It’s far from lonely at the bottom of Investment Executive‘s 2005 Brokerage Report Card, but there is ample evidence of improvement as firms listen to their brokers.

For the second year running, CIBC Wood Gundy, First Associates Investments Inc.,
ScotiaMcLeod and TD Waterhouse Private Investment Advice are holding court at the bottom of the BRC barrel. In 2005, TD and First Associates, both based in Toronto, share the lowest IE rating of 6.4. Wood Gundy is in tenth place — a mere one-tenth of a point ahead — and ScotiaMcLeod’s IE rating of 7.1 earned it a ninth-place finish.

Firm stability, strategic focus and corporate culture have been thorny issues for Wood Gundy, First Associates and TD for the past two years, with technology and payout remaining ScotiaMcLeod’s bête noire.
However, while ratings for Wood Gundy and First Associates continue to slip, ScotiaMcLeod’s scores have stabilized and TD is on an upswing, despite its last-place finish.

TD advisors rated stability a low 7.4 — nonetheless a 1.7-point improvement over 2004. And while Wood Gundy reps scored their firm’s stability at 8.4 — only 0.5 points below average and a 0.3-point increase from 2004 — they’re still worried that the firm won’t be around for long. One Ontario rep says Wood Gundy doesn’t have a strategic focus because it doesn’t need one. “They plan to sell the firm,” he says. “In the meantime, they’re picking my pockets so they can earn millions.” Another Ontario broker jokes that firm’s strategic focus “got lost in the fax machine.” Overall, Wood Gundy advisors gave their firm’s strategic focus a rating of 6.1, a 0.9-point decline from 2004.

Advisors at First Associates are only slightly more certain of their corporate direction. The firm’s strategic focus score fell to 6.6, a loss of 0.8 points from 2004. “This firm doesn’t know where it’s going,” says a First Associates advisor in Ontario. “There’s no direction from management,” says a Western broker.

Over at TD, the firm’s strategic focus score rose an impressive 2.3 points in 2005, settling at 7.1. While still lagging the industry average of 8.1, advisors overwhelmingly agree that the firm is now — finally — on the right track.

Rejigged head office

“I’m optimistic that the new management team will pull together to improve the company,” says one West Coast broker, referring to the radically rejigged head office that was developed following the hiring of TD Wealth Management Inc. executive vice president Bill Hatanaka in 2003.

That’s good news for Dave Pickett, head of practice management for TD Waterhouse in Toronto. Aside from the management makeover, TD advisors have also dealt with the demise of the treasured 70/30 payout grid in late 2003, a change that caused unrest amongst many advisors in 2004.
“There were definitely some eyebrows raised over that,” says Pickett. “To be fair, what attracted some folks to TD was the 70/30 grid.” Resentment over the switch still lingers, as is evidenced in TD’s paltry scores for payout and living up to promises.

With that transition complete, TD has plowed resources into new portfolio and contact management systems, along with a new quote system that will début in June.
“We are building a platform here so that we can eventually grow to 800 or 900 advisors,” says Pickett.

The firm’s brokers are buying into that vision. “TD is forward-thinking and well organized,” says an Ontario advisor. “The long-term strategy looks good,” affirms another.

In keeping with that enthusiasm, TD advisors peg their firm’s corporate culture up almost a full notch from 2004, to 6.4. from 5.6.

That positive feedback is far from the advisor indifference to corporate culture at both Wood Gundy and First Associates. “The prevailing attitude is to do anything not to lose,” says one Wood Gundy advisor.
“That’s boring in comparison to a culture that would do anything to win.” Wood Gundy reps gave the firm’s culture a rating of 5.4, a 1.7 point decline from 2004 and by far the lowest score in the category.

Over at First Associates, another radically rejigged management team is working to win over advisors — but with less success.
The firm’s score for corporate culture dropped to 6.2 from 2004’s 7.2. “The environment here has deteriorated dramatically over the past one-and-a-half years due to the management changes,”
says one First Associates advisor. First Associates president and COO Stuart Raftus came on board in September 2003 and quickly cleaned house. “The worse aspect of this firm is the head office’s attempt to enforce corporate culture,” says another West Coast broker. “We’ve lost a lot of good people.”