The desire to integrate investment services is among the most prominent trends that Megan Meagher and Jeff Newton, co-chairs of BMO Private Wealth Canada, have seen over the past 30 years.
Meger said clients no longer want to spread their work to multiple organizations.
“The clients are looking for a midfield player,” she explained. “They are looking for someone who can put together a team with a variety of solutions and knowledge.”
Major and Newton became co-chairs on June 1, replacing BMO CEO Andrew Auerbach, who had been with the company for 21 years. The delivery came amid a brutal market sell-off that affected the company’s assets.
The company said the assets under management of BMO Wealth Management Inc. It fell 41% to $312.5 billion in the second quarter from $525.2 billion in the second quarter of 2021 “due to the impact of asset divestitures and depletion of low-yield assets.” BMO has refused to specifically offer AUM or share its managed targets to the Private Wealth division.
As if to underscore the challenges of the moment, Meagher and Newton’s first day coincided with the Bank of Canada’s second consecutive half-point hike in its policy rate, the first consecutive increases of this size since 2000.
Newton said the market volatility has led to deeper and more frequent conversations with clients, who were not only concerned about their investments but also how interest rates would affect retirement plans and rising debt burdens.
“This has really become a ‘fashionable’ conversation,” he said. “For generations now, [the cost of carrying debt] It wasn’t really top of mind because of where the rates were squeezed into. These kinds of conversations are definitely at the top of customer concerns at this time.”
Newton said BMO Private Wealth’s advisors are working closely with the company’s private banking division to answer questions about things like the timing of mortgage renewals and payment plans. Counselors can also use digital planning tools to address debt concerns and recruit tax professionals to build retirement strategies.
“We have evolved from being a transaction-only investment management company to offering fee-based opportunities and consistent investment management solutions,” Newton said. “This has resulted in clients requesting a more holistic approach to the relationship with their advisory team through financial planning and now through banking.”
Aside from the additional resources for the company’s business support program, BMO Private Wealth said it will invest between $5 million and $7 million in its financial and estate planning teams as well as in banking support dedicated to its senior teams.
“It’s going to be a differentiator compared to our competitors,” Newton said.
Mass shopping isn’t the only trend that Major and Newton have noticed in recent years. Another is the rising average age of financial advisors and the growing need to attract new talent to the industry.
according to Investment Executive Brokerage Report Card 2022, the average age of an investment advisor in Canada is 50.6, up from 49.2 in 2014.
“It’s important that we get ahead of this,” Major said.
She said BMO Private Wealth had begun discussing early succession with advisory teams to determine time horizons for their advisors and to strengthen practice management.
“It’s about figuring out what these counselors need to complement their current practice, how we acquire the talent to fill a need currently, and what makes sense at that transitional time,” Meger said.
The company has already discovered that advisors working on a team are likely to experience less attrition of advisors when an advisor leaves. The combination of new consultants and seasoned professionals also helps with recruitment.
Major said competition for talent has heated up and shown no sign of abating, with competition for support staff in particular.
“The financial services industry has evolved, and the intersection with technology and innovation also means that we are no longer just competing within the industry,” Meger said. “The skills and experience that make for a successful advisor are now in demand by major tech companies and startups, all of which compete with financial firms in terms of offering progressive benefits, competitive compensation, and an active corporate culture.”
BMO Private Wealth has more than 1,000 investment advisors and 90 investment advisors. A BMO spokesperson said the bonus programs for both new and existing advisors are “competitive” and designed to boost retention, but declined to provide further details.
Retention was not a problem for Newton or Meijer. Newton joined BMO Nesbitt Burns in 1997 as an investment advisor. Meger joined BMO Private Wealth as Vice President and Chief Banker in 2004. She began her career in the industry in 1988 at the RBC Royal Trust, which she described as the first step in her “joining private banking”.
For Newton, the investment industry was a family to call upon for many generations.
“The opportunity to get involved in the capital markets has, in some way, always been something that was discussed around the dinner table, between dinner and drop time at Hockey Night in Canada,” he said. “It was a natural thing I migrated to.”
Newton particularly enjoys the client-facing aspects of the job, marrying his natural affinity for investing in people skills.