Clients are demanding more. Compliance costs are rising. Retirees are decumulating. Everyone’s going after the million-dollar client. And markets are causing antacid sales to spike.

If it’s tough being an advisor, imagine how your boss feels.

“Unless they’re backed by a big mother ship, I think all [small] firms are struggling to figure out how to maintain everything,” veteran wealth management executive John Cucchiella tells “I understand the economics of a small firm, and I believe in the independents. But the independents are under capital constraints. To be profitable means you can’t provide all services, because those services cost money to put on the table.”

And the larger firms know that, so consolidation will continue. Since 2012, the IIAC says 46 investment firms have closed or been taken over, which represents about a quarter of the industry.

Read: Big firms shine as boutiques suffer: IIAC

In another 10 years, says Cucchiella, “I think there will be more investment counselling firms and hybrid home offices than independents if the capital cost structure of organizations do not diminish.”

As the field narrows, “I see payouts at the traditional brokerage firms going nowhere but down,” he warns. “I don’t believe that institutions are going to continue to tolerate 50% payouts for [a few percentage points of] growth.”

Read: Industry leaders expect weaker economic conditions

What it takes to succeed

Given these concerns, several firms recently announced they’ll shift focus to richer clients. But is that elusive high-net-worth market big enough?

“I really do think it is,” he says. “The banks have a clear-cut internal distribution channel they can draw from. It’s not like the independents, where they have to go find those clients. And the benefit that the investment counselling firms have is they’re already deemed, in the eyes of ultra-high-net-worth clients, as high-class shops.”

Read: Former Macquarie, RGMP, Dundee advisors find fourth home

What sets investment counsellors apart, he adds, is a “holistic approach.” That’s arguably an overused phrase, but Cucchiella defines it as connecting clients with a reputable car dealer, helping them choose private schools for their kids or matching them with top accountants for their small businesses. In other words, not just investment management, but things for which an advisor isn’t directly paid (and will pay off).

Firms can pay investment counsellors less than they would traditional brokers, Cucchiella points out. The newly christened TD Wealth Private Wealth Management, for instance, just hired 42 non-securities-licensed wealth advisors whose focus is discovery, not investment management.

He also sees the wealth management arms of insurance companies as formidable competitors. “The sales culture is already in their DNA,” he says. “They’re very good at creating product and getting things to market. They understand that big-picture mentality in terms of looking after health and insurance needs of Canadians.”

Read: Insurers fight for bigger slice of wealth pie

And he says at least some of the Big 5 have unmatchable scale and distribution. “There are a couple of banks that have a great culture internally and are doing a great job.” What’s more, “The banks are continuing to push the advisory business to the branch level. That’s why I think banks will really excel at this. They’ve got a Rolodex of clients.”

It’s also a good time to be an asset manager. “Firms are going to need these partners to create product.” And the large players have the scale to compete on price.

The next big thing

While there may be fewer independents in future, Cucchiella also expects the landscape to become more fragmented.

“Any brokerage firm that’s involved in the principal-agent model, that’s a great business model,” he says. “The only thing [they] have to manage is the risk to [their] brand. The margin is thin, but they download the costs” to the advisors.

That creates opportunity for entrepreneurial advisors with established books.

“You can take five, six advisors who each have $400 million, they can cluster together, go hang their hat at a [principal-agent firm] at an 80-20 split, and create their own hybrid home office,” he suggests. “They own all costs, but if they share all those costs and keep their overhead to a minimum, they’ll end up further ahead than where they are now.”

