Dealers earn better marks for support: Includes chart

The performance scores were up in all three support categories in 2008; the aggregate score for the three services was 7.5, up from 6.7 in 2007. The big winners in these categories are Winnipeg-based Investors Group Inc. and Toronto-based Assante Corp., which racked up aggregate scores of 8.6 and 7.6, respectively, in the three categories.

In the crucial importance ratings, advisors also had a collective change of heart. They rated the importance of support for wills and estate planning as 8.0, up from 7.2 last year; rated support for tax planning 8.0, up from 7.3; and also rated insurance planning more pertinent to their businesses — 8.2, up from 7.7. In aggregate, the importance score for the support categories was up by 0.7 of a point to 8.1.

New to this year’s survey, IE asked advisors to rate the importance and performance of support for financial planning. Certainly high importance scores are natural in a year in which volatile markets sent clients running for the money markets. In such situations, advi-sors tend to diversify their product offerings — insurance, for example — and to deepen their relationships with their clients by offering more services, such as financial plans and tax and estate planning. (It is worth noting that no dealer offers anything more than referral services for wills.)

And while it is clear that advisors consider support for these services important, it isn’t always clear they expect their firms to deliver them. Some — especially industry veterans — pride themselves on their expertise in tax, estate and financial planning, while others have long-established relationships with external experts that they intend to continue fostering. They make these experts their personal “value-added” for their clients.

“Often, with many of our advi-sors, you have to remember that they’re a more seasoned group of people,” says George Aguiar, president and CEO of GP Wealth Management Corp. in Toronto. “They have these established relationships with local accountants and local professionals.”

That fact is underlined with support for insurance planning. Although virtually every dealer offers a managing general agency through which its advisors can channel their insurance contracts, almost no dealer insists its advisors use its MGA. Advisors will choose the MGA that provides them access to the products and services that their clients need.

An advisor on the West Coast with Waterloo, Ont.-based Manulife Securities International Ltd. simply won’t do business with the firm’s recommended MGA because it doesn’t offer Empire Life Insurance Co. products.

“I have a prior relationship with an MGA,” adds an advisor in Alberta with Markham, Ont.-based Professional Investment Services (Canada) Inc.

The rub is that the more volume an advisor does with an MGA, historically, the greater his or her override, which is an important part of the commission calculation. The firms are well aware that this type of relationship is tough to sever. And occasionally, a veteran advisor will own or co-own an MGA, which is a lucrative business.

Hugh Gabruch, general counsel and chief operating officer with Regina-based Partners in Planning Financial Services Ltd. and its sister MGA, Partners in Planning Insurance Services Inc., hits the nail on the head: every advisor can do business with whatever — and as many — MGAs he or she wants.

“From our selfish perspective,” he says, “I won’t want to promote it. That’s the way the insurance business operates. If left to my preferences, I want all of [PIP advisors’] business. But we have not insisted that this be the case.”

From the dealer’s perspective, the risk of paying for — and providing — a lot of support for insurance planning is that the business doesn’t necessarily come back its way. In that respect, it makes sense that Calgary-based Portfolio Strategies Corp. and several other dealers don’t offer an MGA or insurance support at all.

Mississauga, Ont.-based PFSL Investments Canada Ltd. does offer insurance planning — advisors at the mutual fund dealer scored their firm a category-winning 9.6 in support for insurance planning — but estate and tax planning aren’t in the offing. As president and chief marketing officer Jeff Dumanski is wont to say, PFSL clients are middle-income Canadians with simple needs.

@page_break@Toronto-based Assante Corp., for its part, operates more like a traditional brokerage, offering national account services for insurance along with six service specialists.

But, overwhelmingly, dealers rely on product manufacturers for insurance and tax planning support.

Robert Frances, president and CEO of Montreal-based Peak Financial Group, says that insurance carriers provide “strong” support, although they tend not to support advisors who have clients with fewer assets.

Likewise, PIS turns to third-party product providers such as the private-client services divisions of AGF Funds Inc. and Mackenzie Financial Corp., through which PIS advisors can gain access to trust, tax and estate planning services.

“They’ll probably do a better job at it than us,” adds Mark Kent, president of Portfolio Strategies, another firm that outsources its estate and tax planning support services. “It’s just not something that makes sense for us to duplicate.”

Kent also notes that the manufacturers offer this support for free. While that’s technically true, a client will have to house at least $500,000 with some manufacturers for his or her advisor to gain access to the service. Moreover, with a piece of the wallet as the thin edge of the wedge, the manufacturers get the opportunity to offer more products. But, in return, advisors can offer an independent service to their clients and maintain accounts that stay safe and sound should the advisor ever decide to switch firms.

Investors Group, Desjardins and Assante — the firms with the top aggregate scores in these categories — are the only ones to offer an internal team of specialists that provide services in all three areas.

“It’s all embedded in our advanced financial planning,” says Kevin Regan, executive vice president of financial services at Investors Group. “It’s a collection of lawyers and accountants and service professionals.”

But, despite the wealth of both internal and external support, it may be hard for young advisors to find the support they need for insurance, tax and estate planning. And if they are not getting it, they’ll feel hard done by.

For example, an Assante advisor in Ontario makes the point about the estate planning support her firm offers: “There’s no ongoing training and resource library. Basically it’s only available to the high net-worth clients.”

So, where do relatively new advisors turn when they simply don’t have either the experience or the high net-worth clients to qualify for the product manufacturers’ support services? It’s a touchy point; these services are, after all, the cornerstones of full-service wealth management. IE