“Clean up statements”

Yet brokers from almost all firms report problems with their statements, and many preface their criticisms with the comment, ‘It’s an industry problem.’

The most frequent complaint is that the statements are difficult for clients to understand.

‘Ours are terribly confusing,’ says one Lévesque Beaubien Geoffrion Inc. broker in Toronto, echoing the sentiments of many of his peers in the industry. ‘I think they’ve disregarded who needs to read them because they are far from customer-friendly.’

Advisors also criticize the lack of performance and rate-of-return numbers on the statements.

‘This is a serious issue,’ says an advisor with TD Evergreen Investment Services Inc. in Calgary. ‘The account statements are just too cryptic. People want to know performance overall over a given time frame, and this is not obvious in our current statements. I end up wasting time on the phone trying to explain them.’

At least one RBC Dominion Securities Inc. advisor from Winnipeg agrees: ‘Rate-of-return statements are not readily available, and this is not acceptable.’

Information about rates of return looks good when the news is positive. But the firms may not want to provide that information when returns are negative. ‘I think they are concerned about giving the clients too much inside information,’ a Merrill Lynch Canada Inc. broker says.

Not only are the statements confusing and lacking in performance information, they’re often inaccurate, according to some DS advisors. One broker at a Toronto-area office claims stocks have been incorrectly classified on his clients’ statements.

‘Pricing and asset allocation are not always accurate,’ says DS advisor in British Columbia. Another advisor from the same firm has doubts about ‘the credibility of the data and delivery time. We get them late.’

Despite its last-place finish in the category, ScotiaMcLeod Inc.’s statement got faint praise from two brokers who indicated they’re no worse than others in the industry. But some at the firm were harder. ScotiaMcLeod’s statements were described as ‘garbage’ by two Toronto-area company advisors.

Many ScotiaMcLeod brokers, frustrated by the firm’s statements, create their own on their Excel programs. Likewise, a TD Evergreen advisor in central Ontario has created his own account statements using a computer program purchased from a local software developer.

‘It allows us to enter the information that we take off our system – in terms of deposits, withdrawals, purchases, securities and so on – and that basically gives us the overall rate of return,’ he says.

Brokerages don’t usually provide rates of return on standard account statements, the TD advisor continues. But wrap accounts such as DS’s Sovereign program, ScotiaMcLeod’s Pinnacle, and TD’s own Managed Asset Program and Green Line Family of Funds provide quarterly performance reports in addition to monthly statements. Perhaps brokerage firms are using the more informative and comprehensible account statements as a reward for joining a wrap program.

Edward Jones achieved top ranking in the account statement column despite the firm’s conformity to the no-performance-numbers trend.

An eastern-Ontario-based advisor, who gave the statements a high score, says his assessment is based on comments from satisfied clients. New Edward Jones clients receive a binder in which to file statements and a guide explaining each entry.

‘The first piece of the statement is, ‘What am I worth today?” he says. ‘I think they have a pretty good idea of what the number was last month vs what it is this month … it’s nice and clear.’

Perhaps the statement to be reckoned with is that of Investors Group Inc. The Winnipeg-based company won top ranking in a survey of 26 Canadian fund company account statements conducted by Boston-based Dalbar Inc. The Investors statement presents asset allocation information, account activities, quarterly and year-to-date totals and other information using graphics. Three years ago, Investors had the worst ranking in the category.

Brokers at CIBC Wood Gundy Securities Ltd., although critical of statements, are hopeful of change. While Wood Gundy is said to be lagging behind other firms in this area, the company is developing a new account statement format.