Increased tech spending heralds new era: Includes chart

In any case, when CEOs start using geekspeak, it’s a good thing — at least they know getting it right is important. Technology scores are up incrementally this year over last, and that has not always the case. Maybe it’s because, almost across the board, executives have told Investment Executive that spending on technology is now a priority.

“We’re always spending. Everybody is,” says Bob Larose, executive vice president of of private client services with Vancouver-based

Canaccord Capital Inc. , the firm that took second place in combined tech tools and front office scores this year with a 9.0 (vs Richardson Partners Financial Ltd. ‘s 9.1).

When it comes to job satisfaction, advisors weigh technology second only to compensation, and they often cite the tech category as either the best or worst thing about their firms. That’s because a poor system can frustrate an advisor’s work all day, every day. A good system allows advisors to do their jobs.

“Technology is becoming, in some ways, a very big part of the investment business overall,” says Mike Reilly, president and national sales manager at Toronto-based TD Waterhouse Private Investment Advice, whose investment in the Thompson One quote vendor system has pleased its advisors.

Sue Dabarno, Richardson’s president, says technology has changed the way advisors work and communicate. Winnipeg-based Richardson was in the enviable position of being able to start from the ground up, unencumbered by old hardware and software — the so-called “legacy” systems. The company provides the backbone of its new system, plus a technology allowance that brokers can use to beef up their systems as required.

“The platform is essentially a virtual office that allows investment advisors to work anywhere they have access to the Internet,” Dabarno says. “IAs could be in Mexico on vacation or in their retirement home and still conduct business as though they were in the office.” The firm plans to add a portfolio-management system and improve its client statements in 2006, she adds.

Canaccord pushed the envelope this year, too. “I am really surprised,” says one West Coast advisor who recently moved to the firm. “I didn’t think a small boutique firm would have such excellent technology. It is better than what I had at National Bank Financial Ltd. — and that was good.”

In fact, the nimble boutiques still outdo the bank-owned brokerages by a wide margin in this category, but that gap is narrowing — particularly in the category of back-office support and trade execution.

BMO Nesbitt Burns Inc. takes the award for the most improvement. Advisors at most branches watched wide-eyed as technicians recently installed flat-screen monitors and hardware. But, more important, after a year of training, advisors are reaping the benefits of a three-year technology investment cycle.

“We realized that having the technology wasn’t good enough,” says Richard Mills, Nesbitt Burns’ national sales manager in Toronto. “We needed to make sure people were properly trained and educated about it.”

In conjunction with tutoring, a team of “tech guys” travelled across the country to observe how advisors worked with the new technology, he adds: “In the future, we’ll concentrate on making our software work together.”

CIBC Wood Gundy and TD Waterhouse saw scores improve in more than a dozen categories each, including in technology. Much higher tech scores at RBC Dominion Securities Inc. and National Bank Financial are notable as well.

“It took a period of acclimatization to get used to Web-based portfolio management and realize the benefits,” says Gordon Gibson, senior vice president and managing director of National Bank Financial in Montreal. “We’re about 50%-60% there; we want to get 100% there.”

Technology is a catch-all term referring to many aspects, from the speed of the advisors’ desktop computers themselves to the quality and speed of the servers that run several pieces of shared software. Advisors might be pleased or miffed about the intuitiveness of several pieces of software, including the quoting system, the portfolio- and client-management software, and the back-office software. It helps if they all work well together, too. Certainly, there’s a lot that can go wrong or right.

@page_break@But not every chest pain is a heart attack. A case in point is Edward Jones, at which the technology systems are fundamentally sound and the firm invests healthily in technology. Its score is down appreciably, however. Advisors appear to be punishing the firm over details. For example, the firm rolled out e-mail for its advisors after two years of complaints. And, although the firm installed new hardware, including flat-screen monitors, in most offices in 2005, advisors are impatient for this year’s arrival of the well reviewed financial planning NaviPlan software from Winnipeg-based EISI Inc.

If a firm misses a basic target altogether on technology, brokers from coast to coast will punish it. For example, at ScotiaMcLeod Inc. , which improved a lot but not enough over the past year, almost half of the 40 brokers interviewed said the firm’s technology shortfall was the “worst thing about the firm.”

With impressive verbal efficiency, one British Columbia advisor pegs the problem this way: “It is old, cheap and slow.”

“It’s the worst in the industry,” adds a colleague on the opposite seaboard. “It’s been proven. Even our senior executives know that.”

Indeed, it has been proven again. For his part, Hamish Angus, head of the full-service brokerage at ScotiaMcLeod, has acknowledged for the second year in a row that technology is a serious problem. “We’re addressing it,” he says.

The firm spent about $6 million in 2005 installing speedier servers that will be able to handle a more robust front-end system for advisors that is on the way next year, Angus adds: “I think that will help us get back to the point at which we’re extremely competitive in the industry. And we will build on that platform for the future.” IE