It may not be out of the woods yet, but TD Waterhouse Investment Advice has made marked improvement in Investment Executive’s 2003 Brokerage Report Card. After scoring bottom marks in 2001 and 2002, TD moved up a few notches to ninth place this year. And the firm’s individual ratings have improved in all but two of the 27 areas covered in the survey.

“I’m proud to have delivered a wide range of improvements over the past year,” says Peter Lee, president of Toronto-based TD Waterhouse. Lee used 2002’s dismal rating as a platform to take action within his firm. “I wasn’t really surprised [by the 2002 results],” he adds. “We had just gone through a pretty transitional year that put our advisors through a lot of changes.”

Lee’s first step last May was to examine the areas rated by the report card. To gather more feedback from the sales force, regular internal surveys were conducted among hundreds of advisors.

“The advisors were more than willing to provide us with commentary,” says Lee. “We wanted to ensure we had initiatives in line to improve our problem areas.”

Midway through the year following the 2002 report card results, TD Waterhouse hired an outside agency to conduct an additional survey. “Elements of the Investment Executive survey were replicated so we could gain additional insights,” Lee says.
“The findings of this survey were in line with our other results.”

Lee credits constant communication with the sales force as a strong factor in TD Waterhouse’s turnaround. “When you’re trying to make a change, you need to have a robust communications strategy,” he says.

TD Waterhouse’s improvements were in advertising, online services for clients and Canadian research. Lee stresses most improvements stem from long-term initiatives. “Regardless of the economic climate, if an initiative is necessary and part of the infrastructure, we will not jeopardize it.”

TD Waterhouse advisors listed branding as one of their firm’s best aspects and rated its advertising at 6.7, a 4.3-point gain over 2002 and 1.5 points above the 2003 industry average. Lee says TD Waterhouse engaged in “a significant branding change” in July 2002.

Online services for clients saw another significant increase in 2003, gaining 3.2 points from the previous year’s results to register a 7.6, 0.4 points ahead of the industry average. “We have a very robust Web site, which is the product of a large investment,” says Lee.

While TD Waterhouse advisors ranked the firm’s Canadian research slightly above the industry standard (7.1 points vs 6.7), the grade registered a 3.2-point improvement from 2002. Lee says this improvement may have a connection with the recent implementation of TD Waterhouse’s research management group. Led by John Bai, the six-member team offers strong support to TD Waterhouse’s sales force.
“We have always had high-quality people in our research department,” says Lee. “But they were not as visible as they could have been.”

TD Waterhouse also implemented a change in payout in the past year, to considerably less advisor fanfare. The firm switched from the popular 70% payout to a grid system.
This has enraged many advisors. TD Waterhouse advisors rate this year’s payout at 6.7, vs 2003’s industry average of 7.3. TD Waterhouse’s payout rating slipped 0.4 points from 2002’s score of 7.1, and a total of 2.6 points below 2001’s strong 9.3
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“The 70/30 payout was the perk of the firm,” says one Ontario broker. “Now that’s changed, people hate it.” A Prairie broker says he moved to TD Waterhouse because of the promise of a higher payout. “My old firm sued me [as a result of the move], and then TD changed the grid,” he laments.

Lee says there are many reasons for the change, but notes it is in alignment with the firm’s strategic focus. “We wanted to make sure we had a business model more in line with the growth we wanted to see.”

At least one Ontario broker agrees: “I would consider switching firms for more money,” he says. “But, in the long run, I think TD is trying to do the right thing.”

Despite TD Waterhouse’s proactive reaction to advisors’ complaints, pleasing everyone is difficult. Lack of internal communication and lack of corporate direction are common gripes in this year’s survey. “Management does not consult with IAs at all,” says an Ontario broker. An advisor in British Columbia cited terrible management as his firm’s worst quality. “You can write that down two or three times,” he adds.