Independent brokers score their firms better than their bank-owned counterparts when it comes to rating the technological strength of their operations.

That’s despite the fact that most banks can afford to spend more on technology in a few months than most non-bank-owned dealers can afford to spend in a year.

Canaccord Capital Inc., Wellington West Capital Inc., Dundee Wealth Management Inc., Edward Jones and Raymond James Ltd. all scored highly when advisors were asked about their firms’ front- and back-office technology, as well as quote and information systems.

Canaccord took top spot in front- and back-office technology while Wellington scored highest on quote and information systems.

Advisors at First Associates Investments Inc.
gave low marks to their firm’s front and back
office, but high markets to its quote and information systems. Nonetheless, First Associates still scored higher than many of the bank-owned firms when it came to technology.

However, that could soon change, as it seems some banks are gearing up for a new technology adoption cycle after remaining somewhat on the sidelines in the past few years.

Hamish Angus, managing director with Toronto-based ScotiaMcLeod, says that his firm’s advisors’ board has called for greater focus on technology. “It’s taking more of my time and focus,” he says. “We’re spending more.”

Gordon Gibson, senior vice president and managing director of Montreal-based National Bank Financial Ltd., maintains technology spending is very much on the upswing. “A couple of years ago we could boast of having a significant technological advantage over our principal competitors,” he says. “But we invested less in that area in the past couple of years. The advantage we may have had has certainly shrunk. We’re beginning the next cycle. We intend to put a fair amount of money toward front-office technology.”

That bodes well for NBF advisors because the trio of technology categories were ranked as one of the top 15 most important items considered by all of the advisors who participated in Investment Executive‘s 2005 Brokerage Report Card.

That should come as no surprise to investment dealers, as advisors essentially pay the brokerage firm a portion of their commissions so it can provide trading tools and systems for the advisor. Technology is one of the key things that advisors should be getting from their relationships with their firms.

However, it’s clear there’s a lot of frustration with technology issues at brokerage firms, both bank-owned and independent. One Western ScotiaMcLeod advisor says his firm’s back-office technology is “10 years behind” his previous employer. In terms of the front office, another advisor says, “Technology advancements are all promises, no delivery.” Another says simply:
“It sucks.” A West Coast advisor notes that ScotiaMcLeod’s quote system has changed twice during his tenure, and “each time, it’s worse.” However, a few ScotiaMcLeod advisors observe that the front- and back-office technology is “getting better.”

An RBC Dominion Securities Inc. advisor in Atlantic Canada says the problem with his firm is that it does not follow through on providing advisors with the tools to do their jobs, especially in the area of discretionary portfolio management. “[There is a] perceived need to have proprietary software and systems instead of buying ready-made systems, which are just as good if not better than proprietary ones in the marketplace,” the advisor says.

One CIBC Wood Gundy advisor notes that the technology provided by the company is adequate — “But we go outside of the company and hire our own technology at this branch that suits our business much better.”
Another advisor notes that Wood Gundy’s technology is “way behind what was promised” and the back office has “difficulties and old procedures.”

Edward Jones, long the darling of the survey, took some hits on its technology, with one broker suggesting that the firm needs to get a whole new back-office platform. However, another Edward Jones advisor notes that there are major technology changes coming over the next two years that will make the front-office technology “amazing.”

Gary Reamey, head of Canadian operations at Edward Jones in Mississauga, Ont., says the firm spent $250 million globally on technology last year and rolled out 30 new investment tools, many of which apply to Canadian advisors. “It may have been the biggest year for delivering computer system tools to our reps,” he says.

If it was, it isn’t reflected in the scores — yet.
The numbers were up only marginally over last year, although there was a jump in the scoring of its back-office technology.