Three firms among the 16 surveyed for Investment Executive’s 2009 Brokerage Report Card made significant moves in terms of their ratings year-over-year, with one brokerage jumping upward sharply and two going in the opposite direction.
On the positive side of the ledger, advisors with Toronto-based CIBC Wood Gundygave their firm higher ratings across the board than last year. On the negative side, advi-sors at Vancouver-based Canaccord Capital Inc. and, to a lesser extent, Winnipeg-based Wellington West Capital Inc., handed out weaker grades this year than last.
Although Wood Gundy’s IE rating of 7.6, which is the average of its ratings in 31 categories, still places it near the bottom of the 2009 Report Card, it represents a marked improvement from 2008, when its IE rating of 6.7 was the worst among the same 16 firms.
In general, the Wood Gundy advisors surveyed for this year’s Report Card praise their firm for improved leadership; enhanced support for tax, estate and financial planning; and better delivery of services in everything from mutual fund research and equities research to technology tools and administrative support.
“There is a focus on continuing to build and improve,” says a Wood Gundy advisor in Ontario. “The technology is good and the reputation of the firm is tremendous, even [taking into account] the past three to four years, which have been tough.”
Of course, there was little room to move but upward, considering how low advisor satisfaction at Wood Gundy had fallen in recent years. In previous years’ surveys, advisors had given the firm low grades in a wide variety of categories, including strategic focus and corporate culture. They also had spoken of the frustration they felt in having to calm clients spooked by the missteps of the brokerage’s parent bank, Canadian Imperial Bank of Commerce, which had to take significant writedowns related to asset-backed commercial paper.
In this year’s survey, however, Wood Gundy advisors have reacted favourably to a more focused effort from management to communicate and address issues. Both Gary Mayzes, first vice president and regional director, and Peter Lee, regional director, have been actively meeting Wood Gundy advisors across the country, listening to their concerns and letting them know what management is doing.
Wood Gundy advisors gave the firm a rating of 8.0 for support for tax planning, up a significant 3.0 points from last year, and a 7.5 score for support for wills and estate planning, an improvement of 0.8 of a point from 2008. A number of advisors praised CIBC Retail Markets’ July 2008 hiring of managing director of tax and estate planning Jamie Golombek, formerly with Toronto-based Invesco Trimark Ltd., as a positive move.
In addition, the fact that CIBC has managed to avoid negative headlines in recent months has helped Wood Gundy’s image, its advisors say — and the brokerage itself continues to benefit from a good reputation among clients. “The firm is well established,” says a Wood Gundy advisor in British Columbia. “There is name recognition, and a large following among clients.”
To be sure, many Wood Gundy advisors remain dissatisfied about some aspects of working at the dealer. One recurring complaint among the firm’s advisors is that they aren’t benefiting as much as they could from the brokerage’s relationship with the parent bank. “Most of the advertising is for the bank, not the brokerage,” says a Wood Gundy advisor in Ontario. “We are competing with CIBC Imperial Service [the bank’s retail advisory arm] — and we don’t get referrals from them.”
Generally, however, Wood Gundy advisors appear happier with their firm this year than they have in recent years. “We have everything everyone else does,” says an advi-sor in the Maritimes. “We’re up there with the competition, and I don’t feel that anyone has it any better.”
In comparison, the trend is decidedly negative at Canaccord, which posted an IE rating of 7.6 in this year’s survey, down 0.6 of a point from last year. Canaccord advisors gave their firm significantly lower grades in mutual fund and equities research; strategic focus, stability and corporate culture; and image with the public and consumer advertising. All in all, the firm dropped by at least half a point in 18 of the 31 categories in the survey.
Canaccord has undergone much tumult over the past 18 months, mostly stemming from its exposure to the ABCP crisis. Some 1,500 of its clients had held $269 million in ABCP. Canaccord has reported spending $59.5 million to reimburse small-investor clients who had held less than $1 million of ABCP.
@page_break@Following the ABCP fiasco, changes were made within the senior executive ranks, including bringing in John Rothwell from Wellington West to replace Bob Larose as executive vice president and head of private-client services in Toronto. This past fall, the firm let go of 150 employees and put in place 10%-20% salary reductions for senior executives. In March, the firm let go of 75 of its lowest-producing advisors.
Canaccord advisors say the ABCP episode has badly tarnished their firm’s image, and the firm has suffered because management’s focus, until recently, has been almost exclusively on addressing ABCP.
“It was a huge distraction,” says a Canaccord advisor in B.C. “Management has dealt with it and it’s behind us now. But it has been an incredible drain on resources and management’s focus.”
Advisors also complain that the firm hasn’t done enough to build its wealth-management business, as opposed to the capital-markets side of the business, or to support advi-sors with financial, tax-, wealth- and estate-planning tools.
“When it began, Canaccord was all about small companies raising capital for initial public offerings,” says a Canaccord advisor in Ontario. “But it’s different today. To grow our business, we need to deliver wealth-management products, not just IPOs and new issues.”
Canaccord advisors, especially those in Eastern Canada, continue to lament the firm’s lack of name recognition among retail investors. There is also dissatisfaction with the firm’s efforts to support its advi-sors’ marketing programs.
For its part, Canaccord’s management understands that the firm must continue to build out its wealth-management business, bolster marketing efforts and continue to reach out to its advisors by letting them know where the firm is headed strategically.
“We’ve used internal communications, meetings, conference calls, etc.,” Rothwell says, “to ensure that people are aware of what’s happening at all levels of the firm, so there’s buy-in from everyone.”
Like Canaccord, Wellington West’s ratings also trended lower in this year’s survey. The boutique firm is usually among the strongest performers — and remains near the top of the table again this year, with an IE rating of 8.5. However, that rating is 0.4 of a point lower than last year.
Wellington West advisors took issue with the firm’s support for developing financial plans for clients; investment research; back office and administrative support; lack of profile with the general public; and technology tools.
The firm did do an audit of its technology last year, says Charlie Spiring, Wellington West’s chairman and CEO, and has updated most of it. In updating its technology and making it work with the back-office technology supplied by the National Bank Correspondent Network, there were glitches and problems. That has led to some frustration among advisors, Spiring says. But, he believes, in the end, the updated technology will serve the firm’s advisors well.
Wellington West advisors continue to praise the firm for its freedom and independence as well as its corporate culture.
“You can always reach anyone, even most senior managers and executives,” says a Wellington West advisor on the East Coast. IE