Financial services firms continue to underperform in their efforts to provide their financial advisors with strong, reliable back-office systems and services. As a result, advisors feel their time is being drained away from more productive pursuits, such as building relationships with new or existing clients.
“[The back office] is one of those things that when it works well, nobody notices,” says Dan Richards, CEO of Clientinsights in Toronto. “When it doesn’t work well, it causes a huge level of aggravation and grief for financial advisors.”
Advisors across all of the financial services industry’s channels surveyed for this year’s Report Card series said they were less than impressed with their firms’ back office. Most notably, the satisfaction gap – the difference between how advisors rated their firms’ efforts in a category and the importance of that same category to advisors’ businesses – for “back office and administrative support” was the largest in this year’s survey: at 1.2 points on average.
Advisors raised a variety of concerns relating to the back office, including too much turnover among back-office staff or, indeed, understaffing; the lack of proper training among the back-office staff; slow response times; communication issues, particularly in cases in which parts of the back-office services have been shifted offshore; the absence of a dedicated back-office person to co-ordinate the resolution of an issue; and the lack of accountability in the back office.
“There’s a lack of people working in the back office,” says an advisor in Ontario with Toronto-based BMO Nesbitt Burns Inc. “The industry is becoming more complicated, and the back office is not keeping up.”
Adds an advisor in the same province with Toronto-based CIBC Wood Gundy: “We need more experienced staff. There’s high turnover. We either have to find better staff or provide better compensation.”
These issues are part of an overall trend in cost-cutting or efficiency-seeking at some shops, Richards says: “Across the board, over the past number of years, there’s been a steady downloading of functions that used to happen at a central level, which are now the advisor’s responsibility and at the advisor’s cost.”
Adding to the burden is the increasing level of compliance for advisors, says Julie Littlechild, president of Advisor Impact Inc. in Toronto: “The regulatory environment has created a greater download to advisors, for sure. The paperwork associated with that [and] the time they say they invest in that function have definitely increased.”
Finally, the increasing complexity of investment products and the increasingly higher service expectations from clients mean advisors are looking for greater levels of support from a reliable back office.
“If you think what an advisor’s book of business looks like today vs what it looked like a decade or so ago, it was a simpler suite of products [back then],” Littlechild says. “Now, [advisors] are being pushed, not just by their firms [for higher productivity] but by the necessity of dealing with high net-worth clients, dealing with complex products, etc.”
In contrast to the poor industry-wide performance, some firms did receive strong ratings from their advisors for their back office and administrative services. These advisors said they found their back-office staff accessible, quick to respond, efficient and friendly, and good at following up to ensure issues were resolved.
And executives with the firms that received the highest ratings in this category said they try to foster a close relationship between the back-office staff and the advisors to strengthen the delivery of services.
“We make a big effort, not only to make our client-services department visible but to give it the profile it deserves,” says Debra Hewson, president and CEO of Vancouver-based Odlum Brown Ltd., which garnered a 9.3 rating in the category, “because [those people] are an integral part of our offering.”
Another firm that stood out is Montreal-based Peak Financial Group, which garnered an 8.6 in the category. Peak advisors praised their firm for having two back offices – one in Eastern Canada and one in Western Canada. These advisors said this setup provides more flexibility in reaching someone for help. And, the advisors added, both back offices were quick to resolve errors when they arose.
Peak has made several investments into its systems, tools and technology in recent years to ensure its back offices meet advisors’ expectations. And the firm doesn’t offer in-house products, so it’s free to concentrate on providing services to its advisors, says Robert Frances, Peak’s president and CEO: “As an independent dealer, our only product is good service.”
The quality of back-office services is likely to continue to be an important consideration for advisors – and a key differentiator among firms.
“It’s up to dealers to find solutions for advisors,” Frances says, “not only to help them deal with the pressures they’re facing but to [help them] become more competitive through support they receive.
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