Only a year ago, brokers told Investment Executive<\/i> they were a happy bunch. What a difference a year can make. According to the results of our 10th annual Brokerage Report Card survey, Canada’s financial advisors are a lot of things, but happy is not one of them.<\/p>\n

(Click here to view a PDF of the main chart<\/a>.)<\/p>\n

While some blame can be laid on a bear market, it can’t take the full brunt. When the economy dips, as it has over the past 18 months, it’s an opportune time for firms to lend support to their workforce and beef up the brand name with marketing and advertising. Instead, head office has taken swipes at the brokers’ grid to remain profitable in tough times, at the expense of front-line workers.<\/p>\n

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Nowhere is this more blatant than at TD Evergreen<\/b>., at which the grid will be reduced from a 70-30 split to a more standard Street-issue grid on Nov. 1. Only advisors who generate more than $1 million in commissions will stay on the old system. “It’s a touchy question; it’s not gonna be good,” says a Toronto-based TD Evergreen advisor. “Payout has always been our high mark; it’s going to be more miserable to be here.”<\/p>\n

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In mid-April, seven top TD Evergreen advisors in Toronto and eight in Calgary resigned to join National Bank Financial Inc. <\/b>Rumours that they left for money \u2014 one had it pegged at a 100% signing bonus \u2014 have been denied by NBF. Had these advisors remained at TD Evergreen, they would have continued on the 70-30 grid.<\/p>\n

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“They moved for the technology platform, corporate culture and the fact that they’re first in so they’ll have tonnes of elbow room,” says Jeffrey Sandler, NBF’s vice president and regional manager for Ontario.<\/p>\n

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For the second year in a row TD Evergreen brokers have rated their firm last in our survey. However, the cut in payout may be the final straw. In 2001, TD Evergreen brokers gave the firm an average 7.2 rating across all categories. This year’s score has plunged to 5.3, with marks down in 22 of 28 categories.<\/p>\n

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TD Evergreen brokers aren’t alone. On the whole, Canadian advisors are seeing red, both literally and figuratively. That’s the main conclusion of this year’s report, and one that is easily understood by looking at firms’ scores and listening to comments from disgruntled brokers. On the main chart (see page C6), a score in red means it has decreased by at least 0.5 points from the previous year. This year’s scores are almost entirely red across the industry.<\/p>\n

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One company spared the numerical bloodbath is Yorkton Securities Inc.<\/b>, but only because this is the first year the firm has been included in the Report Card, and there are no previous years’ scores with which to compare.<\/p>\n

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Otherwise, brokers from every corner of the country have sent a message to management that they would like more attention after a market that has been less than kind to their clients and the bottom line. But it’s not simply the market. While TD Evergreen brokers contend with the compensation chopping block, RBC Investments<\/b> brokers are told they’re unwanted if they generate less than $300,000 in commissions. Former Merrill Lynch Canada Inc. advisors are dealing with abandonment and growing pains after the merger with CIBC Wood Gundy<\/b>, a division of CIBC World Markets Inc. Yorkton reps are trying to forget a year of fines, upheaval and media scrutiny.<\/p>\n

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Scores are the worst in support categories such as sales, marketing and prospecting materials. “They don’t do dick,” says a Calgary advisor with Raymond James Ltd.<\/b>, when asked to rate his firm’s marketing support. A NBF broker in Toronto is more diplomatic, rating the brokerage’s sales support as “good but never excellent.”<\/p>\n

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Categories that stand out are company stability, strategic focus, public image and individual freedom. Firms traditionally have done well in these areas, but this year brokers are showing their feelings of vulnerability and pressure from head office. With Merrill Lynch closing its retail operations in Canada for a second time, many brokers feel less secure in their firms than a year ago. Scores in the stability category have slipped for every company. While it’s one of the highest-ranked categories this year with an industry average of 8.1, it is down from 9.3 last year and 9.2 in 2000.<\/p>\n

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When asked to score their firms’ strategic focus, ratings and comments are eerily similar to the stability question. Again, the average score has plummeted from a supportive 9.3 to a less encouraging 7.0.<\/p>\n

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Lack of communication is a real barrier between corporate direction and employees. “The top end tells us they have [a strategic focus], but at the street level it’s a zoo,” says an RBC advisor in Atlantic Canada.<\/p>\n

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A Winnipeg broker with BMO Nesbitt Burns Inc.<\/b> feels the same way. Asked about his firm’s focus, he says, “I don’t think there is one. As long as we make money, they don’t care.”<\/p>\n

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Not many brokers think their firms have strong a strong public image. Combined, the industry gives image an average 6.4 out of 10, down considerably from 8.1 last year.<\/p>\n

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Canada’s brokers feel less independent than a year ago. In a business based on entrepreneurial motivation, brokers hold autonomy dear to their hearts. “I’d consider myself fairly independent if it weren’t for the meetings we have to go to and the call sessions,” says an Alberta broker with Edward Jones<\/b>. “Pressure for sales is the worst.” IE<\/p>\n

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