When investment Executive decided to turn its attention to smaller firms in the inaugural Regional Dealers’ Report Card, one big question came to mind: how would the smaller firms stand up to those surveyed in May’s Brokerage Report Card and June’s Planners’ Report Card?

A month of research and 203 surveys later, it turns out that regional dealers have more in common with their national counterparts than you might expect. And judging by the scores alone, advisors at smaller firms are equally satisfied — or dissatisfied — with certain aspects of their firms as their peers at the big dealers. What’s more, all advisors consider ethics, stability and freedom to make objective product choices for their clients to be of utmost importance.

But even though they share many similarities, regional firms aren’t simply smaller versions of their national counterparts. Rather, each of the dealers featured in this Report Card — four of which are registered with the Mutual Fund Dealers Association and three of which operate under the Investment Dealers Association of Canada platform — has a distinct business model and a unique corporate culture. And they all make one thing clear: being small doesn’t mean they’re any less serious about what they do.

Leede Financial Markets Inc. took the top spot among the IDA-member firms with an overall score of 9.2. The Vancouver-based dealer, formerly known as Rogers & Partners Securities Inc., started up in 1987 and subsequently changed its name to Leede when it became a full-service brokerage in 2001. The firm saw a growth spurt in 2003, when a number of advisors came on board from larger firms to form the Vancouver office. Leede now has $1 billion in assets under management and approximately 90 licensed advisors in Victoria, Vancouver and Kamloops, B.C., and Calgary.

The employee-owned firm (roughly 72% of its staff are shareholders) abides by the “keep it simple, stupid” principal. There is no grid, there are no in-house products and there’s little tolerance for anything other than a planning-oriented book of business, says president and CEO Robert Harrison.

“We treat clients’ money like we would our own,” says Harrison. “The client comes first, closely followed by the advisor. We stand behind each of them if they need a little assistance.”

Leede advisors gave the firm top marks in a whopping 20 categories, including total compensation and corporate culture.

Not far behind Leede were Vancouver-based Odlum Brown Ltd. and Montreal’s MacDougall MacDougall & MacTier Inc. , the most established firms in the survey. They had respectable IE ratings of 8.1 and 8.0, respectively.

3Macs, as the latter firm is commonly called, is a full-service, self-clearing retail boutique that traces its roots to the 1850s, when the first generation of MacDougalls opened MacDougall Bros. in Montreal. President and CEO Tim Price estimates that 90% of the firm’s business is in discretionary management. As a result, it usually attracts experienced advisors — more than half of which are portfolio managers.

“Our focus on managed accounts makes us different. We feel this is a good model, and this is our niche,” says Price. Like Leede, 3Macs encourages employee ownership; 124 (69%) of the firm’s 180 employees own equity. The firm pulled in top scores in ethics, stability and sales support among the IDA firms.

With offices in London, Ont., Toronto, Montreal and Quebec City, Price says the firm is “open to expansion across the country.” Still, he recognizes the advantages of being a firm that’s small enough to take its employees’ opinions to heart. Case in point: out of the firm’s 25 board members, 20 of them deal directly with clients — including Price.

“The culture lends itself to being able to provide input to the decision-making process. As a consequence, we tend to be very sensitive to the client and the advisor,” he says.

It’s a similar story at Odlum Brown, whose advisors cite their freedom to run their businesses among the best aspects of their firm. It’s a sentiment echoed by president and CEO Ross Sherwood, who says: “Advisors can do whatever is in the best interest of their clients.”

Odlum Brown employees can also hold equity in the firm — and 76%-78% of them do. In addition, they all benefit from what Sherwood calls an “incredibly flat” management structure: “We’re all in this together; we’re like partners.”

@page_break@The bulk of the firm’s revenue comes from the advisors’ fee-based income. More than 50% of the firm’s advisors are licensed as portfolio managers or associate portfolio managers, and all are required to obtain their licences within five years of joining the firm.

With 83 advisors in four British Columbia cities — Kelowna, Vancouver, Chilliwack and Courtenay — the firm has no plan to expand its reach just yet, Ross says.

“We prefer not to throw huge amounts of money at areas before finding people on the ground,” he says. “We have all of B.C. We do it better than anybody else, and I think we’ll continue to grow.”

