This article appears in the June 2021 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
Advisors’ average compensation has seen its fair share of change over the past year, but on the whole, advisors surveyed for Investment Executive’s 2021 Dealers’ Report Card were happy with their pay.
There were significant shifts in compensation this year. For example, 18.2% of advisors said they made less than $100,000 last year, compared with 14.3% in 2020. The percentage of advisors who said they made between $1 million and $2 million declined to 2.4% this year from 6% a year ago. Despite these shifts, the average performance rating for the “total compensation” category increased slightly to 8.7 this year from 8.5 in 2020.
Independent dealers got high marks in the compensation category. Carte Wealth Management Inc. and Peak Financial Group were the top performers, each receiving a rating of 9.3. This represented a 0.6 year-over-year increase for Carte. (Peak was not included in the 2020 results due to insufficient data.)
Portfolio Strategies Corp. and Sterling Mutuals Inc. also had strong ratings of 9.0 and 8.9, respectively. Sterling tied for fourth in the compensation category with two full-service dealers: Assante Wealth Management (Canada) Ltd. and Worldsource Wealth Management Inc.
In general, advisors at independent firms said they were fairly compensated for their work.
“[I’m] very impressed with the firm,” said a Carte Wealth advisor. “[It’s the] most dynamic firm I’ve ever been at.”
Kirk Purai, Carte Wealth’s president and CEO, said the dealer’s grid payout ranges from 65% to 85%. While assets determine where an advisor sits on the grid, the final payout is more of an “independent negotiation,” Purai said.
Most firms saw little year-over-year change in their compensation ratings. The one exception was IG Wealth Management, which saw its rating rise to 8.4 this year from 8.0 in 2020. Despite this increase, IG Wealth was one of the three lowest-rated firms in the compensation category.
Comments from IG Wealth advisors were mixed. “We have been going through some transformations and reworking the grid structure,” said an IG Wealth advisor in Alberta. “I’m happy, but I’m still not convinced it’s for the best, long term.”
IG Wealth decided to remove deferred sales charges in 2016, said Brent Allen, the firm’s senior vice-president, financial services distribution. However, IG Wealth still pays upfront compensation directly to advisors for new clients and assets, and there are no asset redemption chargebacks.
Allen said IG Wealth has an “enhanced grid” that allows advisors to earn a higher payout based on three metrics: completion rate of financial plans, client feedback and bringing in new clients. “We have a wide range on our grid depending on how productive you are,” he said.
IG Wealth advisors noted that the firm recently moved to a new fee-based platform, which was a step in the right direction, if a bit disruptive. “[There was] organized chaos with the transition, but it was good,” said an IG Wealth advisor in Alberta.
The firm saw its rating for “support for fee-based models” increase to 8.6 from 7.8 a year ago. Having a fee-based model also was more important to IG Wealth advisors, who gave the category an importance rating of 9.2, compared with 8.3 in 2020. (The average importance rating across all firms for fee-based support was stable at 8.7 this year, compared with 8.6 in 2020.)
In the past year, IG Wealth also introduced a nominee platform called IG Advisory Account, which allows for tiered asset pricing and family account bundling. More than 300,000 accounts were opened through this platform in the past year, Allen said.
One firm that has struggled with a transition to a fee-based platform is Desjardins Financial Security Independent Network (DFSIN). DFSIN launched its new platform, Dataphile, in October 2020.
“They changed the system last year in the middle of Covid to Dataphile and it was very difficult. We’re still suffering from it,” said a DFSIN advisor in Ontario. “They pushed it down our throats and we had to swallow it.”
DFSIN’s fee-based rating remained stable but low at 6.6 (compared with 6.7 in 2020), and advisors said they felt unsupported during the new program’s rollout.
Advisors with DFSIN gave the fee-based category an importance rating of 7.5, down slightly from 7.8 last year, although the category still has a significant satisfaction gap among DFSIN advisors (the amount by which the importance rating exceeds the performance rating) of 0.9. That’s nearly double the category’s average satisfaction gap of 0.5 across all firms.
André Langlois, president of DFSIN, said he recognizes that introducing a new platform is challenging at the best of times, never mind during a pandemic. “Getting used to new tools sometimes is difficult, especially in [this] Covid year,” Langlois said.