Advisors across the traditional pillars of the financial services industry have laid a decent licking on their firms for subpar back-
office and administrative support, a service category advisors consider among the most important.

Investment Executive asked advisors to score both back-office technology and a range of duties performed by their firm’s IT department. The responsibilities include dividend distributions, interest posting, trade reconciliation, payroll, benefits and a whole gamut of behind-the-scenes support services. The insurance industry reps also included the efficiency of underwriting in their rating of their back-office administrators.

While no channel scored failing marks, none scored stellar marks, either. On the back-office side, the industry average was 7.7, with insurance advisors giving their firms an average score of 7.9 and their banking counterparts scoring their back offices an average of 7.2.

Yet advisors across all channels gave back-office support an average importance score of 9.0, a signal to their firms that they mean business in this category. There is nothing glamorous about paperwork; but when it’s done badly, it can affect advisors by making them look bad in the eyes of the clients.

There were pockets of brilliance. Mississauga, Ont.-basedPFSL Investments Canada Ltd. took the overall winning scores in the category, at 9.3 for technology tools on the advisor desktop and 9.2 for back-office and administrative services. Winnipeg-based Richardson Partners Financial Ltd. set the standard among the investment dealers for technology tools with a score of 9.2; Winnipeg-based Wellington West Capital Inc. and Vancouver-based Odlum Brown Ltd. were standard-setters for back-office support, both with an 8.8.

Yet there were consistent problems among many investment dealers and planning firms. Advisors pointed at executives who simply won’t spend the money where it’s needed. They suspect that low remuneration for back-office staff, high turnover and poor training for those employees that do hang around are the reasons for inefficient back offices.

The trouble lurks mostly within the bureaucracy of the bank-owned firms, for which scores dropped, on average, by 1.4 from last year’s Report Card. In contrast, the average score for the national independent brokerages, the regional firms and the boutiques combined dropped by less than 0.3 of a point.

Nowhere was the problem more glaring than in Alberta, where wage inflation across the entire province is making it difficult for the entire financial services industry to cope. Employees won’t stay long unless they are paid well, and administrative-support jobs typically don’t command high salaries.

“More support staff are needed, and these employees need a higher level of pay because the turnover is so high,” says an Alberta advi-sor, whose sentiment was echoed by others in the industry. “We lost a lot of support because people can find other jobs paying $10,000-$15,000 more a year.”

The same holds true for planners. “The company needs to get smart people, pay them well and hang on to them,” says a Manulife Securities International Ltd. advisor in Ontario.

At the retail banks and credit unions, account managers point to the technology rather than to their colleagues in administration. Some firms are still living with cumbersome legacy systems, which may have been around since the 1970s and 1980s. Even when the systems are patched over with newer systems, they still don’t make the grade. The solution is to replace them wholesale, technology experts say.

While account managers’ ratings of the importance of back office and technology tools were among the highest in the industry, they also scored the categories lower than any of their counterparts. In fact, no bank scored better than 7.9 in the back office/administration portion of the score, and most were in the low 7s or high 6s.

Broad changes to technology systems, no matter where advi-sors are working, are expensive and risky from a corporate perspective. The hardware itself is costly, and choosing the right software takes time. When new systems are implemented, it is costly to train all those concerned. The overhauls often take more than a year, and they cause upheaval in the interim, which means such moves are considered chancy by executives.

No single firm knows this better than Toronto-based ScotiaMcLeod Inc. , which, for the second year in a row, had the lowest score for technology tools of any firm in any sector. Its back-office support score was marginally better, ranking second-lowest this year. An executive there says new systems now are in place, and the firm expects better scores next year.

@page_break@Advisors at Toronto-based DundeeWealth Inc. say the full-service planning firm has been integrating various versions and nine systems from acquisitions over the past year and a half. The firm has invested more money in training advisors on the new system than on the integration itself, but notes the adjustment takes time.

The financial costs and short-term complaints from advisors during a change in technology systems may be worthwhile in the long run. Advisors at firms that made the investment years ago rewarded their firms with strong scores.

Winnipeg-based Investors Group Inc. , for example, took the plunge in the late 1990s and scored third among the planners.

The back office at the insurance brokers is a different and much bigger ball of wax. Reams of client data pass through many hands during the underwriting process and while finding the correct solution to the client’s needs. Even under the best circumstances, this can take time, but a client with special needs can create a lot of work.

“The time I spend talking about underwriting takes up about 10% of my time,” says an insurance advisor at Sun Life Financial (Canada) Inc. The high-volume firm took the lowest mark in the back-office category among the insurers, but executives there are already tasked with ironing out the underwriting problem.

It comes as no surprise, therefore, that London, Ont.-based Freedom 55 Financial, a division of London Life Insurance Co., which has managed to implement its own online data and order entry process in the past year, scored the top mark in the category among the insurers. IE