Why IG handed over key fund management to Goldman Sachs
How Goldman convinced IG they could serve Canadian advisors
Narine framed their search for external managers around the core role that a manager plays in the life of an advisor and the life of a client. Advisors, she says, want to make sure they’re not being asked to do the job of an investment dealer. They want dealers who can provide them with a strong shelf of investment products so they can do their job: making sure clients are happy.
Narine says Goldman Sachs offered a clear vision about different asset classes within these portfolios and how they could stand up in a changing world. Perhaps more importantly, in Narine’s view, Goldman offered a tailored view of the Canadian retail market. They understood the dominance of the big banks in Canadians’ financial lives. They fully grasped the realities of Canada’s regulatory landscape and tax system. As much as investment managers like to discuss pension-like investing approaches, Narine says that Goldman understood the unique needs of retail clients and the fact that a pension-like approach can’t always serve individual families with immediate liquidity needs and different time horizons.
Goldman, Narine says, offered clear points of view on questions like how private assets could be integrated into portfolios. They took a stance on whether Canadian or US small-caps are better positioned right now. They offered, she says, a willingness to take “opportunistic risk,” within long-term strategic allocations. While most managers they interviewed talked about protecting assets, Narine says Goldman added to their defensive strategy by looking for ways to capture emerging opportunities.
What IG wants to do with Goldman onboard
Narine says that in assessing the macro risks of the day, managing shifts in interest rates or equity market volatility should be treated as table stakes. The expectation is that any manager, internal or external, can do that. What she says IG wants to do with their Goldman partnership is manage structural demographic changes that impact Canadian investors and advisors. Those include issues like structural home country bias in portfolios, a holdover from decades of RRSP eligibility rules. They include tax realities and the costs that families may suddenly incur during the great intergenerational wealth transfer. They include rising longevity and changing retirement lifestyles, impacting how long people live in retirement and how much ley leave to their heirs.
While Narine says that not all products will solve all these issues, the right management of these products can help support advisors and their clients through them. She adds that as investors become more sophisticated and come to advisors with questions that past generations might not have asked, they need the backing of management teams with the skill and sophistication to provide a strong answer.
