Why is it so hard to get back-office and administrative support right? Despite dealers’ best efforts, advisors continue to rate the importance of the category higher than their firms’ ability to perform.
Overall, advisors surveyed for Investment Executive‘s 2008 Dealers’ Report Card scored their firm’s back office an 8.0 in performance but a much higher 9.0 in importance. This gap improved marginally from the 2007 Planners’ Report Card, when advisors rated the category a 7.9 in performance and a 9.1 in importance. This year, Mississauga, Ont.-based PFSL Investment Canada Ltd. set the standard, with its advisors rating its technology a 9.2. Advisors at Toronto-based DundeeWealth Inc. and Calgary-based Portfolio Strategies Corp. gave their firms a rating of 7.3, the category’s lowest.
A comment from a Dundee-Wealth advisor on the East Coast concerning the firm’s back-office staff sums it up: “They don’t return phone calls or e-mails. No one wants an answer tomorrow; everyone wants an answer now.”
Efficiency is the linchpin of any back office. In the eyes of advisors, if the back office is efficient, it holds the company together; if it’s not, that creates tension. And there are any number of reasons why back offices may be lacking in efficiency. For example, says a DundeeWealth advisor in Ontario, who gave the firm’s back office a mediocre rating of 5.0 in performance but a top 10.0 in importance: “The firm should train its people better. They are inefficient and we feel we are doing their work. There is too much turnover.”
At Portfolio Strategies, concerns about the quality of the firm’s back office are focused on the technology platform. Its back-office system, provided by Winfund Software Corp. at a base monthly cost of $30 an advisor, is a sticking point. A Portfolio Strategies advisor on the Prairies, who scored the firm’s back office a 5.0 in performance but an 8.0 in importance, says: “The firm needs to improve the access to technology. It’s fee-based, so you have to pay for services.”
For just that reason, Portfolio Strategies is committed to Win-fund’s back-office platform. “Some of the biggest national firms offer a suite of software at a price of maybe $150-$300 a month [per advisor],” says Ken Parker, the firm’s vice president of finance and compliance. “The feedback we’re getting is that advisors are not utilizing all that software.
“We will just focus on the plain, back-office Winfund module, which advisors need to run their mutual fund businesses,” he adds. “We are not in the software business; we are in the mutual fund business. So, we don’t really have an idea or a mandate to layer on software and then charge everybody a set fee. It’s almost a profit centre for some dealers. We are not going to run it as a profit centre.”
However, the issues that Portfolio Strategies’ advisors have with their firm’s back office are not just technological. The back-office staff’s attitude and performance is also a burr under the saddle.
“A few people among the staff are a big pain in the ass to deal with,” says a Portfolio Strategies advisor in the West. “We bring in so much business and I can’t even get them to be nice to us.”
However, the recent experience of Regina-based Partners in Planning Financial Services Ltd. suggests firms can improve their rating in the category quite quickly. In this year’s report card, PIP advisors gave their dealer an 8.0, a marked improvement from last year’s 7.4.
One reason for PIP’s improvement: it changed its back-office platform to Univeris Corp.’ s Enterprise Wealth-Management Systems from EDS-SOLCORP’s WealthServ-RepVisor on Nov. 26. There were some challenges with the WealthServ-RepVisor system, says PIP’s general counsel and chief operating officer, Hugh Gabruch: “We were unable to have them dealt with to our satisfaction. Given the plans that Univeris had to enhance the modules for the system, we felt that, in the longer term, it suited our technological goals.”
A lot of time and money was invested in getting the back-office staff up to speed on data migration to the new system to make the transition as painless as possible. The cost of the process was “substantial,” Gabruch says. “It was well into the millions of dollars.”
But a PIP advisor in the West says the firm is now on the right track: “It is getting there. PIP had a slow start, but it is doing a good job.”
@page_break@Although technology was what drove PIP advisors to boost their firm ratings, Montreal-based Peak Financial Group‘s improved rating of 8.1 for its back office, up from 7.6 in 2007, is attributable to increased staffing. “We hired considerably last year,” says Robert Frances, Peak’s president and CEO. “We opened up several positions in the West at our new satellite back office in Weyburn, Sask. Advisors in the West seem happy about that.”
Staffing issues affected Saska-toon-based Sentinel Financial Management Corp.’ s back-office rating as well, but in a different way. Because of the economic boom in Saskatchewan, finding and keeping employees is getting tough. “We are all very concerned with the incredible demand for labour,” says Merlin Chouinard, Sentinel’s president and chief compliance officer.
Adds a Sentinel advisor: “People are learning on the job — at my expense.”
“There seems to be constant retraining,” says a colleague.
So, is there such a thing as a perfect back office? Gabruch chuckles. “It is the almost impossible dream,” he says. “When you combine the lack of uniform agreement as to what should be in, then superimpose the very different approaches that fund companies have — it creates a situation in which advisors everywhere, I’m sure, grumble under their breath from time to time.” IE