Technology, stability and pay

And that shows up in how planners at the country’s largest distributers rate their firms in Investment Executive’s first annual Planners’ Report Card. Whether the rankings are high or low depends on the generosity of the payouts, the strength of the back- and front-office systems and the firms’ strategies for the future.

In a random, anonymous survey, Investment Executive asked 30 planners at each of the 13 largest national firms to rate their firms in 17 categories on a scale of one to 10, 10 being best. The average scores in each category were then plugged into a simple formula to give each firm its overall IE Quality score. To get the IE Value scores, we factored in the planners’ reported payouts, giving us a rating of what planners get for the gross commissions they generate.

So who – in the planners’ opinion – is the top firm? On the basis of straight IE Quality scores, the highest ratings go to Winnipeg-based Investors Group Inc. and Mississauga, Ont.-based Primerica Financial Services Ltd. But we admit to comparing apples and oranges in our survey – both Investors and Primerica mainly distribute their own branded products while the other firms in our survey offer a diverse range of products, giving them a leg up in some categories. Primerica has also aroused a certain amount of contraversy over its recruiting methods (see page C4).

Yet, according to their reps, PFSL and Investors are both good at what they do. When it comes to strategy and stability, the two firms score at least a full point above the national average. This isn’t surprising since both belong to financial conglomerates – Investors to Power Financial Corp. and PFSL to U.S. giant Citigroup. Investors’ planners also give it top marks for its image, sales support and account statements. Technology, training and marketing support get good grades at PFSL.

Despite the high scores, there is a downside. With only proprietary products to offer and strenuous non-compete contracts, planners at the two firms rate them low in the freedom-to-move category. Payout is another issue. By factoring in the planners’ estimates of their payout, these firms drop to the bottom of the barrel. Planners at these companies report mediocre payouts.

Once payouts are factored into the overall equation, the broader-distribution firms shine. At the head of the class is Radville, Sask.-based TWC Financial Corp., edging out Toronto’s Equion Group. Apart from reporting an A+ payout of 74.5%, TWC’s planners praise their firm for its technology – both back- and front-office – and give it a top score for the ease with which they can move their books.

While TWC is leading the way, Equion is just a whisker behind in the IE Value rankings and just slightly ahead in the IE Quality. Equion’s planners give it high scores for training, image and marketing and sales support. “We put a huge effort into training,” boasts one Equion planner, noting that, “unlike brokers, we help anyone who needs help.”

The one category where Equion’s advisors give the firm a low grade is in ranking the ease with which they can leave the firm. Equion is the original company under the umbrella of Winnipeg-based Assante Corp. and part of Assante’s strategy as an industry consolidator is to give its reps equity to tie them to the firm.

Planners at Assante’s most recent major acquisition – Toronto-based Financial Concept Group – also give their company a low score for ability to leave, 5.9 vs a national average of 7.2. However, unlike the relatively happy planners at Equion, those at FCG give their company only average scores in most other categories. FCG is the lowest ranked of the three Assante-owned firms that we surveyed. On a quality basis it ranks sixth among the 11 traditional firms, but factor in its 65% average payout and the firm falls to last among the 11.

The other Assante-owned company we surveyed – THE Financial Planning Group of Pointe Claire, Que. – scores fourth out of 11 in terms of quality and third overall when payout is considered. In contrast to the other Assante firms in our survey, FPG planners give their company an above average score for their ability to leave – which may be more indicative of their commitment to stay than the ease of leaving. “With the new Assante agreement it is hard [to leave], but if I was not satisfied I would not have signed the non-compete clause. I am very happy with the firm,” says a contentedly indentured FPGer.

Also in contrast to Equion, planners at FPG and FCG score their firms on the low side for training. Yet at least one FPG planner is optimistic about the recently founded Assante Academy. “[Training] was poor up until about four months ago, then they decided to put a move on training staff. This is only because of Assante. They are making dramatic changes.”

Apart from such internal initiatives, Assante is a critical force for change within the industry – aggressively leading the charge into industry consolidation. Firms must acquire – or be acquired – and those doing the buying face the necessity of going public to fund that consolidation.

Ross Dixon Inc., parent company to the Ross Dixon planning franchises, is one company taking the bull by the horns. The Kitchener, Ont.-based company is launching an IPO and contemplating future acquisitions. It has already acquired a securities arm. All these moves have Ross Dixon’s planners pleased. The company scores well in the back office and image categories. But one Ross Dixon planner says that apart from the firm’s name, its best qualities are its “vision for growth and direction as an independent because there’s so damn few of us left.”

The firm ranks third overall among the planning companies for quality and fifth for value.

Coincidence or not, the companies that place in the bottom half of our survey all are rather vague about their long-term strategies. “We need to become one-stop shopping,” suggests one planner with Markham, Ont.’s W.H. Stuart Mutuals Ltd. The firm makes a strong showing in the value rankings thanks to the best-reported payout on the street, almost 80% on average, yet its planners give the firm relatively low scores otherwise. Apart from its payout, the firm only ranks above average in four other categories.

The planners at Ottawa-based Balanced Planning Financial Group and Waterloo, Ont.’s Regal Capital Planners Ltd. give their organizations marks that put them slightly ahead of W.H. Stuart on the IE Quality ranking but, since their payouts aren’t as high, they fall behind on the IE Value score. Balanced’s planners give it above-average scores for freedom, ease of movement and a couple of other areas but, otherwise, say the firm is below average. That’s not all bad, as far as some planners go. “I like Balanced because they let us do our own thing here … I’m very happy with things like a lack of sales support,” claims one, but another laments: “Honestly I have no idea why I am here.”

It’s a similar story at Regal – good ratings for freedom but in exchange, planners get little support. “They allow me to be independent … I got to work at home when my husband was dying. They don’t ever tell you what to do, or how to run your business,” notes an Ontario planner. But the uncertainty over the planning giant’s future, particularly after its aborted dalliance with Assante, has some advisors worried. “It’s iffy right now because everyone is trying to buy us.”

Similar uncertainty is plaguing reps at Toronto’s Fortune Financial Corp., Money Concepts and CMG-Worldsource Financial Services Inc. of Markham, Ont. While CMG-Worldsource’s planners give it high scores for their freedom, payouts and overall satisfaction, they rate it below average in support and training.

At Money Concepts, planners give the firm below-average marks in areas such as technology, training and support, but they also mark it down for payouts, ease of movement and strategy. “I want to tell head office: ‘You up there don’t know how we are functioning in the field’,” complains a frustrated Ontario planner.

The Fortune story is a familiar one. The company has been struggling with regulatory snafus, rep defections, failed deals and bad press, but it now has a deal with Toronto’s Dundee Bancorp Inc. The reps are cautiously optimistic: if the deal goes through as planned reps expect the company will turn around significantly. An East Coast rep says the firm has been without a strategy for some time, yet he allows: “It’s hard to remember your initial job was to drain the swamp, when you are up to your ass in alligators.”