Compliance Legal Rule Compliancy Conformity Concept

When advisors adjust to regulatory changes, they turn to their firms’ compliance teams for support – and some brokerages are better than others at providing guidance.

For the 2019 Brokerage Report Card, advisors were asked to rate their firms’ “support for dealing with changes in the regulatory environment” as well as their “relationship with the compliance department.” Overall, participants indicated support had improved at most firms, with the former category netting an overall average performance rating of 8.8 vs 8.6 in 2018.

The firms that improved the most in the “support” category were bank-owned investment dealers BMO Nesbitt Burns Inc. and ScotiaMcLeod Inc., moving up from last year’s 7.6 and 7.0, respectively, to 8.4 for both (both firms are based in Toronto). The highest performer for this category for 2019 was Mississauga, Ont.-based Edward Jones, with a rating of 9.7, which was slightly above 2018.

“We’ve been working on all [of] these [regulatory] changes as they are coming,” says an Edward Jones advisor in Ontario. They added that the firm has “taken all the work out of our hands and helped us; I’m very happy with that.”

A ScotiaMcLeod advisor in Alberta said they feel supported in a constantly changing regulatory environment, and several others praised the brokerage for staying ahead of the latest compliance developments.

“Actually, it’s been very good,” says a ScotiaMcLeod advisor in Ontario. There’s “lots of support in making adjustments and changes, and [the firm has] brought in [new] systems. It seems very important.”

When it comes to advisors’ relationships with their compliance departments, Leede Jones Gable Inc. was rated highest with a 9.8. Advisors at the Calgary-based brokerage said the firm clearly communicates compliance requirements and keeps up with changes. Still, while one advisor acknowledged the compliance-focused leadership of Leede, another located in Quebec said they would appreciate more conference calls, as they “just get emails, which could be lost.”

Bob Harrison, Leede’s president, says there’s “a plethora of compliance people” out in Western Canada and Ontario. “We have hired additional people” to deal with increased regulatory activity, he adds.

At most firms, the importance and performance ratings for both compliance categories rose year-over-year. Yet at the brokerages with the weakest performance, advisors reported there was still confusion around emerging regulatory policies. Specifically, advisors were concerned about policies expected to increase the time and money spent on compliance.

In the category of “support for dealing with changes in the regulatory environment,” performance ratings for both Vancouver-based Odlum Brown Ltd. and Toronto-based CIBC Wood Gundy fell by more than half a point year-over-year. The firms were rated 8.9 and 7.7 for 2019, respectively.

One Wood Gundy advisor in Ontario says the firm offers “unrealistic time frames and they don’t care.” Says another Wood Gundy advisor in Ontario, “Helping? Try telling. They just tell us what we have to do.” Other wish list items from various Wood Gundy advisors included more time to implement new processes and policies, and more assistance with paperwork.

At Odlum Brown, advisors were pleased to get regular briefings and conference calls on upcoming changes, but some cited hurdles such as staff changes in the compliance department and outdated systems.

Increased guidance will be important as regulators and self-regulatory organizations continue to implement reforms and make adjustments. Given the current uncertainty surrounding the pending client-focused reforms from the Canadian Securities Administrators, for example, how are firms facilitating stronger compliance support?

Edward Jones points to communication as being key to developing and sustaining good relationships between its advisors and compliance department. It’s necessary to get to know “each branch team, understanding their specific businesses, their client base and the markets that they serve,” in order to tailor supervision and compliance approaches, says Wayne Bolton, head of compliance at Edward Jones, in a statement emailed to Investment Executive.

“With regulatory changes that are focused on the client’s best interests, there is no better way to plan for and effect that kind of change,” says Bolton, who also mentioned that the firm holds regional tours designed to get advisors’ feedback on business priorities, including compliance needs.

At Toronto-based RBC Dominion Securities Inc. (DS), compliance executives seek to build complete compliance solutions for its advisors instead of “just compliance manuals,” says Nick Cardinale, chief compliance officer, RBC Wealth Management Canada. Advisors rated the bank-owned brokerage 9.3 in both compliance categories, down 0.1 year-over-year for the support category but up 0.3 for advisors’ “relationship with the compliance department.”

Cardinale says the firm’s management committee works closely with its compliance team: when new initiatives are discussed and implemented, both groups are at the table, leading to quicker solutions to complex issues. “That helps avoid frustration down the line because everyone’s aware of what the regulatory expectations are,” he says, highlighting the diverse backgrounds of the firm’s compliance team (e.g., some have worked as traders; others have worked for regulators).