Markets are rocky, investors are shorting Canadian banks, and boutique money managers continue to consolidate.
Against that backdrop, TD Bank Group’s decided to set ambitious growth targets and hire more than 400 folks for its wealth management business.
The economy notwithstanding, Dave Kelly, senior vice-president of TD Wealth Private Wealth Management, says he sees “tons of upside opportunity” for expansion. TD commands 12% of the mass affluent market – defined as clients with less than $750,000 in investable assets – and plans to raise that to 15% by 2020.
And, he says, nearly 40% of high-net-worth Canadians do their banking with TD, but only a portion access other services. TD has 9.5% of overall HNW market share (clients with $750,000+), and hopes to make it 12% by 2020.
To reach the HNW market share goals, Kelly needs to add $80 billion in new assets and 30,000 client households, or “between 5,000 and 7,500 per year.” Some of those clients will come from the wider bank’s existing 450,000-or-so households.
He says that transition is viable because “we’re only providing 10% of our client base with the full range of solutions we think we can bring to bear,” he says.
As to the remaining 90%, he says most of the mass affluent clients get their wealth services from other banks or planning businesses. For the HNW clients, “it’s more of a mix of banks, including bank-owned brokerage firms, and there you start to see more of the boutique presence.”
To be competitive, Kelly says TD plans to bring “a family office strategy to the market with much greater scale.” Under that model, advisors will shift from “a traditional financial-planning and asset allocation conversation to a goals-based conversation.”
And Kelly reaffirmed TD will be launching an ETF suite this year, saying, “In the high-net-worth space, trends are clear that fee-based solutions will continue to grow, and ETFs are a great fit there.” (He declined to give further details.)
He also touts the firm’s bench of 70 wills, estate and business planners, saying, “Versus boutiques, we have many more of the business specialties, like private banking and private trust.”
To that end, TD’s brought its private banking, private investment counsel, private trust and private investment advice under one business: TD Wealth Private Wealth Management. This business will focus on clients with at least $750,000 to invest. Asked about potential layoffs due to this consolidation, Kelly says, “Certainly not from here forward, no.”
Instead, the firm hired 42 wealth advisors in Q4 to be relationship managers for HNW clients. “They’re identifying [existing] clients within the TD client base who look like they would receive value from our private wealth management.” (The wealth advisors aren’t securities-licensed; their focus is discovery.)
Kelly estimates between 60% and 65% of the 42 wealth advisors were internal hires. He plans to hire another 20 wealth advisors this year, at least half of which will likely be external.
Overall, the bank’s goal is to bring on a total of 130 investment advisors and another 275 branch-level financial planners by 2020.
Why wait until now to do what boutiques have traditionally seen as their strength: offering team-based, goals-based advice?
“I don’t think it’s a question of having it be a new thought,” he says. “We had to do a lot of work to make sure our advisors were prepared and supported to be able to deliver that integrated wealth management proposition. While we’re coming to market formally now, we’ve been at this for a number of years getting ready.”
TD by the numbers
- Number of advisors: 1,100 (850 securities-licensed)
- Mass affluent market share: 12%
- High-net-worth market share: 9.5%
- High-net-worth book size: $50 billion
- Private banking market share: about 15%
- Investment counsel market share: 3rd in Canada
- Investment advice market share: 6th in Canada
Stay tuned to Advisor.ca for interviews with the other Big 5 heads of wealth management.