TORONTO–Banks and credit unions in Canada are gaining a larger piece of the pie in mutual fund sales in the country as other providers struggle to compete with institutions that have strong bank networks.
The Globe and Mail reported that companies such as AGF Management and Fidelity Investments Canada, along with other independent companies, at one point held 57% of net assets in the industry, while the banks and credit unions only made up 31%, according to research conducted by Investor Economics.
Today, the banks and credit unions have surpassed the independents with 47.5% of market share, while the independents have dropped to 42%, The Globe and Mail reported.
The publication noted that the independent fund companies are struggling to survive in an industry that is dominated by Canada’s Big Six banks, which have bought a number of smaller players over the past decade. Since 2004, The Globe and Mail noted, banks have been ramping up their wealth-management strategies and as a result have created networks with more than 13,000 branch advisers on hand to service Canadian investors.
But these distribution channels, which sell a large proportion of in-house or proprietary products – such as bank-branded mutual funds – are becoming one of the biggest challenges for the independent fund companies to overcome, The Globe and Mail said in its analysis.
The Globe and Mail quoted several former investment advisors with bank-owned firms as saying they felt pressured to sell in-house funds and in-house products, rather than what might have been better options for their customers. Those advisors had left the banks as a result.