Over the years, many readers have wondered why Investment Executive compares the firms featured in the Dealers’ Report Card, as they appear to be as different as apples and oranges. But when you look at each firm’s raison d’être, the common ground is obvious: they are all licensed by the Mutual Fund Dealers Association of Canada (MFDA) and all are focused on serving the financial planning needs of their clients largely through the use of mutual funds.

Each firm has adopted its own unique approach to the way it conducts business in order to cater to the needs of their financial advisors, and to stand apart from the competition. This ranges from a one-stop shop that offers a plethora of support services to a bare-bones platform that caters to more entrepreneurial advisors. Thus, the dealer channel is proof that there is more than one business model that can lead to success.

– Full-service dealers

Some of the largest firms in the dealer space fall under the category of “full-service” dealers. These firms are praised for providing their advisors with a multitude of wealth-management services that can help them serve their clients better. For example, firms such as Assante Wealth Management (Canada) Ltd., HollisWealth Inc. (both based in Toronto) and Oakville, Ont.-based Manulife Securities offer their advisors several support services, including teams of lawyers, accountants and planning specialists.

The level of support can vary from firm to firm; as well, certain support services may involve a fee or be offered only for in-house products. In addition, many full-service firms offer advisors the opportunity to run a business on either the MFDA platform or the Investment Industry Regulatory Organization of Canada’s (IIROC) platform.

(Generally, advisors who operate on these firms’ IIROC platform differ greatly from their counterparts at the brokerage firms. Although advisors at the dealers also sell securities, such as equities and bonds, the majority of their books of business still are heavily focused on mutual funds, which is why they’re surveyed for this Report Card.)

Another benefit of these large, full-service dealers is that many are owned and run by parent companies with significant financial heft, which gives the advisors a sense of stability.

“As long as CI [Financial Corp.] continues to be [Assante’s] owner, we’re going to be around a long time,” says an Assante advisor in Ontario. “We are not going to disappear. “

But not everyone feels comfortable that their firm is owned by a corporate giant. For example, advisors with HollisWealth, the recently rebranded DundeeWealth Inc., continue to have mixed feelings about Bank of Nova Scotia’s ownership of their dealer.

HollisWealth continues to offer its advisors an independent platform. But, after a change in leadership that saw longtime bank executive Tuula Jalasjaa, now managing director and head of HollisWealth’s retail advisory network, take over the reins, many advisors feel that the parent bank’s culture is starting to encroach on their independence.

“We’re dealing with a big bank now,” says a HollisWealth advisor in Ontario, “and it seems like there is more of a ‘my way or the highway’ attitude.”

Adds a colleague in Atlantic Canada: “We’re finding the bank is starting to intrude, and this can drive some of the senior guys away.”

Markham, Ont.-based Worldsource Wealth Management Inc. also saw a change in leadership, with John Hunt, president of the firm’s IIROC division, taking over the reins of Worldsource’s MFDA division, Worldsource Financial Management Inc. Thus, the Report Card survey has now been extended to include advisors on both platforms as, in previous years, only advisors on the MFDA platform were surveyed.

– Independent dealers

Several independent firms in the dealer space cater exclusively to the needs of seasoned, entrepreneurial advisors. These advisors generally receive higher payout grids in exchange for setting up their own support services and branch offices.

(These firms may house IIROC platforms, but they are run as separate divisions that maintain an independent management team and support services.)

“Our main focus is independence and working with established entrepreneurs,” says Mark Kent, president and CEO of Calgary-based Portfolio Strategies Corp. He describes the firm’s business model as a bare-bones dealer at which advisors use third-party providers for the support services they need in return for higher compensation. “It just doesn’t make sense to create those [support service] departments if they’re available for free from the fund companies, which might even be doing a better job than some of the dealers.”

One service that firms such as Portfolio Strategies, Windsor, Ont.-based Sterling Mutuals Inc. and Richmond Hill, Ont.-based Global Maxfin Investments Inc. are keen on offering their advisors is a strong back-office system that can process their mutual fund transactions expeditiously.

Sterling Mutuals, a new entrant to the Report Card, is home to 165 advisors and works off a platform similar to that of its competitors – albeit with a strong focus on providing best-in-class technology to its advisors. In fact, in 2013, the firm launched its own internal back office, which Nelson Cheng, Sterling Mutual’s CEO, says helps to set the dealer apart from its competitors.

“Our main priority is to have a dealer that looks after the advisors in terms of compliance and gives them a good system to follow in terms of placing their orders,” Cheng says. “We look at things from the advisor’s point of view, and a lot of the tools that we have at Sterling are actually based on suggestions from the advisors themselves. You can’t compete just on compensation – that’s not a good game to play.”

© 2014 Investment Executive. All rights reserved.