Primerica leads the pack

2001 PLANNERS’ REPORT CARD
The best …
Category	2001	2000	1999
Freedom from pressure	9.2	9.5	9.3
The firm’s ethics	9.1	9.0	9.1
The firm’s stability	8.8	8.8	8.6
Legal and compliance	8.9	8.9	8.8
 
… and the worst
Category	2001	2000	1999
Advertising	5.4	4.4	5.3
Marketing support	6.4	5.8	6.6
Ease of moving firms	7.3	6.8	7.3
The firm’s public image	7.3	6.8	7.0
 
SOURCE: INVESTMENT EXECUTIVE RESEARCH
INVESTMENT EXECUTIVE CHART

Financial planning has moved from a grassroots industry in which mom-and-pop operations provided advice on mutual funds and saving for your kid’s education to a world of buttoned-down corporate leviathans. The funny thing is that most planners surveyed in Investment Executive‘s third annual Planners’ Report Card seem to like where the industry is heading. But that’s not to say they haven’t had to make a few sacrifices along the way.

In recent years, mutual fund distributers, who make up the core of the planning business, have been criticized for being unsophisticated and short-sighted, while their front-line workers were accused of being unqualified and unregulated. Industry consolidation, increased competition and ongoing regulation have been the catalysts for turning planners into a version of their more institutionalized cousins. And it seems the more institutional you get, the happier you are.

Top scores this year go to Mississauga, Ont.-based Primerica Financial Services Ltd. The firm is part of U.S. banking behemoth Citigroup and it’s not surprising its advisors gave it a 10 for stability. The firm also headed the pack in nine of 18 other categories.

Second place in the survey is another industry giant, Investors Group Inc. of Winnipeg. While having to forfeit a large chunk of their commissions and much of their freedom, the front-line workers at both firms say they love the administrative and technical support they receive from head office.

We admit to comparing apples and oranges — possibly even lemons — in our survey because both IG and Primerica sell mainly proprietary products, which sets them apart from the distributors that offer third-party products. As well, this is the first year the survey has included FundEX Investments Inc. of Markham, Ont. It scored well in most categories but wasn’t eligible for the top spot because it doesn’t offer its planners a full range of services.

For the most part, however, the results show planners are adapting well to the tempest of change. Most have willingly exchanged some of the independence they were weaned on for team benefits such as technology and research — except perhaps one Ontario advisor with Regal Capital Planners Ltd. to whom we spoke. He has been with the company for almost 30 years and still does every order by hand. His desktop is made of wood, he says, and he’ll retire before the company forces him to get wired.

But he is definitely in the minority; for most planners, it’s pretty difficult to imagine doing business without contact-management software, corporate e-mail and computerized order entry. Even more difficult to conjure up is working independently and forking out the cash for your own system. The nature of technology makes it virtually impossible for anyone to make a go of it on his or her own. The costs are burdensome, especially when systems need to be replaced every few years.

The price of technological support is loss of freedom. Planners today don’t have the same freedom to work independently as they used to. While a large number of the planners we spoke to said they maintained a great deal of their freedom and entrepreneurial spirit, it’s easy to see that being under a corporate umbrella means reining in some of that zeal once in a while. “There’s no pressure to sell the firm’s products,” says a Winnipeg-based advisor with IG. “I just don’t get paid if I don’t.”

Independence and the space to build your business your way is the talk among advisors who work under the FundEX banner. Planners pay a yearly fee of $12,000 for both front- and back-office support, and keep 100% of the commissions they generate. “Because [head office doesn’t] take a percentage of commissions, there is no vested interest to do a high volume of trades,” says a FundEX planner in Toronto. “I am totally independent. Their income is not dependent on what I make, so I have total control over my business,” says another Ontario-based planner.

FundEX is the exception to the rule. Every other firm takes a percentage of assets based on commissions. So, while the pressure to generate commissions may be subtle, it does exist. Firms are also reaching for more control over advisors’ books with non-compete clauses and making employees shareholders.

But spirits are high among most planners. Average survey scores rose considerably in nine categories in a year that saw the markets tumble. Last year, planners were staring into the eyes of a bull market and saw red. This may be due to the fact that when times are tough people tend to lighten up and when times are good it’s easy to find fault. Whatever the case, planners are embracing their institutional parents now more than ever.

Those parents are the ones having a tough time these days as they struggle to hold their ground in a sea of consolidation. Assante Corp. of Winnipeg has snapped up more than a dozen rivals in the past few years. The integration is almost complete and companies surveyed in years past — Equion Group Inc., Financial Concept Group and THE Financial Planning Group — have been absorbed under the Assante name.

The company’s girth has made the integration process difficult, prolonged and costly, so it’s no surprise that many of its planners are very disgruntled. Since this is the first year we have treated Assante as a corporate entity, we have nothing to compare it to. But we do know that the company is well below the national average in almost every category, including stability, strategic focus and public image.

“If we didn’t get bad press, we wouldn’t get any,” says a Toronto-based planner with Assante. Another planner in Ontario says the worst aspect of his company is “head office and the new consolidation, [which] is causing a few growing pains.”

Near the bottom of the barrel is Ottawa-based Balanced Planning Financial Group, which like Regal Capital is now part of consolidator BRM Capital Corp.’s growing stable. Balanced planners were brutally frank when scoring their firm, which sank at least 0.5 points in 10 of 18 categories over last year.

Asked to rate the stability of the firm, one Balanced planner from Alberta says: “I don’t know, I’m never quite sure which firm I’m working with because of all the takeovers.” A Vancouver-based planner is also upset with all the name changes: “Changing the name to Cartier Planners [BRM’s proprietary fund family is Cartier funds] is really stupid. Everyone will think we only sell Cartier funds. And that is really bad.”

Waterloo, Ont.-based Regal Capital fared better, but still sits in the lower half of the survey. Regal advisors are uneasy about being acquired by BRM. “The worst aspect is the amalgamation because there are a lot of unknowns,” says a southern Ontario planner. “I’m apprehensive about the new corporate structure.” IE