Brokers have turned their attention to financial planning and insurance in the past year, mirroring their firms’ evolution from stock jockeys to providers of full-service advice.
According to this year’s Brokerage Report Card, 44% of the 400 brokers surveyed have completed the Canadian Securities Institute’s professional financial planning course, a significant jump from the 26% in the 2003 Report Card who had completed the course. This — along with the 26% who have the certified financial planner designation — would seem to indicate that advisors are better prepared to offer financial-planning advice, which 83% of those survey say they do.
Just as relevant to the full-service concept is the percentage of brokers who are insurance-licensed: 75%. And at some firms that is even higher. For example, all brokers surveyed at RBC Dominion Securities Inc. and more than 90% of brokers at CIBC Wood Gundy and Edward Jones hold insurance licenses.
“We’re very proud of our sales force,” says David Agnew, RBC DS’s national director in Toronto. “We want to make sure we have the best-qualified group in the country.” At RBC DS, insurance may represent only 3% of the firm’s business but it’s important as a part of its estate-planning services.
CIBC Wood Gundy’s Tom Monahan has a similar attitude toward insurance licensing for brokers. “Insurance is one of our strategic focuses,” he says. “As part of our training programs for our new IAs, it’s one of our requirements that they become insurance-licensed.”
Insurance and insurance licensing is a core part of Edward Jones’s training program, as well. “If you’re going to serve individual investors, you have to offer the appropriate range of products and services,” says Gary Reamey, head of Canadian operations for Mississauga, Ont.-based Edward Jones.
This, then, is the new reality for advisors, particularly those at the large bank-owned dealers: triple licensing — securities, mutual funds and insurance — not dual licensing.
National Bank Financial Ltd., however, is an exception. It is taking a slightly different approach to how it offers insurance. Rather than have all its advisors
insurance-licensed, advisors refer their insurance business to a group of experts.
Says Richard Lupien, the Montreal-based firm’s national sales manager: “What we have decided to create is some experts in insurance, so that in every province, in every region, some insurance people that are pros … deal with the investment advisor, and they have a split of the income from it,” he says.
But its focus, too, is a full-service offering,
On the financial-planing front, the PFPC seems to be winning out over the CFP designation. Only 26% of the brokers polled for the 2004 Report Card have their CFPs, the same number as last year.
On the investment front, about one in five are designated either Canadian investment managers or fellows of the Canadian Securities Institute although it varies greatly by firm. That compares to one in four in 2003.
Some firms actively encourage brokers to obtain designations. Edward Jones, Raymond James Ltd., CIBC Wood Gundy and Wellington West Capital Inc. help their brokers manage the cost of achieving designations. At both Toronto-based Raymond James and CIBC Wood Gundy, brokers are reimbursed once the course is passed, while at Winnipeg-based Wellington West, the company covers part of the fees.
CIBC Wood Gundy’s Monahan says compensating brokers for finishing courses is part and parcel of the firm’s goal to provide better service to clients. A better educated advisor means better-serviced clientele, he says .
The support these firms give to their brokers is reflected in better-than-average numbers for most of these designations. At CIBC Wood Gundy, 54% of brokers polled have their PFPCs and 26% their CFPs, while 24% are FCSIs. At Raymond James, 30% have the CIM and 30% have the FCSI designations. At Wellington West, 23% have completed the CFP, 64% the PFPC and 18% have CIMs. Among Edward Jones brokers, 71% have their PFPCs and 35% have their CFPs.
Although most firms are still enthusiastic about broker education, their drive for more designations has cooled. As Bob Larose, executive vice president and national sales manager at Canaccord Capital Corp., puts it: “We encourage [brokers] to get better educated all the time. If that results in designations, that’s fine.”
At Vancouver-based Canaccord, just 48% of brokers hold insurance licenses. In terms of designations, a CFP, CIM or FCSI is held by 13% of brokers, respectively, while 32% have completed the PFPC. Overall, 74% of Canaccord brokers polled say they offer financial planning and 65% offer insurance and estate planning.