The business of retail stock brokerage in Canada is going from sought-after to dumped-overboard, as Canaccord Financial Inc. deeply cuts back its advisor force to deal with a market slowdown.
Canaccord, one of Canada's biggest independent securities dealers, is closing 16 branches and keeping 16. Canaccord is also cutting loose 35 advisory teams in the offices that remain. Toronto-based Canaccord lost about $6.5-million in the most recent quarter handling accounts for individuals, but will now "operate in a near break-even basis in current market conditions," the firm said.
A year or two ago, firms were willing to write big cheques to lure advisors and their clients, so to see dozens of advisors being let go is indicative of just how tough the retail business has become. Trading volumes are down, clients are skittish and the secret sauce of brokerage – interest spreads on client accounts – has almost disappeared. The result is firms are struggling to make any meaningful money on brokers they paid a lot to acquire.
Canaccord is trimming dozens of brokers, but they don't deal with a big share of client assets. Only about 16 per cent of the $13.1-billion of client assets managed by Canaccord in Canada were handled by the branches that are closing.
At the same time, the firm is adding to its money management business in Britain, by buying a business with about $1.3-billion in assets.