Read: Building your own equity

Melissa Shin is Editorial Director of Advisor's Edge. Email her at
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@ VISIVA, your bias is pretty clearly against advisory channels but I’m afraid this is misguided (perhaps to a personal experience?) and you are essentially wrong in your opinion for most Canadians although it may be right for yourself. Why? well, independent financial industry studies have shown the vast majority of people using brokerages and advisors show a very high level of satisfaction with their advisors while a smaller proportion – like yourself- show great dissatisfaction. Also shown is that those that have an advisor to help them have better rates of returns than doing it themselves. That is not to say that some people can’t do their own trades or do the research – good for them if they want to build their own house too – but, in the end, one person’s unfortunate interaction with an advisor is not the same or even the majority and not everyone can figure out how to do investing so instead stick in their pillow or just lose it to taxes without checking things out. I only wish I could have assisted you before your bad encounter with another advisor to show you what 25 years of experience, qualified proven and trusted expertise and customer service awards I have gained doing the job properly could do. What you believe should be destroyed has helped so many many people achieve the goals they always hoped and dreamed for.
In Canada, we hope Canadians become educated more and more and do it themselves well – that is part of the new education revolution – but, for human reason, they do not. while your own advisor issue occurred to make it very distasteful to use an advisor, please know that not every person that does not understand how to do things for investing are preyed upon; they aren’t. Instead, for the most part, they are arduously defended by the advisors that want nothing more than their neighbour and caring client to become even more successful than they are. For example, Advisors that are paid on trailing fees are rewarded only if the portfolio increases in size. If the money they manage reduces in size, say to half its value (as many did in 2008’s global crisis), then the Advisor’s income also drops by half. Do you work in a job where your salary could be cut in half without the Employment Standards Council or a Union you may have getting involved? Well Advisors without salaries struggle daily with the risks they may incur with dropping asset sizes and income risk and there is no one there to protect their livelihood – not one organization or government organization. It may surprise you to learn that the average salary income on one study alone (done annually) showed for a good Advisor earns about $130,000/yr. often before personal ad some business expenses. While an excellent wage perhaps to your thinking, they however accept a risk that their incomes can also go suddenly to $50,000/yr with no notice. They have EVERY incentive to make the money grow for ALL their clients PARTICULARLY if the Advisor also sees the benefit to their own income growing too. If that sounds bad, it shouldn’t You should WANT an advisor to have that occur as it ensures they want your money to grow too. Just ask yourself why you would work at any job that told you you’ll never amount to anything better than entry level and you have no hope for a salary increase no matter if the work you do at the company is the best year after year. Why would you work hard there? Wouldn’t you just put in your time until you found a new job that appreciates your hard work? Of course you would. It’s the same for Advisors except that YOU (the client) are the one hiring them and they want your support as you are the employer.
If an Advisor fails at that, don’t blame the Advisory system, blame the one Advisor. Replace him/her with a better one. Contact trusted people you know for names, meet the Advisor and get referrals from those you might like to work with and ask them questions of how they are paid and three of their satisfied clients and get proof. Interview different Advisors and get a comfortable feeling and check their registration to make sure they haven’t been given fines and broken any laws. It’s just like hiring anyone – take your time and do the background checking. It doesn’t take a brilliant person to do the basic things anyone with a house would do to get a repairman in or a landlord would do to check references of a new tenant. The effort people put into that pays them dividends! Good luck with your endevours and may good people, and trustworthy advisors, cross your path from now on.

Tuesday, Feb 9, 2016 at 8:31 pm Reply


@Richard Knowles – I appreciate your comments. Most advisors are good, ethical, moral and work in the best interest of clients. But few bad apples create a bad name to the industry. Most shocking experience for investors when incur significant DSC charges if they never understood the consequences of investing at DSC basis.

Many known investors use trading platform for Equities, derivatives, ADR, ETF and currencies that provides 24/7 online access, Gain and Loss statement in details, very competitive currency rates, easy trading and low commission.
I agree that the trailing commission may not be significant if the account size is small and during market correction. Fees charged on “Fee for Service” accounts too will be lower during market correction. But today many professional and family clients invest significant amount into their RRSP, RESP, TFSA and Open plans and the advisor able to assess whether to accept the client or not based on his requirements. The advantage for Advisors is that Canadian investors cannot invest directly with the fund companies like most of other nations including Australia, Singapore, Hong Kong, Europe, UK and the US. Certainly Advisors deserve reasonable compensation for their quality and professional advice, guidance, value of service and time.

Friday, Feb 12, 2016 at 7:51 pm


Canadian financial services industry is failing investors due to advisor greediness and failure in suitability that lead to clients incur charges/losses;
DSC and LSC product type should be banned as Regulators’ research indicate that clients are not always understand fees. Elderly and retired clients’ large investments are invested at DSC/LSC basis and the clients incur significant DSC charges due to failure in suitability. Regulators should require Members to report failure in suitability on METS and Regulators examine advisors when number of clients incurs significant DSC charges as it is a serious failure in DSC suitability and it tarnishes the reputation of the industry. In many cases, clients are more knowledgeable than their advisors. Many young investors believe in DIY method and learning in their best interest and not investing through advisors.
For a healthy investment environment, investment/fund supermarkets should be available in Canada with state of the art technology platforms to help investors and industry by dumping antic systems that most brokerages have at present. Brokerage business will continue to suffer in the long term due to investors dissatisfaction, losses, higher fees and charges and losing confidence in so called advisors and brokerages.

Tuesday, Feb 9, 2016 at 11:22 am Reply

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