Advisors find the right fit

Even advisors with Mississauga, Ont.-based PFSL Investments Canada Ltd. and Winnipeg-based Investors Group Inc. – two firms that usually receive top ratings but saw ratings drops in several categories this year – retained an upbeat mood despite growing concerns among their advisors.

“I have been in the business long enough to know what else is out there,” says a PFSL advisor in Ontario. “It is ridiculously good here.”

Adds an Investors Group advisor in Manitoba: “The grass may be greener elsewhere, but it only offers different challenges.”

Indeed, the ratings advisors have bestowed upon their firms indicate both the areas in which they believe their firms are excelling and the ones in which they have room to improve. For instance, several firms saw significantly higher ratings in categories such as “firm’s corporate culture” and “support for developing a financial plan for clients,” with some firms standing out for having an open-door management culture or providing the tools necessary for preparing financial plans.

In contrast, some firms saw much lower ratings for “firm’s marketing support for advisor’s practice” and “firm’s image with the public.” The reasons ranged from the firms not providing enough resources to not raising more brand awareness.

To obtain these ratings, Investment Executive (IE) researchers Brent Jolly, Shivan Micoo, Johnna Ruocco and Gian Verano spoke with 524 advisors at 12 dealer firms across Canada. Advisors were asked to give performance and importance ratings for each of the 35 categories in the Report Card. These ratings were based on a scale of zero to 10, with zero meaning “poor” or “unimportant” and 10 meaning “excellent” or “critically important.” Individual ratings were then averaged out for each of the categories, both firmwide and Report Card-wide.

The “IE rating” is the average rating for all categories for each firm. The “overall rating by advisors” reveals how advisors rated their firms as a whole.

There were several new categories making their début this year, including “firm’s effectiveness in keeping advisors informed” and “firm’s receptiveness to advisor feedback.” Two other new categories – “support for developing an investment plan for clients” and “support for overall wealth-management process” – were grouped along with other questions related to wealth-management support services.

For the most part, the fluctuation in ratings that changed by half a point or more this year indicates the dealer firms are finding a middle ground when it comes to meeting their advisors’ needs. Two that received a smattering of lower scores – PFSL and Investors Group – were, in context, registering top ratings in previous Report Cards. At the other end of the scale, those that received a number of improved ratings have done so because advisors’ faith in their firms was being restored.

Among the latter group was Calgary-based Portfolio Strategies Corp. For example, advisors rated their firm higher by half a point or more in nine of the 22 categories that applied to the firm this year. In particular, the rating in the “firm’s corporate culture” category rose to 8.2 from 6.9 in 2011 and the rating for the “your branch manager” category rose to 8.4 from 7.3.

“The culture is very friendly,” says a Portfolio Strategies advisor in Alberta, “[with] a lot of peer mentorship and easy access to upper management.”

Advisors were also enthusiastic about Portfolio Strategies’ branch managers. Says a Portfolio Strategies advisor in British Columbia: “[He] always makes himself accessible to advisors, helps with sales training and reviews advisors’ books to help them maximize their business potential.”

“In the past year or so, we’ve been a lot more active in working with the branches,” says Mark Kent, the firm’s president and CEO. “I think our communication has definitely increased in frequency.”

Communication also was a reason why advisors with Burlington, Ont.-based Manulife Securities gave their firm significantly higher ratings for both corporate culture, to 7.7 from 7.1, and in the branch manager category, to 8.9 from 8.4. After a couple of years of seeing ratings in a number of categories decline by half a point or more, the firm is back in good stead among its advisors this year as they rated it higher by at least half a point in 11 categories as well as in the overall rating by advisors.

“It’s a little like family to some extent,” says a Manulife advisor in Ontario. “We have a good relationship with management and head office. If we need advice, we can go to them. They listen to your input and they will do something to solve your problem.”

A healthy leadership culture and strong financial backing were said to be two of the firm’s most positive aspects. Not surprising, Manulife saw its rating in the “firm’s stability” category rise to 8.8 from 8.3.

In fact, three other dealers also saw their ratings for firm’s stability rise by half a point or more: Toronto-based DundeeWealth Inc., Markham, Ont.-based Worldsource Financial Management Inc. and Portfolio Strategies.

DundeeWealth advisors were particularly pleased with maintaining their independent culture while having the financial heft of DundeeWealth’s new owner, Toronto-based Bank of Nova Scotia. Says a DundeeWealth advisor in Ontario: “I don’t have to sell the reputation to clients. And the association with Scotiabank has only made it better.”

As for Worldsource advisors, although some complained that the firm’s leadership has some work to do, many pointed to the strength of the parent company, Toronto-based Guardian Capital Group Ltd., as the reason for their satisfaction.

Even firms that did not see any significant improvements in the stability category this year garnered positive feedback from their advisors regarding this topic.

“The company has experienced a lot of growth and expansion in recent years,” says an advisor in B.C. with Lévis, Que.-based Desjardins Financial Security Independent Network. “[Its] balance sheet is impeccable.”

That sentiment was echoed by other Desjardins advisors who were happy to see the firm’s efforts toward expansion – including its acquisition of Winnipeg-based MGI Financial Inc. last year. Others pointed to the backing of the large, stable credit union, which has provided the infrastructure and support they need.

“People are with us because they want to be,” says Shawn Smith, Desjardins’ vice president, distribution, for the Ontario and Atlantic regions in Toronto. “And with that comes the expectation that we’re meeting all of their needs – be it through the product offering, support services or compensation.”

Although Richmond Hill, Ont.-based Global Maxfin Investments Inc. didn’t see much of a change in its stability rating (6.7 this year vs 6.6), its advisors are much relieved that the firm has completed the amalgamation with Calgary-based Professional Investment Service (Canada) Inc. (PIS), which it had acquired in late 2009, after a few years of hammering out pre-existing compliance issues with that firm.

“[The firm has] come through rocky times with its acquisition,” says a Global Maxfin advisor in Alberta. “It was difficult to do business with them before, but it’s gotten better.”

That said, former PIS advisors in the West expressed concern regarding access to their branch managers. “There has been a fair bit of turnover,” says a Global Maxfin advisor in Alberta. “That has to be reflective of something.”

Adds a colleague in the Prairies: “There’s been a lot of change as of late among our branch managers.”

In fact, Global Maxfin president Bruce Day confirms that the firm recently created a corporate branch-management system. It operates out of the firm’s head office just north of Toronto; although this may not be convenient for advisors in the West, Day says: “We’re better off where we have some control. We can’t have branch managers in every little office. If we were to do that, payouts go down.”

Although Global Maxfin still ranks behind its peers in the “freedom to make objective product choices,” stability and “firm’s ethics” categories – areas that continue to be highly valued by advisors in the dealer channel – the firm’s performance ratings in those categories did not drop significantly.

In fact, none of the firms saw much change in their ratings in the ethics and freedom categories. Many advisors were content with the state of their firms’ compliance departments and reputation, as well as the flexibility on product offerings.

© 2012 Investment Executive. All rights reserved.