Taking note of what advisors want: Includes Main chart

Judging by the buoyed scores in this year’s survey results, more firms are finally catching on. As a result, the 637 brokers that participated are happier than last year — and happier advisors generally award their firms with more generous scores.

And even though the scores on page C4 are crucial in understanding how advisors think, the hundreds of comments that back them up are equally revealing. In these comments, three main themes came to the fore:

> Advisors demand the freedom to sell what they choose. “That’s why I came here,” says an advisor at Vancouver-based Leede Financial Markets Inc.

> Advisors want and expect an ethical firm, despite their grumblings about over-bearing compliance. “My firm insists on it, and I’m happy about that,” says a National Bank Financial Ltd. advisor in Quebec.

> Advisors appreciate the comfort of a stable firm, both in its leadership and its financial standing. “I take it for granted that we’re going to stick around for a while,” says an Edwards Jones advisor in Ontario.

Those three areas ranked most important among advisors, and the firms that delivered tended to rank highly across the board.

Take Winnipeg-based Wellington West Capital Inc. : the Winnipeg-based dealer earned the top average score this year, after being tied with Richardson Partners Financial Ltd. , also of Winnipeg, for top honours last year. Wellington West’s advisors rated their freedom to make objective product choices a perfect 10, and its scores for ethics and stability weren’t far behind. Chairman and CEO Charlie Spiring appears to have mastered the two-step formula for making advi-sors happy.

For instance, here’s how he ensures advisors have the right product offerings: “We go to our advisors in advance and ask their opinions on what products they would like to see, what works for them and what their clients are demanding. Then we’ll take that advice and search for the products they’re looking for. Some firms pay lip service to speaking to their brokers. That’s not the case here.”

Wellington West advisors overwhelmingly agree. “They really listen to you here. There’s no ladder of higher-ups to deal with,” says an advisor in Ontario. Adds another advisor in the Prairies: “I like the freedom, that ability to call my own shots, and the broad range of products.”

Richardson Partners is another front-runner this year, placing second overall. The firm scored solidly in virtually every category, particularly in those deemed most important.

On ethics: “It starts at the top and it goes down to the bottom,” says an advisor in the West. “I don’t think anyone would last here if they weren’t ethical.”

On the firm’s stability: “The Richardson family is fully committed for the long haul,” says an advisor in Ontario.

And on freedom to sell what they want to: “I always have choices. Always,” says an advisor in Quebec.

Richardson Partners’ success is at least partly the result of hiring the right people. The firm is doggedly committed to high net-worth clients, so advisors should have $750,000 in revenue or $100 million in assets under administration. New hires should be independently minded, and an interest in building a fee-based business is a bonus.

“We found that more advisors are earning the portfolio management designation and want to work within a firm that will support them in those strategies, which is what we do here,” says Sue Dabarno, CEO.

But another firm stood out this year. Blackmont Capital Inc. of Toronto, whose parent company, Rockwater Capital Corp., is fresh off its acquisition by CI Financial Income Fund, managed to raise its overall score by an impressive 0.7 points. The firm’s biggest leaps occur in those categories that are most difficult to measure, including public image and corporate culture. Blackmont advisors even felt better about their firm’s stability, as evidenced in a 7.4 rating, up from 6.6 in 2006.

“The general feeling within the organization is substantially different than it was two years ago,” says Bruce Kagan, president of Blackmont’s wealth-management division. For one thing, he says, the firm has been focused on providing the products and services that clients want. Perhaps equally important, the company is working on “communicating that information like a small firm, not like a big institution.”

@page_break@This means that in addition to monthly newsletters that keep advisors up to speed on company initiatives, advi-sors are also encouraged to call head office once a month to ask Kagan any questions they like.

However, Kagan adds, there’s still a lot of work to do — and Blackmont advisors agree. For starters, they would like to see a corporate branding effort. “I always have to explain who we are,” says an advisor in Ontario. A bit of regional friction has crept in, too. One advisor in British Columbia says his least favourite aspect of working for Blackmont is the so-called “Toronto factor” — a nod to the difficulty of working at a firm whose head office is provinces away.

