Growth without sacrificing a boutique culture
To put this in context, I categorize the big banks as Tier One; mid-sized dealer firms as Tier Two; and my firm – currently with 20 Advisors (and growing) and 6 full-time employees – as Tier Three.
Recently, we onboarded an MGA called LifePlan Investments, a company that was ready to move forward with a Tier Two dealer until I caught wind of their intention to provide their insurance Advisors with a platform for growth, while retaining autonomy. It’s definitely a win-win given the alignment, the recruitment opportunity for us, and the investment solution for LifePlan – greater choice, with access to ETFs in addition to mutual funds and insurance.
In terms of our trajectory, I feel that this alliance speaks to untapped possibilities – namely, other MFDA dealers without an ETF platform. The reality is, while the industry is consolidating, there’s growth potential for smaller independent shops with adequate resources to withstand the compliance burden, regulatory oversight and rising costs associated with running a dealer – coupled with the inherent revenue challenge associated with the decline of the DSC model.
At the individual Advisor level, there’s also been a shift as Tier One and Tier Two organizations establish higher minimum thresholds for assets under management. We don’t impose that pressure; in fact, we’re positioned to recruit Advisors who have been displaced because of swelling targets.
I’ve worked hard to create a culture that attracts Advisors who respond to autonomy, and clients who appreciate a family environment. The key to growth without losing that spirit will be to stay true to my priorities – communication and follow through. I maintain an open-door policy, accessible to my team (compliance officers, operations managers and licensed associates) and ready to discuss anything of importance to the practice. Similarly, when it comes to clients – or Advisors who want to discuss a client situation – I respond the same day to emails, phone calls, and voicemails. It’s not easy being pulled in multiple directions, but it’s very satisfying to be able to help, and it’s in keeping with my simple motto: do what you say and say what you do.
ETFs that align with my get-paid-while-you-wait approach
Despite access to all of the major providers, we launched our platform exclusively with BMO Global Asset Management’s ETFs. From a client perspective, BMO is a recognized brand, which offers peace-of-mind. Personally, I like the flexibility of the product shelf; if a client is not a candidate for individual ETFs, chances are, BMO has a fund to fit the objectives, whether the priority is to save on fees, reduce volatility or increase returns.
If I want to take advantage of a tactical covered call overlay for someone who is not in a fee-for-service account, I can get it through the BMO Covered Call Canadian Banks ETF Fund. And if you look at the pricing, it’s the same. In a fee-for-service account, the ETF is 70 basis points plus my 1% fee, and if I buy the Fund version, guess what? It’s 1.7%. Plus, it fits into my get-paid-while-you-wait approach – growth and an additional income stream from underlying equity investments, all with reduced risk. In fact, every mandate in my client portfolios produces a distribution, whether it’s from a diversified fixed income solution, traditional dividend-focused equity solution or an alternative solution.