What happens when investors tap back office info through the ‘Net’

But in truth, some investment firms are doing a better job than others in using technology to improve back-office operations and to make the lives of their brokers easier and more efficient.

This became evident when Investment Executive asked 400 brokers at 10 national firms about the effectiveness of systems they use to process orders, track transactions and access internal and external information.

The hands-down winner is Mississauga, Ont.-based Edward Jones. Vancouver-based Canaccord Capital Inc. took top ranking for its trading system and Montreal-based Lévesque Beaubien Geoffrion Inc. also put in a credible performance.

Although the three firms should be commended, a troubling sign is that 8 is only an A-minus if one uses academic standards, and many firms were given marks that clearly indicate they need to do far more high-tech homework.

“There is more that can be done,” says Francis Wenzel, marketing director with Montreal-based Exchange Market Systems EMS Inc., which sells a software package called BrokerWare that provides a connection between a computer’s interface and back-office systems.

One of the biggest issues facing many brokerage firms, Wenzel says, is the varying levels of access that investors have to back-office information through the Internet. The trend will become more important as investors use their computers to seek stock quotes, corporate information and account information throughout the business day.

That could be a challenge because some back-office systems were either developed using proprietary technology that’s incompatible with other systems, or not designed for third-party access.

On a positive note, Wenzel says brokerage firms in Canada and the U.S. are far ahead of rivals in Europe and Asia because back-office firms such as Automated Data Processing Inc., International Business Machine Corp.’s ISM Information Systems Management Corp. unit and Vancouver-based Dataphile Software Ltd. have done a good job penetrating the brokerage market.

In Canada, Edward Jones is obviously recognized as being one of the most effective users of technology, topping the IE survey overall for the second consecutive year.

Gary Reamey, a principle with Edward Jones and head of Canadian operations, says the company’s commitment to technology has become its corporate cornerstone. It has a far-flung network – 4,700 branch offices, including 207 in Canada, where advisors work independently and need top-flight communication and productivity tools delivered from a central location.

“If you can be at the forefront of technology, you can help shape it,” he says, adding that all of the investment firm’s offices are linked by satellite.

Perhaps the best indication of Edward Jones’s high-tech excellence is the difficulty Reamey faced trying to explain the differences between the back-office system and the front-end systems used by their brokers.

He says Edward Jones’s high-tech mantra is the seamless integration of products and services that can be accessed from a desktop computer and the systems that exist behind the scenes. The goal, he says, is making it easier for brokers to focus on doing business rather than worrying about complex technological issues.

Continual upgrades

A key strategy for Edward Jones is continually upgrading its systems, a task buoyed by a 700-person information technology department. A good example of the investment firm’s efforts is a current program to put a new front-end on all desktop computers to make it easier for brokers to enter new accounts into the company’s ISM back-office system.

Clearly, the company’s efforts are meeting the expectations of its brokers. “It’s as close to perfect as we can be,” says a Markham, Ont. broker. “I can do all my trades with no problems.”

Canaccord’s high ranking is a significant achievement given the pressures put on the company’s technological infrastructure following the acquisition of C.M. Oliver & Co. Ltd. last September – a move that created Canada’s largest independent brokerage.

Pharid Jaffer, Canaccord’s senior vice president, information systems, says the integration of C.M. Oliver was made easier by the flexibility of its back-office technology – a client/server system developed by DataPhile Software.

“In the last six months, we have grown the firm by 50% through acquisitions and this system has scaled up with us,” he says.

A brokerage can have the best back-office system available but it won’t be effective if it isn’t user-friendly or able to provide information on a real-time basis. Canaccord’s 450 brokers can review all their trades online and make any necessary adjustments immediately rather than having to manually go through status slips.

“It’s pretty sophisticated and we can scale up the technology and use it better to service our investment advisors and have them serve clients better,” Jaffer says, adding that Canaccord handled a record number of trades in April without any computer glitches.