The fortunes of two bank-owned brokerages, BMO Nesbitt Burns Inc. and ScotiaMcLeod Inc. (both based in Toronto), took dramatic — and opposing — turns in this year’s Brokerage Report Card.
Nesbitt’s advisors rated their firm higher by half a point or more in 16 of 33 categories and rated their firm lower by that same margin in only two categories. In addition, the firm’s “IE rating,” which tallies the average of all of a company’s scores, also rose by half a point.
This positive trend follows a dismal showing in 2017, when advisor dissatisfaction with the firm came to a head, as they rated their firm lower by half a point or more in 21 of 31 categories – not including the “IE rating” and the “overall rating by advisors,” which dropped by that same margin last year.
“There was pretty much a palace revolt and the firm’s [executives] didn’t want to [listen to advisors], but they had to,” says a Nesbitt advisor in British Columbia.
Nesbitt advisors have seen a fair bit of change at their firm since last year’s Report Card was published, including the introduction of Andrew Auerbach as head of the brokerage. Auerbach took on the role of executive vice president and head, private client division, in February 2018, six months after Charyl Galpin left the firm to become chief regulatory officer, wealth management, with Bank of Montreal (Nesbitt’s parent).
Besides a change in management, some of the increases in Nesbitt’s year-over-year ratings point to a change in mood among the brokerage’s rank and file.
For example, Nesbitt’s advisors rated the “firm’s receptiveness to advisor feedback” at 6.6, up from 5.2 in 2017. Although advisors noted that there’s still much room for improvement, management appears to be doing a bit better at listening to their concerns.
“They’ve taken a lot of advisor criticism into account over the past year,” says a Nesbitt advisor in Atlantic Canada, “and they have made some changes [as a result].”
Nesbitt’s advisors also noticed an improvement in the “firm’s corporate culture,” which they rated at 6.4 this year, up a full point from 5.4 in 2017. In large part, advisors were happiest with the corporate culture at their branches.
“I can only speak about my branch, but it’s an interesting collection of young and more senior advisors. The young guys work together and the senior guys are there for support,” says a Nesbitt advisor in Ontario. “I can walk into any office and ask a question that will help me with my business.”
Yet, Nesbitt’s leadership still has work to do in building up the culture, as many advisors noted that tensions remain between them and the wider corporation.
“[Company management] has tried to change the firm and, in the process, they’ve diminished it,” says a Nesbitt advisor in B.C. “When you’ve lost the confidence of advisors and you’re losing advisors, I don’t see how that can sustain itself.”
For Auerbach, gaining back advisors’ confidence and easing that tension will come through ongoing two-way communication, both to share where the firm is going and to get advisors’ thoughts on the path Nesbitt is on.
“[Being] side by side as we set the strategy [and] direction is really important to the culture of this firm,” he says.
But as Nesbitt aims to move forward, ScotiaMcLeod took several steps backward, according to its advisors. ScotiaMcLeod’s ratings declined by half a point or more in 18 of 33 categories, as well as in the overall rating by advisors. Last year, advisors rated the firm lower by half a point or more in 17 of 31 categories, as well as in the IE rating and overall rating by advisors.
Notably, ScotiaMcLeod advisors expressed frustration that management simply doesn’t seem to be listening to their concerns. On that note, the firm’s rating for “firm’s receptiveness to advisor feedback” dropped by half a point or more for the third consecutive year, to 5.8 from 6.4 in 2017, 7.4 in 2016 and 7.9 in 2015.
ScotiaMcLeod advisors were quick to point out there are many ways they can share their thoughts with management, including an advisory council. However, the issue is that advisors believe their words fall on deaf ears.
“[Management] listens beautifully, but don’t do anything,” says a ScotiaMcLeod advisor in B.C.
Communicating what the firm has done in response to feedback, as well as continuing to discuss its direction, are ongoing tasks that can be done in a variety of forms, from conference calls and emails to one-on-one conversations, says Rob Djurfeldt, managing director and head of ScotiaMcLeod. This communication is something that Djurfeldt is always looking to improve upon, he says.
“[When] I’m travelling across the country,” he says, “the questions I often ask advisors are: ‘How do you want to hear from us? How can we better communicate?'”
One thing Djurfeldt had to discuss with advisors is the firm’s decision to lay off 7% of ScotiaMcLeod’s advisor and support staff in 2016 – something that continues to rankle with many survey participants. For example, ScotiaMcLeod advisors once again rated the “firm’s ethics” significantly lower this year, at 7.8, down from 8.6 in 2017, in part because of the downsizing.
“Two years ago, [management] sold [some] advisors’ books to other advisors without telling [the first group of advisors] – then fired those advisors,” says a ScotiaMcLeod advisor in Ontario.
Djurfeldt says the firm con- tinues to talk with advisors about the firm’s direction. Although advisors weren’t happy at the time of the layoffs, many now understand why such decisions were made.
Still, as Djurfeldt acknowledges, “It didn’t make it any easier to say goodbye to friends.”