Four hundred brokers, 11 companies and three researchers. You do the math. Let’s start with the phone calls. To prepare the Brokerage Report Card, Investment Executive researchers conduct hundreds of telephone interviews, starting in January.
Some result in a completed survey, some do not, but persistence pays off. The efforts of Heather Buchansky, Aileen Corr and Nicole Fernandes provided us with a snapshot of the brokerage industry in 2004.
We ordinarily choose firms with at least 200 reps and a national presence, but to spice things up for our 12th annual Report Card, we included a smaller firm this year: Wellington West Capital Inc. The Winnipeg-based firm has been opening offices across the country and is busy positioning itself as a viable alternative to the bank-owned firms. We decided to see how it stacked up.
In another change from last year, we decided to take a channel approach. We restricted the Report Card to firms that have been historically broker-oriented. Berkshire Securities Inc. and Dundee Securities Corp. will be included with their planning colleagues in next month’s Planners Report Card.
While we have the advisors on the phone, we also ask them to comment on issues affecting the industry. This year we were particularly interested in gauging broker reaction to proposals for a single national regulator and the possibility of the federal government allowing banks to merge. We think you’ll find the results as interesting as we did.
To declare a winner, we ask brokers to rate their firms on a scale of zero to 10 (poor to excellent) in 27 categories, including payout, freedom from pressure and compliance. We then average the scores to produce a firm’s score for each category.
To create the IE rating, we average the category scores, and award extra marks for the number of times a firm bags a first-place finish. We then use the IE rating to determine final rankings.
There was plenty of movement within the rankings, and most of the firms showed improved ratings. You’ll notice the sea of green on our master table on page C4, which indicates that that category score has improved by at least 0.5 of a point. The red numbers, which indicate a score that has fallen by 0.5 of a point or more, are less prominent than a year ago.
After we compile the rankings, our reporters interview the retail heads of the firms to get their take on our findings. We use the comments to add further perspective to our stories. This year, every firm except BMO Nesbitt Burns Inc. and ScotiaMcLeod Inc.
consented to be interviewed.
We’d like to share one more piece of information with you. Each year, we ask brokers to provide an overall rating for their firm. This year we also asked them how their clients would rate their firm.
The two scores were consistent at most of the firms, but we noticed two differences.
At Canaccord Capital Corp. and Wellington West, brokers rated their firms higher than they thought their clients would, indicating those firms may need to do a better job reaching out to investors.
At TD Waterhouse Investment Advice, brokers rated their firm lower than they thought their clients would. This may indicate the unhappiness felt by TD brokers has yet to spill over to their clients. IE