Canada’s investment dealers are doing a relatively good job in helping their financial advisors deal with the onslaught of regulatory changes that are shaking up investment industry practices, according to the results of this year’s Brokerage Report Card.

Specifically, as the industry prepares to implement the second phase of the client relationship model (CRM 2), both the advisors surveyed for this year’s Report Card and their firm’s executives say the pace of regulatory reform has been overwhelming. (CRM 2 is a sweeping set of changes that focuses on enhanced cost disclosure and performance reporting, which is being adopted in phases over the next two years.)

As a result, advisors value highly any help they can get in adapting to the new rules, as demonstrated by the fact that the new category – “support for helping to deal with changes in the regulatory environment” – received an average importance rating of 8.9.

Overall, advisors appear to be pleased with the steps their firms have taken to ensure that they’re both aware of the changes and prepared to comply, assigning their firms an average performance rating of 8.5 in the category.

“There are so many changes coming, and [the firm is] on the ball,” says an advisor in Ontario with Toronto-based ScotiaMcLeod Inc. “They have to be.”

“A lot is being pushed down our throats from [the Investment Industry Regulatory Organization of Canada (IIROC)],” adds a broker on the Prairies with Toronto-based CIBC Wood Gundy. “The firm is dealing with this as much as is humanly possible.”

Calgary-based Leede Financial Markets Inc. earned the top performance rating in the category with a 9.4. The firm’s advisors commended Leede for both keeping them informed regarding regulatory developments and providing tools to meet the new requirements.

“They are keeping us abreast of what’s going on,” says a Leede advisor in British Columbia. “They are taking the time for everyone to get organized.”

Robert Harrison, Leede’s president and CEO, says regular communication is a critical part of supporting advisors during periods of regulatory change: “As we put in new guidelines and rules, we’re sending them out to everybody on an ongoing basis. It seems that we’re sending things out every week.”

Other firms that earned their advisors’ praise in this category have been similarly focused on keeping their advisors in the loop regarding looming reforms.

“It’s all about making sure [advisors] are aware of it and what it means to their business, as well as providing advice, support and resources,” says Andrew Marsh, president and CEO of Toronto-based Richardson GMP Ltd., which was rated at 9.1 in the category.

Advisors also laud firms that take steps to prepare for regulatory changes proactively rather than waiting until the last minute to comply. Advisors with Mississauga, Ont.-based Edward Jones, which was rated at 9.2 in the category, say their firm has been particularly effective at planning ahead.

“We are forewarned and forearmed,” says an Edward Jones advisor in Ontario. “We were all advised and we are all clear on coming changes and how we need to shift now to mitigate issues going forward.”

David Lane, principal and head of Canadian operations with Edward Jones, says the firm strives to ensure that its advisors are complying with the rules well before they come into force. “We got out in front of this,” Lane says. “We’re shooting to get things done prior to when they are required to be done.”

Meanwhile, some other brokerage executives say they have found it difficult to prepare for these regulatory changes due to the limited guidance received from regulators.

“The details of these changes have not necessarily been clear,” says Alex Besharat, managing director and head of ScotiaMcLeod. “As late as December, for example, IIROC was still coming out with interpretations of what the [Canadian Securities Administrators] had said earlier. So, we’ve had to do a lot of work here, both to interpret the changes and then communicate the changes to the field.”

This confusion at the executive level has translated into a frustrating experience for advisors with some brokerages. “There hasn’t been much communication on it,” says a ScotiaMcLeod advisor in Ontario.

Adds an advisor with Toronto-based TD Wealth Private Investment Advice in Alberta: “Other than saying changes are coming, nothing else has been said.”

However, even in cases in which firms are working hard to keep their advisors informed of regulatory changes, executives can’t control the extent to which advisors consume the material that’s being offered.

“Part of the problem with communication is that by the time you send out a lot of it, they stopped reading it 10 emails ago,” says Monique Gravel, managing director and head of Wood Gundy. “[Advisors] have to be willing to pick up the phone to get on a conference call or read the emails.”

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