Scotiabank plans to add branch advisors, expand product reach

By Katie Keir | December 14, 2023 | Last updated on December 14, 2023
4 min read
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Scotiabank’s wealth management business plans to increase its asset management footprint in Canada, through measures such as adding more advisors in its branches and offering innovative products.

A Dec. 13 presentation for the bank’s 2023 investor day by Jacqui Allard, group head of global wealth management, said approximately 10% of the bank’s retail clients invest through its mutual funds.

But in the medium term, the bank seeks “higher penetration [and] share of wallet” through expansion of its branch-based and mobile advice teams as well as growth of its third-party sales territories. (Branch advisors can sell only in-house proprietary product.)

Scotiabank plans to add up to about 600 people across the branch-based and mobile advice teams over the coming years, the bank confirmed in an email to Advisor.ca, with particular focus on hiring from within.

Allard noted during the presentation Q&A period that finding, training and promoting branch advisors through the mobile advice team that consists of non-branch investment specialists was a great opportunity.

Other strategies will include launching new products and allowing more access to alternatives through partnerships. The bank will concurrently invest in its Smart Investor platform and Tangerine, the presentation said.

The bank’s wealth arms include bank-owned brokerage ScotiaMcLeod as well as its branch-based business, and MD Financial Management, which was acquired in 2018 and targets physicians in Canada. The bank also owns Dynamic Funds through which it sells product.

Allard said in the emailed statement that in addition to the bank’s efforts to support mutual fund advisory for retail clients in branches, there are plans to expand “across our Canadian wealth management business lines through hiring in many of our advisory businesses.”

Scotiabank’s wealth planning model includes typical features like holistic financial planning and investment management, and estate and insurance planning. The bank also wants to consider clients’ personal health and well-being, the presentation indicated.

Citing Fraser Institute research on aging and health-care costs, Allard’s notes mentioned that a quarter of the domestic population will be age 65 and over by 2040, with more than 70% of those Canadians having at least one common chronic condition for which costs need to be managed.

Allard joined Scotiabank this fall, starting as deputy group head of global wealth management in September and coming from Royal Bank of Canada. She took on her current role this month.

Shortly after she joined, Scotiabank announced it was cutting 3% of its global workforce, representing about 2,700 employees. Reasons cited included a move to reduce costs and restore positive operating leverage, as well as the strategic refresh initiated by CEO Scott Thomson after he stepped into his current role in February of this year.

Since then, the bank announced that eight branches would be closed across rural Newfoundland, with customers who require in-person banking services pushed to other branches.

Scotiabank took a hit in its fourth-quarter earnings, in part due to charges related to the layoffs and branch closures so far. Thomson said at the time that the results reflected a front-loading of costs that were expected to translate to earnings growth ahead.

By 2028, Allard’s presentation said, the bank’s wealth management business is aiming for 10% earnings growth and 8% growth in assets under management (AUM), with approximately 20% return on equity. The earnings and AUM figures refer to compound annual growth.

Thomson’s Dec. 13 presentation, titled “The New Way Forward,” said the bank has shifted focus to “lower risk, less volatile geographies in North America” and that capital has been earmarked to help grow the domestic wealth franchise.

He noted that the bank has underperformed compared with peers in the past five years, looking at metrics like earnings per share and return on equity, and that only 16% of retail clients are primary, actively engaged clients with the bank.

A key part of the bank’s new lean strategy is to grow and scale what are deemed priority businesses, which includes “capital light” global wealth management, as well as add more primary clients, Thomson’s presentation said.

Scotiabank is Canada’s third-largest institution by market share, with more than two million clients, $317 billion in AUM, and $610 billion in assets under administration (with 2% compound annual growth in AUM and 7% growth in AUA within the past six years).

The bank also offers wealth services in countries like Mexico, Columbia, Peru and Chile — though its new strategic focus could result in exits from some foreign markets. There are plans to grow its wealth and financial planning capabilities in those areas, with particular focus on Mexico and the Caribbean.

In Investment Executive’s 2023 Report Card series, advisor support and tools from Scotiabank were rated in two separate reports: investment advisors with ScotiaMcLeod offered insights, as did the institution’s branch-based planners. Brokerage arm ScotiaMcLeod received an IE rating of eight out of 10, based on results in 27 categories, while Bank of Nova Scotia received an IE rating of 7.7 out of 10, based on results in 25 categories.

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Katie Keir

Katie is special projects editor for Advisor.ca and has worked with the team since 2010. In 2012, she was named Best New Journalist by the Canadian Business Media Awards. Reach her at katie@newcom.ca.