As Covid recedes, investment industry faces challenges from markets and personnel

There’s a line making the rounds in the underused halls of Mackenzie Investments these days, Christopher Boyle says: “There are decades when nothing happened, and years when decades happened.”

“That feels like where we are right now,” Mackenzie’s senior vice-president for institutional sales and service said on Tuesday.

Boyle and others were at the Investment Funds Institute of Canada’s (IFIC) Operations Day event in Toronto to review what’s happening in the investment industry — from a volatile investment environment to aging demographics to efforts at luring employees back to the office.

Decades-high inflation and rising interest rates have investors seeking different types of solutions, he said. For starters, many investors who abandoned GICs years or even decades ago are returning, with sales of products offering comparable returns suffering.

“We have all benefited from a tailwind of beta for the last 30 years because of a drop in the rate structure,” Boyle said.

“I think the industry’s going to have to come forward with solutions that will deliver that consistent income to investors with less volatility.”

Private investments will likely play a much greater role on the retail side, he said, which will also add a lot of complexity to client portfolios.

Oricia Smith, president of SLGI Asset Management Inc. and senior vice-president of investment solutions with Sun Life Canada, said demographic changes will also shift clients’ investment needs.

An aging population will be more focused on retirement income, she said, forcing advisors to adapt, and the pandemic has led to a greater focus on financial planning and holistic advice.

“Talking about wealth and health together is currently important,” she said at the event.

With the demographic shift leading to more assets controlled by women, Smith said the industry also needs to do a better job recruiting women. The proportion of female advisors has been stuck around 18% for some time, she said, suggesting a structural problem.

At IFIC’s first in-person event in two years (there was also a livestream option), back-to-office plans naturally made it into the conversation.

Boyle said Mackenzie’s office has about 30% occupancy. While hybrid work is here to stay, he said it’s important to meet in person — especially at a senior level where you’re grappling with big issues.

Virtual work allows people to become “desensitized,” he said, and for “constructive tensions” to grow into less constructive ones. Spending time together socially can help repair relationships that may have taken a “bruising” through remote work.

But luring workers back, particularly younger ones, has been a challenge, especially as some have never worked in the office.

Smith said it’s important to organize office time so that people aren’t showing up and spending the whole day at their desks on Zoom calls.

Firms are using lunches and speakers to draw workers back, hoping that once they’re in the office they’ll feel energized and want to return.

Boyle said that may take a few tries. As with exercise, the first few times out might feel awful. (“I’ve never worked out in my life,” Boyle said, “but I know people who have.”) He encourages employees not to give up right away. Once they get used to using those muscles again, they’ll start to see the benefits.