Merlin Chouinard feels the same way. The president and chief compliance officer of the survey’s top-ranking MFDA firm, Saskatoon-based Sentinel Financial Man–agement Corp., says the firm has no intention of going national just yet. The dealer’s 117 advisors currently work out of Saskatchewan and Alberta, although the firm recently received its registration to do business in B.C. and Manitoba. However, the expanded registration is more of an effort to keep clients who have moved to those jurisdictions than a strategic move to beef up Sentinel’s presence in other provinces.

Sentinel had an IE rating of 9.2, tied with Leede overall.

“If the opportunity comes up for us to take on additional agents because of this, then, fine, we’ll look at it,” Chouinard says. “But I’m not interested in going out and aggressively trying to recruit agents or other dealerships at this point in time.”

Sentinel is one of three companies that make up Sentinel Financial Group; its sister companies include Sentinel Life Management Corp. , a managing general agent through which Sentinel advisors place about 95% of their insurance business, and Sentinel Mortgage Corp. , which specializes in retail mortgages for homeowners.

Notably, Sentinel advisors frequently cite Chouinard himself as one of the best aspects of their firm, indicating a strong link between top management and staff.

“Merlin is a man of integrity; he’s the reason I’m here,” says a happy Sentinel advisor in Saskatchewan.

Such comments were virtually unheard of in the Brokerage and Planners’ Report Cards. At the national firms, most advisors rarely interact — much less form relationships with — the heads of their respective companies.

That’s just one of the marked differences in how advisors define corporate culture: while those at national dealers usually describe a strong corporate culture as one without a bureaucracy, those at regional dealers take it a step further. For them, it not only means no bureaucracy but it also includes a “tight-knit” staff, or a firm that “feels like family.”

“My firm is small enough that my opinion is valued and I can have an impact,” says a GP Capital Corp. advisor in Ontario.

With only 34 licensed advisors in Ontario, Toronto-based GP Capital (IE rating of 7.4) is the smallest and youngest firm in the Regional Dealers’ Report Card. Nevertheless, it’s primed for growth. With an eye on recruiting advisors who have a minimum of $10 million in assets, the firm — which president and CEO George Aguiar describes as a “value-based dealer with an emphasis on financial planning” — just received its registration in Saskatchewan and B.C., and is gearing up to go national eventually.

Here, again, corporate culture is paramount. “We pride ourselves on being a safe place for advisors to come in and be part of the organization,” Aguiar says. “There is a strong camaraderie, a strong culture. It’s important that our advisors fit.”

Calgary-based mutual fund dealer Portfolio Strategies Corp. made a solid début in the Report Card rankings with an overall IE rating of 8.4. The firm, which has 300 advisors, is registered in five provinces and operates on a unique franchise-like business model in which individual branches have much of the control.

President Mark Kent insists the firm is fiercely independent and hands-off. With no sales targets or ideal book sizes, the dealer is focused on “entrepreneurial people who are big enough to know their way around the business,” he says. “No one has a rigid job description for what they can and cannot do. Everyone is welcome to chip in with their opinion and help out. We want someone who fits with our model and our culture.”

For those who fit, things are good. “I’m very happy here, and I expect to stick around until I retire,” says a 56-year-old advisor in Alberta.

Finally, there’s Calgary-based mutual fund dealer Generation Financial Corp. (IErating of 6.9), whose 105 advisors are still adjusting to new president Ken Parker, who came on board on May 23. Although the vast majority of advisors say they have high hopes for their new boss, the effects of the executive turnover are evident. Generation was pummelled in categories such as stability and strategic focus, a telling sign that advisors are still uneasy about the dealer’s future.

However, Generation is far from a lost cause. Advisors were quick to praise the firm’s desk-fee model, in which they’re expected to pick up the cost of their back-office system, as well as all the fees associated with the MFDA, in return for 100% payout. Generation advisors are happy with their compensation; the firm scooped up first place in this category among the MFDA firms (8.7). Generation advisors also like the fact that they run their own businesses. The firm provides no training, no advertising and no support.

“It is not trying to be more than what it is,” says a Generation advisor. “It realizes that, as an independent, you need to promote yourself. And the flat-fee model is the wave of the future.”

For his part, Parker is proceeding with cautious optimism. “When I looked at the company before joining, I saw a lot of fundamental strengths in the people and the business model,” he says. “So, now I am looking at its history and digging to see how things have been operating. I don’t want to disrupt what’s going well, but I want to strengthen the things that can be improved.” IE