Pieces are coming together

Whether advisors work at a full-service dealer or at a more bare-bones independent, they hold dear three core components above all else: “freedom to make objective product choices,” “firm’s ethics” and “firm’s stability.” Advisors consistently value these categories the most; they receive the highest overall average importance ratings in the Report Card year after year. And the firms actually deliver on these three core components, as the overall average performance ratings that advisors give their firms for these three categories are among the strongest. Things are no different this year.

“If you can’t talk to your clients about the firm’s stability, then you can’t get your business off the ground,” says an advisor in Alberta with Winnipeg-based Investors Group Inc., which continues to be rated highly in both stability and ethics.

In addition to strong ratings in these key categories, Investors Group ratings also increased in other areas, such as “support for helping clients accumulate assets for retirement,” “support for helping clients plan for post-retirement income” and “support for overall wealth management process.”

This is significant because advisors across the board rated each of these three categories as more important to their businesses by half a point or more this year.

“[Our business model],” says Todd Asman, senior vice president of products and financial planning with Investors Group, “is all about the planning objectives and the long-term view.”

Another category that advisors said has become more vital is the “firm’s support for mobile technology and the mobile advisor” – this category’s overall average importance rating also rose by half a point this year. However, the majority of firms are struggling to meet their advisors’ expectations in this category. (See story on page C8.)

“When [the iPad-based platform] was first introduced, my expectations were that more of my applications would be enabled [in the tablet format],” says an advisor in Ontario with Toronto-based HollisWealth Inc. “But they’re only partially enabled, which means I can’t do all the functions and then I have to use my desktop.”

Speaking of meeting advisors’ expectations, Richmond Hill, Ont.-based Global Maxfin Investments Inc. is doing a much better job at that this year. The firm’s performance ratings improved in 14 of the 22 categories in which it was rated, with nine ratings rising by half a point or more.

In particular, Global Maxfin advisors rated the firm higher in categories such as “firm’s strategic focus,” “advisor’s relationship with compliance department” and “firms delivery on promises.”

“The firm has improved a lot,” says a Global Maxfin advisor in Ontario, “in being more willing to work with us rather than be authoritarian.”

But Global Maxfin still has a long way to go – many of its ratings still are relatively low compared with those bestowed upon the other firms. Furthermore, it’s possible some ratings could decline in the future. Three of Global Maxfin’s sister companies (Global RESP Corp., Global Growth Assets Inc. and Global Educational Trust Foundation) and the group’s chairman and CEO, Sam Bouji, have run into compliance deficiencies with the Ontario Securities Commission (OSC).

It’s not the first time the Global corporate group has had issues with the regulators. After acquiring Calgary-based Professional Investment Service (Canada) Inc. in late 2009, Global Maxfin inherited several pre-existing compliance issues that it then had to deal with during the amalgamation, causing much concern among the firm’s advisors.

Thus, Global Maxfin advisors continue to question their firm’s stability. And although Global RESP and its affiliates have settled with the OSC, the terms the OSC has put in place will see Bouji step down as CEO of Global Maxfin within the next nine months.

“Global Maxfin is a privately held company owned by one individual who is frequently in trouble with the regulators,” says a Global Maxfin advisor in Alberta. “That’s a concern and makes it a challenge for advisors. That’s something [the CEO] has to deal with on an ongoing basis. It hinders the growth of the organization.”

One firm that saw a change in leadership over the past year – but under far less precarious circumstances – is Markham, Ont.-based Worldsource Financial Management Inc., the mutual fund arm of Worldsource Wealth Management Inc.

Last year, Andy Mitchell, former president of the mutual fund arm, announced he was leaving to join SEI Investments Canada Co. Upon Mitchell’s departure, John Hunt, president of the firm’s brokerage division, Worldsource Securities Inc., stepped in and took over leadership of both divisions. Hunt then integrated both platforms and now runs them under one roof. As a result, IE now surveys advisors at both of Worldsource’s operations.

But that wasn’t the only change IE has made relating to the firms surveyed for the Dealers’ Report Card. (See story on page C5.) The two most important changes are the introduction of Windsor, Ont.-based Sterling Mutuals Inc. and the removal of Mississauga, Ont.-based PFSL Investments Canada Ltd.

PFSL is a major player in the mutual fund sales space. But upon further analysis – resulting, in part, from increased feedback among advisors – it was decided that the firm’s model was no longer a viable option for the Dealers’ Report Card.

IE‘s Report Card series aims to provide advisors with a voice by allowing them to rate their firm and its services, as well as give feedback, in a confidential manner. Advisors then use the results of the Report Card to compare their firm with its competitors and see what else may be available if they’re looking at making a change.

Although PFSL has never failed to satisfy its advisory base, it became evident that its unique marketing-based business model is not one that most advisors would consider. In addition, it was found that as a result of this model, PFSL advisors would give their firm abnormally high ratings because they were using the Report Card as tool to recruit other advisors rather than as a platform to provide feedback to PFSL executives.

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