Scotiabank courts wealthy investors with new partnerships and portfolio management tool

Bank of Nova Scotia BNS-T is courting the wealthiest tier of investors by launching a new portfolio management tool and offering access to institutional-quality advice, broadening the bank’s efforts to beef up its wealth management division and boost fee-based income.

On Tuesday, Scotiabank launched a new investment management platform, Scotia Global Intelligence, that allows ultra-high-net-worth clients to aggregate the accounts they have spread across multiple financial institutions, providing a complete view of their wealth.

Currently, Scotiabank advisers and private bankers may have limited information about external accounts, which means they aren’t fully incorporated in wealth planning discussions. By partnering with Addepar, a financial technology company, Scotiabank will enable clients to see their full wealth picture, and it can therefore offer better counsel on issues such as diversification and asset mix.

To differentiate itself from rivals able to offer a similar macro picture, Scotiabank is also partnering with Marsh – formerly Mercer – to offer guidance on client investments outside of Canada, particularly alternative assets.

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Ultra-high-net-worth clients often have money in different countries, and investment management rules such as Know Your Product, or KYP, limit the advice that Canadian advisers can give. Often, global funds haven’t been scrutinized by their firm’s due diligence departments.

Marsh’s investment arm, however, advises on $16-trillion worth of assets for clients such as sovereign wealth funds and family offices, and the firm has done research on thousands of investments worldwide, including alternative assets such as private equity and infrastructure funds.

This expertise will now be made available to Scotiabank clients and their advisers, offering guidance that is typically reserved for institutions, Andy Nasr, Scotiabank’s chief investment officer for global wealth management, said in an interview.

The new partnerships align with Scotiabank’s determination to expand in wealth management. Across the banking industry, wealth management has become a highly desirable business because it does not suck up much capital – whereas commercial lending, for instance, requires reserves for loan losses – and it generates relatively sticky fee income that rises when asset prices appreciate.

Over the past year, Scotiabank has been touting its success in wealth management for mass affluent investors, or traditional retail investors. A few years ago the bank ranked sixth for mutual fund sales in Canada, but is now ranked third. This gain has largely come from integrating what was once a siloed wealth management division into Scotiabank’s retail banking operation.

Scotiabank, like its rivals, is also targeting ultra-high-net-worth clients that have $10-million worth of assets or more because they tend to have complex needs and can be cross-sold services such as estate planning, tax planning and investment advice, boosting the fee pool per client.