Upon naming Joe Oliver as chairman of Echelon Wealth Partners last June, CEO David Cusson outlined what the former finance minister brought to the table: “With Joe aboard, we will have a strong voice representing the value of robust independent investment firms in Canadian capital markets."
Specifically, Oliver brings decades of experience in the investment industry, but also expertise in the regulatory process from his years with the Mutual Fund Dealers Association
, Investment Dealers Association and Ontario Securities Commission
Echelon Wealth Partners, a marriage of Euro Pacific Capital and Dundee Goodman Private Wealth in 2016, is an example of an independent firm that is managing to carve out its own place in the wealth management space. With over 100 advisors and portfolio managers, the firm manages over $4 billion in assets, with 10 offices in Canada and Japan.
Having Oliver on board is another statement of intent, as Echelon strives to become one of the country’s top independent brokerages. As a former regulator himself, the former MP for Eglinton-Lawrence, explains the difficult balancing act that goes into drafting legislation.
“I understand why it is more comprehensive than it used to be, but there is a danger that disclosure will become so verbose and lengthy, that it adds costs and doesn’t necessarily achieve the regulatory purpose to protect investors,” he says.
Another unintended consequence of increased regulation, and the associated costs of compliance, is simply less advisory firms being out there. Competition is good in any industry, so less independent names in the space certainly isn’t in consumers’ best interests, explains Oliver.
“We know that people getting advice tend to do better,” he says. “Those with larger portfolios can afford more and the investment firms are more interested in them. So you have to be careful that regulations don’t become so burdensome that it drives the investors out of the market who most need advice.”
One of the major talking points in Canada today is the federal government’s tax reform plans for incorporated businesses. The proposals put forward by finance minister Bill Morneau received quite the backlash from the advisor community, not surprising given that small business owners make up a large part of their practices.
As someone who has sat in the hot seat now occupied by Morneau, Oliver explains his philosophy when it comes to taxes.
“You always have to balance competing interests, but the tax system is supposed to be fair, and also efficient,” he says. “We were of the view that you try to minimize the tax bite because it can create quite the disincentive to entrepreneurship, to employment and economic growth. People with a different philosophy will be more focused on income redistribution and inequality. I’m of the view that you try to raise all boats.”
Trying to balance the federal budget, a task he achieved in 2015, is now the responsibility of his successors. Oliver, meanwhile, concerns himself with his in-tray at Echelon. As a new brokerage in the space, establishing its brand as somewhere investors can trust is a priority. Wealth management in 2017 is an industry in a state of flux, so the firm needs to ensure it is as the front end of that progression.
“We have to think about ways to provide products that aren’t terribly expensive and are suitable for people with less means, because there are a lot of them,” says Oliver. “That is one of the main challenges. I’m not critical in principle with robo-investing, but clearly for most people they want to deal with a human being.”
Robo-advice is something that divides opinion in the advisory space: threat or tool? As a platform, it clearly has its uses, and increasingly the human version are using it to delegate some of the financial planning donkey work.
In Oliver’s view, robos have their place in the investment space, and will be increasingly used by investors of lesser means.
“They are not necessarily disadvantaged in using a robo-investor provided the initial analysis of their financial circumstances has put them in the right category,” he says. “Then the firm can afford to provide the best possible
management of those resources, because in aggregate they are big enough to justify the effort.”
As a profession, advisors and financial planners have struggled in the court of public opinion over the years. Having formed part of the federal government for four years, Oliver is no stranger to criticism – it goes with the territory. Expecting nothing but praise is as unrealistic on Bay Street as it is on Parliament Hill, but it’s certainly something to strive for.
“I was a lawyer, an investment banker, and a politician, so sometimes a bad reputation is richly deserved, and other times not at all,” he says. “Of course it is a concern, because if people don’t have confidence in their advisor, then they won’t put their money in; but it’s really important that they get advice.”
The need for proper financial planning has never been more apparent, so there is real opportunity for advisors who treat the job with the required respect. As the boomer generation retires, Canada will undergo the greatest transfer of wealth in its history. The implications for those tasked with directing that transfer are clear.
“We have a retirement issue – People are living longer, and government pensions are never going to be adequate for the vast majority of people to keep them in the same standard of living,” says Oliver. “Increasingly, people will have to rely on their investments, so the need for intelligent investing is going to be become more acute for individuals.”
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