Last year, Ontario Finance Minister Peter Bethlenfalvy asked the Ontario Securities Commission (OSC) to review this shrinking shelf and report back to him in February. The report has not yet been made public.
In the Banks Report 2022 published by Investment executivea sister publication of Finance and Investments, the category “freedom to make objective product choices” received an average score of 8.2 out of 10, up from 8.4 last year. This rating has decreased over the past five years, from 8.8 in 2018. (There was no Report Card on Banks in 2020 due to the pandemic.)
CIBC, RBC and TD said Investment executive when changes to product availability are made in 2021 smaller tablets will help advisors manage growing compliance demands while having a minimal effect on asset levels. The banks also said customers could also buy third-party products through their direct investment or brokerage services.
This year, they reiterated their positions.
“A streamlined product line allows us to spend less time on security selection, which we know is not the primary driver of financial results, and more time on customer relationships, building and serving the plan itself “, said David Terry, Vice President and Head. of financial planning, TD Asset Management. David Terry reports that more than 80% of planner assets at TD branches were held in TD-branded products before the policy change on the 1st.er July 2021.
Peter Lee, senior vice president of central banking at CIBC, says his bank’s product line is well-priced and includes more than 140 mutual funds and about 24 managed portfolios, some of which are underwritten by marketers.
Michael Walker, vice president and head of mutual fund distribution and financial planning at RBC, says only 2% of clients’ assets were in third-party funds when they made the switch last year. “As part of this review, we looked at our tablets and the caliber of RBC Global Asset Management in terms of leading products, and we made this decision,” he says.
In this year’s study (as of December 31, 2021), in-house products made up 90.8% of the average portfolio of the bank’s board, up slightly from 88.3% of the previous year, before changes related to customer-centric reforms (RAC).
In addition, the use of internally managed accounts (internal wrap accounts) returned: These products make up 21.0% of the board’s average portfolio, up from 13.4% in 2021 and 23.0% in 2018. (These product data do not include the Bank of Nova Scotia due to differences in advisors’ business models).
Many CIBC, RBC and TD advisers were open about their pre-existing preferences for domestic products.
“I welcome you [les changements de produits] because they reduce my risk. It allows me to focus on financial planning rather than investing and I think there is a wide enough range of products,” says a TD Bank adviser in British Columbia.
Several CIBC advisers said they felt no pressure and were able to find what was best for their clients. “Exclusive product changes were not a problem for my client portfolio. I have very little interest in non-RBC funds. people trust [aux produits de RBC] based on their reputation and past performance,” said an RBC adviser in the Atlantic provinces Investment Executive.
But a minority of councilors disagreed with the exclusive approach. The most vocal were those from TD (working under TD Wealth Management), who received a rating of 5.2 for freedom of product choice. This rating has decreased significantly (by 0.5 or more) from 6.5 a year ago and 7.5 five years ago (in 2018), when most advisers said there was simply no pressure informal to focus on the internal product.
“I can understand why [les tablettes de produits ont changé]but it’s not the easiest experience when it comes to customers, says a TD consultant in Ontario in the Report card of this year. I understand the risk and compliance aspect, but it limits the options for customers. »
“I think the new changes to the CARs have created a conflict of interest. It is extremely restrictive, adds another TD councilor in Ontario. They should not have closed it only to exclusive products, IMHO.”
Some advisers at banks that scored highly in the product freedom category have similar views.
“If I could [vendre] Third-party funds will be much better,” says a CIBC adviser in Ontario.
“We’re kind of forced to use products designed in-house,” adds an RBC BC advisor. CIBC earned the highest score of any bank in this category at 9.4, unchanged from 2021 but up from 9.6 in 2018.
“I don’t like the fact that we no longer have the possibility to offer third-party funds. I think that the banks have made a strategic decision to eliminate [ces fonds de leur] offer,” said an Ontario advisor at RBC (where advisors work for RBC Financial Planning). RBC came ex aequo ranked second for freedom of product choice (together with BMO) with 9.2, down from 9.4 a year ago, but up from a 9.1 score in 2018.
In addition to the freedom in the choice of products, what distinguishes the best performing banks in the 2022 report is the quality of the funds and innovation.
RBC and CIBC achieved the highest points in the “marketing of new investment products” and “quality of product offering” categories. That’s how they got to the top of the Report card ofInvestment executive (if we take the average of all category scores of a bank).
These banks scored 9.1 and 8.9 for new products, respectively (from 8.7 in 2021 for RBC and unchanged for CIBC). Their ratings for product quality were 9.1 and 9.0, respectively (unchanged for RBC and from 9.3 a year ago for CIBC).
RBC is “ahead of some of its competitors. [Les antécédents de Gestion globale d’actifs [RBC] they are very strong,” said an RBC adviser in the Prairies.
Another RBC adviser in Ontario says he’d rather the bank focus on refining its older, more popular products than adding a slew of new products to the shelf.
A CIBC adviser in Ontario says new products are still available, although other advisers have suggested compliance documents and CARs could make it difficult to sell new products.
In 2022, TD Bank advisors once again gave their bank the lowest rating of the Big Six for new products and product quality (7.3 and 7.4, respectively, with the first number unchanged and the second being from 7.2 last year). TD is also the lowest performing bank in the index.Investment executive in the Report card of this year.
“The Bank could do faster and more timely launches to reflect what is happening in the industry,” suggests a TD Bank adviser in Ontario, who also called for better quality GICs and more exchange-traded funds (ETFs).
TD and RBC said one way to stay competitive is to offer access to third-party funds in their private equity products.
David Terry says TD’s managed portfolios include third-party funds. Also, as of November 2021, TD is “one of the only firms in a bank branch environment to offer direct access to ETFs for its clients. We know this is a big consumer trend. (TD Wealth Management advisors are listed in the values register.)
At RBC, says Michael Walker, a new exclusive global portfolio line “invests only in a selective selection of fund managers and third-party products.” The bank also launched index ETF funds in January that branch advisors can access.
If bank branch product lines are further adjusted based on upcoming regulatory revisions, clear guidance for advisers will be needed.
A National Bank adviser in Ontario, who reflects on CARs, says he is grateful for the bank’s compliance podcasts, while a TD adviser in Ontario appreciates when “there is a lot of support on how to apply. [les changements des RAC] in our daily practice.