Advisors displeased with account statements

“I love them, and so do my clients,” says a Richardson Partners Financial Ltd. on the East Coast. “They’re easy to read.”

But a fellow Richardson Partners advisor in Ontario feels the exact opposite about the same statements: “The statements are confusing and tough to read.”

“Just as you’ll never get two clients to agree on what makes a perfect statement, you’ll never get two advisors to agree,” says David Burnes, executive vice president and chief operating officer of NBCN Inc. , the firm responsible for producing the statements of almost 70 Investment Dealers Association of Canada firms, including Toronto-based Richardson Partners, Winnipeg-based Wellington West Capital Inc. , Mississauga, Ont.-based Edward Jones and Montreal-based National Bank Financial Ltd.

This lack of consensus is one reason why advisors rated client account statements a 7.5 on average — relegating the category to the bottom third of the survey. And the fact that client account statements ranked as low as they did begs the question that a Raymond James Ltd. advisor in Alberta asked: “Does anyone like their statements?”

Advisors at Toronto-based GMP Private Client LP certainly seem to. The boutique firm led the way with a rating of 8.6.

“The biggest advantage we have is being able to combine the clients’ various accounts into one statement,” says a GMP advisor in British Columbia, “whether they are separately managed accounts, portfolio managed accounts or traditional stock-picking. The unified managed account gives clients a very comprehensive report. It is very professionally done and lends an institutional appeal to the account reporting that is unique in the field, to my knowledge.”

Richardson Partners and Wellington West also received high scores, of 8.4 and 8.1, respectively. NBCN produces client account statements for these two.

Burnes attributes these top scores to NBCN proactively asking for feedback about client account statements. Any issues are addressed in breakout sessions at NBCN’s annual conference, during which changes to the client account statements it produces are decided upon.

“It is all about listening to the advisor,” Burnes says. “We poll our clients and ask them what their clients are telling them and what changes they would like to see; we prioritize and cost it out, and then deliver it over the next year.”

Advisors field a wide range of complaints from clients: there is too much information; there is not enough information; clients cannot understand their statements, clients need clarification.

It is answering such calls that takes advisors away from other revenue-generating duties and client services — which no doubt accounts for low scores in the client account statement category.

“Clients have no way to calculate their rate of return,” says a TD Waterhouse Private Investment Advice advisor in Ontario. “That pushes us to produce that work for them on a demand basis. I don’t have the time to do that for every client.”

A MacDougall MacDougall & MacTier Inc. advisor in Ontario was having a similar experience, but found a solution: “Because I get calls from new clients asking me to explain their statements, my team prepared a brochure that explains the account statements to clients.”

Although advisors are frustrated, there is a feeling that statements are as good as they are going to get, given the current IDA regulations.

“They are bulky and difficult to read,” says a Raymond James advi-sor on the West Coast, who gave her firm’s client account statements a rating of 6.0 in performance and a 10 in importance. “They try to be transparent, but they become murky. For the average individual, there is too much info. But that may be due to compliance issues.”

Heavy regulation drives the content of clients statements. “There are lots of requirements around disclosure of description on the types of investments,” Burnes says. “An example is on a mutual fund. There may be a requirement to disclose whether it’s a DSC load or no-load, or what type of load is involved. All of those come down to acronyms that the average retail customer doesn’t want to see. And it all gets in the way when you have only so much real estate on a statement to tell clients clearly the investments that they have.”

@page_break@Burnes says creating a good statement as something of a precarious process: “You have to balance the regulatory requirements that you have to fulfil against trying to be as plain in language as you can in these statements.”

So, what, then, does the future hold for client account statements? Some advisors think the answer may lie in technology. “Rather then sending hard copy to clients,” says a BMO Nesbitt Burns Inc. advisor in Eastern Canada, “statements should be sent by e-mail because, by the time clients receive them, the record is ancient history.”

But regardless of how a client account statement is delivered, Burnes says, what trumps everything is the ability one day to provide individual clients with a tailored statement.

“Today, we don’t have any capability to offer a statement customized at the client level,” he says. “That, to me, is the Holy Grail of client statement reporting. We continue to pursue the Holy Grail. And, as far as I’m concerned, we are not done until we have produced that customized statement at the client level.” IE