Independence is a word that is much bandied about in the advisory business. But what it means can differ widely, depending on the advisory channel, the firm and the individual advisor.

Advisors at both national and regional investment dealers, mutual fund dealers and full-service planning firms probably define “independence” as the freedom to run a business with as little interference as possible from above. That could include freedom from pressure to sell proprietary products or the ability to move to another firm while retaining clients.

Conversely, account managers at banks and credit unions may view independence as the flexibility to structure their work schedules around their personal lives, a freedom made possible by the depth of support and direction provided by their firms.

Although most firms say they don’t get in their advisors’ way, different companies have different definitions of what independence means.

Freedom and independence “doesn’t mean the firm can’t have opinions about the direction in which clients are going and their demands,” says Tom Monahan, head of CIBC Wood Gundy. “But we have to make sure we’re not standing between the advisors’ relationships with their clients and their ability to advise them appropriately.”

The bank-owned dealers certainly value their independent and high-earning advisors. And, because of their size, they can provide them with a level of sales support, marketing and brand recognition that independent brokerages can’t. The bank-owned firms also have the breadth and depth to give advisors a high degree of flexibility.

“Part of freedom and independence is being able to offer clients everything you can possibly offer. Not every firm has that,” says Mike Scott, managing director at RBC Dominion Securities Inc. in Toronto. “If the advisor wants to get into the discretionary business, we have that. We also have wealth management, financial planning and estate planning.”

GREATER AUTONOMY

But the steady flow of advisors migrating from bank-owned investment dealers to independent dealers suggests that some advisors believe they’ll find greater autonomy at the independent houses. One Blackmont Capital Inc. advisor in the Maritimes says the best aspect of working at his firm is “being able to think for yourself and not being pushed into doing what banks want you to do.”

As well, independent brokerages — both national and regional — often offer equity positions in the firm. “Our advisors are owners in the firm,” says Sue Dabarno, president of Richardson Partners Financial Ltd. in Toronto. “They’re on the front line with the clients, so why shouldn’t they have a say about how the business is run?”

Advisors at mutual fund dealers and full-service planning firms gave a high rating to freedom to make objective product choices, but gave sales support, equity research, consumer Web sites and advertising much lower scores in terms of importance than other investment advisors.

“We think advisors can get support services from the manufacturing side of the business,” says Geoffrey Charlton, the executive vice president of Burlington, Ont.-based Berkshire Investment Group Inc. “Our ideal advisor is one who values independence and who puts his clients first.”

Insurance advisors also value their independence. However, they are much more reliant on their firms for key areas of support compared with advisors at planning firms. Insurance advisors give higher ratings to firms’ support services and to categories such as consumer Web sites and advertising.

“The advisor appreciates his or her independence, but relies on the MGA for the support he or she needs to be productive,” says John Lutrin, chief marketing officer and executive vice president of Hub Financial Inc. in Vancouver.

Insurance advisors are “in all probability, people who are relatively entrepreneurial, yet are interested in having support services provided by a full-service relationship,” says Jack Garramone, vice president of the sales force at Clarica Financial Services Inc. in Waterloo, Ont.

Account managers at banks and credit unions seem to be the least independent of all advisors — at least, in the traditional sense of freedom to make product choices for clients or to move to another firm. In fact, account managers gave the highest importance scores among the channels to categories such as sales support, the firm’s image with the public, consumer Web site and advertising.

“We have an extremely strong brand in building relationships with customers, helping them become better off with our services,” says Wendy Hannam, executive vice president of Bank of Nova Scotia in Toronto. “Account managers come to work to help customers get ahead financially. And the account managers enjoy a rewarding career.”

@page_break@PART OF A SPECIAL TEAM

“We don’t want independent people who only want to work for themselves,” says Trudi Kloepper, senior vice president of investment services at Coast Capital Savings Credit Union in Vancouver. “We are very interdependent, so you really have to want to be a part of this special team.”

But despite their dependence on their firms, or perhaps because of it, account managers tend to be pleased with their situation and happy with the flexibility they have.

“The flex benefits and the flex hours are huge,” says a CIBC account manager when he was asked about the best aspects of his job. “I value the independence of managing my own book of business, but I also appreciate getting clients from the bank so I don’t have to deal with the stress of finding my own clients.” IE