Dealer firms have to do a better job in keeping the promises they make to their financial advisors – especially in the categories of compensation, technology and advisors’ ability to maintain their independence, said the advisors surveyed for Investment Executive‘s 2015 Dealers’ Report Card.
Although advisors rated their “firm’s delivery on promises” at 9.0 in overall average importance, the overall average performance rating of 8.1 results in a “satisfaction gap,” of 0.9 of a point, which is among the 10 largest such gaps in this year’s Report Card.
Furthermore, among 11 firms at which advisors were surveyed, only one saw its performance rating in the promises category rise year-over-year: Mississauga, Ont.-based Investment Planning Counsel Inc. (IPC), whose performance rating rose to 8.6 from 7.8 last year. Meanwhile, the rating for one of the firms tied for the lowest rating in the category, Richmond Hill, Ont.-based Global Maxfin Investments Inc. (7.5) has remained level with last year’s rating, and the remaining nine firms all saw their performance ratings decrease.
Failure to live up to promises related to compensation is one reason why Lévis, Que.-based Desjardins Financial Security Independent Network saw its rating drop to 7.5 from 8.1 in 2014.
“When Desjardins purchased MGI [Financial Inc.], they promised us a lot, but not everything they told us has come true,” says a Desjardins advisor in British Columbia. “For example, they recently decreased our pay by 11%. They keep charging more fees for me to run transactions.”
Montreal-based Peak Financial Group is another firm whose delivery on promises rating dropped by more than half a point, to 8.5 from 9.1 in 2014. One reason for this is related to the firm’s failure to deliver on improvements to technological tools.
“Some technical things, they were slow on,” says a Peak advisor in Ontario. “Technology is a weakness still here.”
Nevertheless, Peak advisors still gave their firm one of the highest ratings in the category – and that’s because the firm has kept its word on an issue that’s very important to many advisors.
“The promise [Peak made to me] was independence – and they delivered,” says a Peak advisor in Quebec.
Independence matters to advisors
IPC also has benefited greatly from delivering on its commitment to allow its advisors greater freedom. Says an IPC advisor in Ontario: “I joined IPC because they were an independent [at the time]. The firm has allowed me to stay in that mode.”
The fact that IPC advisors feel their firm has maintained its promise of independence is important to Chris Reynolds, IPC’s president and CEO, who notes that this characteristic is a key part of the firm’s brand as an independent dealer that attracts experienced advisors.
“We’re where veteran advisors build their businesses – and they build it their way,” Reynolds says. “We have lots of support, but it’s up to [advisors to] use it or not.”
Advisors with Toronto-based HollisWealth Inc., who joined the Bank of Nova Scotia-owned firm as a result of that bank’s acquisition of DundeeWealth Inc., have very mixed views on whether their firm and its parent bank have maintained their commitment to advisor independence at the rebranded HollisWealth.
“Scotiabank has held up its end of the bargain from the acquisition – to be hands-off,” says a HollisWealth advisor in Alberta.
In contrast, a HollisWealth advisor in Ontario says, “We should be partners, not adversaries. They’re taking away our independence.”
For the most part, a majority of HollisWealth advisors share this latter sentiment, as the firm’s performance rating in the promises category dropped by the most of any firm this year, to 7.6 from 8.7 in 2014.
Tuula Jalasjaa, managing director and head of the retail advisory network at HollisWealth, is not surprised by this reaction. She suggests that advisors who are frustrated with what they perceive to be decreased independence actually are reacting to changes the firm must make in order to be in line with regulatory requirements.
Independence includes having access to an open-architecture product shelf, controlling the construction of portfolios and choosing how and what the advisor will charge clients, says Jalasjaa: “That’s independence, and we’ve preserved that. What independence is not is a choice about things such as whether you want security of client data or implementing [changes related to] regulatory requirements.”
To stress HollisWealth’s focus on independence for advisors, Jalasjaa adds, the firm will be promoting that very feature through a marketing campaign that was scheduled to begin at the end of May.
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