Independent fund dealers’ group steps out of the shadows

By Doug Watt | January 10, 2006 | Last updated on January 10, 2006
3 min read

The new executive director of the Federation of Independent Mutual Fund Dealers (FIMFD) wants to boost the trade association’s profile and membership base in 2006.

Consultant Sandra Kegie was appointed to the job in July after spending eight years as a compliance officer at various fund dealerships. She is also the founding chair of the Association of Canadian Compliance Professionals.

In a recent interview, Kegie conceded much of the FIMFD’s recent work has been behind the scenes. “There hasn’t been a lot of public lobbying. Perception matters to people. If we are perceived to be active, ergo we are, so we need to have both so that you get everyone’s support.”

One of Kegie’s first priorities will be to provide industry information to members, through the development of a website and other electronic communication, such as a newsletter. “That’s going to be my primary focus for the first half of the year.”

Although she wouldn’t reveal numbers, Kegie says the federation’s membership base is “relatively small” and that she will also be working hard to attract new members in 2006.

The FIMFD held its first official annual general meeting in December, voting on bylaws and electing a board of directors. Beyond those housekeeping items, members also discussed industry issues, such as the possibility of fund dealers being allowed to distribute exchange-traded funds.

“We have spoken with the MFDA and the OSC about this and we have a plan in place so we are going to move forward cautiously.” Kegie says.

The Portus situation was also discussed, since Kegie also sits on an industry committee set up to handle the fallout from the fund’s collapse last year.

“We’ve been working with Berkshire’s counsel of behalf of the dealer community,” she says. “We want to position ourselves in front of the regulators as being at the table and being included in the conversations to determine what may happen to dealers and advisors who participated in that distribution and ensure that everyone is treated fairly. We’re also closely monitoring court activity so we can provide information to dealers that they can in turn pass that on to their advisors and clients.”

Kegie says the fund dealer community is also looking for clarity from the MFDA on due diligence issues, pointing out that the process is much different for a Portus-like product than it is for an established offering from a major mutual fund company.

“The MFDA expects that if you have not done due diligence on all of the products on your approved list, you will immediately stop distribution until you have performed that diligence and you will not reinstate the product unless you come up with a positive ranking,” she says.

“So what are you expected to do with mainstream mutual funds from companies that have a track record? Nobody has done due diligence on those products or companies. But I’m supposed to be able to show that process in my files.”

Although policy and regulation will be critical, Kegie also wants to help independent dealers figure out their strategic direction. “Should they be branching out into other businesses, maybe an IDA firm, or going the mortgage broker route? Some are looking at (using) a dozen corporate entities to cover their various channels and keep them separate.”

It’s a challenge for fund dealers, she admits, many of which are staffed by entrepreneurial salespeople who feel stuck in a very narrow field. “They are driven by competition and they believe they are unfairly disadvantaged because what they can sell is restricted.”

Still, Kegie believes there’s still plenty of value for firms who choose to stick with mutual funds. “I believe in order to be successful, you have to embrace the mutual fund world for what it is, rather than what it is not.”

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Doug Watt