Investment advisors may take their firms to task over the quality of training, chargebacks, poor consumer advertising or any number of other attributes. But they may still speak of their firms in glowing terms and give them top marks in Investment Executive‘s annual Brokerage Report Card.
The dealers obviously get some things wrong — and some important things right. Which begs the question: what do advisors value most?
This year’s Brokerage Report Card asked advisors to rate not only the quality of the services offered by their firms but also the importance of those services to them as they build their businesses. In doing so, brokers uncovered the areas in which brokerage firms need to shape up in order to attract and retain the best in the industry.
Not surprising, the firms that knew what their brokers valued the most fared well in this year’s Report Card, while those that ranked poorly tended to underdeliver in the categories advisors considered important.
The message to firms: know what your brokers want and do everything you can to provide it.
What proved to be more enlightening were the aspects that advisors valued most.
Brokers from 12 firms across Canada rated ethics, freedom from pressure to sell proprietary products and stability as the three most important aspects of their firms, beating out the somewhat more predictable issue of compensation, which ranked seventh. On the opposite end of the spectrum, mutual fund research, advertising and ease of moving firms all rated low on the importance scale, which could be an eye-opener for the firms committed to pouring money in those directions.
Just as telling were the responses to what are arguably two of the most important questions on the Brokerage Report Card, in which brokers are asked to list the best and worst aspects of their firms.
The answer varies depending on to whom you’re talking. Advisors at the bank-owned brokerages, not surprisingly, cite their firms’ consumer-friendly brands as one of the best aspects of their dealers and say that stability and inter-bank referrals are perks to working at one of Canada’s big banks. These are some of the same brokers who put freedom and independence at the top of their best aspects list, a comment usually reserved for proud brokers at the independent firms.
“We have the freedom to build our business with a secure income, and we can deliver on what we want to do: financial planning,” says a TD Waterhouse Private Investment Advice advisor from the Prairies.
At BMO Nesbitt Burns Inc., a West Coast advisor echoed the sentiment: “I feel like I’m running my own franchise and I have a lot of freedom,” he says. “I can do what I want with a big firm name behind me.”
Granted, the banks rated lower in freedom scores than the Canaccords and Wellington Wests of the industry. The two telling categories — freedom from pressure to sell proprietary products and freedom from pressure to segment the client base — scored averages of 9.0 and 8.5, respectively,
with the banks’ scores coming in slightly lower. Still, the ratings in these categories improved at every bank except CIBC Wood Gundy this year, a sign that the pressure imposed by the big banks may be lifting.
“We want our advisors to be absolutely client-focused and deliver solutions to meet their needs,” says Hamish Angus, managing director with ScotiaMcLeod in Toronto. “We don’t want any bias toward in-house products or [pressure to sell] specific products. That goes against the whole concept,” he says.
RBC Dominion Securities Inc. toes the same line. “At our firm, client experience is No. 1,” says national director David Agnew in Toronto. “Even for new issues, we never force people to buy something. It’s just not in our culture.”
That philosophy extends to the rest of the banks IE surveyed; the official word on sales targets and monetary incentives for proprietary products is simply: “There are none.”
Freedom from pressure to sell proprietary products isn’t even an issue at Wellington West Capital Inc., Raymond James Ltd. and Edwards Jones. Those three firms don’t offer proprietary products of any kind.
Brokers from Canaccord Capital Inc. were particularly vocal about freedom and independence this year, consistently citing them as the two best aspects of working at their firm. (Although the firm does have proprietary products, brokers aren’t encouraged to sell them through sales targets or preferential payout, the company says.)