HUB Financial takes its mutual fund dealership off the sidelines

By Donna Glasgow | November 01 2013 03:36PM

HUB Financial is well known as a leading managing general agency working with thousands of advisors across Canada for their life insurance, segregated fund and annuities business. Lesser known is its mutual fund dealership HUB Capital, which deals with very few advisors. John Lutrin, HUB’s executive vice president, wealth management division, is now working to bring HUB Capital into the spotlight.
Among the 3000 life advisors with which HUB does business, about 40 per cent are dual-licensed to sell insurance and mutual funds, says Lutrin. “Yet, with HUB Capital, we only have approximately 200 mutual fund advisors on our platform,” he told The Insurance and Investment Journal in an interview last summer.

“We had a HUB Capital mutual fund dealership off to the side, kind of in the shadows where it’s been a facility for a few dual-licensed advisors, but quite frankly we’ve never pushed it, we’ve never grown it because segregated funds have been our primary driving force on the investment side.”

Changing market

The changing segregated fund market, however, has made HUB rethink its approach to its investment business. “I think segregated funds – as good as they’ve been too us in the past in terms of business opportunities – there’s obviously a slowdown...”

Some insurers are pulling out of the market or curtailing some of the benefits and features on their products, while MERs and pricing are increasing, observes Lutrin. “It’s becoming less of a competitive product…If you look at the industry’s sales numbers, clearly it’s on a downcycle.”

Mutual fund business, on the other hand, offers great growth potential, since sales are up in this sector and HUB can potentially leverage the existing relationships it has with dual-licensed advisors. It is now reaching out to these advisors to bring over their mutual fund blocks to HUB Capital and put all their “eggs in one basket” as the firm’s recent ad campaign invited them to do.

“The vast majority of dual-licensed advisors that do their life and seg funds with HUB have got their mutual fund licence elsewhere. That is a huge opportunity for us…” The plan, he adds, is to show that HUB Capital is not an off-to-the-side facility as it may be perceived, but a full-fledged, robust, attractive mutual fund dealership.”

HUB is also “definitely” looking to attract mutual fund advisors from outside its own network, he adds. However, the natural place to begin is with its current dual-licensed advisors.

New backoffice system

What does HUB Capital have to offer that could motivate someone to bring over their mutual fund block? A new backoffice system for its investment business is one attraction, but the main advantage is that HUB Capital does not require advisors to have the same level of mutual fund assets under management as larger dealerships.

“When I look at the investment industry, everybody is raising the bar. If you are a mutual fund advisor with anything less than 25 to 30 million dollars in assets under management, you’d probably be facing pressure from your dealership to either increase or get out. Whereas in my market – the mid market – I’m saying to advisors, I will look at your practice in total.”

For example, if a financial planner has good life insurance business, living benefits business and the mutual fund block is only 10 or 15 million dollars, they would not be turned away by HUB for being too small, he says. “We cater to that market. That’s really the message I want to get out there.”

Asked in late September about advisors’ reaction to this invitation, Lutrin said that it is a slow process to move a block of mutual fund business, but “there certainly has been much interest and desire expressed on the part of several advisors to move over.”