new direction / sefa ozel

This article appears in the June 2023 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Investment Executive’s (IE) Brokerage Report Card, which celebrates its 30th anniversary in 2023, highlights the resiliency and innovation of many of Canada’s investment advisors in the face of challenging headwinds.

The firm with the highest IE rating was, as in 2022, Wellington-Altus Private Wealth Inc., at 9.6 out of 10. (The IE rating is the average of a firm’s category ratings, which are collected on an ascending scale of zero to 10.) The firm’s performance, as rated by advisors across 27 categories, was stable year over year.

Wellington-Altus advisors remained most pleased with the company’s vision and support of entrepreneurial teams. “Everything is made simple and [there’s] a focus on providing the best, and [on] constantly evolving,” said one of the brokerage’s advisors.

The firm’s lowest performance result was for “client relationship tools” (rated 9.0, and a new category this year). As one Wellington-Altus advisor put it, there’s always potential to improve the “ease and speed at which staff could perform” tasks for clients. (Implementation is key to advisor-pleasing technology.)

Three firms shared the second-highest IE rating (8.9) for 2023: CG Wealth Management (down from 9.1 in 2022), Richardson Wealth Ltd. (up from 8.8) and RBC Dominion Securities Inc. (RBC DS; down from 9.0).

The terms “entrepreneurial,” “freedom” and “flexibility” were commonly used by advisors when describing these brokerages. The highest category rating for each firm was “freedom to make product choices.” CG Wealth and Richardson Wealth each received 9.8, little changed from last year, and RBC DS received 9.6, down from 9.9.

Advisors with all three brokerages also expressed positive sentiment in the “leadership team” category.

One CG Wealth advisor in Ontario valued the “boutique” and flexible mindset of their firm, citing its “smaller cultural feel” with “a lot of resources.”

A Richardson Wealth advisor in Ontario said they were part of “a very collaborative firm” that fosters “a more personal and more meaningful client experience.” Another Richardson Wealth advisor, in Alberta, said innovation is possible because the firm “welcomes new ideas and strategies [from advisors].”

Brand strength was noted as an asset by RBC DS advisors, who also said they felt a sense of independence.

“[I have the] freedom to run my business the way I feel it should be run. The culture is terrific [and] less competitive than one would think. Management is very approachable,” said an RBC DS advisor in Quebec.

The category with the highest average importance rating has long been “freedom to make product choices.” That category was top-rated again, at 9.8 out of 10. (See “10 categories rated most important”.)

The categories in which advisors with CG Wealth, Richardson Wealth and RBC DS cited a need for improvement were “advisor’s experience with back-office tools & services” and “client account statements & portals.” In the latter category, the three firms were rated 8.4, 8.3 and 7.9, respectively, compared with 8.6, 8.4 and 7.8 a year ago.

Those two categories were among the 10 in which advisors across all firms identified the largest average satisfaction gaps (the difference between a category’s average performance and importance rating).

Advisors’ largest collective gripe was that the pace of back-office hiring and upgrades wasn’t fast enough to meet their needs — which is why Richardson Wealth and other firms have sought partnerships with external providers.

“When it came to clearing, settlement, operation and administration, that’s not our core business,” said Scott Stennett, COO, director, operations and information technology, with Richardson Wealth. The firm has been using Fidelity Clearing Canada as its back-office provider since the beginning of 2023.

In January, one of Richardson Wealth’s advisors in Alberta said, “We’re currently transitioning our back office and it’s currently chaos, but it’s getting better.”

In February, a Richardson Wealth advisor in Ontario said, “If I [consider the transition] we’re dealing with, there’s growing pains. But nothing I’m dissatisfied with.”

iA Private Wealth was the only brokerage to see significant year-over-year improvement in its back-office services rating (7.4, up from 6.9 in 2022; IE defines “significant” as movement of at least half a point). It also was the only firm in this year’s Report Card whose IE rating improved significantly (to 8.0 from 7.5), with significantly higher advisor sentiment in 12 of 27 categories.

After several years of criticism from advisors, iA Private Wealth is now being praised for having leadership with a strong vision, as well as for providing advisors with business freedom.

An iA advisor in Ontario said the best aspect is the ability to reach out to those making decisions within the organization: “We would like to see change happen faster, but it is still exciting.”

Another iA advisor in Ontario noted “drastic” improvement in the firm’s tools and support, saying it “was not initially a very strong firm. [But] where those things are not perfect, you see them making progress.”

Adam Elliott was named president of iA Private Wealth in April, after the Report Card research finished and following Stephan Bourbonnais’ appointment as executive vice-president of wealth management for iA Financial Group in late January.

In an interview, Bourbonnais said iA Private Wealth will invest in a digital client portal and related tools, as well as enhance practice management support. The firm’s focus will be serving and recruiting entrepreneurial advisors, he added.

Two firms that struggled in this year’s Report Card were ScotiaMcLeod Inc., which saw its IE rating slip significantly to 8.0 from 8.6 in 2022, and TD Wealth Private Investment Advice, which had the lowest IE rating of all firms for 2023 (7.4, down from 7.7 a year ago).

Advisors with these firms appreciated their freedom to choose products as well as “support for remote work,” with each brokerage garnering some of their highest performance ratings in those categories. Yet, both companies also saw their performance ratings dip significantly year over year in several other categories (eight for ScotiaMcLeod and nine for TD Wealth PIA).

The lowest category ratings for both firms were tied to the technology suite, indicating weakness in client-facing tools and back-office services. Advisors with these brokerages also wanted more proactive leadership and new offerings, such as U.S. licensing.

“I would love to see us continue to push into new frontiers,” said a ScotiaMcLeod advisor in Ontario, acknowledging that the firm has a culture in which advisors “share best practices and ideas.” Innovation, though, requires taking “calculated risks to help us grow into being the market leader in Canada.”

“[The firm must] continue to ensure that they give all advisors equal attention,” said a TD Wealth PIA advisor in Alberta. Rather than focusing only on “the top end,” they should “try to have everyone succeed.”

Todd Barnes, managing director and head of ScotiaMcLeod, said the bank-owned brokerage isn’t aiming to be the largest in Canada. The strength of its brokerage arm is “the intimacy and flexibility [from] that boutique feel,” he said. Barnes said the firm plans to help advisors improve their client relationships and to connect wealth specialists across divisions.

At TD Wealth PIA, all advisors and all practices are prioritized, said Ryan McNally, senior vice-president, wealth advice distribution, TD Wealth. With its “planning-led strategy for clients,” the bank-owned brokerage continues to add advisors and hire support professionals.

The message from leadership, he said, is: “If [anything is] getting in your way [regarding] growth and client engagement, we’re going to go and fix that.”

For details on methodology for the Report Card, click here.

10 categories rated most important by advisors in 2023’s Brokerage Report Card

  1. Freedom to make product choices: rated 9.8 for importance
  2. Financial planning support & technology: 9.4
  3. Client onboarding tools: 9.3
  4. Support for discretionary portfolio management: 9.2
  5. Quality of firm’s product shelf: 9.2
  6. Advisor’s experience with back-office tools & services: 9.2
  7. Leadership team: 9.2
  8. Total compensation: 9.2
  9. Products & support for high-net-worth clients: 9.1
  10. Firm’s receptiveness to advisor feedback: 9.1