Brookfield Private Wealth sees symmetry with Canadian advisors, investors

For all its institutional relationships, brand recognition, and historic roots in Canada, Brookfield’s private wealth business is a relatively new addition to this country. In 2020 Brookfield Private Wealth hired Karen Khalil to build out their private wealth business in Canada. In the six years since her team has grown from one to twelve as more Canadian advisors see Brookfield’s alternative strategies as a value add for their high net worth and ultra high net worth clients.

John Sweeney, CEO of Brookfield Private Wealth, explained the opportunity that his side of the alternatives giant has identified in Canada. He outlined how the firm has leveraged their strong relationships with Canadian banks and institutions to build connection with Canadian advisors. He explained where Canadian investors, and global investors, have shown interest in Brookfield’s alternatives strategy and how Brookfield PW wants to make its presence felt among more Canadian advisors.

“Canada is very much a market that was institutionally led for a long time, the Canadian pension plans were probably some of the most sophisticated and earliest adopters of alternative investments. Now you're seeing that high net worth, ultra high net worth market really follow that program. We built a business to serve that growing trend. That's why we have the people there,” Sweeney says. “Because you can't just sell to ultra-high net worth. Your product, performance, and deployment has to be great. The way you service, support, report on, deal with advisors in Canada, or really anywhere, I think that's becoming as important as just the investment side.”

How Brookfield Private Wealth sees the Canadian market

Despite a growing interest in alternative strategies, Sweeney says that there is a degree of investment inertia in Canada that his firm wants to overcome. Canadian investors, he says, are still heavily allocated to a 60/40 asset mix with a big overweight to the TSX, which means an overweight to financials, energy, and materials.

In the context of strong Canadian equity performance in recent years, Brookfield Private Wealth have framed their offerings as diversifying rather than just return enhancing. Sweeney explains that the alternative strategies that Brookfield Private Wealth offers in Canada are more aimed at diversifying the source and nature of a client’s returns with assets that behave differently in different market cycles and tend to be domiciled in other countries. While return enhancement is part of their offering, Sweeney notes that stability and diversification now appear to be more in demand among the clients and advisors they work with.

In distributing those strategies, Sweeney explains that the Canadian competitive landscape and the dominance of the big banks and bank-owned brokerages has been advantageous for Brookfield Private Wealth. Existing relationships are strong and Sweeney believes that the banks understand the way Brookfield acquires and operates assets. “They get us,” he says.

What Canadian clients want from Brookfield

Globally over the past year Sweeney says that Brookfield’s infrastructure strategies have had the greatest uptake among private wealth clients. The appeal of income generation and non-correlation has prompted a global rotation into infrastructure that Sweeney says has lasted for the past two and a half years. Real estate has benefitted from a similar rise in popularity. In Canada, however, Brookfield Private Wealth’s evergreen infrastructure strategy has yet to be made available. As a result, Sweeney says that the Canadian investor appetite has largely been for their private credit and private equity strategies.

Private credit has been a challenged space this year, but Sweeney notes that the strategies in that space operated by Brookfield subsidiary Oaktree Capital Management are “a bit different.” Most of their lending has not been in the mid-market sponsor-backed space. Loans to software companies have been some of the hardest hit parts of the private credit market this past year, and Sweeney says that Oaktree has been both “lucky and good” around the software space. The were “lucky” in that they didn’t have a lot of software exposure to begin with, and “good” in that the software they did own tended to perform well.

Beyond the performance of particular strategies or assets, Sweeney emphasizes the need for high-quality service among high net worth clients. Performance is often the result of macro forces or the aforementioned ‘luck,’ but Sweeney says his team can control the quality and frequency of their reporting, their availability to field calls and questions, and the overall level of service they deliver to advisors.

Within that service work Sweeney says his team wants to educate advisors. To that end they’ve established something called the alts institute, which offers a suite of resources around alternatives and private market investing. They’ve also specifically targeted the rise of women in the wealth space, highlighting the growing importance of women as clients and advisors as more wealth moves into their hands. All of these service improvements, Sweeney says, should serve his firm’s wider goal of becoming a more complete and trusted part of the Canadian wealth landscape.

“We’re going to do what we set out to do,” Sweeney says when he asks about the association he wants advisors to have with Brookfield. “In infrastructure, I won’t want to be the top performer, we want to give you our infrastructure exposure. I want people to think ‘they told me they were going to do this, they did this, then they supported and serviced us well.’ I think if we can execute like that, we’re going to have a very successful business, not only in Canada but globally.”