On a similar note, perennial low-scorers TD Waterhouse Private Investment Advice and CIBC Wood Gundy, both Toronto-based, rallied this year, each tacking on at least 0.5 points to their average scores.

It has been a steady climb back up for TD Waterhouse, whose score bottomed out at 5.9 in 2004. Mike Reilly, president and national sales manager, credits a dramatic change in the firm’s corporate culture for the higher scores. The firm’s relationship with the parent bank has also changed. Once regarded as a corporate behemoth, the bank is beginning to serve as a new source of referrals for the once-beleaguered dealer, Reilly says; last year alone, it directed $2.5 billion in new business to TD Waterhouse advisors.

“We don’t compete with each other for our clients’ assets, and that’s made for a phenomenal partnership,” Reilly says.

But TD Waterhouse’s scores for strategic focus stalled at 7.6 this year, perhaps indicating some lingering trepidation among its advisors.

“The firm is very focused, but is it the right focus?” asks a TD Waterhouse advisor in Quebec. “The firm is targeting the affluent and super-affluent. And so the flow of referrals from the branches depend on the clients’ assets. But what happens when we run out of these types of clients?”

As a whole, however, advisors at bank-owned dealers aren’t as happy as their peers at the independent dealers or the regional firms. True, the combined average score of the six bank-owned firms was dragged down by lower scores at ScotiaMcLeod Inc. , Wood Gundy and TD Waterhouse, but even the top-scoring firm among the bank-owned dealers — Toronto-based RBC Dominion Securities Inc. , which garnered an average score of 8.1 — ranked behind the top-scoring firms in other groups.

So, what’s the beef of advisors at the bank-owned firms? Judging by the scores alone, technology tools and back-office systems aren’t up to par, compensation is lacking and advertising is dismal. Still, the banks perform where it matters. Their scores in the categories that advisors deem most important — freedom to make objective product choices, ethics and stability — were on par with those at the independents and boutiques.

At the same time, advisors at bank-owned firms are demonstrating a growing willingness to recommend their firm to other advi-sors. At Wood Gundy, 86% of survey respondents say they would recommend their firm to a peer, compared with only 78% last year. That figure crept up three percentage points to 96% at Toronto-based ScotiaMcLeod, and rose five percentage points to 88% at TD Waterhouse. In comparison, 100% of advi-sors at the regional dealers say they would endorse their firm to another advisor.

That’s not to say things are perfect outside the realm of the bank-owned dealers. Advisors at the national independents still struggle with what they perceive as a lack of public image. For instance, a Raymond James Ltd. advisor on the West Coast says, “We’re often confused with Edwards Jones.” (Incidentally, Edward Jones doesn’t appear to have an image problem. The Mississauga, Ont.-based firm scored 9.2 in public image category, a full point above the performance average in the category.)

It’s a different story for regional dealers. Advisors at the smallest firms feel that their firms are more deeply entrenched in the communities they serve; and although their firms don’t have a national image, they’re well regarded by those who count.

“We are very aware of the public’s perception of us, and we cultivate that perception to the best of our ability,” says an Odlum Brown Ltd. advisor on the West Coast. “People at big firms can lose sight of that and not realize that their actions can affect their firm. We are a small firm, so we can’t afford a scandal.”

Vancouver-based Canaccord Capital Inc. and Edward Jones are the standouts among the national independent firms in terms of overall average score, proving that very different firms can be similarly successful.

Bob Larose, executive vice president of private client services at Canaccord, says an ideal advisor at the firm should have a $50-million book; at Edward Jones, there’s no specific figure. Canaccord pays a flat 50% commission, plus a bonus based on gross production; Edward Jones’s payout varies. Canaccord says it values its brokers the most; Edward Jones says clients come first. In fact, virtually the only thing these two firms share in common is happy advisors.

So, how do they do it? Explains Larose: “We usually talk to the advisors. They have their priority list, and we incorporate it with the firm’s goals so we can work together to give them what they want.” IE