High-tech frustration

Consider comments by RBC Dominion Securities Inc. advisors when asked about their client-management software: ‘It’s God-awful. It’s absolutely the pits. I can only guess they’re locked into the contracts with the dunderheads they’re using …. Mind you, I hate all forms of technology.’

One broker, so fed up he decided to buy his own software, says the integration between DS’ software and its trading system is non-existent. To begin with, inventory prices are sometimes inaccurate – a fact he describes as ‘a mortal sin.’

At ScotiaMcLeod Inc., a brokerage in the throes of installing a new program, advisors are struggling. ‘If you trust it, you are dead. If you rely on it, you are dead,’ says one veteran advisor in Ottawa. ‘The stuff they’ve done causes more headaches than comfort.’

Praise at the top-ranked firms is equally strong. ‘Technology is another reason I chose Edward Jones,’ says one advisor from the Mississauga, Ont.-based firm.

And brokers at CIBC Wood Gundy Securities Inc. are elated the firm invested some money into technology they hail as ‘excellent’ and ‘fabulous.’

Large brokerages understand how the ideal software system should work, but few have managed to put it in place. Investment Executive’s ’99 Brokerage Report Card posed three questions about technology: how do you rate client management software, portfolio management systems and your quote and information system. Each issue affects the other.

‘If it’s done right, they’re all integrated,’ notes Gary Reamey, head of Canadian operations at Edward Jones, where brokers use relatively seamless technology throughout the branches, including in-house software with a suite of programs they can easily navigate. Portfolio management and asset allocation options are designed so that a client can understand them.

A recent speech by Royal Bank of Canada chairman John Cleghorn to Edward Jones brokers was beamed by satellite, like most Jones data, to each branch, and clients were invited to watch. The St. Louis-based parent of Jones has spent about $150 million in the past two years on technology.

In reality, such a system takes time and money to develop. Many advisors across Canada must instead cope with a patchwork of programs that don’t always fit together well.

Many firms promise each year to upgrade their software. But no such word will be coming from DS, which will first solve its data configuration problems before considering a more comprehensive desktop system next year, says Peter Armenio, who heads up the firm’s private wealth division. In the meantime, brokers see improvement in quote and research data on their intranet.

Believe it or not, Microsoft’s disk operating system (MS-DOS) is still kicking around, with varying degrees of success in financial centres across the country. And why not? Windows-based technology is not a panacea for advisors, who are pleased with programs they are used to. New programs have bugs. ‘We have the best in-house system around; it is the envy of all people on the street,’ says one Lévesque Beaubien Geoffrion Inc. advisor.

Lévesque was among the top performers again despite the fact most advisors are using the DOS version of Croesus, a software package developed by Montreal-based Unigiciel Inc. The system was first introduced at Lévesque four years ago and has since gained followers in the industry.

‘It allows [the advisor] to carry out all different functions and information to flow easily between all different applications,’ says Peter Conway, manager of the project office at Lévesque in Montreal. ‘So you don’t have to re-key symbols …. You can look at prices, portfolios, make orders, do research information, all at once.’

The same software was deemed worthy of only a 6.5 rating by TD Evergreen Investment Services Inc. advisors, likely because the system hasn’t been fully integrated with a central database at the brokerage, says Bill Henderson, executive vice president, operations and technology, at the Toronto-based firm. The data problem has caused some portfolio miscalculations.

The firm expects to resolve the issue this summer, while rolling out a Windows-based version of the Croesus program, now called Spectra Croesus Portfolio. (Toronto-based Spectra Securities Software Inc. took over distribution of the product more than a year ago, when it took a stake in the company and integrated it with its own desktop software.)

Advisors at Evergreen have been promised new systems before, but all technology spending was halted, except for Y2K compliance, when Toronto- Dominion Bank was in merger talks that later failed. Henderson says the firm elected to start fresh with Spectra.

Merrill Lynch Canada Inc., which scored a marginal passing grade last year, landed an even slimmer 5.1 in 1999. ‘We’ve listened to our people and it’s going to be a different score next year,’ promises Peter Kahnert, vice president, corporate communications. He says a beta-test of the same Spectra portfolio system has received high marks from its investment advisors.

A new program doesn’t guarantee great grades from the brokers. The variables are time, money and dedication to ironing out the wrinkles. California-based Plaid Brothers’ portfolio software works well at Wood Gundy, the second-place finisher. Wood Gundy was the first to bring the package to the Canadian industry, and it works consistently with Plaid to develop functions. Advisors there have lived through the firm’s determination to get it right: seven upgrades to Plaid in five years.

The system’s success is also dependent on the integration of portfolio and client information and order entry, says Mike Boluch, executive director of technology at CIBC Wood Gundy Private Client Investment. Once an order is confirmed the advisor simply fills in the variables.

‘All you’re left to do is to fill in a variety of fields, commissions, et ceteras and away you go, you’re gone,’ says Buloch.

Trades are downloaded to branches every night where portfolios are updated. A range of 20 pre-programmed reports, half client-centred and half advisor-related, are popular with the brokers. Ongoing training is integral to the technology’s success, adds Boluch.

Advisors might take heart because their firms really do want complete integration of their systems. Not only to keep advisors happy, but to keep them from walking out the door with their clients’ data in hand.