Given the horrendous market conditions, it would have been hardly surprising to discover that investment advisors are in a surly mood in this year’s Brokerage Report Card. But that does not appear to be the case: overall, the scores advisors gave their firms this year hold up remarkably well compared with last year.

And it’s not because advisors have somehow been insulated from the crisis. In fact, the brokers in our survey have seen their books shrink appreciably, their revenue decline and, presumably, their compensation negatively affected.

Yet brokers remain remarkably sanguine. Scores are up for branch managers, marketing support and bond desks. Brokers even report being a tiny bit happier with their compensation arrangements this year. Perhaps, they are just glad to have a job when so many Canadians are fearful of theirs. Brokers are less pleased with equities research, new issues and their relationship with the compliance department; as a result, those scores have slipped.

The first two quibbles are easy enough to understand. On the research front, clients and brokers are surely wishing that they had some warning of the market meltdown before it hit. Much of the new-issue business has disappeared along with the weak markets. It’s the last category that’s more worrying — compliance.

Client complaints are rising rapidly, according to the federal Ombudsman for Banking Services & Investments. OBSI says that suitability complaints and claims of inappropriate leverage are leading the way. But the real concern is that amid the pressure to reduce expenses, firms have been cutting back on their compliance resources. OBSI is seeing evidence of that, and regulators are worried about it, too.

In early April, the Investment Industry Regulatory Organi-zation of Canada issued a bulletin to its members, warning them to ensure that they maintain an effective compliance function in spite of the desire to cut costs. The IIROC bulletin stressed that quality compliance, supervision and risk management is more important than ever.

Retail brokers have weathered the market meltdown about as well as can be expected. Firms should be careful not to jeopardize this success by cutting back on compliance and risk management at a time when investor confidence is fragile and the financial services industry’s credibility is in question.