For the most part, firms in the 2019 Brokerage Report Card saw performance improvement year-over-year. Although some firms struggled to deliver, the average IE rating across all firms (8.3) jumped from 8.1, where it had sat since 2015. (An IE rating is the average of all of a firm’s category ratings.)
Making a big comeback was Toronto-based ScotiaMcLeod Inc., which pulled a 180 and reclaimed its place as a competitor in the bank-owned brokerage space. Its IE rating hit 8.2 this year, up from 6.9 in 2018, following several years of decline in advisor satisfaction across multiple areas of the business.
ScotiaMcLeod advisors rated their firm significantly higher this year (by half a point or more) in all 33 main survey categories, with the majority of participants pointing to executives being open to hearing about advisors’ challenges and ideas, and to an overall improvement in corporate culture. The category rating for “firm’s receptiveness to advisor feedback” jumped from 5.8 to 8.4, more than two full points year-over-year, and the firm was rated 8.3 for corporate culture.
“We went through a period where advisors didn’t feel there was enough two-way communication, and the firm has absolutely resolved this. They’ve recently hired a communications specialist […],” says a ScotiaMcLeod advisor in Ontario.
Another ScotiaMcLeod advisor in Ontario says, “If we have an issue, it becomes a firm issue, so they are quick to help us address it.”
Desktop technology woes continue to be the firm’s biggest challenge, receiving a rating of 6.7 (its lowest-rated category), but strides are being made. Says one ScotiaMcLeod advisor in Ontario: “We’ve been chastised for technology for so long and it’s become [an unfair] stigma. The firm is aggressively improving the technological systems. […] It’s finally getting better.”
Advisory teams are upbeat despite the structural changes the firm has been through, including layoffs in 2016. “I think we have something very special. […] The culture is coming back to what it used to be,” says an East Coast advisor.
Building on momentum from last year, another bank-owned brokerage saw a rise in advisor satisfaction. Ratings for Toronto-based BMO Nesbitt Burns Inc. increased by half a point or more in 18 of 33 categories, with the largest improvements seen in “firm’s corporate culture” (7.6 vs 6.4 last year) and “firm’s strategic focus” (7.8 vs 6.5 last year).
“For the past 24 months the firm has been on the upswing. The culture has improved significantly, which to me means overall satisfaction for everybody,” says a Nesbitt advisor in Ontario.
Even though advisors may be thrilled with the firm’s positive momentum, many were “thrown off” by the January 2019 amalgamation with the private bank, and worried what it will mean for the future of Nesbitt Burns.
“There are so many changes going on right now, it would be nice to have a bit more clarity moving forward,” says a Nesbitt advisor in Quebec. “The flow of information from the top to advisors still needs work.”
A Nesbitt advisor on the East Coast adds: “I just hope we don’t lose our independent, entrepreneurial spirit.”
The firm comes up short in “back office administration support” and “firm’s marketing support,” receiving ratings of 6.4 and 6.3, respectively. In a statement emailed to Investment Executive (IE), a BMO Nesbitt Burns representative says that tools like social media aren’t integrated into the advisor desktop, but that marketing and creative services consultants are there to help boost advisors’ marketing efforts, digital profiles and contact with clients. The bank is looking to “improve the process by increasing the adoption rate” of new technologies.
In an era of constant change, communication is more important than ever, especially for maintaining a strong corporate culture. While some bank-owned firms are adapting to their advisors’ needs, Toronto-based CIBC Wood Gundy advisors said their firm is missing the mark. The brokerage was rated 7.0 for corporate culture, a dip from last year’s 7.5, while receptiveness for advisor feedback remained low but was up slightly at 6.4.
“I think the culture is deteriorating; they’ve really watered down the brand,” says a Wood Gundy advisor from Alberta. “There’s certainly more of a sentiment that it isn’t as entrepreneurial as it used to be. The future is not looking good.”
Wood Gundy advisors also expressed concerns regarding their advisor councils, stating that these forums, which had previously been used to collect feedback, have all been eliminated. A Wood Gundy advisor in Ontario says head office has “selective hearing” when it comes to certain issues.
A CIBC representative says in a statement emailed to IE that the bank is in the process of establishing both a client advisory board and council to help all CIBC Private Wealth Management advisors. There are also road shows, branch visits and roundtables that take place during the year, they say.
Following a shuffle in the firm’s leadership in April 2019, a new executive vice president has been named for Wood Gundy: Ed Dodig will replace Peter Lee, who took the position in 2016 and is now moving to the banking centres part of the business. (See Shifting ground at CIBC.) IE research took place prior to the announcement.
As for the independents, focus and freedom seem to be the name of the game. Specifically, executives say it matters how strong a firm’s strategic focus is – and how effectively that’s communicated.
Stuart Raftus, executive vice president of Vancouver-based Canaccord Genuity Group Inc., says the firm has “recreated and refined” its focus compared to a few years ago. The firm also seeks to include advisors, who are viewed as partners, in that process.
“We ask for their feedback, we listen to it, and we incorporate that into our strategy, and into what some of our internal products and services look like,” he says. “Communication and transparency are absolutely critical.”
Advisors appeared to be pleased with this approach.
“They’ve done well [with] the plan they put out and in executing it. They deserve so much credit for the way [they’ve] turned this company around,” says a Canaccord advisor in Ontario.
“I’m seriously happy I moved here; I have no regrets,” says a Canaccord advisor in Quebec. “The culture is positive and improving, [and] the brand is growing, and that’s because the message from leadership is simple.”
Industrial Alliance Securities Inc. (iA Securities), a new entrant to the Brokerage Report Card based in Quebec City, is also aiming to boost its culture, reputation and industry share. John Kelleway, president of iA Securities, acknowledges the firm is in the midst of change, saying that it’s prioritizing “checks and balances,” and is currently doing conferences and road shows to maintain executive-advisor dialogues. For “firm’s receptiveness to advisor feedback,” advisors rated the firm 7.3.
The consequences of iA Securities’ acquisition of HollisWealth in August 2017 still reverberate with advisors. To assist, Kelleway says executives are focused on the “harmonization and integration of the two different platforms,” acknowledging that the firm is aware of advisors’ current concerns about “brand confusion.” Advisors rated iA Securities a 6.5 for “firm’s reputation with clients” and a 7.5 for “firm’s effectiveness in keeping advisors informed.”
As a rookie to this particular Report Card, there are no past results to use as comparison. However, while iA Securities’ IE rating of 7.2 is lower than that of other brokerages, its advisors are optimistic about what lies ahead.
“Overall, it’s been a tough year of transition, but […] we are progressing in the right direction,” says an iA Securities advisor in Ontario. Says one on the East Coast: “They listen and they learn. But we will have to wait and see.”