IFIC’s Hockin announces retirement

(April 27, 2005) Tom Hockin has announced his retirement as president and CEO of the Investment Funds Institute of Canada (IFIC), effective October 2005, bringing an end to his 11-year career in the post.

“Two years ago, when I turned 65, I told the board I was good for two more years, but I wanted to retire while there was still some tread on the tires,” Hockin said. “I just set the date yesterday, saying that October would work for me.”

The mutual fund industry has undergone dramatic change during Hockin’s tenure, during which time IFIC introduced its code of sales practices and communications and played a central role in creating the Mutual Fund Dealers Association.

“I think I spent the first five or six years here just explaining the product to the Department of Finance, to National Revenue and even to regulators and the media, because it was a new product,” Hockin said. “Now we’re into a more mature stage, where the things that had to build fiduciary integrity into the whole manufacture and distribution of the product have been built.”

Hockin says he has no regrets over his IFIC career, but laments that Canada’s fragmented regulatory framework slowed implementation of reforms.

“The one new big change which should start while I’m still here is that of independent directors and the proper parameters around what they should and should not do,” Hockin noted. “I think IFIC should play a role in their training.”

Aside from this effort, Hockin’s successor will face a number of challenges, not least of which is improving IFIC’s delivery of the industry’s message, according to Dan Richards, president of Strategic Imperatives, a Toronto-based consulting firm.

“When you talk to people in the fund industry of advisors, they say that to go to the next level and be relevant, IFIC needs to more effective in telling a strong industry story out to investors, out to the media and out to the regulators.”

Richards explains that one of the challenges IFIC has always struggled with is the variety of agendas that needed to be harmonized if the industry was to speak with one voice. But the fund companies that distribute through advisors have different priorities from the banks, which have become a much bigger player in the industry, while the direct distribution model has differing concerns as well.

“To a certain extent, the fund industry is a victim of its own success,” Richards said. “It attracted competition, expectations were raised, the level of scrutiny was increased, and these are all things that are a direct function of how successful the industry was during the period that Tom was at the helm of IFIC.

“That’s one of the big challenges for anyone succeeding Tom, is unifying the industry and having a common agenda.”

Don Reed, president and CEO of Franklin Templeton Investments, places part of that responsibility on the shoulders of his colleagues at the fund manufacturers.

“The decision makers of the various firms are going to have to step up and become more involved,” he says. “There have been some very good people on the [IFIC] board in the past, and we’re going to have to see that continue and see representation from the CEOs of the various firms.”

Mature industry

There is no question, though, that the investment fund industry has been almost completely transformed over the past 11 years. There have been waves of consolidation, followed by new boutique fund companies sprouting up and the large-scale movement of the banks into the fund industry.

Hockin himself points to a number of IFIC initiatives, “including personalized rates of return, personal trading by portfolio managers, fair valuing and a host of other industry fiduciary advances.”

“Tom came on board at a critical time for IFIC, when the industry was still pretty fragmented. Not every firm was even a member of IFIC,” says Richards.

While the fund manufacturers were governed by the provincial regulators, the distribution channels were largely unregulated, with top-selling advisors often receiving “gifts” from fund companies, usually in the form of travel. Such practices came to an end with the introduction of IFIC’s code of sales practices.

“The mutual fund distributors had not been subjected to close regulatory oversight and had not really been subjected to the robust rules that the securities industry had been following for a long time,” says Joe Oliver, president and CEO of the Investment Dealers Association. “This was a period of adjustment, but I think most market participants have come to understand the need for an adequate degree of regulation in an environment where there’s a higher public expectation of appropriate behaviour.”

Choosing a successor

To select a successor, IFIC has assembled a search committee, comprised of Murray Taylor, president and CEO of Investors Group; Blake Goldring, president and CEO of AGF Management; Glenn Butt, president of FundTrade Financial; Michel Fragasso, chairman of IFIC and one yet-to-be confirmed senior vice-president from one of the banks.

The committee has drawn up a set of search parameters — which Fragasso says closely match the personality of Hockin — including knowledge of the regulatory environment and media savvy.

A search firm has been hired to cull through the possible candidates, narrowing the list to about six or seven. IFIC’s own search committee will then further winnow the list down to the best two or three candidates before naming their choice.

Hockin is also retiring from his role as president and CEO of the IFIC-affiliated Canadian Institute of Financial Planning. He will continue on the board of the Institute of Corporate Directors and as chair of the Canadian Educational Standards Institute, as well as other non-profit boards.

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

(04/27/05)

Steven Lamb