It seems fitting that in the current volatile marketplace, financial planners are seeing red. Asked to rate their firms, advisors pulled no punches, giving their companies significantly lower marks in Investment Executive‘s second annual Planners’ Report Card.
In choosing the firms for our survey, we looked first at the numbers and selected those with at least 200 planners, and then those with a national presence. We anonymously and randomly asked 30 planners at each of Canada’s 14 largest distributors to evaluate their employers in 18 categories on a scale of one to 10, 10 being best. The average scores in each category were then plugged into a formula to give each firm its overall IE Quality score. To reach the IE Value scores, we factored in the planners’ reported payout, giving us a rating of what planners get for the gross commissions they generate.
This year’s blue ribbon, in terms of the quality score, goes to Winnipeg-based Investors Group Inc. for the second year. But the IE Composite winner is a newcomer, Burlington Ont.-based Berkshire Investment Group Inc. Investors sells mainly proprietary products (as does Primerica Financial Services Ltd. of Mississauga, Ont.), while Berkshire and the other firms surveyed distribute a wide range of products, which gives them an advantage in some categories.
While both Investors and Primerica had front-row seats in the financial planning ring last year, their average scores this year sent them off to the balcony. Primerica’s quality score dipped a whole point from last year, putting it in third place, and Investors fell to 8.0 from 8.6 a year ago, the result of lower marks in 11 of 18 categories.
This year’s award for most improved company goes to Money Concepts (Canada) Ltd. of Toronto, which had significant improvements in 10 categories, putting it within the industry average. That may not sound impressive, but in a year when most scores sank, Money Concepts deserves recognition.
Waterloo-based Regal Capital Planners Ltd., Toronto’s CMG- Worldsources Financial Services Inc., Toronto-based Equion Group, Financial Concept Group Inc. of Toronto and Primerica all saw numbers drop in at least nine categories. Account statements and image were both areas of complaint, and marketing support, advertising and training received the lowest marks.
The only area in which there was a reasonable increase this year was sales support, rising to 7.7 this year from 7.0 in 1999.
Although planners rate their firms’ stability slightly higher this year, the industry appears to be anything but stable. With the recent buyout of Ottawa-based Balanced Planning Financial Group by BRM Group of Montreal, last year’s buyout of Fortune Financial Corp. by Toronto’s Dundee Bancorp Inc., and Assante Corp.‘s acquisition of Equion, FCG and The Financial Planning Group/DPM Securities Inc. of Pointe Claire, Que., stability means being bought out by a more stable company.
“We’re just a target to be taken over, a small-fish-in-a-big-pond kind of thing,” says a Vancouver advisor with Manulife Financial.
The soon-to-be Assante planners gave their firms average scores in last year’s survey, but with a lack of focus and the inability to move from one firm to another, this year’s scores are mediocre to downright embarrassing for some of the group.
At Investors, advisors give top marks for marketing support, advertising and public image. Planners also gave the firm’s ethics and account statements high marks. Despite above average scores in almost all categories, Investors planners rate it low in the freedom-to-move category, mainly because it distributes its own products and contracts stipulate that the rep’s book of business belongs to the company. What keeps Investors at the top in the quality ranking is above average scores for its order-execution system and the highest score for its client management software (important factors in a year in which back offices couldn’t keep up with market volume).
TWC Financial Corp. still holds the highest average score for its technology systems, but the Radville, Sask.-based company could not maintain its high standing from last year. It dropped a whole point from last year’s quality score, and when payout was factored in, it comes out average.
Berkshire’s planners gave the firm better-than-average scores in 16 categories, and good payout bumps it ahead of Balanced Planning, with W.H. Stuart Securities Inc. of Markham, Ont., close behind Berkshire in the composite score with payouts of almost 80%. They are also the only three firms that scored more than a point above the national average in the sales support question.
When it came to moving one’s book, these organizations rate it fairly easy. However, Balanced’s and W.H. Stuart’s quality scores hover just around the national average, and their planners only give a few categories above average grades.
Questions such as marketing and advertising support dipped well below 1999’s average; only Investor’s and Regal scored higher than a six in the ad category.
New question
The quality of a firm’s research was a new question added to this year’s survey, with a national average of only 5.8.
The score is low because research is limited to the overall market, with little or no product-specific stuff, and for the most part it comes from an outside source. Advisors rely on fund companies, Bell Charts and the Internet, although marks and comments suggest in-house research would be greatly appreciated.
Marks this year are down for several reasons: planners receive little or no support; there is greater competition; technology is less than stellar; and the fact that securities regulators seem to take a dim view of independent contractors, requiring registered representatives to be company employees.
“Competition? I can feel the hot breath on my back,” says a W.H. Stuart advisor from Newfoundland.
A CMG planner says he’s “tired of the bullshit. Regulators are creating problems …. They regulate us as if we were salespeople, but they expect us to provide the financial planning function. They don’t care. I’m getting to the point where I don’t care either.”