Older clients are entering decumulation and younger clients are more diverse, Desjardins exec explains how the industry can adapt
Denis Dubois sees advisors at the crux of Canada’s changing wealth demographics. The Executive VP, Wealth Management and Life and Health Insurance at the Desjardins Group is seeing how the advisors in their independent networks and the wider industry have had to confront some major changes in Canadian demographics. From the retirement of history’s wealthiest generation to the shifting nature of who is now accumulating wealth in Canada, Dubois believes that the whole industry needs to be tracking demographic change to find out where their own growth will come from.
Dubois outlined some of the major shifts in Canadian demographics that he believes will continue to shape the advisory business. He outlined how client change is being driven by aging baby boomers and a larger cohort of immigrants and their children. He explained, too, how the advisory business needs to change to reflect ongoing differences in the Canadian economy and meet the service needs of clients now.
“Advisors need to keep track of these changes from multiple angles. The first one is that generational shift as baby boomers needs’ change. They were in the accumulation phase, but now their needs are more about the transfer of wealth, their health, and decumulation,” Dubois says. “Then we have how the demographic profile has changed with immigration as the driver of population growth for the past 10 years… We all need to track these shifts and how they’re changing advisors’ client base.”
With changing generations, Dubois notes, come changing lifestyles, ethics, and expectations. The traditional baby boomer client’s goals and desires are quite different from what he sees coming from younger clients. There is a greater focus on wellness and experience over accumulation. Many of those younger clients are expecting an inheritance, but the fact of that inheritance may distract them from the here and now. Their expectations around how service is delivered and the medium of that delivery are significantly different from previous generations. Dubois’ view is that the industry has to adapt to those changing expectations in order to keep growing.
One of the biggest ways the industry can adapt, in Dubois views, is in the makeup of its advisory teams. Dubois accepts that contemporary advisors tend to skew heavily male. They are often older and less diverse in background than the contemporary client population. While demographic change is happening on advisory teams, Dubois believes it is happening too slowly. He is concerned that if the advisory population can’t adapt to reflect their clients, then those clients will look for alternative solutions. He is working to bring more women and people of diverse backgrounds into the independent advisor networks at Desjardins and he argues the whole industry should be doing the same.
In seeking to shape the growth trajectory for his organization, Dubois says his focus is on long-term sustainable change rather than quick wins from short-term elements. At the same time, he has to be responsive to immediate challenges brought about by long-term trends. Firms, he says, need to balance the need for immediate growth with long-term client retention and advisors are at the core of that balancing act. The older generation of retiring baby boomers must be served while the new generation’s expectations should be adjusted for.
One of the ways advisors can strike this balance, Dubois explains, is in building their practices into businesses and those businesses into institutions. By building out a team with the capacity to meet different client needs advisors can turn their practices into more robust operations. That means adding capacity in areas that advisors may not have traditionally focused on, like estate plans, tax plans, and even newer areas like philanthropy planning. That institutionalized practice can then serve as an asset for their own retirement, or as a means of powering future growth.
Dubois argues, too, that if advisors don’t make these investments in their own transformation they could be exposing themselves to the risk of losing out, or failing to build enough capacity to adapt to regulatory or technological change.
“A lot of advisors have made the shift,” Dubois says. “It’s about adapting to changes, because if they don’t, they might not see it year by year but they could end up one day with a model that is not working anymore. And that can happen if you forget to adapt along the way.”
