Firms find there’s more than one road to success: Includes chart

“We’re a mid-market player,” says president Richard Williams. “We don’t focus our energy on the top 5% of Canadians; we focus on the average Canadian — the other 95%.”

WFG offers its advisors mutual funds, insurance, segregated funds, critical-illness and disability insurance, group insurance, mortgages and travel insurance. Most of the firm’s profits come from its mutual fund and life insurance products.

Not only is WFG dedicated to serving the average Canadian with its product variety, it is also intent on recruiting them. The firm’s business model has two main focuses: to increase its client base and to recruit advisors. The firm talks to clients about joining its roster of 2,600 advisors.

“It’s not a traditional corporate environment,” says a WFG advisor in Ontario. “The firm is growing entrepreneurs, not employees.”

WFG — which is part of the Aegon Group — looks for entrepreneurs between the ages of 25 and 50 who have owned businesses in the past and are looking for a change. WFG wants its advisors to make a minimum of $50,000 a year, but, Williams says, how they do it is up to the individual advisor.

“We bring in people from all walks of life, such as new immigrants to Canada,” he says. “Because our business model is unique, traditional reps who have been in the business for a long time may find it difficult to understand our model. We can work with someone who is brand new and develop them under our structure.”

WFG supplies its advisors with a back office, then gives them the independence to run their businesses as they see fit. After five years with the firm, advisors own their books of business. Even though advisors start with a lower level of compensation, it increases as they grow their businesses and recruit other advisors. Advisors also get “override commissions” on the sales of the advisors they recruit.

“It could be the person I brought in today and the person he brings in tomorrow. I’ll get a piece of what they sell,” says Williams.

“You can build a business as big as you want, plain and simple,” says a WFG advisor in Western Canada. “Whatever you put in, you get out.”

Sitting in second place overall and in first place in the dedicated sales agents category, is Aurora, Ont.-based State Farm Insurance Cos., with an IE rating of 8.9. The firm boasts 400 advisors dedicated to selling State Farm products.

“Our State Farm agents are the only ones who can offer our products, so that makes the majority of our products proprietary,” says Pete Karageorgos, State Farm’s public affairs supervisor.

Although in-house products can be limiting, advisors say there are redeeming qualities. “It’s kind of slow getting products,” says a State Farm advisor in the West. “But when we get them, they’re good.”

And advisors can decide on which products to focus. “The best thing is the freedom to do what I want within our contract,” says a State Farm agent in Ontario. “It’s financial stability.”

State Farm’s advisors can also decide if they’d like to be mutual fund-licensed and registered with the Mutual Fund Dealers Association or pursue other professional designations. Clients belong to State Farm and stay with the firm if an advisor chooses to leave.

Karageorgos says State Farm looks for advisors who have an entrepreneurial spirit and are prepared to pay their own business expenses. Advisors are compensated strictly through commissions.

The firm that placed third overall in the Report Card and second among the MGAs (with an IE rating of 8.5) is the polar opposite of WFG. Chairman and CEO Jim Burton founded Toronto-based PPI Financial Group 29 years ago to serve the upscale client market.

@page_break@”Our objective is to serve independent insurance advisors who serve sophisticated, wealthy and ultra-wealthy clients,” says Burton. “We offer upscale customized solutions to a narrow market.”

The MGA doesn’t offer mutual funds and, even though its strength is in its proprietary insurance products, there are no restrictions on what products its advisors can sell. Still, PPI’s 100 advisors, who own their books of business, give 80%-100% of their insurance business to PPI’s proprietary products.

A PPI advisor in Central Canada calls the firm’s product selection leading-edge. “PPI goes to the carriers and together they create products, which become exclusive to the firm,” he says.

The firm has a staff of 200 salaried employees spread across five — soon to be six — regional offices. The staff includes lawyers, accountants, actuaries, underwriting specialists and software specialists. This is a support network set up to assist advisors who want to provide value to sophisticated clients.

“This is an innovative, broker-based firm,” says a PPI advisor in Western Canada. “PPI recognizes the life insurance agent is important to the delivery of the product.”

PPI looks to recruit advisors who are on the leading edge of their practices, Burton says: “We tend to be selective when it comes to inviting in advisors, based on the type and amount of business they are doing.”

Despite their differences, this year’s top firms all ensure that their advisors fit into the firm and that the firm fills its advisors’ needs.

“Executives are open to listening to agents,” says a State Farm agent in Western Canada. “There is good communication up the ladder.”

A PPI advisor on the West Coast agrees: “There are fantastic work relationships, great people, excellent service and excellent compensation. And the best agent contract in the industry. This firm is very responsive to my needs.”

Less enthusiastic feedback came from advisors at other firms on this year’s Report Card. Waterloo, Ont.-based Clarica Financial Services Inc. — part of Sun Life Financial Inc. — took last place among the firms with dedicated sales forces, with an IE score of 7.7. Advisors at the firm say this is partly because of poor compensation.

“It keeps squeezing you,” says a Clarica advisor in Ontario. “There is continual download of expenses, a continual decrease in commissions and a continual increase in required volumes.”

Although some advisors are unhappy, they don’t feel free to leave the firm. “It has me locked up tight,” says a Clarica advisor on the Prairies.

But Jack Garramone, vice president of the Clarica sales force, says the more productive the advisor is, the greater the pay. “We’ve recently increased the sales bonuses for our average and above-average producers on the insurance side,” he says.

Woodbridge, Ont.-based Report Card rookie Hub Financial Inc. took last place among the MGAs, with a 7.6. Advisors there say Hub’s lack of support services pulled down its rating.

“It could do a lot more to improve by having an in-house financial planner,” suggests a Hub advisor on the West Coast. “I’d also like it to provide financial planning software I could secure through the firm or download from the Web.”

But support is not completely lacking, says Hub’s chief marketing officer and executive vice president, John Lutrin, who adds that Hub advisors can consult a tax or estate planning representative in each region free of charge. “For anything tax, legal or technical, the expertise is there,” he says.

A Hub advisor in Ontario looks on the bright side: “You have to make it happen. You are not given the support of the [head] office, but you have the freedom to be all you want to be.” IE