Much dissatisfaction at two dealer firms

Advisors with Global Maxfin gave their firm significantly lower scores (defined as at least half a point or more) compared with those given to PIS last year in 17 of the 20 categories in the survey that applied to the firm, including the “overall rating by advisors” category. As well, the “IE rating,” which is the average of all the categories except the overall rating by advisors, was down by a similar margin.

Global Maxfin is the dealership arm of Global Family of Cos. , a financial services firm that also owns a brokerage, a managing general agency and a distribution channel for registered education savings plans. In September 2009, Global Maxfin acquired PIS, the Canadian mutual fund dealer subsidiary of Australia-based Professional Investment Holdings Group.

Both Global Maxfin and PIS run on an independent advisor platform model in which support services tend toward the minimal, while payout is intended to be higher than at other dealer firms. Advisors with both Global Maxfin and PIS were surveyed for this year’s Report Card, and Investment Executive compared these ratings with the ones PIS advisors gave their firm in 2009.

A number of advisors with Global Maxfin said they were discontented with the direction of the firm since the change of ownership. In fact, the rating in the “firm’s corporate culture” category fell to 5.8, a drop of 2.3 points from 8.1 in 2009, and the “firm’s strategic focus” rating dropped to 6.1, a decline of 1.8 from 7.9 last year.

One advisor in Alberta, in particular, suggests that the culture of the acquiring firm did not fit well with that of PIS: “Global Maxfin comes from an RESP-manufacturing sales background with a tightly controlled sales force, and it acquired a company that has a lot of colourful, independent people working for it. It’s been a rough transition.”

Other advisors were simply frustrated that they find themselves working for a firm under new ownership yet again. More than three years ago, PIS’s parent acquired privately held mutual fund dealer Generation Financial Corp., renaming it PIS. Thus, Global Maxfin advisors gave their new dealer a “firm’s stability” rating of 6.7, a decline of 1.7 from 8.4 in 2009.

“I hate the idea that dealers can be bought so easily,” says a Global Maxfin advisor in British Columbia. “It fosters a lack of consistency.”

Other notable complaints from Global Maxfin advisors included a slow and sometimes error-prone back office; a lack of marketing support for advisors’ businesses; and decreased compensation, which the advisors blamed on a change in the grid structure that occurred last year under PIS ownership prior to the acquisition.

For its part, Global Maxfin says that it’s committed to respecting the freedom of all its advisors while, at the same time, helping them grow their businesses.

“We believe in independent advisors,” says Richard Pyper, the firm’s executive managing director. “We want to earn their business.”

Indeed, some Glo-bal Maxfin advi-sors surveyed for this year’s Report Card did say they were happy to be working now for a Canadian-owned company with a national reach. They were also encouraged that the firm appears to be committed to the independent platform model. Says a Global Max-fin advisor in Manitoba about the most positive aspect of working at the firm: “The freedom to run our own business as long as it is compliant. There are good people here.”

As part of the transition, Global Maxfin is slowly merging the two companies into one, with the head office and all the back-office support out of Richmond Hill. Once that process is complete — and any glitches smoothed out, says Pyper, back-office efficiencies should result in stronger service.

Global Maxfin executives say they’ve been travelling across the country to consult with advisors and to introduce themselves.

They say they are committed to retaining PIS’s two compensation models: an integrated grid and a fee-based model. Although the firm says it has no plans to return grid levels to where they were before they were cut by the previous owners, the firm plans to put more resources into supporting its advisors, particularly in the areas of practice management, marketing support and succession planning.

However, Global Maxfin executives acknowledge that a disproportionate amount of their time and focus since the acquisition has been spent on fixing the firm’s legacy compliance problems, which date back to the PIS and Generation Financial days. Both firms ran afoul of regulators for deficiencies in their compliance regimes.

“We’ve had to redo every single policy, every procedure in the company,” Pyper says. “So, there has been lots of compliance communication [sent to the advisors], and probably not enough focus on practice-building communication. But we hope, over the next five or six months, we’ll be able to get out more to talk to people about their businesses, about their practices.”
@page_break@Meanwhile, advisors with Assante appear to have become generally disenchanted with how their firm has been performing. They gave their dealer significantly lower ratings compared with last year in 19 categories of the 31 in the survey that applied to the firm. Additionally, the “IE rating” is down by a similar margin.

Assante advisors complained that the availability of support services — whether for tax planning, wills and estate planning, insurance planning or financial planning — was too tied to the selling of products and services from Assante’s parent firm, Toronto-based CI Financial Corp. “If you use proprietary stuff, you get support,” says an Assante advisor in Ontario. “If you don’t, they don’t talk to you — even if you have a large account.”

Another area of grievance is “technology tools and advisor desktop,” for which a new desktop system to replace an out-of-date one has long been promised but slow to be delivered. “It’s a sore point,” says an Assante advisor in B.C.

Some Assante advisors say they would like to see their firm dedicate more resources toward consumer advertising and marketing support for their businesses. Says an advisor in Atlantic Canada: “The firm needs [to build] a little more public awareness and name recognition.”

Other areas of concern for Assante advisors were “ongoing training,” which they say was scaled back as part of cost-cutting during the downturn; and “total compensation,” as grid levels were lowered in the aftermath of the financial crisis in the autumn of 2008.

Assante went through a change of leadership late last year, as Steve Donald, a veteran at the firm, took the reins from Joe Canavan, who had decided to step aside.

Donald says his strategy is to build on the firm’s successes as opposed to making any significant changes in direction. However, Donald is putting an emphasis on helping advisors grow bigger books of business and increasing the quality of service and advice. “I think we have a tremendous network of advisors,” he says. “We are going to be able to continue to differentiate ourselves from the average advisors [in the industry] and elevate the services that are provided to clients.”

Assante’s approach to support services puts an emphasis on how an advisor’s practice is structured, Donald says: “What we believe in, as a dealer, is an integrated approach to wealth management, looking at all aspects [of a client’s needs]. Where we have advi-sors who hit all those items, there is a disproportionate amount of support.”

And despite the questions regarding access to support services, Assante advisors who did use the firm’s support services praised their quality.

In terms of technology, Donald says, the new advisor desktop, which is close to being rolled out, will help advisors tremendously in building their practices — particularly in wealth-planning support.

“We’ve made significant progress,” Donald says. “This initiative is truly, I think, going to be a game-changer for us in terms of being able to provide integrated information to our advisors on their desktop.”

Donald admits Assante did pull back during the downturn in terms of consumer advertising and marketing support, as advisors concentrated on managing existing accounts. However, he says, resources are flowing back into those areas.

In May, the firm launched a series of events across the country featuring presentations from a portfolio manager and other investment experts, to which Assante advisors could invite clients and prospects.

Donald says Assante remains committed to ongoing training. In retrospect, he says, the decision last year to cancel the annual national conference was probably a misstep: “We probably should have looked elsewhere [for cost savings]. Any opportunity to network with your peers, understand what’s working, is a benefit.”

The firm’s annual conference was back on this year, scheduled for late May in Ottawa.

Although Donald says there are no plans to raise grid levels to what they were before the recession, he did say the firm will continue to put resources back into areas that will help advisors grow their businesses. “As a result [of the support and resources Assante is providing],” he says, “their practices are growing at a much faster rate than any grid reduction.”

Donald believes that Assante advisors are well positioned to build their businesses and help clients as the economy continues to slowly emerge out of the recession: “There’s no question that these have been a very difficult past couple of years. But as I travel across the country and talk to advisors, I get the sense everybody is ready to get back to work and really capitalize on what’s going on.”

IE