TD Asset Management has a long history of success in asset allocation, now they’re adding new innovations and an improved partnership experience for advisors
Michael Craig has seen TD’s asset allocation products evolve with the Canadian investor. The Managing Director and Head of Asset Allocation and Derivatives at TD Asset Management (TDAM) says that as TDAM began offering asset allocation strategies in the ‘90s, they served the typical Canadian investor, who would only be holding Canadian stocks and Canadian bonds. In the 2000s TDAM’s offerings expanded into the U.S. and global markets anticipating a change in investor preference.
They’ve spent the past decade innovating in the asset allocation space. Now, asset allocation is about balance, supporting advisors, and managing investor psychology. Entering a new decade that’s already begun with a global pandemic and market crash, Craig says that TDAM is pushing innovation in its asset allocation even further, reducing volatility by adding private assets into the mix.
Craig told WP about the philosophy driving TDAM’s asset allocation suite and the strategies at work in their products. He explained how active management strategies, including recent acquisitions in the private asset space, are being integrated into these strategies. He talked through past performance, especially during the recent market crash, and highlighted how TDAM’s asset allocation products can act as a tool of psychological management, helping advisors protect clients from their own poor decisions.
“We spend our days trying to build resilient portfolios, but we can never undo poor decisions by clients,” Craig says. “For example, if a 42 year old moved into cash, as opposed of staying invested in March while saving for retirement, the 20 years they still had to work, may have just turned into 24 years because they’ve lost almost 40% of their return. It's really important to try and provide solutions that stop clients from panicking and making decisions like that.”
TDAM builds its asset allocation solutions that are transparent and easy to access while evolving to suit investor needs and goals, Craig explained. Whether the goal is to pay for a child’s education, save for retirement, or afford a sailboat, Craig says there’s a TDAM asset allocation solution that will deliver. As well, the products they offer generate returns “with style” offering lower volatility than most market indices, meaning that when clients do look at their portfolios the anxiety that often prompts bad decisions is less likely to manifest, even during market crashes like the one we just saw.
Craig typified the overall performance of TDAM’s asset allocation products as “solid” during the COVID-19 pandemic crash. He attributes some of this to their quality-focused construction, meaning all these products are built with serious downside protections that might see them gain a bit less in the boom times, but drives much stronger, more stable performance when things get worse. Now, to add a third layer of uncorrelated protection, Craig says that TDAM is looking to integrate private asset strategies offered by the former Greystone Capital Management Inc., an alternative asset manager acquired by TD two years ago. One top advisor says these strategies are driving TDAM’s latest value add.
“Not all [investments] are built the same way,” Says Francis Sabourin, director of wealth management and portfolio manager at Francis Sabourin Wealth Management within Richardson GMP. “[TDAM’s] fixed income and quantitative expertise are very unique to them. Also with the purchase of Greystone, they have two very niche global ETFs; one in real estate and one in infrastructure, both managed actively.”
According to Craig, these two strategies are the first in a wider suite of alternative asset options that will be integrated at significant scale within TDAM’s suite of asset allocation products.
While TDAM is driving to innovate within its products, they remain committed to a fundamental value add for advisors too: taking on a huge piece of an advisor’s workload through asset allocation strategies enables advisors to serve clients better and grow their book of business. He says that in a maturing industry, Advisors face significant negative fee pressures. Their clients, too, are more sophisticated and have more access to information than ever. It’s almost cliché now to say that an advisor has to provide a holistic financial service to earn their fee, but in doing so, something has to give. Craig says that TDAM’s asset allocation solutions can take the burden of stock picking off an advisor’s shoulders, freeing them to offer a holistic service.
Craig says that TDAM has proven itself a worthy partner for advisors with a history of commitment to quality and innovation in its products. He says it’s changing, too. Rather than the faceless monolith of a big bank that some independent advisors might shy away from, Craig says that TDAM is opening itself up, and becoming a better asset allocation partner in the process.
“I took over as head of this group about 15 months ago to be far more transparent, approachable, and helpful to our clients,” Craig says. “That's important because if you can allocate to a particular manager you get all the insights that manager is working from, that's really helpful to your business. Moreover, you get a second level of insight through the Asset Allocation team, making strategic adjustments to these portfolios over time.
“We want to be able to provide both a great investment experience but also a great content experience so advisors and clients can be confident that a when things get bit rocky that we've got their back. They will make good decisions, and which ultimately keeps them invested, and keeps them on track for achieving their goals. That’s what matters the most.”