees MFDA & IIROC George Aguiar President and CEO, GP Wealth Management Patti Best SVP Client Experience, Mackenzie Investments John Webster President, Queensbury Securities Mark Kent President, Portfolio Strategies


4 Client Name Accounts versus Nominee Name  Embedded Trustee Fee  Potentially limits investment options  Generally requires paper trail  Dealer/Advisor have limited control on the account (example, Transfer out)  3rd Party Reconciliation  Fund redemption can settle to clients bank account  Dealer/Advisor has partial control of client service experience  Dealer/Advisor at risk of direct trading  Transparent Trustee Fee  Quicker trade execution/less cumbersome trading  No trade forms  Dealer/Advisor have higher level of control on the account  Direct Reconciliation  Fund redemption settles to cash  Dealer/Advisor has direct control of client service experience  Dealer/Advisor controls trading



7 A number of factors may threaten the commission-based model of the financial advisor. Meanwhile the fee-based model adoption is slow to emerge. Factors threatening the traditional commission based model Fee-based model slow to emerge in the financial advisor channels in Canada, meanwhile full-service brokers lead the charge 1 Media and regulatory focus Since the financial crisis, there is increased scrutiny placed on advisor remuneration and value delivery Revenue stream volatility For a maturing advisor base, predictable revenue in a fee- based model represents an attractive degree of stability ETFs and ETF portfolios ETFs are an increasingly important asset class and, for the most part, do not have compensation embedded in their fee structures Britain and Australia have taken steps to eliminate commissions as a form of advisor remuneration Other jurisdictions are regulating a fee for service approach Source: Investor Economics Retail Brokerage Report and Distribution Advisory Service; FA-IIROC includes MFDA firms with an IIROC platform e.g. Assante, Manulife, Peak. Advisor fee-based adoption ratesShare of assets in fee-based programs *Includes non-discretionary (FBB) and discretionary fee-based programs (AM, IHMW and SMW)



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11 Nominee and CN Questions 1.What impact does CRM2 have on the future of cient name business? Can you really operate efficiently and effectively with Client Name with the introduction of CRM2? 2.What benefits do the choice and flexibility of nominee represent to your business. How important are these benefits? 3.Can Client Name adequately support a Fee For Service offering? 4.Are Nominee Account Holders subsidizing Client Name Account Holders with MERs?

12 Fee Questions 1.What are the real elephants in the room regarding embedded versus exposed fees? – Defined value propositions – Cross-subsidization – Uninvited complexity – Banks vs Independents 2.What kind of disruption to you anticipate in our business? 3.Who is going to win/lose in an exposed-fee world? 4.What advice would you give to a dealer wanting to thrive through the disruption of CRM2? 5.What are the best steps you see advisors and dealers taking to address this issue? 6.What good can come of this?

13 MFDA/IIROC Questions 1.The analysis strikes me as asymmetrical. We see MFDA advisors moving with some frequency to IIROC but not the other way. Why is that? It is a natural progression? 2.Describe an MFDA advisor who would be an ideal candidate to move to IIROC? 3.How would you convince this advisor to make the move? 4.What are the best reasons for an advisor to stay on MFDA.

14 From Wikipedia "Elephant in the room" is an English metaphorical idiom for an obvious truth that is either being ignored or going unaddressed. The idiomatic expression also applies to an obvious problem or risk no one wants to discuss. [2]Englishmetaphoricalidiom [2] It is based on the idea that an elephant in a room would be impossible to overlook; thus, people in the room who pretend the elephant is not there have chosen to avoid dealing with the looming big issue.elephant


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