It’s a seemingly innocuous question: how do you rate your firm’s product offering? But when Investment Executive posed that query to more than 1,500 advisors for this year’s five Report Cards, it becomes clear that the question digs a little deeper.

Advisors’ responses reveal more than just how they feel about their product offering. They also demonstrate how the product offering helps — or hinders — advi-sors’ businesses and their ability to serve their clients well.

Judging by the numbers in the 2006 Advisors’ Report Card, products play a crucial role in advisor satisfaction. Advisors rated their freedom to make objective product choices a 9.5 in terms of importance, marking a 0.6-point leap from last year. Likewise, the quality of the product offering has also taken on greater importance, as indicated by the 9.0 importance rating, up significantly from 7.3 in 2005.

Fortunately, performance ratings are on the rise as well. Advisors gave their firms’ product offering an overall average score of 8.5, up from 7.8 last year, and gave freedom to make objective product choices a 9.1, up from 8.4 in 2005.

“I can look a client in the eye and say honestly that I am recommending a certain product above every other product available on the market,” says an Equinox Financial Group Inc. advisor. “And for that to happen, you have to have complete product objectivity. Clients have to come before pay.”

Comments such as these, cou-pled with bolstered ratings across the board, lead to one big question: what has changed on the product landscape to make advisors so happy?

The increasing availability of banking products might be one explanation. Almost 80% of investment advisors say they now have access to products such as high-interest savings accounts and GICs, while 72% of advisors at mutual fund dealers and full-service planning firms and 63% of advi-sors at regional firms say they can offer their clients banking products. Besides working to keep assets within the firms, banking products are an ideal way for firms to broaden their offerings and dub themselves “full service.”

Granted, “full service” has several definitions. Some firms use the term to describe a business model that runs on both the Mutual Fund Dealers Association platform and the Investment Dealers Association of Canada platform, thereby allowing advisors to offer virtually any product a client could ask for. Others consider themselves full-service by virtue of offering a range of mutual funds, insurance and banking products but not securities.

Yet, advisors’ satisfaction doesn’t appear to hinge on whether their firms operate on a dual platform. Looking at the results of the Planners’ Report Card (Investment Executive, June 2006)— in which firms are categorized as full-service or MFDA-only — the scores for quality of product offering are almost identical. In fact, with a combined average score of 8.5, the MFDA-only firms slightly outscore their dual-platform counterparts, which have a combined average score of 8.3.

However, MFDA-only firms seem to stand apart on their referral arrangements for alternative investment products. Advisors at single-platform firms, such as Partners in Planning Financial Services Ltd. and Manulife Securities International Ltd. , were more likely to acknowledge their firms’ access to securities and other products not readily available on their existing platforms through referral arrangements. As a whole, though, firms are approaching referral arrangements cautiously, citing 2005’s Portus Alternative Asset Management Inc. hedge fund fiasco.

Toronto-based Laurentian Financial Services, for example, has never approved a referral arrangement and has no intentions of doing so, says Steve Cole, regional vice president of sales and recruiting. “We just don’t believe you can do your due diligence in a referral arrangement,” he says.

Even so, Laurentian is trying its best to meet customer needs, both through a stock-buying arrangement with MRS Securities Services Inc. and by possibly becoming a dual-platform dealership in the future.

Another noticeable product trend is the shift toward managed products, which is being driven by an increasing effort by firms to serve high net-worth clients. Among the investment dealers, some firms are going so far as setting targets for brokers’ book breakdown.

Toronto-based Blackmont Capital Inc. , for instance, wants to see one-third to one-half of its advisors’ books in managed products. At ScotiaMcLeod Inc. , the goal is to derive 30%-35% of the firm’s business from managed products.

@page_break@Despite the targets, most firms maintain that, ultimately, it all comes down to what the advisor wants to sell. Charlie Spiring, chairman and CEO of Winnipeg-based Wellington West Capital Inc. , sums it up: “We have some brokers who are 100% in managed products and some who are at 0%. We don’t require a broker to be in managed money, although our firm’s bias will be more toward that.”

For their part, advisors don’t appear to feel the push toward any particular product. “I’ve never once felt pressured to sell a certain product since I’ve been here,” says a Raymond James Ltd. broker in Ontario.

What might come as a surprise is that, for all their talk about the freedom to sell the products they want, advisors at independent brokerages tied their counterparts at the bank-owned houses in scores for product offering — and only narrowly outscored them in the “freedom to make objective product choices” category.

But that’s not to say the banks are completely without preference. “There really isn’t any pressure, but there’s always a slant,” says a BMO Nesbitt Burns Inc. advisor. “At presentations, the firm tells you what it would like.”

Insurance advisors echo this sentiment. Despite high scores in the “freedom to make objective product choices” category, advisors express their unhappiness with the increasing corporate push to sell mutual funds. One advisor at Freedom 55 Financial says the worst thing about his firm is “the emphasis on all the funds and investments and all the stress involved with it.”

Mutual funds comprise 22% of an average insurance advisor’s product mix, a figure that’s sure to rise as the push toward selling funds continues. Leander Dueck, senior vice president of individual distribution at Great-West Life Assurance Co. in Winnipeg, says it’s increasingly difficult to remain competitive in the market with only one distribution model. “We really believe that to be a successful advisor, you need to be mutual fund-licensed,” he says.

On average, 69% of insurance advisors surveyed hold their mutual funds licence; some firms, such as Freedom 55, have made it a requirement.

So, despite the overall surge in product scores this year, firms could do still more to take the pressure off their advisors. In fact, they might take their cue from the regional dealers. The seven firms (three investment dealers and four fund dealers) score an overall 8.5 in product offering and a 9.6 in freedom to make objective product choices, the highest scores of any channel. Their secret? Genuine trust in their advisors’ ability to run clean, profitable businesses that keep the clients’ best interests at heart.

“No one leans on you; no one says, ‘More of this, more of that.’ It’s about the client, and that’s why I’m here,” says a happy advisor at Vancouver-based Odlum Brown Inc. IE