Moving firms easier, for now

  2001 PLANNERS’ REPORT CARD
Ease of moving firms
 	2001	2000	1999
FundEX	9.8	n/a	n/a
TWC Financial	9.3	7.4	9.3
Regal Capital	8.9	7.6	8.7
Berkshire	8.4	7.6	n/a
Balanced Planning	8.1	7.3	8.1
IPC Financial	8.1	n/a	n/a
W.H. Stuart	7.7	7.5	9.2
Money Concepts	7.1	6.8	6.1
CMG Worldsource	6.8	6.2	8.5
Dundee	6.6	6.9	n/a
Primerica	6.6	7.6	3.9
Sun Life	6.3	n/a	n/a
Manulife	6.0	7.2	n/a
Investors Group	5.3	6.0	6.7
Assante	4.4	n/a	n/a
 
SOURCE: INVESTMENT EXECUTIVE RESEARCH
INVESTMENT EXECUTIVE CHART

 

 

 

 

Moving firms is a big change in a financial planner’s life and it can happen in one of two ways — as smoothly as a train on rails or bumpier than a bicycle on a gravel road.

Despite the added paperwork, the formation of the Mutual Fund Dealers Association and non-compete contracts, planners rate the ability to move firms easier in 2001 than it was last year. The ease in moving jumps to an average 7.3 this year from 7.1 in last year’s Planners’ Report Card. The reason for the increase may be because the MFDA hasn’t yet implemented new rules applied to moving and transferring clients.

But among the 450 planners surveyed in 15 firms across the country there are still many who told IE that switching firms is nothing less than a nightmare.

“I came from Investors Group [Inc.] — I got sued when I left,” says one Berkshire Investment Group Inc. planner in Atlantic Canada. An IG planner in southern Ontario says, “Investors Group claims they own the clients.” IG was rated 5.3 on ease of moving.

Others think that moving firms isn’t the problem — it’s the paperwork left behind that’s the deterrent to leaving. One planner from Balanced Planning Financial Group in British Columbia agrees, saying it’s pretty easy to change firms — except for the mounds of paperwork that must be completed.

This year, the spotlight focuses on the potential effects the MFDA will have on transferring clients. One FundEX Investments Inc. planner in Ontario says, “While the company has blanket transfers right now, whether that continues will depend on the MFDA, which will prohibit blanket transfers.”

“I think this is a licensing issue,” says another Ontario FundEX planner. “They are trying to do away with bulk transfers. But moving from FundEX right now is as easy as it can be within the industry.”

With bulk transfers, planners can move their entire book of business without clients’ absolute knowledge and consent. With the formation of the MFDA, clients will be protected from this. To move clients with them to a new firm, planners must obtain written consent from each client.

One Berkshire planner from Ontario says, “Now that [Berkshire] is an MFDA member, you can’t move [clients] in a block, but it wouldn’t be any tougher than other places.”

An Ontario colleague insists that Berkshire will assist planners in moving if they leave the firm on good terms.

A different perspective exists at Assante Corp., which has acquired a slew of financial planning firms. “I wouldn’t even consider moving firms,” says an Assante employee in Toronto. Another in Saskatchewan agrees it would be extremely difficult to do.

While many planners don’t move firms because they’re content to remain where they are, others don’t move because they don’t want to get into a client-retention struggle with the existing firm or deal with the psychological impact of pulling up roots and starting again.

Although rated No. 1 overall in this year’s Planners’ Report Card, planners with Primerica Financial Services Ltd. rated the ability to leave their company a low 6.6.

“On a personal level, moving firms would be hard. I would be free to do so, but the company would make the transition difficult,” says a Primerica advisor in southern Ontario. A Primerica planner in the Maritimes says the company doesn’t allow planners to go after their former clients for at least two years:”We have a contractual obligation not to contact our clients to take them with us, but I do not think that there would be litigation.”

Jeff Dumanski, senior vice president of marketing at Primerica, says the company has a two-year non-compete clause, which he says is typical in the industry. “It’s important to have something like that. It discourages inappropriate behaviour and conduct, and it also adds a certain element of consumer protection,” he says. “It’s a backbone to support the reps who choose to stay with us.”

Most planners hate to see clients lost in a shuffle, so many stay where they are, they say, to protect clients’ interests.

“If it wasn’t such a pain in the ass, I wouldn’t be with CMG,” says a CMG Worldsource Financial Services Inc. planner in Ontario. “The grief involved in moving clients is prohibitive. The difficulty in moving firms is also ultimately bad for the clients.” IE