A happier bunch

I respect the company that [Toronto-based Assante Wealth Management (Canada) Ltd.’s] has become under CI [Financial Corp.’s] stewardship, says an Assante advisor in British Columbia. We’re moving ahead of the competition in many ways. It’s very positive. The support in place is going to allow us to capture more assets.

One reason advisors may be feeling happy with the work their dealers are doing is the resultant growth advisors have seen in their books of business. In fact, the average advisor’s book rose to a Dealers’ Report Card record high of $39 million this year, up from $34.4 million in 2015 and from the previous high of $36.5 million in 2014. (See Advisors experience solid growth.)

But the sense of optimism advisors have about their dealer firms is most obvious in the ratings they gave their firms. In particular, 63 of the ratings that advisors gave their firms were higher by half a point or more whereas only 18 were down by the same margin. In turn, Toronto-based HollisWealth Inc., Oakville, Ont.-based Manulife Securities, and Richmond Hill, Ont.-based Global Maxfin Investments Inc. all saw their IE rating, which is the average of all categories in which advisors rated their firm, rise by half a point or more. (See Shifting fortunes for four firms.)

One firm that’s seeing hard work pay off is Global Maxfin. Not only did that dealer’s advisors rate their firm better by half a point or more in 10 of the 20 categories in which the firm received a rating, but the independent dealer’s IE rating rose by the same margin and has been increasing steadily for the past few years. Specifically, many Global Maxfin advisors pointed to the fact the company has been able to remain independent when many competitors are being bought out by larger players.

[My firm] is one of [a few] remaining totally independent dealers, and [we] offer a full range of products, says a Global Maxfin advisor on the Prairies. [We’re] a one-stop shop.

The one exception to the overall positive results was Windsor, Ont.-based Sterling Mutuals Inc.: its ratings dropped by half a point or more in 10 of the 23 categories in which it was rated. (The firm’s IE rating also dropped by the same margin.) Much of this dissatisfaction stems from Sterling Mutuals’ acquisition of Armstrong & Quaile Associates Inc. last year, something for which advisors said the firm was not ready.

[The firm] outgrew itself with the latest acquisition, says a Sterling Mutuals advisor in Ontario.

Although Sterling Mutuals is the only company in this year’s Report Card to be dealing with the after-effects of a merger, the firm is not alone in the work it’s doing to try to meet advisor expectations. In fact, many advisors in the survey pointed to anticipated improvements as a reason for their overall optimism.

For example, technology tools and advisor desktop is one category in which advisors frequently are frustrated with their firms even when progress is being made. Case in point: the category had the largest satisfaction gap the difference between the overall average performance and importance ratings in the Report Card, which suggests that advisors’ lofty expectations are not being met in this category.

Yet, five firms saw their performance ratings for tech tools rise by half a point or more. Advisors as a group acknowledged that technology is always a category in which firms are forever playing catch-up, but they expect to see improvements soon.

We are supposed to get some improvements this year, but there are some growing pains right now, says an advisor in Ontario with Lévis, Que.-based Desjardins Financial Security Independent Network.

Another category that has long been reason for complaint by advisors is client account statements and the results of this year’s Report Card show that this has not changed. By and large, advisors take issue with the fact that the statements are too long and often confusing for clients.

They’re not great, says an advisor on the Prairies with Mississauga, Ont.- based Investment Planning Counsel Inc. They’re not as wonderful as they could be, but that’s an industrywide problem.

Nevertheless, many advisors saw updates to their firm’s client account statements as a result of the implementation of the second phase of the client relationship model (CRM2), which will require greater cost and performance disclosure.

[Client account statements] are getting better because we are moving toward CRM2, says an advisor in Alberta with Winnipeg-based Investors Group Inc. Clients see their rates of return, for good or bad, so we have to talk about them. I am fine with that. (See Account statements fail to inspire.)

Another category in which firms are making changes as a result of CRM2 is advisor compensation models. This year, advisors were asked to rate their firm’s support for operating within a fee-based model for the first time because of the number of advisors making the transition to this platform and away from commissions.

I was one of the first [advisors on the fee-based platform]. We’ve been through the gamut [with] no support, and now there’s quite a few advisors who are operating [for fees], says a HollisWealth advisor in B.C. [Fee-based compensation] has become easy to work with, both in terms of how you execute on it and you can crossreference and make sure the billing is accurate. We have everything in-house.

A common theme among advisors who feel supported by their firms and are happy with their dealers and the work to prepare for the future is strong communication. A closer look at the ratings shows that firms that have a strong rating in the firm’s strategic focus, firm’s effectiveness in keeping advisors informed and firm’s receptiveness to advisor feedback categories tend to be rated highly overall. (See Communication affects satisfaction.)

HOW WE DID IT

Canada’s mutual fund and fullservice dealers don’t hesitate to tweak their businesses in order to make improvements when necessary and the same holds true for the way Investment Executive (IE) approaches its annual Dealers’ Report Card. That’s because the questions IE asks financial advisors in the Report Card survey are reviewed and refined on an annual basis.

In particular, some of the categories that IE research journalists Ahmad Hathout, Megan Marrelli, Beatrice Paez and Kat Shermack asked the 477 advisors at 11 dealers to rate their firms have changed.

Research journalists asked advisors to give two ratings for each of the 31 categories in the main table on page C4: one for the firm’s performance and another for the importance of that category to the advisor’s business. (Each rating is on a scale of zero to 10, with zero meaning poor or unimportant and 10 meaning excellentor critically important.) One of the categories included in last year’s Report Card support for constructing a deaccumulation strategy for retired clients was removed because it was considered redundant among the other wealth-management- related categories in the survey.

In contrast, the firm’s support for advisors operating within a fee-based model category was added to reflect the growing number of advisors making the transition to and operating within a fee-based model instead of a commissions-based business.

Another change to this year’s survey was rephrasing the firm’s image with the public category. This year, advisors were asked to rate their firm’s reputation with clients and/or prospective clients. This change was made to clarify that the question is about a firm’s reputation, not its marketing efforts.

In addition to changes in some of the categories, one of the firms in the Report Card has gone through changes of its own. Windsor, Ont.-based Sterling Mutuals Inc. acquired Waterloo, Ont.-based Armstrong & Quaile Associates Inc. (A&Q) in June 2015. A&Q advisors were not surveyed for this year’s Report Card because the merger took place less than a year before research began. Responses from former A&Q advisors will be included in the 2017 Dealers’ Report Card.

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