Berkshire, Dundee hold the stage with the pros

Each firm took first place in a category. With a rating of 8.4, Berkshire tied for top honours in front-office technology with Edward Jones, while Dundee led the pack with an 8.0 rating in corporate finance. Both firms have a solid Web presence. Advisors at these firms also like the freedom they have to sell the products they favour.

But advisors were not hesitant about expressing some concerns. Berkshire’s split personality is particularly evident. In addition to its top-five finish among overall broker rankings, it also recorded the lowest scores in seven categories.

Advisors voiced widespread complaints about advertising support. This was one of Berkshire’s low scores, but it promises improvements. Geoffrey Charlton, senior vice president of national sales in Burlington, Ont., says it makes no sense to cut marketing budgets: “This is the best time to work with clients. This is when they need us more than ever.”

Dundee is also reviewing its marketing spending for the second half of the year, says Don Charter, the Toronto-based firm’s chief executive.

Advisors at each firm like their payout structures, which offer them a choice of the more traditional brokerage grid based on gross commissions — generally at the firms’ corporate office — or an “associate” category more typical of the fund distribution business, where the payout is 85% and advisors pay the expenses. Dundee says it has no plans to review its payout structure, while Berkshire’s Charlton says the firm is in the process of looking at different compensation arrangements. “We are one of the independents that has not cut payout in a long time,” he says.

Selling more securities means, to a certain extent, incurring “higher levels of compliance and regulatory costs,” says Dan Richards, Toronto-based chief executive of Cartier Partners Financial Group Inc., a financial planning firm that is also encouraging its advisors to get securities licences.

“I think, in the foreseeable future, there will be a role for advisors who say, ‘My clients generally aren’t interested in stocks and bonds. They don’t have a need’,” he says.
“But having a way to accommodate clients will be an issue everyone will have to grapple with.”

Richards adds that firms that were traditionally mutual fund dealerships can take various routes to offer full financial advice. Every aspect of the firm can be farmed out to third parties: back- and front-office support, research, fixed-income products and training. Regarding securities sales, firms can have a referral system or a 1-800 number for clients to call for specific stocks, or they can hire and train planners who have securities licences. Dundee and Berkshire have taken the last route.

Dundee’s Charter doesn’t want his firm’s direction misrepresented. He says brokerages are moving toward the focus taken by financial planners — to asset-gathering and long-term goals — not the other way around. “Where the bank-owned brokerages excel, we want to be like them,” he says. “Where they’re not good, we don’t want to be like them.”

Likewise, it was never Berkshire’s goal to become a full-scale brokerage, says Charlton. There are no plans to develop institutional trading desks or options products. Becoming a securities firm was something Berkshire realized it had to do to meet clients’ needs. The firm hired about 100 advisors and reps last year, and about 40% of its Berkshire Investment Group Inc. advisors who had securities licences moved over. Better payouts await advisors who acquire more training.

At Dundee, the first cycle of continuing education credits required by the IDA has been met. Spending on training is under review at the company and may increase in the second half. The firm currently holds a national conference and some branch sessions on financial planning, including some sponsored by Dundee Insurance Agency Ltd.