Even though advisors considered some aspects of their firm’s business to be less important in this year’s Planners’ Report Card than they did last year, their top priorities have barely changed.
A firm’s ethics, the most important category in last year’s survey, and freedom to make objective product choices, which ranked third in 2005, tied for first this year — both received an overall importance rating of 9.3.
Advisors continue to consider ethics to be extremely important because clients aren’t interested in dealing with a shady company, they say; poor ethics can give both a firm and an advisor a bad reputation. A Berkshire Investment Group Inc. advisor from the East Coast says good ethics is extremely important to him: “In a small town, one bad decision and your reputation and your business are dead.”
Ethics were also mentioned frequently when advisors were asked to list their firm’s best aspects. Freedom and independence also showed up on that list. A Peak Investment Services Inc. advisor from the West listed “ethics, integrity and independence” as the best things about his firm.
As the numbers show, freedom to make objective product choices ranks at the top of the list for most advisors. A PFSL Investments Canada Ltd. advisor from the Golden Horseshoe says the thing he likes most about his firm is “freedom — the personal freedom to run my business without pressure. No one’s hammering into my head that I have to do something I don’t want to do.”
Freedom to make objective product choices was also cited frequently when advisors were asked if they would recommend their firm to others. When a FundEx Investments Inc. advisor from Ontario was asked why he would recommend his firm, he said: “The independence. They give you the tools and you make the choices.”
This freedom is what brings advisors in and keeps them attached to a firm. According to a Peak advisor in Ontario, freedom to choose the products he wants for his clients is “one of the reasons I am here.”
An Investors Group Inc. advisor from the Maritimes offered a similar sentiment about his firm’s stability. “It’s why I’m here,” he says. Advisors surveyed ranked their firm’s stability second in the importance ratings. It received a rating of 9.2.
For advisors, it’s not just about having a stable environment in which to work; it’s also important for clients to feel comfortable with the company to which they are entrusting their money. “The size and stability of the company puts clients at ease,” says an Assante Corp. advisor from British Columbia.
Trade execution followed stability in overall importance ratings with a 9.0. And just below that came the firm’s delivery on promises made to advisors when they joined, which ranked 8.9 overall in importance.
“We’re in the business of trust,” says a Peak advisor in Ontario. “It’s about the firm keeping its word. If I am going to be honest and forthright with clients, the firm should behave in the same way with me.”
At the opposite end of the spectrum, rankings for sales support and company consumer Web sites dropped significantly this year. Sales support plummeted by 1.2 to 6.6 from 7.8 last year. And consumer Web sites fell by 0.4 to 6.5. In the end, they ranked among the five least important categories, along with international and U.S. equity research (6.5), a firm’s consumer advertising (5.8) and IPOs and new issues (4.2).
Interestingly, both sales support and consumer Web sites were given higher ratings for performance than for importance. Overall sales support was rated 7.3 in performance, while consumer Web sites were given a rating of 6.8 in performance.
As for consumer advertising, it rated 5.8 in both performance and importance, apparently because advisors believe their own marketing is just as important as their firms’ campaigns. “It’s not too important to be branded with Berkshire. It’s more about me, and my image,” says a Berkshire advisor in the West. Adds a Dundee Private Investors Inc. advisor from Central Canada: “It’s the advisors who do their own advertising. What the firm does is not as important as what I do.”
National advertising initiatives can also be expensive undertakings, as advisors are quick to note. “It’s not that important,” says a Berkshire advisor in Ontario of his firm’s consumer advertising initiative. “An ad campaign means I get paid less.”
@page_break@To some advisors, advertising in order to build up a company’s image and name is not as important as the service they provide. “We’re almost a little backward to the norm because we’re not recognizable,” says a Peak advisor from the Prairies. “But our investments are recognizable. The prominence of the name isn’t really important.”
Besides sales support, having a consumer Web site and consumer advertising, advisors said support for financial planning, wills and estate planning, and tax planning were not as critical this year as in 2005.
Wills and estate planning support was given an importance rating of 6.9, down by 1.2 from last year’s rating of 8.1. Tax planning support saw an even bigger drop. This year it rated 6.9 in importance, down 1.5 from 8.4 in last year’s Planners’ Report Card. Advisors also rated financial planning support as less important; it fell 0.6 to 7.4 from 8.0 in 2005.
However, several advisors disagreed strongly with these assessments. Says a Dundee advisor from southern Ontario of wills and estate planning: “It’s becoming more and more important.” An East Coast advisor from Laurentian Financial Services agreed, complaining about his firm’s lack of support for wills and estate planning: “We don’t have a lot of support for that, and it’s more important every day.”
Discrepancies between a category’s importance and its performance ranking were slight with most firms. However, Assante — which received the lowest overall average rating at 6.7 — had the biggest gap between importance and performance rankings. In most categories that its advisors rated as important, the company’s performance was rated as poor — a signal that the firm may want to pay greater attention to those categories. IE