2008 Dealers’ Report Card: Acquisitions result in advisor satisfaction: Includes main chart

After the uncertainty of being shopped and the frustration of weathering new ownership and management shuffles, life is settling down for advisors in the mutual fund dealer/full-service world. By all accounts, they are feeling more secure — and rating their firms accordingly. When it comes to their firms’ stability, strategic focus and corporate culture, advisors are more generous with their ratings.

Take advisors at Markham, Ont.-based Pro-fessional Investment Services (Canada) Inc., for example. They have experienced some positive changes in the year and a half since Generation Financial Corp. was taken over by one of Australia’s largest mutual fund dealers, Professional Investment Holdings Group, in November 2006.

The Canadian subsidiary is now in the process of instituting its Australian parent’s business model, which will see advi-sors work closely with “centres of influence” such as accountants and lawyers.

With new management in place for more than a year now, PIS has been defining its strategic focus with advisors as well as polishing its image with the public.

“We spend a lot of time with our advisors, doing a lot of client seminars and building our image within each advisor’s practice,” says Ken Rousselle, president and CEO of PIS. “We work with our centres of influence and spend a lot of time getting in front of their clients, introducing a lot of planning ideas.”

When it comes to strategic focus, advisors at PIS generally have high hopes for the firm’s ideas. Some, however, are still a little apprehensive that the way the parent firm conducts its business may not fit well with the Canadian financial planning profession.

Although some advisors are questioning the regulatory requirements that come with working with accountants, others tout the new plan as one of the best things the firm has going for it.

“Marrying financial planners to accountants is not only innovative for the client but also for the advisor,” says a PIS advisor in British Columbia.

Whether advisors are jumping for joy or grumbling under their breath, one thing is certain: PIS’s parent company is well known internationally, which brings a new sense of satisfaction about the firm’s strategic focus and corporate culture.

“It is there to help me without expecting anything in return,” says a PIS advisor in Alberta. “It is bringing back an old-school team culture to the industry, in which there isn’t so much infighting and competition among planners.”

And comments such as “unequivocal stability as part of an international agency” and “PIS has been buying companies around the world; with that kind of capital, it is definitely stable” are just two examples of the appreciation PIS advisors have of their firm.

Advisors at Regina-based Partners in Planning Financial Services Ltd. are also experiencing a new-found sense of stability. The mutual fund dealer was acquired by Calgary-based ECI Investments Ltd., a subsidiary of Calgary-based holding company InterBorder Holdings Ltd., in March 2007. Although many PIP advisors voiced uncertainty about their firm’s future in the 2007 Planners’ Report Card, their outlook is more optimistic this year, with PIP seeing a huge increase in its stability rating, which jumped to 8.5 from 7.7 in 2007.

“The firm has been more solid since it was purchased,” says a PIP advisor in Central Canada. “The firm was hemorrhaging because of its heavy commitment to software and because it didn’t make the required capital. So, a white knight came along and bought it out. I am led to believe that it has a lot of investments and capital.”

Hugh Gabruch, general counsel and new chief operating officer of PIP, says the increase in the firm’s stability rating following the buyout is understandable: “It’s a fact. We’re part of a much larger group of companies that has made our health and growth a priority. It has provided us with the capital needed.”

@page_break@The new parent has already shown its commitment. PIP launched a new back-office system with Univeris Corp. this past November and is in the early stages of setting up a formal succession plan that will include a financing program for advisors.

“We’re finding that our advisors are asking for more and more involvement from us in these types of things, and our interests really converge here,” Gabruch says. “From our point of view, it helps us retain their books of business and sustain our business. For them, it’s a win/win: it gives them an exit strategy and gives their clients transitional continuity.”

And with a rating of 8.0 in “the firm’s delivery on promises” category, up from 7.5 in the 2007 Report Card, PIP advisors are not just hearing these ideas, they are seeing them fulfilled.

“Everything it said it would deliver, it has delivered early,” says a PIP advisor in Ontario. “I have never seen that in a large company.”

It will be interesting to see if advisors with Burlington, Ont.-based Berkshire-TWC Financial Group Inc. will feel the same way about their new firm in next year’s survey. Although Waterloo, Ont.-based Manulife Securities International Ltd. acquired Berkshire in August 2007, the final stages of the merger will not be completed until later this year.

Manulife Securities, however, already has the wheels in motion. The rebranding has started for Berkshire advisors, while Manulife Securities advisors will be trained in Berkshire’s back office, the Broadridge Dataphile platform, this autumn.

Although the firms are not yet fully amalgamated, IE considered them as one entity for this year’s Report Card. And if the ratings Berkshire advisors are giving the dealer are any indication, it is showing promises of good things to come.

“The future prospects that open up as a result of the merger are huge,” says an advisor in Ontario who comes from the Berkshire side of the merger. “I think Manulife Securities is doing a decent job of absorbing Berkshire without stepping on people’s toes. It now has an IDA platform while still retaining Berkshire’s culture.”

But not everyone is convinced that the culture will remain the same.

“We used to have a very good image; I hope we still do now that Manulife is here,” says an advisor in B.C.

Adds an advisor in Quebec: “There seems to be more of a focus on the investment dealer side, not the mutual fund dealer side. As a Mutual Fund Dealers Association of Canada advisor, you feel as though you’re being swept along.”

Rick Annaert, president and CEO of Manulife Securities, says his main focus is the integration and making sure the transition goes well for advisors and clients. Annaert and his management team have visited 18 cities and met with advisors, letting them know how the merger will affect them and what the overall process will be.

“Generally, our advisors are excited by what our future looks like,” he says. “The integration is going well because Berkshire and Manulife Securities have very similar cultures, with our approach toward independence and our approach toward our clients. Our advisors are getting a chance to see just how much we align in business strategy. So, whether you’re from the green team or the blue team, the executives talk alike and express themselves in the same way.”

A firm that has reaped the rewards of a major takeover is Toronto-based Assante Corp. After consolidating a number of small dealers, Assante was put on the market in 2003 and was acquired by what is now Toronto-based CI Financial Income Fund. With CI came a new management team, which began the tough process of building a unified, full-service dealer.

But, over the past four Report Cards, Assante has seen its scores climb steadily; compared with 2005, the dealer has seen huge improvements in the ratings its advi-sors give for stability, strategic focus, public image, the delivery on promises and, particularly, corporate culture: this year, Assante advisors gave their firm an 8.2, up 2.2 from 6.0 in 2005.

Assante now has 800 advisors, 45% of whom are securities-licensed. Over the past four years, says Bob Dorrell, Assante’s senior vice president of business development, it has added 75 advisor teams — which have two to four advisors each — and $2.3 billion in new assets under administration. When recruiting, Dorrell says, the strength and stability of the firm is all part of the pitch, and a lot of that has to do with CI being its parent.

“The fact that we are an integrated firm is another component,” he adds. “Advisors don’t have to worry about us going out of business.”

Dorrell also points out that since CI stepped in, chargebacks to advisors have gone down, an equity-matching program has been launched and communication between head office and advisors has strengthened.

Says an Assante advisor in Ontario: “We’ve consolidated our position in the Canadian marketplace over the past three years. By giving advisors control over the business while still delivering excellent product choices for clients, we’ve become a leader in financial planning.” IE