Back-office average scores slipped in In-vestment Executive’s Planners’ Report Card this year, showing that if a firm isn’t getting the basics right, advisors will punish it.
Given that most firms use one of a handful of back-office technology systems, advisors were asked to rate their firms on a broad set of criteria, including dividend distributions, interest posting, trade reconciliation, payroll, benefits and a whole gamut of behind-the-scenes support services.
Overall, advisors say having a strong back office is among the key elements of their satisfaction; they rated its importance a 9.1 out of 10, ranking it fifth in the importance listings. At the same time, dozens of advisors said the back office ranked among the worst aspects of their firms.
The overall average in the back-office category dropped to 7.9 from 8.1 in 2006. The dissatisfaction was most apparent at Toronto-based Dundee Wealth Management Inc. , which saw its score drop precipitously by 1.1 points to 7.0. “Communication is brutal,” says a Dundee advisor in British Columbia. “They’re always screwing up.”
The firm acknowledges that its back-office systems aren’t what they should be. Dundee has been integrating various versions and nine systems from earlier acquisitions over the past 12 months, with just one left to do, says Dan Brintnell, executive vice president and co-head of Dundee’s retail di-vision. Brintnell says the firm has invested more money in training advisors on the new system than on the integration itself, but notes the adjustment takes time.
“We’re going to get advisors who think the new system is terrific and amazing, and we’re going to get advisors who find change a challenge. They’re the ones that need to spend more time learning it,” he says. Still, he remains confident that it’s only a matter of time before advisors are fully on board.
At most firms, almost every year brings a new piece of software, a new version or a system upgrade for the servers. Chris Reynolds, president of Mississauga, Ont.-based Investment Planning Counsel, says the firm last year rolled out a completely Web-based version of the software it has been working on for some time.
Rolling out even new versions can take time and cause problems. Indeed, it’s much easier to score well in a category such as back office when an advisory base is limited, admits Merlin Chouinard, president and chief compliance officer at Sentinel Financial Management Corp. , a Saskatoon-based firm with 47 advisors. Sentinel, with a performance score of 9.1, and Mississauga-based PFSL Investments Canada Ltd. (9.2) were the top-scoring firms in the back-office category.
“A lot of firms throw out one back-office system and introduce a new one,” says Chouinard. “The switch can be a nightmare.”
A priority of Lévis, Que.-based Des-jardins Fi-nan-cial Security Independent Network this year is to harmonize the back-office system of Performa Financial Group Ltd., which it acquired in 2006, with its current system. Luckily, both Performa and DFS Independent Network run on the Univeris platform. But it will still be a “technological challenge” to ensure both systems are integrated smoothly, says Steve Cole, the firm’s national sales manager.
Firms are now adding bells and whistles to what were once order-processing programs. Toronto-based GP Wealth Management Corp. , for example, has added an asset-management component to its back office and has just started training modules with advisors.
Advisors with planning firms may take heart that back-office challenges are not restricted to planning firms. Similar complaints and challenges appeared in the 2007 Brokerage Report Card.
If advisors are willing to bash their firm verbally on this point, they also understand the problem — and point to the solution.
“How can they make it better? They need more experts in that area. They need a professional back office that’s knowledgeable,” says an IPC advisor in Ontario.
Advisors say back-office staff may not be paid enough to produce or stay around long enough to develop expertise. “They need to get smart people, pay them well and hang on to them. Get rid of the halfwits that are handling my business,” says an Ontario advisor with Waterloo, Ont.-based Manulife Securities International Ltd.
Advisors at Winnipeg-based Investors Group Inc. awarded their back office an overall 8.3, which trailed only PFSL and Sentinel. Kevin Regan, executive vice president of financial services, says the firm made most of its back-office investments in the mid-1990s, and there have subsequently been no fundamental changes — which may be a reason its advisors are happy. IE
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