Dissatisfaction with client account statements is a perennial issue in Investment Executive’s Dealers’ Report Card. This year is no different, as financial advisors continued to express frustration about statements that are too long and confusing for the average client.
However, the introduction of enhanced client account statements and annual performance reporting under the second phase of the client relationship model (CRM2) means many advisors are waiting to see if this industrywide problem is resolved soon.
The overall average performance rating in the “client account statements” category is 7.5 while advisors gave the category an overall average importance rating of 8.6, leading to a “satisfaction gap” of 1.1. This represents the third-largest such gap, behind “technology tools and advisor desktop” (see story above) and “back office and administrative support,” two categories in which firms always fail to meet advisors’ expectations in these two categories.
In fact, advisors at only two of the 11 firms in the Report Card gave their firms a rating of 8.0 or higher in the client account statements category. Advisors’ comments revealed that their dissatisfaction typically focuses on one of two issues: firms are not working hard enough to produce clear and concise statements; or the industry as a whole has consistently failed to improve the quality of statements over the years.
Advisors with Mississauga, Ont.-based Investment Planning Counsel Inc. (IPC). gave their firm the lowest performance rating in this category, at 6.9, down from 7.5 in 2015, for both these reasons. Specifically, many advisors believe the firm’s client account statements can be improved – but they also realize their firm is not the only one with problems in this category.
“The format we’re using, I get some complaints [from clients]. I checked out what the other firms do [and] they don’t have forms that are much better,” says an IPC advisor in Ontario. “[Statements] need to be self-explanatory and the average person should be able to read them.”
Relying on advisors’ feedback
IPC executives and advisors hope this situation will change soon. The firm is relying on advisors’ feedback to improve client account statements, which will include the details of compensation and portfolio performance and rate of return that are required under CRM2, says Reggie Alvares, executive vice president of operations and information services with IPC. Those improvements will be evident in this year’s fourth-quarter statements.
“In terms of the layout and presentation, we have made changes to make [the statements] a little more attractive and a little more understandable,” Alvares says.
IPC wasn’t the only firm to receive a low rating in the category. Advisors with Richmond Hill, Ont.-based Global Maxfin Investments Inc., Lévis, Que.-based Desjardins Financial Security Independent Network, Calgary-based Portfolio Strategies Corp. and Oakville, Ont.-based Manulife Securities all gave their firm the second-lowest performance rating of 7.2 in this category.
Yet, Manulife Securities stands out among this group as the only firm with a rating in this category that rose by half a point or more year-over-year. Although many of Manulife’s advisors continue to look for improvements to statements they describe as “clunky” and “hard to understand,” there are advisors willing to give the firm the benefit of the doubt as they wait for revised statements that are fully compliant with CRM2.
“[The statements] are undergoing a lot of change as the industry changes. The dealer is working on where it needs to be [in this area],” says a Manulife advisor in Ontario.
Advisors with Toronto-based Assante Wealth Management (Canada) Ltd. rated their firm higher in this category, giving the second-highest rating (8.0, up from 7.6 in 2015). Specifically, Assante advisors gave their firm credit for improving reports to clients and making the statements more compliant with the CRM2 regulations.
“[Assante] uses state-of-the-art statements. Everything is disclosed. We’re years ahead,” says an Assante advisor in Ontario.
Various colleagues also lauded Assante’s Navigator Financial Reporting tool, which is an application on advisors’ computers that allows advisors to create customized client reports that can be provided in addition to the regulator-mandated statements sent from the firm’s head office.
Advisors appreciate new tool
As a result, Assante received positive feedback from advisors who appreciate having this tool at their disposal, says Bob Dorrell, senior vice president of distribution services: “They can easily generate a statement now, whereas in the past, they may have had to cobble that information together from multiple systems.”
Meanwhile, advisors with Windsor, Ont.-based Sterling Mutuals Inc. rated their firm lower in this category year-over-year – 8.1 vs 8.7 in 2015 – but still gave their firm the highest rating in this category. Most Sterling Mutuals advisors are happy that their firm’s client account statements are straightforward, detailed and reader-friendly. However, other advisors said that clients receive too many statements that are just too long, but recognize that the firm has little control over that.
“[Having the firm] mail [statements] out on top of the fund companies is redundant, but I know the [Mutual Fund Dealers Association of Canada] forces [my firm to do this],” says a Sterling Mutuals advisor on the Prairies.
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