Investment firms have harsh first quarter

Investment firms have harsh first quarter

Investment firms have harsh first quarter

Canada’s investment firms had a wretched first quarter, but there are bright spots. Where does the advisory segment stand?

According to data issued by the Investment Industry Association of Canada, the 192 member firms earned a collective net profit of $515 million in the period, down 13.9% from the previous quarter and down a sharp 26.5% from the same period in 2012.

There was also a sharp contrraction in the industry, with the number of active firms dropping from 198 to 192, the result of mergers and some firms closing shop. Ian Russell, IIAC President and CEO, told Wealth Professional that the decline was "an expected corporate strategic response to grueling business conditions that give no sign of abating, and rising costs.”

The combined data include institutional and retail operations. For the retail segment, the data are wildly mixed and demonstrate highly volatile performance across the segment.

The 100 firms in the retail segment earned a collective $5 million, rebounding sharply from a $26 million loss in the final quarter of 2012 and the even deeper loss of $31 million in the same period a year earlier.

However, the 31 firms in retail full-service segment recorded a collective loss of $7 million. That's bettering a loss of $28 million in the final quarter of 2012 but it's down a massive 259.5% from the $4 million earned in first quarter 2012. Full-service firms such as Desjardins Securities and Manulife Securities, generate most of their revenues from retail clients and have their own front and back offices.

Retail introducers such as Burgeonvest Bick Securities and Acker Finley saw a net profit of $12 million, a rise of 605% from 2 million in final quarter 2012 and a rise of 133% from the same period a year earlier. Introducers generate most of their revenues from retail clients but typically don’t have back offices, instead using a carrier firm.