Advisor demand behind moves to IDA platform: Includes chart

“The MFDA platform is fine,” he says. “The IDA platform just gives an advisor greater breadth in dealing with a client’s needs.”

The motivation, as it is so often these days, is about high net-worth clients who want margin accounts, discretionary accounts and other products and services available only on the IDA platform.

Chris Reynolds, president of Investment Planning Counsel, says its securities arm, IPC Securities Corp., is the fastest-growing division in the business right now, with two to five advisors joining it every month. “What we are trying to do is offer a choice of
platforms so when an advisor says it’s time to make that movement in his or her business, we have a good platform,” he says.

Similarly, Markham, Ont.-based Worldsource Financial Management Inc.
added an IDA platform three years ago. It’s smaller than the mutual fund platform, but it’s growing, says chairman Gwyer Moore.
Likewise, Berkshire Group has added Berkshire Securities Inc. and is building a presence.

Some acknowledge fears that, without an IDA platform, they’ll lose clients, reps or both. “Yes, [I’m worried],” says Dino DeRosa, chief compliance officer at W.H.
Stuart & Associates in Unionville, Ont.
“Especially because we can no longer hold stocks and bonds in self-directed accounts as of October 2005.” Most of the firm’s reps aren’t securities-licensed, so clients may gravitate toward IDA dealers. “I’m not too concerned about losing the reps,” he says.

Other say they aren’t worried about migration. Scott Sinclair, president and CEO of Toronto-based Money Concepts Canada and AEGON Dealer Services Canada Inc., notes the vast majority of Canadians’ financial needs are met with mutual funds.
Jeff Dumanski, executive vice president of marketing at PFSL Investments Canada Ltd., agrees. “They get money management, diversification, low investment minimums,” he says. “They get products throughout the full-risk spectrum. I think there is wide spectrum of people for whom those products meet needs.”

Yet Greg Gray, president and CEO of Waterloo, Ont.-based Manulife Securities International Ltd., is convinced the cultural gap between brokerages and planning firms is still wide. He says most advisors feel more independent on the MFDA platform. In an IDA firm, advisors are generally employees, he says: “And that doesn’t sit right with independent advisors. They’re independent for a reason. It’s the business model they choose; that’s how they want to deal with their clients.”

Still, if most firms are racing ahead with the MFDA platform, they’re touching the brakes occasionally. Even a principled answer such as Gray’s is followed with the admission that Manulife is considering the IDA platform.
“Not because we dislike the MFDA,” he says, but because Manulife “wants to provide reps and clients with flexibility.

“It’s not something you are going to jump into with both feet without strong research,” he adds. “We have advisors who would like us to consider going to an IDA world — but it’s a handful, not the majority.”

Still other firms see an IDA platform on the radar, but only just. “It’s not in our immediate plans,” says Steve Cole, Toronto-based national sales manager at Laurentian Financial Services. “It’s not perceived as a need by senior management.”

“Are we planning to offer an IDA service?”
asks David Vowles, president and CEO of Markham, Ont.-based FundEx Investments Inc. “I think in time we will.”

Planning firms have a lot of vested
interested in the MFDA. Some note that its infrastructure costs are lower than those of the IDA. Firms have built compliance around MFDA rules and regulations, and now they’re familiar with them, adds Cole.

Robert Frances, president and CEO of Montreal-based Peak Financial Group, which owns IDA firm Peak Securities Inc.as well as fund dealer Peak Investment Services Inc., cuts to heart of the debate.
“The jury is still out about where the MFDA will be, long term,” he says. “Will it join the IDA?”