Strategic focus is a firm’s DNA, the plan according to which everything else — its development, its business — unfolds. It’s not coincidence, then, that the top firm in our survey, Edward Jones, was also ranked No. 1 by its brokers in terms of strategic focus, and our overall loser, CIBC Wood Gundy, chalked up the second-lowest score in that category.
When it comes to determining overall success, much depends on the ability of senior management to define a successful business plan, execute it and communicate it.
Advisors, of course, love to take shots at head office, and this year is no different. Asked about his firm’s strategic focus, a broker in Oakville, Ont., jokes: “If they had one, it would be helpful.” A Toronto broker wonders exactly what his firm’s focus is. “They don’t have one they’ve communicated to us,” he maintains.
Two general approaches can be divined from the numbers, comments and qualifications collected by our researchers.
There are the big bank-owned brokerages that are busy developing wall-to-wall wealth-management practices. At the other end of the spectrum are the entrepreneurial firms, often the smaller independents.
On the bank side, RBC Investments, the Canadian Cadillac in terms of financial service, is the best example. The company has grouped everything from its full-service brokerage (RBC Dominion Securities Inc.) to its self-directed discount broker (Action Direct) under one large umbrella, Canadian wealth management.
As a group CWM includes private banking, investment counseling and personal trust groups. Although each business operates separately, the heads of each division work closely together, says Lorne Harper, head of Toronto-based RBC DS: “The business is really evolving. Clients are coming to us and looking for fairly sophisticated solutions. It’s not as simple as buying a stock. They expect us to help them with estate planning, integration of trusts, insurance and banking,” he says. “They’re looking at us for the ability to sit down and bring it all together.”
To do that, RBC provides a number of perks for its advisors, from big proprietary technology initiatives to intensive training programs (new recruits come into Toronto for three weeks of education). There is a network of insurance advisors in its branches, as well as “wills and estates consultants” (lawyers). Advisors, in effect, act as the face on a large resource-rich network.
Of course, there’s a trade-off for the advisor. While the service is gold-plated, advisors are employees, which brings a cost in payout. No surprise, but both BMO Nesbitt Burns Inc. — another of the wall-to-wall firms — and RBC were ranked lowest in the payout category with a 5.4 and 5.6, respectively. Or, as a Nesbitt advisor in British Columbia says: “Solid for them, not good for me.”
Brokers brand themselves
The leader in the payout category (see page C14) was Canaccord Capital Corp., which, not coincidentally, is diametrically opposite in terms of its strategic focus to the big banks.
Advisors at the Vancouver-based independent are considered solo entrepreneurs, with the firm acting as partner, says Bob Larose, the firm’s national sales manager and executive vice president.
“We let our brokers brand themselves,” he says. “We have brokers who are estate planners, if that’s what they want to focus on, and we have others who may be venture capitalists who want to raise money for small firms. We don’t take that venture capitalist and say, ‘No, you have to become an estate planner.’ We mandate that you be compliant and ethical — that’s it. You can run the business the way you see fit.”
The reason is a practical one, says Larose: “[The advisor] will just get fed up and leave. I would rather keep our brokers as happy as possible so they’ll tell their friends to come and work here as partners, not employees.”
Cultivating that “entrepreneurial” attitude means making advisors responsible for more of their own costs as well as giving them a higher payout. Confirmation of that is in the numbers; Canaccord was ranked No. 1 in terms of payout, with an 8.7.
But some mid-tier firms seem to be working to strike a balance between the two ends of the continuum. Raymond James Ltd. is an independent in Canada but the company is backed by its parent, Florida-based Raymond James Financial Inc., the seventh-largest brokerage in the U.S.
The philosophy of the firm, says Terry Hetherington, national sales manager of the Toronto-based firm, is to offer something from both the entrepreneurial and the big-bank camps. “Our strategic focus is to offer the best of both worlds. Our No. 1 goal is to build a home for independent client-focused people but maintain a conventional sales force.”