Meet joe advisor. with 10 years of experience under his belt, Joe is dually licensed, managing $25 million in assets and growing his book of business by 10% a year. To top it off, he’s CFP-designated and has a knack for attracting high net-worth clients. On paper, Joe should be any firm’s dream advisor. The question is: will an advisor like Joe be a good fit with just any firm?
The short answer is: no. For this year’s Planners’ Report Card, Investment Executive asked the surveyed firms to describe their ideal advisor. In most cases, they rattled off a specific book size or a laundry list of professional designations. At the heart of it, however, each is looking for advisors who “get it.” They want advisors who understand how to run a clean, profitable business and, more important, know what to expect from dealers in return — whether it’s the support of a full-service planning firm, freedom to operate as an independent advisor with limited frills or anything in between.
The differences can be significant. Take PFSL Investments Canada Ltd., which describes its ideal advisor as the “average Canadian.” Contrary to most firms, PFSL encourages advisors to join the firm on a part-time basis, as they ease into the financial planning business and obtain their licences. PFSL advisors aren’t looking to get rich, and their book sizes reflect it: almost 60% of PFSL advisors surveyed for the Report Card had less than $5 million in assets, and none had more than $20 million. It’s safe to say Joe Advisor wouldn’t be a good fit.
“Our business model is ‘middle-income Canadians serving middle-income Canadians’,” says Jeff Dumanski, PFSL executive vice president of marketing. All reps have to obtain the minimum provincial sales licensing, but none is required to get a CFP. The firm recommends advisors obtain their designations, but doesn’t help to pay for them.
Dumanski insists that clients are best served by advisors who share similar circumstances. “Our reps have their own financial challenges,” he says. “We rely on them to be educated and to understand the products they offer, and on how the product impacts their lives and the lives of middle-income Canadians.”
That’s a far cry from the ideal advisor at Toronto-based Assante Corp., at which 44% of the advisors surveyed have $30 million-$50 million in assets.
“I think the ‘perfect world’ advisor would have 100 clients, each with $1 million-$3 million in assets,” says chairman and CEO Joe Canavan. That’s a lofty target for a firm whose average advisor has about $26 million in assets, but, Canavan notes, different parts of Canada breed different advisor profiles, so describing the ideal isn’t easy.
Fresh off a “restructuring and refinement” phase, Assante is gearing up for a recruitment campaign that’s targeting advisors with at least five years in the business, $25 million-$35 million in assets and at least one professional designation.
Over at FundEx Investments Inc., president and CEO David Vowles looks for advisors with at least $12 million in assets and an eye to run an independent practice. The firm, which offers its advisors 100% payout, doesn’t provide training or any support services other than compliance and back office (for which advisors pay a $1,500 monthly fee). CFPs are optional, and advisors can run whatever kind of business they choose — after all, they’re paying for it, Vowles says. “The core benefits of FundEx are autonomy and freedom. Advisors have their own vision for their practices, and all we require is that their activities be onside with regulation,” he adds.
Planners at IQON Financial Inc., Worldsource Financial Management Inc.
and Peak Investment Services Inc. should have $10 million-$25 million in assets and a CFP, but the firms are decidedly hands-off when it comes to how advisors should run their business. “We leave that up to the advisors,” says Worldsource chairman Gwyer Moore. “We could have good advisors focusing on a few high net-worth clients and others focusing on a broader level of clients at a lower level, with both [types of advisors] doing very well.”
Steve Cole, national sales manager at Laurentian Financial Services, has a very specific advisor in mind, both in terms of book size and business mix. The firm looks for advisors with at least $10 million in assets (minimum 10% annual growth in AUM) and a bent toward insurance.