Fewer firms offering in-house support

Of the 481 advisors surveyed for this year’s Dealers’ Report Card, 223, or 46%, hold the certified financial planning designation. That’s in stark contrast to the brokerage channel, in which only 156, or 25%, of the 627 advisors surveyed for this year’s Brokerage Report Card say they hold the CFP. In fact, the designation is the foundation upon which many advisors at dealer firms base their businesses — 87% say they complete financial plans for their clients, and 54% of their clients have a financial plan in place.

Many firms in the Dealers’ Report Card had prided themselves on their financial planning perspective in previous years — so much so that the Report Card itself was formerly entitled the Planners’ Report Card. But that name was changed to the Dealers’ Report Card in 2008 to reflect changes in the channel, as more and more firms began to shift to a full-service model, with securities and mutual fund platforms.

Recently, the number of firms offering in-house support to advisors for developing a financial plan for clients has begun to decline. In 2009, Calgary-based Portfolio Strategies Corp. — well known for its bare-bones business model that includes higher-than-average payouts and minimal support services — was the only firm in the Report Card not to be rated in the “support for developing a financial plan for clients” category.

This year, four additional firms have stated that they no longer offer the service, including: Quebec City-based Desjardins Financial Security Investments Inc., the aforementioned Peak, Regina-based Partners in Planning Financial Services Ltd. and Richmond Hill, Ont.-based Global Maxfin Investments Inc., which was listed on previous Report Cards as Professional Investment Services (Canada) Inc.

For advisors who joined Global Maxfin as a result of its recent acquisition of PIS, Global Maxfin continues to have an agreement with a service provider to offer financial planning software at a discounted rate. However, unlike PIS, Global Maxfin will not be offering financial planning training or seminars.

“We are paying out a high amount on the grid, along with a very competitive flat-fee model,” says Global Maxfin president Bruce Day. “So, there is very little margin left for the dealer to provide additional support services.”

Meanwhile, for those firms that still offer support for financial planning, some advisors expressed concerns about departments being cut back, services being available only if advisors sell proprietary products or software tools that don’t meet clients’ needs.

Burlington, Ont.-based Manulife Securities saw a significant drop in financial planning support, to 5.4 from 6.5 last year. But the firm is currently in the process of adapting its Web-based client-management tool for advisors, which will feed directly into advisors’ financial planning software. Manulife does not require advisors to use any specific software, says president and CEO Rick Annaert, as it wants to continue to give advisors the independence to choose the software that suits them best.

A Manulife advisor in Ontario who rated the firm’s financial planning support at zero says that he would prefer the firm provide the software: “It would be nice if we had a standard Manulife software across the company. Manulife should present a more unified face to the public.”
@page_break@Winnipeg-based Investors Group Inc. has built its reputation on its financial-planning focus, and after a year of tumultuous markets, its efforts have paid off. The firm saw the largest increase in the category, up by 0.4 of a point to 9.1 from 8.7 in 2009. An advisor in Ontario states that the most positive aspect of working at Investors Group is “the ability to do complete and full financial plans with every investment, insurance and debt product. It is about having access to the whole package at competitive rates.”

Similarly, a colleague in Manitoba says the firm’s best attribute is “its ability to help people do financial planning.”

The full-service dealer places strong emphasis on one-on-one client relationships that involve completing full financial plans and developing long-term objectives.

“We want advisors first to look at the client and the client’s needs, and then that dictates the kind of product mix the client would have,” says Kevin Regan, Investors Group’s executive vice president of financial services. “We try to make sure advi-sors look at insurance needs, banking needs, mortgage needs, as well as the investment product line.”

The firm provides all new advi-sors with the education necessary to establish themselves in the industry; as well, Investors Group helps advisors begin the education necessary to become full-fledged financial planners. The firm strongly encourages advisors to obtain the CFP designation, and offers credits that can be used to cover the costs of acquiring it.

In fact, 72% of Investors Group advisors surveyed hold the CFP. An advisor with the firm on the East Coast says the industry needs to put more emphasis on education requirements: “Too many people are saying they’re financial planners, and they’re not.”

Currently, there are between 17,000 and 18,000 CFPs in Canada, with an additional 2,000 candidates writing the CFP examination this month, says Cary List, president and CEO of Toronto-based Financial Planning Standards Council. “Financial planning is critically important to the industry,” says List. “In fact we, as a society, need to find ways to harness the interest and the willingness for consumers and advisors to engage in comprehensive integrated financial planning. The industry needs to get consumers to make sure that they are doing their own due diligence. And many clients assume they are working with a CFP because it is a minimum requirement, but it is not. So, to hold the CFP goes a long way today — much more than it did before.”

Mississauga, Ont.-based In-vestment Planning Counsel also strong-ly encourages advisors to obtain designations, with a significant focus on financial planning. The firm saw a slight increase in its rating for the category, up to 7.8 from 7.7 last year. Advisors offer their clients the Dream Plan, a financial plan that helps clients live out their lifetime goals.

“We are focused on helping advi-sors deliver a better client experience, and it has to be based upon financial planning,” says John Novachis, IPC’s president and CEO. “All of our business processes and methodology are around delivering a holistic wealth-management offering, from the investment side to the risk-management side to the estate side to the cash and credit side. It is a full-service wealth-management experience.”

IE