Fifteen firms battled it out in Investment Executive’s seventh annual Planners’ Report Card, from full-service planning firms to the bare-bones dealerships, and one main point emerged: there’s more than one way to be successful in the financial planning business.
Whether serving middle-income Canadians or striving to attract and retain high net-worth clients, the top-rated firms have very different ideas about what it takes to stand out in an increasingly competitive landscape. In terms of what firms offer advisors, one’s strength is another’s weakness. But as different as they are, each has advisors who think their firms are on the right track and awarded generous scores to prove it.
Leading the pack again this year is PFSL Investments Canada Ltd., which boasts a philosophy that continues to please its 4,500 dually licensed reps. Summed up as “middle-income Canadians serving middle-income Canadians,” PFSL’s business plan takes aim at underserved clients with an offering of 3,000 pre-approved mutual funds and Primerica Life Insurance Co. of Canada products.
The latter accounts for the firm’s profitability, as PFSL executive vice president of marketing Jeff Dumanski explains: “We’re the manufacturer [of insurance], and we have more control over our destiny there. We can set prices and compensate for all of our expenses. And we control all facets, from the beginning to the end of the product.”
The firm stands apart as far as new advisors are concerned. Those looking to make the transition from their day jobs into financial services will be right at home, as part-timers are welcome. “Our reps come from all walks of life,” says Dumanski.
“We’re not looking for MBA graduates, although we’ll take them. We’re not looking for high-school dropouts, but we’ll take them.”
It also offers a unique “ownership program,” whereby reps who reach a certain level of production and cash flow qualify to own their book of business. About 90 PFSL reps so far have qualified for the program, which dovetails into a succession plan once the rep decides to leave the business, at which time the book can be sold to a rep within the firm.
The offering is winning over enthusiasts: “I was able to come in, learn the business and now I have ownership,” says a happy PFSL rep in Ontario. “I can build it the way I want to and run it the way I want.”
But for all the hype about freedom and independence, the ratings at Investors Group Inc. prove that those factors alone don’t account for advisor satisfaction. With only IG-branded funds to choose from and no chance to own their book of business, advisors are expected to develop “enduring relationships” with clients — ideally, ones that span into the next generation. Likewise, the firm encourages outgoing advisors to pass on their business to family members who can continue to manage the client/advisor relationship. (Advisors who want to leave the company for another firm must forfeit their clients, the company says.)
Being a captive sales force, however, has its perks as well. The firm’s strengths lie in its full gamut of support services, including training, marketing, succession planning and a variety of product specialists — all of which garnered solid ratings in the Report Card.
“We’ve got all the things that are important to an advisor who’s trying to run an efficient and, frankly, profitable business,” says Kevin Regan, IG’s executive vice president, financial services. The services appear to be paying off: none of the surveyed IG advisors had less than $5 million in assets; by comparison, 58% of PFSL reps fell into that category.
For some firms, a full-service model is the only way to go when it comes to operating a national planning operation. “It would be a compliance nightmare if you didn’t have that type of model,” says Michael Wolfond, CEO of Regina-based Partners in Planning Financial Services Ltd. Granted, there’s varying definitions of “full-service.” At PIP, it means limited prospecting materials, “hire your own” sales support, no consumer advertising and no internal specialists for tax, estate and financial planning.
Still, PIP advisors are a happy bunch, judging by the firm’s fourth-place standing in the Report Card. Wolfond credits low overhead and lean staffing for the firm’s successful model, whose flat structure has been hailed by advisors. “We’re lucky we live in Saskatchewan,” Wolfond says. “The margins are small, and we’re not top-heavy.
Trying to run it any other way wouldn’t work.”