2001 PLANNERS’ REPORT CARD

Payout

 

%

rating

FundEX

100

10.0

W.H. Stuart

81

8.8

IPC Financial

80

8.3

Sun Life

78

7.9

TWC Financial

77

8.0

Berkshire

76

8.5

CMG Worldsource

75

7.3

Assante

74

7.6

Balanced Planning

74

7.3

Money Concepts

74

7.3

Dundee

73

8.2

Regal Capital

71

8.1

Manulife

69

7.4

Investors Group

62

7.4

Primerica

57

8.6

 

SOURCE: INVESTMENT EXECUTIVE RESEARCH

INVESTMENT EXECUTIVE CHART

High pay by itself isn’t enough to satisfy financial planners, but those who believe they are getting a good deal on payout tend to be happiest with their firms overall, according to this year’s Planners’ Report Card.

Most of the categories planners rate in our satisfaction survey are qualitative. What do you think of your firm’s strategy? How much freedom do you have? What do you think of your firm’s public image?

However, the one category that’s unambiguously quantitative is payout. You’d expect this rating would be the easiest to analyse: high payouts should produce high ratings and happy planners.

Not always. According to the planners we polled, high payouts do not necessarily make planners happy with a particular firm. However, if they are satisfied with their payouts and the firm makes good on its promises to the reps, they feel pretty good about the firm overall.

It’s no coincidence that the folks at FundEX Investments Inc. rate their payout satisfaction the highest, and also generate the highest overall IE quality score. Their payout is as high as it can be at 100%.

At the other end of the scale, the reps at Primerica Financial Services Ltd. receive the lowest payout rate among the firms surveyed, but they still give the firm a high score denoting their satisfaction with that payout, and the firm consequently rates highly overall.

Similarly, the reps at Berkshire Investment Group and IPC Financial Network Inc. recount high degrees of satisfaction with their payouts, and the firms also rank near the top of the survey.

One Berkshire rep from Ontario says the firm’s payout is “above average, but you get what you pay for.”

Getting what you pay for appears to be the key to happiness. The planners at FundEX have obviously chosen its full-payout model for a reason and are naturally satisfied with the situation. “It’s the best! They’re just generous people!” gushes one FundEX planner from Ontario.

Despite the enthusiasm of some of the reps, FundEx is not a charity. Planners are levied a flat rate for back-office services, but it scores highest because planners seem to feel good about the service they get for the amount it costs them. But most of all, the FundEx planners treasure the freedom and independence the firm’s payout model affords them — and that’s where the true satisfaction emerges.

The flat-rate model means absolutely no pressure from the firm to produce. It is going to get paid regardless, so it’s up to the planners to figure out how hard they want to work, and how much they want to produce. “Because they don’t take a percentage of commissions, there is no vested interest to do a high volume,” says a FundEX loyalist in Toronto. “I am totally independent. Their income is not dependent on what I make, so I have total control over my business,” says a colleague in eastern Ontario.

It’s the high level of control that planners at FundEX get over their business that seems to make them truly happy about their payout situation. “I like being my own manager, and being able to afford to hire my own assistant. At Assante [Corp. of Winnipeg] they were hitting us with a $10 transaction fee and were lowering our commissions, so I could not afford an assistant,” says an Ontario-based planner who made the jump to FundEX.

At the other end of the scale, the planners at CMG Worldsource Financial Services Inc. and Balanced Planning Group give their firms some of the lowest scores for payout, and they also trail the pack for overall satisfaction. “I’m underpaid. They don’t do enough for the 25% that I give them,” says a planner with CMG Worldsource in British Columbia. “But you have to be licensed with somebody, and I don’t want to work for anybody who takes more than 25%. It’s frustrating that the head office is in Toronto. I don’t get enough support, and if I have a client after 2 p.m., the office in Toronto is closed.”

While there does appear to be a pretty substantial correlation between planners who are happy with their pay and planners who are happy overall, payout isn’t everything. W.H. Stuart & Associates Inc. and Investors Group Inc. are the exceptions that prove the rule.

For example, W.H. Stuart boasts a very high payout and garners a high score for satisfaction, not only with the payout itself but also in categories such as “freedom from pressure to sell house funds” that appear to be a collateral benefit of a high payout. However, the firm scores below average in almost every other category, so although the payout is good, it’s not enough to make up for the perceived inadequacies in other areas of the firm.

IG’s payout, on the other hand, gets one of the lowest satisfaction scores, but IG still rates well overall. IG planners may not be paid that well, and they may not be very happy about it — “The pay could be better,” says one rep from Manitoba — but the firm apparently does enough in other areas to keep the troops happy overall.

Apart from these notable exceptions, however, planners’ satisfaction with their payouts tends to be a strong predictor of their overall happiness.

The lesson for firms and planners alike is: it’s not how much you’re paid that’s most important, but the structure of firms’ payouts and the value reps get from the firm. IE