Fidelity appoints new senior marketing executive

(November 11, 2004) Following in the footsteps of AIC and AGF, Fidelity Investments has hired a new senior marketing executive. Mark Wettlaufer, former president of TD Asset Management, started at Fidelity at the beginning of November as executive vice-president of products and marketing.

The Toronto-based fund company is also expanding its wholesale force, a project led by Rob Strickland, says a Fidelity spokesperson.

As with AIC and AGF, the changes are aimed at boosting declining sales, industry observers believe. Fidelity suffered $217 million in net outflows in October, according to preliminary estimates from IFIC.

AIC’s October net redemptions were $247 million, IFIC reported, while AGF was hardest hit with $300 million in outflows, according to a company press release.

“All three of these companies have sustained heavy redemptions over an extended period,” notes Rudy Luukko, investment funds editor at Morningstar Canada. “And, in all three instances, the company owners feel that they have to do something different, and they aren’t going to start changing the way that they manage money.”

“So, the logical thing for them to do is to try something different at the sales and marketing level,” he adds. “And as we’ve seen at all three companies, that also means hiring new people in senior roles.”

Luukko notes that although Wettlaufer is keeping a low profile for the moment, he expects Fidelity will soon be making some kind of marketing splash in the advisor community in an effort to turn around its net redemption situation.

Earlier this year, AIC hired David Whyte, formerly of AIM Trimark, to head up its sales force while AGF combined its sales and marketing group, choosing Randy Ambrosie, formerly of HSBC Securities, to lead the new division.

Industry analyst Dan Hallett points out that although the three firms seem to heading in the same direction, each faces slightly different challenges. Still, Hallett believes the key to the fund industry’s current sales malaise hinges on securing relationships with key distribution channels.

“Good performance goes a long way toward this end, but it’s not the only necessary ingredient,” he maintains. “Since performance trends are cyclical, there is always a period of time when a company is out of vogue. Hence, taking steps to firm up relationships with distributors is important — and increasingly so given that the higher growth days of the fund industry are in the past.”

Hallett notes that some of the redemptions stem from the heady days of the mid-to-late 1990s, when close to 75 cents of every dollar of new fund sales went into a deferred sales charge (DSC) fund.

“The maturing of those older DSC units coincided with the occurrence of steady redemptions for these firms.” Advisors have tightened up the products on their shelves and some of their preferences have changed, he adds. “The net sales figures reflect that.”

Filed by Doug Watt, Advisor.ca, doug.watt@advisor.rogers.com