Industry insights with Rick Headrick
Rick Headrick, President of Sun Life Global Investments, has a distinct vantage point for viewing regulatory change. With 19 years in the investment industry, a CFP designation and currently a member of the IFIC Board of Directors, he grasps the potential advisor and client impacts. Last fall, he presented to hundreds of advisors across Canada on proposals to prohibit DSC and low-load, Client Focused Reforms with potential new KYC and KYP considerations, and sales practice guidance. We will be sitting down with Rick once a quarter to get an update on industry and regulatory change.
Q: While you were on the road last fall, you had a chance to talk with many advisors before and after you presented. What did you take back from those conversations?
A: That is one of the benefits of being on the road: you get to hear advisors’ views firsthand. Many advisors told me they are feeling fatigued, overwhelmed, confused and worried. The wave of change that’s been coming at their business is in many ways unprecedented. It started with CRM and, later, CRM2, with enhanced cost disclosure. And it has continued over the last five years. It’s not that advisors are opposed to change, it is that they believe changes are being made without full understanding of the way their businesses work or the costs involved.
This steady flow of regulatory change is coming while advisors are facing change or challenges in other areas. With industry consolidation, a number of advisors have moved into different administrative systems that affect how they work, what kind of support they get and how they are paid. In the IIROC world, we’ve also seen a shift from transaction-based to fee-based. At the same time, they are facing competition from disruptors such as robo-advice and their profession as a whole attracts criticism in some of the media coverage. So, there is tremendous change at a time when the average advisor is getting older. Some of those older advisors are considering getting out of the business entirely.
Having said that, I believe it’s also a great time to become an advisor. While there is an incredible amount of information available to investors, you still have to interpret it. That takes time and expertise that people are willing to pay for. And, surprisingly, in surveys of millennials, they seem to want to meet face-to-face with an advisor more than other generations do.
Q: You are on the board of the Investment Funds Institute of Canada (IFIC). What has that experience been like?
A: The board is made up of senior leadership from various companies - heads of distribution, CEOs, CFOs and Chief Compliance Officers. And my time on the board has been invaluable both personally and from a company perspective. Even though IFIC is our industry group, when you are in discussions with people around the table, everyone there is one hundred percent trying to do the right thing for investors. Our conversations are about investors – how investors need advice, and how to ensure they get proper advice. At a business level, sitting with my counterparts from other companies and sharing what we think about advice and client needs, based on our experience – that is extremely valuable.