Adding advisors

“Our goal is to have a branch, a financial advisor and an assistant in every community in Canada,” says David Gunn, principal, financial advisor talent acquisition at Edward Jones. “We’re not there yet, but that’s an objective we have.”

Gunn anticipates that one-third of the goal will be filled by professionals who already are licensed to sell individual securities, mutual funds or life insurance products. The remaining two-thirds will likely to consist of people who are changing careers or are established community leaders.

Edward Jones’ determination to grow at this pace demonstrates that the firm is upbeat about the Canadian market and has seen success here, says Ian Russell, president and CEO of the Investment Industry Association of Canada in Toronto.

The firm has demonstrated an understanding of the need for wealth-management services in Canada, says Russell: “[That need] is really a product of the aging demographic and the demand for more services, [such as] financial planning, retirement advice, estate planning and specialized tax advice.”

Edward Jones, a subsidiary of St. Louis, Mo.-based Edward D. Jones Co. LP, launched in Canada in 1994. The Canadian subsidiary has 670 advisors and slightly more than $27 billion in assets under management (AUM).

The advisor numbers target is ambitious, considering the firm has been in Canada for slightly more than 20 years and has not yet reached 700 advisors, says Dan Hallett, vice president and principal with Oakville, Ont.-based HighView Financial Group: “I’m not sure they’re going to quite hit [their goal], but I don’t doubt they will grow.”

Gunn is confident that his firm can reach the initial goal of adding 1,000 advisors, based on the U.S. parent’s success in expanding its advisory force during the past 30 years. His positive attitude also may be influenced by the feedback received from advisors employed at other financial services firms who attended focus groups organized by Edward Jones in 2015.

“What we discovered was we had an awareness opportunity,” says Gunn. “A lot of advisors at other firms just didn’t know much about us. But then, when we shared some of the key competitive advantages of our firm, they were really surprised at what we offer.”

Some of those advantages for advisors who join Edward Jones include a full-time assistant paid for by the firm, a branch office in the advisor’s own community and “industry-leading compensation” as determined by third-party research, according to Gunn.

“It was a study conducted by a third-party research group that found our firm consistently compensated advisors more than the market-level comparison at the examined production levels,” Gunn says. “The examined productions levels were $400,000, $600,000 and $1 million of gross production.”

The feedback from the advisors who attended the focus groups motivated Edward Jones to increase its spending in advertising specifically to attract experienced advisors. Advisors who use public transit in Toronto and Vancouver, two key areas for desired growth, may have seen large posters in transit stations and vehicles touting the firm’s commitment to advisors’ communities and training programs.

The campaign is designed to appeal to advisors who are tired of long commutes into the downtown core and may be ready to open an office closer to home, Gunn says.

But Edward Jones also is making sure to target advisors whose businesses and client base are a fit with the firm’s culture of serving serious, conservative investors who have a long-term outlook, says Gunn. The firm conducts a thorough analysis of the book of business of each advisor who is interested in joining the firm to ensure that the advisor’s client base fits the firm’s investment philosophy.

The right advisors for Edward Jones are likely those who enjoy working in a structured environment in which training and technology is provided, says Hallett, who sees it as an opportunity for advisors who work in retail bank branches and are looking to move into the brokerage environment.

Edward Jones also may achieve some success by adopting a component of its parent company’s recruiting strategy, which targets junior advisors within large teams at major brokerage firms. These would be advisors who may be able to bring their own book of business to Edward Jones and who want to lead their own practices, Hallett says.

These extensive recruiting efforts are meant to prepare the firm for what it believes will be a surge in new clients. Its current AUM means that Edward Jones is serving just shy of 1% of the market, Gunn says. He adds that there are thousands of “underserved” clients in Canada who either are unhappy with their current advisor or don’t have one.

Russell agrees that Edward Jones has an opportunity to expand its client base, especially in the mass-affluent market, which is being affected by shifts in the financial services sector. Financial services firms are facing higher costs and some are raising the minimum account thresholds, leaving clients with lower levels of assets to receive commoditized services, he says: “[Edward Jones] sees investors who are looking for a more personalized service and personalized wealth management and they don’t have huge amounts of money.”

Gunn says his firm isn’t exploring the adoption of fintech services, such as robo-advisors, for clients: “For our target client, that face-to-face contact, whether it’s [through a video conference] or across the table, is still so important to ensure that an advisor hears and learns their goals.”

© 2017 Investment Executive. All rights reserved.