Tough year ahead for firms, says IIAC

This coming year will test firms and advisors, said Ian Russell, CEO of IIAC, at the Empire Club of Canada luncheon today in Toronto.

As the Canadian economy gets back on its feet, he adds, more investors will jump back into markets. In fact, many people see 2014 as the year to get back in the game, so be ready to help with their transitions.

Due to client eagerness, many advisory-firm CEOs across the country (48%) expect profits to rise in 2014, finds a recent IIAC study. Most expect clients to change their portfolios and reduce their cash holdings (63%). Additionally, firms have cut costs and added scale to help boost performance.

The main problem is many companies, especially smaller dealers, will also need to invest in technology in 2014 to meet tough regulatory changes, such as CRM and disclosure reforms. The study finds the majority of industry CEOs (84%) say regulatory pressures and costs will weigh on 2014 growth.

Read:

• Small firms fight for survival: IIAC
• Use tech to attract prospects

“The industry will increasingly be looking for clear justification [of] any new rules,” says Russell, who predicts any changes that discourage small business investment and undermine industry growth won’t be welcomed. Last year alone, 13 dealers resigned from IIROC due to overly stringent regulation, he adds.

Read: What’s up in the boutique sector?

Nonetheless, more than half of CEOs (52%) plan to hire more staff, and few firms (10%) plan to acquire new business. They’ll instead focus on boosting services and on business investment since much financial industry consolidation has already taken place.

Read:

• Updated: More MGA acquisitions to come
• Advisors shocked by Macquarie sale

“This will be a make-or-break year for many firms,” says Russell. “In 2013, we saw that investors trust their advisors” and we need to continue to offer them investment choices and opportunities.