IDA launches new industry analysis

(April 2, 2004) The IDA has launched a new quarterly industry report, called IDA Wealth Watch, a publication aimed at the retail investment dealer.

“The first edition is a little broad in coverage, because it’s really meant to define the business and identify some broad trends and drivers,” says Jon Cockerline, director of capital markets at the IDA. “The follow-up editions are going to be a little more issue specific and deal with the latest developments in the business.”

“Consumer behaviour has changed in a way that’s very supportive of the business,” he says. “We’re seeing a lot more focus on managing risk, which has given way to structured products, wraps, hedge funds, principal protected products, and [consumers] are acquiring these through advisors more than ever — that’s really been a beneficial impact.”

But despite the market setbacks in recent years, the report says Canadians are fairly well off. Financial assets of individuals and unincorporated businesses have climbed to nearly $2.5 trillion today from $1.5 trillion in 1993, debunking the belief that retail investors were wiped out by the tech wreck.

In fact, Canadians are still quite heavily invested in the equity market. In 2003, stock holdings made up 27% of total financial assets, second only to pensions and insurance, which together make up 39%. But still, we like our liquid assets, holding 25% of our wealth in cash and deposits.

The IDA Wealth Watch also discusses trends including the growth of the affluent investor class and changes in compensation structures. “We’re also seeing a big change in the kind of compensation, with the movement toward fee-based rather than transaction-based,” added Cockerline.

And in case the past few years have seemed like a blur of activity in the investment industry, Wealth Watch includes a “Chronology of Change” page, detailing major events ranging from the 2001 Investors Group takeover of Mackenzie to Dundee’s acquisition of Cartier this past November.

The first edition of Wealth Watch casts an eye to the future as well, predicting the wealth management market will reach $4 trillion in the next 10 years.

“Firms that are capable of building platforms based on a robust range of transactional and advisory services and best in class products tailored to the individual needs of their consumers will benefit greatly,” the report says. “While the high net worth consumer will likely continue to be targeted by many wealth management firms, many firms will also compete to service the needs of a growing class of less affluent investors, who need and are demanding similar levels of choice and services.”

The full IDA Wealth Watch report is available online at www.ida.ca.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com