Advisors dish out cheers and jeers

By contrast, advisors at Toronto-based DundeeWealth Inc. doled out scores at least 0.5 of a point lower than last year in 11 categories, while awarding a higher score by the same margin in just one.

Two related categories won kudos from Desjardins advisors: “consumer advertising” received a rating of 7.1, up 1.4 points from 5.7 in 2007; “image with the public” received a rating of 7.4, a 0.9-point improvement from 6.5 last year.

The improvement in these two categories, says Steve Cole, regional vice president of Desjardins, is attributable, at least in part, to a more consistent branding strategy.

In December 2006, insurer DFS rebranded its insurance and savings product distribution subsidiary, LFS Laurentian Financial Services, changing its name to Desjardins Financial Security Independent Network. In addition, mutual fund dealer Optifund Investments Inc. and DFS’s then-recent acquisition, Performa Financial Group Ltd., began operating under the DFS name.

“That instantly increased our brand awareness,” Cole says, “simply by the fact that we now pick up extra miles on the advertising that is done by all the Desjardins subsidiaries.”

But that is not to say the distribution arms of the Quebec-based financial services giant Desjardins Group don’t have their challenges. Despite the stronger scores, many Desjardins advisors, particularly those outside of the parent’s home province, bemoan its lack of brand presence in the rest of Canada.

“The public image outside of Quebec needs a lot of work,” says a Desjardins advisor in Ontario.

Adds a colleague: “Desjardins doesn’t have a big enough presence. It is a well-kept secret.”

Cole promises that Desjardins will do what it can to raise both the dealers’ and the network’s brands: “We have received significant dollars from our parent company to do just that over the next three years.”

Desjardins advisors also give their dealers improved scores in high-value categories: the firm’s corporate culture, ethics, freedom to make objective product choices for clients, ongoing training, total compensation and delivery on promises made.

Cole can’t point to any one particular action the firm has taken that would lead to the higher scores, but says that Desjardins has committed to taking steps, such as hiring more support staff, to keep its advisors happy.

Desjardins advisors also gave the dealers significantly improved scores for its consumer Web site and their relationship with the compliance department.

Advisors weren’t as pleased with the dealers’ availability of initial public offerings and new issues and in the pricing of fixed-income products. Regarding the latter category, DFS has referral services with Desjardins Securities, and, Cole says, the firms are looking at ways to broaden the range of fixed-income products available to its advisors on both platforms.

It was a different story at DundeeWealth. There, advisors rated the firm’s stability, strategic focus, delivery on promises made, ethics, total compensation and corporate culture all significantly lower than last year. DundeeWealth advisors complained of a lack of communication from head office and an unclear sense of the firm’s direction.

DundeeWealth did endure a volatile 2007, which no doubt influenced advisors’ perceptions. It sold off its banking subsidiary, Dundee Bank of Canada, as well as an 18% stake in the parent firm to Bank of Nova Scotia. DundeeWealth, which has long been fiercely independent, made the move after Dundee Bank found itself holding some $400 million in asset-backed commercial paper.

Soon after the sale, Toronto-based CI Financial Income Fund made a hostile takeover bid for publicly traded DundeeWealth, which struck a committee to explore unsolicited bids from several parties, but ultimately decided not to sell.

“I suspect what was happening last year,” says Dan Hallett, president of Windsor, Ont.-based fund analysis firm Dan Hallett & Associates Inc., “[was] the Scotiabank deal and the CI Financial offer probably created uncertainty in the minds of advisors.”

@page_break@The deal with one of the country’s big banks also probably confused some of DundeeWealth’s advisors as to the firms’ strategic direction. “First, banks are our enemies, and then we’re doing deals with them,” Hallett says. “So, there may have been some inconsistency in the advisors’ minds.”

DundeeWealth has also felt the sting of the ABCP debacle on its bottom line. In May, the firm announced a $49.-million loss in the first quarter ended March 31, including a $75.9-million writedown of ABCP to add to the $95.2 million ABCP-related writedown it took in fiscal 2007.

A DundeeWealth advisor in Quebec says the firm gets into trouble when it wanders away from its core strengths. “It is growing too fast and in too many directions,” he says. “It does too many things. Let’s do one thing and let’s do it well.”

Dundee advisors also complained about the firm’s recently revamped client account statements, giving the firm a 5.4 rating in the category, a 1.2-point drop from 2007. Clients find the statements confusing and, sometimes, inaccurate. “I am so embarrassed when a client walks in with an inaccurate statement,” says a DundeeWealth advisor in Ontario.

DundeeWealth’s advisors also gave their firm significantly lower scores in the availability of IPOs and new issues, pricing of fixed-income products and the quality of technology tools and the advisor desktop.

“There are no tools and there is no contact management system in place,” says a DundeeWealth advisor in Ontario. “I have to use my own. The database is full of bugs and half of the system doesn’t work properly. It’s cumbersome.”

Executives at DundeeWealth declined to be interviewed.

But despite their dissatisfaction, DundeeWealth advisors did give the firm much improved marks for transition support — a rating of 7.8, up from 7.0 last year.

And generally, they say, they appreciate the firm’s commitment to their independence, which goes a long way toward mitigating other gripes they might have. IE