Different firms have different structures

But there are other ways planning firms distinguish themselves. In this year’s Planners’ Report Card, two among the 15 firms surveyed stand out for their business models. Both FundEX Investments Inc. and Money Concepts (Canada) Ltd. offer a range of services and payout models that vary significantly from the traditional distributer firm model.

At FundEX advisors pay a flat annual fee for the services they receive and keep 100% of the revenues they generate. Money Concepts is a franchise; franchisees use the Money Concept brand and marketing materials, and get training and other support as part of the package.

“The reason somebody would go to FundEX is if he wanted to have control and not work under somebody else’s banner,” says a FundEX planner from southern Ontario. “You have to be disciplined enough to run your own business and do your own marketing and research, because you don’t have a large company doing it for you,” he says.

“You need to be a certain type of person and have at least five years of experience in the business. You wouldn’t start out at FundEX.”

Markham, Ont.-based FundEX was formed by six shareholders, five of whom are financial planners. The idea to create a company that would present a 100% payout was born. The firm received its mutual fund licence in August 1995.

“We didn’t want to run just any mutual fund company — they’re a dime a dozen,” says Dave Porco, shareholder and director. “We took a page from the Re/Max book when it first came into Canada. We charge our associates a flat fee to process their business, and we’re a true 100%-payout company.”

FundEX planners were initially charged a flat fee of $10,000 a year; two years ago, it was raised to $12,000, and it could well be raised to $14,000 by the end of this year, says Porco. FundEX planners who were surveyed for this year’s report card rated payout a perfect 10. (This is the first year the company was surveyed so no comparison is available.)

“I would argue that the planners at FundEX are much more successful,” says a FundEX planner from the Midwest. Another from Toronto says, “Because [head office doesn’t] take a percentage of commissions, there is no vested interest to do a high volume.”

Toronto-based Money Concepts is a franchise operation. It, too, revolves around independence, but on a more local level.

“We’re an entrepreneurial organization. Our company overall is down to earth, we’re community based and each of our offices is run by its own president,” says Jennifer Dewling, Money Concepts’ president and CEO.

The birth of the Canadian franchise took place in 1984 when Grant Sylvester bought the right to bring the U.S. franchise to Canada. It has been expanding nationally ever since, priding itself on fostering an environment in which its planners thrive.

With 97 offices across Canada, planners can be independent yet can still access head office for support. According to Dewling, planners who are attracted to Money Concepts have three characteristics: a true entrepreneurial spirit, a desire to be a financial planner and they are caring and focused on the client.

“I can truly say that’s what attracted me to the organization,” she says. “The planners are their own owners, yet we still have a strong link with them on a corporate level. Our slogan is: ‘You’re in business for yourself, but not by yourself’.”

Money Concept planners who took part in Investment Executive’s survey this year said their payout is 74% and rated it 7.3. Unlike FundEX, Money Concepts keeps a percentage of the revenues generated by the rep and in return provide its planners with with items such as developing seminars, client appreciation events, newsletters and brand identity.

In that way, Money Concepts more closely resembles other financial planning firms in Canada although, in those firms, planners are essentially employees. And like those planners, Money Concept planners say they enjoy the amount of support provided on the corporate level — and this sometimes compensates for their company’s negative aspects.

Whether it is FundEX or Money Concepts, advisors don’t feel the pressure to sell proprietary products or products the company wants them to sell.

For example, says a Berkshire Investment Group Inc. planner in southern Ontario, “because Berkshire is owned by AIC [Ltd.], it is more partial to, and the percentage is higher for, mutual funds. The company is happier to see us sell mutual funds than stocks. The company owns our book and we are employees of the company,” says a

Personal needs for independence or support, and payout percentage, are big factors in where planners decide to work.

“The best aspect is the availability of people at head office. If I need help, I call and I get help,” says a Manulife Financial Corp. planner in the North West Territories. IE