Every year, advisors from the four distribution channels — investment dealers, mutual fund dealers, banks and credit unions, and insurance — rate everything from their back-office technology to their freedom to move to other firms. For this year’s Report Cards, Investment Executive asked the 1,430 advisors surveyed also to rate, on a scale of one to 10, the importance of each category to them.

Despite subtle and significant differences in their respective career channels, advisors are united on a number of fronts: they want to work at ethical firms (9.4 average importance rating), they appreciate stability at their companies (9.3) and although advisors bemoan their legal and compliance departments, they know they couldn’t operate without them (8.9).

The marks may reflect the upheavals in the financial services industry in recent years, as illustrated by the $2.4-billion settlement paid by CIBC for its involvement in alleged fraudulent transactions with fallen U.S. energy trading company Enron Corp. But it may reflect something more fundamental to the values advisors hold dear.

“How could ethics not be important?” asks a West Coast advisor at brokerage firm
Edward Jones. “That’s why I came to work here. It’s the most important consideration for joining the firm, and it remains that way.”

Edward Jones brokers aren’t the only ones touting the importance of high ethical standards. Time and time again, advisors ranked it as the most important attribute a firm can have.

That’s not to say advisors don’t have their fair share of complaints about the stringent nature of their compliance departments. An Ontario broker with Vancouver-based
Canaccord Capital Inc. took aim at the firm’s legal and compliance department, calling it “overbearing, suspicious and accusatory.”

But senior executives aren’t making any apologies for their rigorous efforts in keeping their firms above-board. “Compliance is extremely important, and we take it very seriously,” says David Agnew, national director of RBC Dominion Securities Inc. in
Toronto “We play by the rules, and I think our clients are pleased with that.”

Agnew may as well be speaking on behalf of every brokerage firm, mutual fund dealer, insurance company and bank on the Street. Each firm surveyed by Investment Executive said compliance was adding to both the costs and the administrative burden but was absolutely necessary in the current regulatory environment.

“The reputation of a firm is hard-earned and goes very quickly,” says Hamish Angus, managing director and head of ScotiaMcLeod’s full-service brokerage in Toronto. “Any time there are [negative] headlines in the industry, it reflects negatively on all of us.”

According to assets under management, advisors in the top 20% rated most categories the same way as those in the bottom 80%, indicating that book size doesn’t necessarily matter. Whether advisors are managing $10 million or $100 million, ethics and stability still garnered top marks in importance, as did compensation, corporate culture and the firm’s image with the public. Likewise, advisors at both ends of the AUM spectrum were in agreement about what is not important: consumer advertising, ease of moving firms and mutual fund research all ranked among the least important.

The ratings also suggest that the older advisors get, the less they rely on services that help them build their businesses. Average importance ratings for sales support, consumer advertising and client prospecting materials all dropped by at least half a point among the oldest advisors.

On the other hand, advisors with less experience rated most of those categories slightly higher in importance than advisors with more experience, suggesting many of the support services and tools offered by firms are more valuable to those gaining a foothold in the industry.

Conversely, importance ratings for succession planning inched up as advisors aged, indicating they are giving some thought to leaving the business. On a similar note, advisors with the fewest years of experience rated purchase financing as more important than those who have been around the longest.

The more obvious discrepancies, however, show up when the channels rated importance. Account managers routinely rated attributes such as consumer advertising, Web tools, on-going training and branch managers more highly than their peers in other channels. Those in the banking industry were more likely to consider various aspects of their firm important, proven by the 8.4 importance rating they averaged across all categories (compared with 8.0 and 8.1 in the remaining channels).

@page_break@Overall, in addition to ethics and stability, advisors value firms that live up to their promises (8.9) and like the freedom to sell the products they believe are best suited to their clients (8.9). Finally, there is the age-old question of money: how important is compensation to advisors? Pretty important, it turns out. The category rated a solid 8.8 in terms of importance (averaging a 9.0 among the youngest advisors), but it was still
markedly behind ethics and stability. IE