Stability, with a few concerns

Adds an advisor in Ontario with Burlington, Ont.-based Manulife Securities: “We’re getting supported from outside [product provider] companies such as Franklin Templeton [Investments Corp.], but not Manulife.”

For the most part, advisors seemed to be holding up their end of the bargain, with average assets under management (AUM) increasing to $27.8 million from $23.7 last year, while serving more clients as well. But advisors aren’t necessarily being rewarded for this growth; they complained about decreasing compensation and rising fees. (See stories on pages C6 and C10.)

Despite these disconnections between advisors and their firms, the dealer channel continues to show stability, with very little or no movement in performances ratings throughout the 36 categories in which advisors rated their firms. Thus, it’s no surprise that last year’s top performing firms are once again garnering top scores while those that struggled in 2012 continue to lag this year.

Also, advisors’ priorities have not changed. Advisors continued to rate “firm’s ethics,” “freedom to make objective product choices,” “firm’s stability” and “firm’s delivery on promises” tops in importance, and the firms that are delivering in these areas were the ones their advisors lauded. For example, Markham, Ont.-based Worldsource Financial Management Inc. appeared to be doing a better job this year, as its ratings in firm’s stability and firm’s ethics both increased by 0.4 of a point each.

“The size of the firm means it’s stable,” says a Worldsource advisor in Ontario. “The good relationships we have with the investment companies means there’s a lot we can offer our clients.”

Overall, the firm saw its ratings increase in 22 of the 34 categories in which it was rated, with ratings in nine categories improving by half a point or more.

Andy Mitchell, Worldsource’s president and chief operating officer, spends a lot of time in the field talking face to face with the firm’s 600 advisors. “As far our firm goes,” he says, “we have a very open-door policy – regardless of your region, your book size, who you are or what you bring to the table.”

Toronto-based Assante Wealth Management (Canada) Ltd. also was a standout this year in terms of its ratings; it saw rating increases in 32 of the 34 categories in which it was rated, with 22 increasing by half a point or more. In addition, the firm saw its IE rating, the average of all the categories in which a firm was rated, increase to 8.2 from 7.6 year-over-year.

“We are a firm that is large and stable enough to keep moving forward during tough economic times,” says an Assante advisor in British Columbia. “[The firm has] started providing more support services since 2008.”

To ensure Assante is meeting its advisors’ expectations, Steve Donald, the firm’s president and CEO, has ongoing dialogue with advisors. (See story on page C12.) Assante has implemented several communication-related initiatives, including a management road show through which executives meet with advisors across Canada.

In contrast, advisors with some other firms don’t feel as connected with their upper management. Lévis, Que.-based Desjardins Financial Security Independent Network saw the largest drop in the two communication-related categories, with its rating in the “firm’s effectiveness in keeping advisors informed” category dropping to 7.6 from 8.3 last year, while the firm’s rating in the “firm’s receptiveness to advisor feedback” category fell to 7.4 from 8.3 last year.

“From my perspective, their communication isn’t screened by priority,” says a Desjardins advisor in Western Canada. “We get so much and they send us links to articles constantly, so the communication loses value.”

Desjardins advisors also complained of recurring problems with technology, empty promises and the lack of ongoing training. However, Desjardins was not alone in generating complaints. Richmond Hill, Ont.-based Global Maxfin Investments Inc., DundeeWealth and Manulife also are not meeting their advisors’ expectations. All three firms have had to deal with mergers or acquisitions within the past several years, and although some advisors were quick to embrace their new firm, others seem to still be having trouble fitting in.

Says a Manulife advisor in Ontario who joined that firm six years ago when its parent, Toronto-based Manulife Financial Corp., acquired Berkshire-TWC Financial Group Inc.: “I feel like an insignificant cog in the wheel.”

“Manulife isn’t focused on helping the average advisor grow his or her book,” adds a Manulife advisor in Ontario. “They don’t seem to know what it’s like in the trenches.”

Advisors with Global Maxfin, which purchased Calgary-based Professional Investment Services (Canada) Inc. in 2009, rated their firm better in certain areas vs last year but still say the firm has a long way to go. Says a Global Maxfin advisor in Ontario: “The firm needs to get away from RESPs and focus more on the mutual fund advisors.”

DundeeWealth advisors have mixed emotions about Toronto-based Bank of Nova Scotia‘s acquisition of their firm in 2010. Although not much had changed initially, advisors now are starting to notice some big differences. Earlier this year, Richard McIntyre, the firm’s former managing director and head of retail advisory network, was moved to the bank side. In turn, McIntyre was replaced by Tuula Jalasjaa, former managing director and head, investment management services, with Scotia Asset Management LP, who has been with Scotiabank for more that 15 years. In addition, some DundeeWealth advisors say, their firm will be rebranding later this year, which will see the DundeeWealth name disappear.

“DundeeWealth is disappearing,” says a DundeeWealth advisor in Ontario. “They have a new name chosen to replace DundeeWealth, and when they announce it, they’re going to have to make it known.”

The changes in leadership and branding have DundeeWealth advisors doubting how much independence they will be able to maintain as the bank’s culture creeps deeper into their firm. Says a DundeeWealth advisor in B.C.: “The firm’s strategic focus is a big unknown right now. We aren’t sure what influence the bank will have on us.”

Adds a colleague in Ontario: “I’m often wondering if we’re going to be Bank of Nova Scotia tomorrow.”

How we did it

There were no major changes to the participating firms in this year’s Dealers’ Report Card, although a new category rating advisors’ sales assistants was added to the questionnaire.

However, there was one slight adjustment to this year’s main ratings table. Previously, Investment Executive (IE) boldfaced the top ratings in the individual categories. Upon review, it was decided those ratings will no longer be boldfaced because highlighting first-place standings may have created some confusion.

For example, firms such as Mississauga, Ont.-based PFSL Investments Canada Ltd., which consistently has received the majority of the top ratings in this Report Card over the years, may have been seen as having the best services on the Street as a result. Rather, the ratings reflect how advisors feel about their firms’ efforts in these categories, which is the goal of the Report Card series.

This year, IE researchers Justin da Rosa, Tessi Sanci, Dane Taylor and Jeff Wimbush spoke with 509 financial advisors, selected at random from IE‘s research database, at 12 dealer firms. Advisors were asked to provide two ratings for each category in the Report Card: one for their firm’s performance in the category and another for the importance of that category to their individual business. Advisors rated the 36 categories on a scale of zero to 10, with zero meaning “poor” or “unimportant” and 10 meaning “excellent” or “critically important.”

Individual ratings then were averaged for each category, for each firm and for the entire Report Card. The “IE rating” is an average of all categories for each firm. The “overall rating by advisors” indicates how advisors rated their firms out of 10 on average.

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