It may not be fancy. Indeed, many in the industry turn up their noses at its strategy. But PFSL Investment Canada Ltd. has found success by targeting the average Canadian.
Mississauga, Ont.-based PFSL is something of an anomaly in the Canadian investment business. If Wal-Mart Stores, Inc. is the retailer to the masses, PFSL is their financial advisor. By tapping a huge, underserved market — one in which there is not much direct competition — it has carved out its market. These days, most brokerages and financial planning firms are climbing all over themselves to capture high net-worth clients. PFSL has no such pretensions. Its target market is unabashedly middle-income Canadians.
To most firms, the average Canadian is not an attractive client. According to recently released data from the 2001 census, the median pretax family income was $55,016 in 2000. Most advisors wouldn’t get out of bed for a $50,000 account, let alone a household with an annual income of that magnitude. At the end of the year, such a family may have just a few thousand, or hundred, dollars to invest.
Many companies are pushing their reps to slough off these clients. But not PFSL. It sees opportunities in these small accounts and the families that hold them. PFSL’s executive vice president of marketing, Jeff Dumanski, says his firm’s mandate is helping middle-income Canadians become debt-free and financially independent.
Those goals have helped this company weather the market downturn better than many other firms, Dumanski says. One of PFSL’s key advantages is that it has diversified income streams from three main business lines: mutual funds, insurance and debt consolidation.
The firm’s success, and that of its reps, is not because it has had better luck in the investment market, or that average Canadians are getting any richer. (In fact, census data show the median family income is virtually unchanged over the past 10 years.) Rather, the availability of its services for both sides of the household balance sheet has enabled it to ride out the weakness in the investment markets.
The firm’s strategy has also apparently captured the imagination of its sales force.
Some reps speak of the company with almost religious fervour. One rep from the Prairies calls its mission a “crusade” that aims to “right the wrongs that have been done in the financial industry.”
Those wrongs include bad investment choices, clients saddled with oppressive debts and savers stuck in low-paying bank accounts, suffering ever-escalating account charges. “They don’t discriminate against small clients,” says one PFSL rep. “A guy came in nine years ago with $30 [minimum per month] and I retired him with half a million dollars. If I had turned him away, he would have been faced with a bank account and low interest.”
PFSL wants those small clients, and it also wants small reps. Part of the crusade to correct those wrongs is proselytization — getting others to join the cause. And, apparently, hundreds are lining up to be dipped in the the PFSL waters. Dumanski reports that the company has licensed almost 600 new reps this year and added about 1,200 reps last year. All this recruiting has taken place while the market stumbled though its third straight year of losses.
Attracting new reps is a big part of the PFSL business model, as is evident from its huge recruiting numbers. And the firm’s accommodating approach is obviously part of the attraction.
One rep from the Prairies explains the company’s appeal, saying: “A lot of people here have been taken advantage of and they want to help others.” The rep says these people wouldn’t work for any other firm in the industry.
This sentiment is not uncommon at PFSL. Another rep says that he and his colleagues wouldn’t move firms unless someone held a gun to their heads. “I love this company! I have never seen a company that treats its employees this way,” this Prairies-based rep gushes.
The intense feeling inspires PFSL reps to give the company very high marks in almost every category of our survey. In fact, PFSL ran away with the Planners’ Report Card this year, recording first-place scores in 17 categories, resulting in an overall score of 9.6 out of 10, which is well ahead of the second-place firm’s overall score of 7.9.