by Tom Bradley

The buzz in the industry right now is all about the big changes Scotiabank is making on the wealth management side. They’re restructuring their business and being particularly ruthless about it. Yesterday, Scotia announced a $275 million restructuring charge, part of which goes to cutting 7% of their advisors at ScotiaMcLeod.

Scotia isn’t the only one making changes. All the banks are watching their costs closely, as growth is slowing. They don’t want their profits and return on equity ratios (ROE) to slip, so nothing is being overlooked. Even retail banking, where the ROE is north of 40% at some banks, and wealth management, which is similarly profitable, are being downsized.

Scotia is stirring the pot the most right now and our team has come across a number of advisors who have been let go, or are being asked to restructure their practice.

If you’re working with an advisor whose book of clients has been sold to someone else in the office, you should take a serious look at where you’re at. Presumably, you went to the brokerage firm because of the advisor (the firms are all the same), so with that person gone, you need to revisit your rationale for staying.

I’ve come up with some steps you might consider if you’ve been sold:

  • Book a meeting with the branch manager and ask her to give you the name of three advisors who she thinks will fit well with your situation. Likely, one of them will be the advisor who has been assigned your accounts.
  • Ask the manager for a report that shows your total cost of investing and what your long-term returns have been. One of the causes of the industry turmoil is the upcoming regulations around fee and performance reporting, referred to as CRM2 (Client Relationship Model). Most brokerage firms have the software to produce a report for you right now.
  • Interview the three advisors.
  • Enjoy the super attentive service. They’ve sold you down the river, so you might as well take advantage of their desire to keep you on board. If you’re ever going to ask them for help or information (i.e. fees and returns), now is the time. If they don’t reach out to you right away and jump through a few hoops, your decision is easy. It might even be time to consider a non-bank alternative.
  • And finally, don’t sluff this off. If you’re going to stay with your new advisor, it should be the result of a conscious decision.

In these situations, clients often forget who’s the CEO of their portfolio. Hint: It’s not a Bay Street executive who has a profit target to hit.