MAIN CHART

While most canadians look forward to spring, Investment Executive researchers have a love-hate relationship with the season. Spring marks the start of report-card season, and it’s when our researchers talk to hundreds of brokers at Canada’s largest national investment dealers.

During February and March, at the height of RRSP season, researchers Maureen Halushak, Lara Hertel and Lisa Weaver used professionalism and considerable charm to persuade 455 brokers to rate their firms in dozens of categories for our 11th annual Brokerage Report Card.

You might think getting brokers to devote this much time to answering our questions would be difficult — and you’d be right. But brokers know the survey is a chance to speak candidly and anonymously about their firms, and that the firms heed the results.

There are a few new firms in this year’s report. Berkshire Securities Inc. and Dundee Securities Corp. made the cut by bulking up on the number of registered reps they employ. Rockwater Capital Inc., a rookie shop run by industry veterans, bought boutique dealer First Associates Investments Inc. in 2002, and merged it with the private client business of Yorkton Securities Inc. at the beginning of 2003.

The inclusion of the new firms affected scores across the board, but it failed to budge Edward Jones from the top spot.

Some trends emerge this year. Brokers are more content with their lot than in 2002. Last year’s survey captured the disgruntlement felt by brokers as equity markets collapsed and commissions fell. In 2003, the flood of red ink that splashed over the ratings table in 2002 has receded.

A second trend is that independent firms are rated more highly than bank-owned firms.

For the survey, advisors are randomly selected from IE’s mailing list and must have a minimum of one year’s industry experience. The firms surveyed must have at least 200 registered reps and a national presence. Using telephone and fax
questionnaires, we speak with an average of 40 advisors from each firm. We ask them to rate their employer on a scale from zero to 10 (poor to excellent) in 27 categories ranging from how they feel about sales support to the quality of research. We then average the brokers’ ratings in each category and produce a firm’s overall score for that question.

To create the IE rating, we take each firm’s scores for 27 categories and average them.
We then award extra marks for how many times a firm took the top spot in a category.
We use the IE rating to rank the firms from highest to lowest.

Comparing the overall broker rating to the IE rating reveals a certain “goodwill” factor at work at most firms. Advisors gave a higher rating to their firm as a whole than their category responses would indicate.

The rising number of firms and the blurring of lines between brokers and financial planning firms isn’t making our task any easier. Although we don’t expect this problem to go away, we will be watching to see how the industry evolves. Next year will probably see more companies added to our survey.IE