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

Dealer firms may be losing ground in their quest for financial advisors’ approval, according to Investment Executive’s 2023 Dealers’ Report Card.

Average ratings for most categories fell from their 2022 levels, and two of the three top-rated firms were rated lower than they were last year. As a result, the average of all firms’ IE ratings dipped to 8.1 from the Report Card’s 10-year high of 8.4 in 2022. (An IE rating is the average of a dealer’s category ratings.)

As in 2022, four categories saw satisfaction gaps (the difference between a category’s performance and importance averages) of more than a point. All four were technology categories, with “advisor’s experience with back-office tools & services” reporting the largest gap (1.4).

The firm with the highest IE rating was, like last year, Carte Wealth Management Inc.: 8.8, down from 9.1 in 2022.

One Carte Wealth advisor said the dealer is “staying ahead of the curve” due to its “technology, expertise and tools.” Another praised the dealer’s “breadth and depth of product,” as well as its compliance support.

Carte Wealth led its peers in performance ratings for 11 of the 21 categories in which it was assessed. Yet its ratings in 12 categories (including in some that it led) were weaker than a year ago.

Those 12 categories included three of the ones most important to advisors: “quality of product shelf” (9.2, down from 9.7), “freedom to make product choices” (9.6, down from 9.8) and “compliance relationship & support” (9.2, down from 9.8).

Carte Wealth’s largest downward shifts from 2022 were in “client account statements & portals” (8.3 from 9.0) and “business development support” (8.1 from 9.0). The firm’s advisors indicated that remote access to the firm’s technology and client documents need improvement.

Maria Jose Flores, president of Carte Wealth since May 2022, said the firm offers “a dedicated team” to troubleshoot remote-access issues for clients and advisors. That said, heightened cybersecurity requirements regarding client documents have led to the use of a security tool called SideDrawer, which can make technology and email access difficult outside of the office.

The next two highest-rated dealers were Sterling Mutuals Inc. and Peak Financial Group, where advisors touted freedom, independence and solid back-office services.

Sentiment among advisors with Sterling Mutuals was nearly stable year over year, with its IE rating at 8.6 versus 8.5 in 2022. Peak’s IE rating, however, dropped to 8.5 from 8.8 due to lower performance in 11 categories compared with 2022.

Peak has a “powerful back office” that’s supported by the firm’s growth and “accessible” staff, said one advisor in Quebec.

However, Peak advisors also mentioned hurdles in digital and skills-development areas. “[Peak] has gone through some interesting ups and downs over the past five years as the firm has grown,” said another Peak advisor in Quebec. “A lot of the tech solutions need to recognize the needs of individual advisors on a day-to-day basis.”

The firm released an enhancement to one of its tools, My Peak Connect, in mid-July, said Robert Frances, president and CEO of Peak. The update is meant to help advisors complete forms and account profiles more efficiently, among other things.

“In the last year we’ve also added significantly to the dashboards and alerts,” Frances said, “working hard with [advisors] to understand and shadow their practices.”

The firm with the lowest IE rating in 2022, Manulife Securities Inc., repeated that dubious distinction in 2023. And like most of its Report Card peers, Manulife’s IE rating was lower this year (6.9, down from 7.2). The slide was largely due to digital issues. Manulife saw significant performance declines — of half a point or more — in five categories, the largest being “client onboarding tools” (rated 5.1, down from 6.0 in 2022).

Further, Manulife was rated 5.8 for the performance of its technology suite (the average of its six technology ratings), the lowest of all firms in the Report Card.

A Manulife advisor in Ontario said there’s “a lot of hope and optimism” about the dealer’s current leadership, but that its client relationship tools, portals and digital signatures needed improvement.

Manulife aims to transform its infrastructure and offerings, according to Richard McIntyre, president and CEO. Plans include the adoption of Fidelity Clearing Canada ULC’s (FCC) uniFide digital and back-office tools, announced in March.

“If you’re not evolving fast enough, you just get left behind,” McIntyre said. “Going onto that [FCC] platform is going to be a big move [that] offers an opportunity to really start thinking through how we run our business [and] how we support advisors and help them grow.”

These actions are being noticed by advisors. “[Manulife has] a clear roadmap of things that need to be changed going forward,” said an advisor in Ontario.

The next two lowest-rated firms for 2023 were CI Assante Wealth Management and Portfolio Strategies Corp., which both received IE ratings of 7.9. That rating fell significantly from 8.6 for CI Assante in 2022 (Portfolio Strategies was not assessed in the 2022 Report Card due to insufficient advisor responses).

CI Assante advisors graded their firm significantly lower in nine categories, even while appreciating the heft and ambition of their dealer. One advisor in British Columbia listed CI Assante’s “national scale with [a] national brand” among its best features.

Still, several advisors at that firm expressed the need for back-office and digital improvements. CI Assante’s largest year-over-year category drop was in “advisor’s experience with back-office tools & services” (rated 6.1, down significantly from 7.6 in 2022).

A CI Assante advisor in the Prairies acknowledged the firm was addressing back-office issues, but said, “[That’s] my number one headache. With high volumes, it’s been difficult for the back-office to keep up. [I’ve seen] a lot of holes exposed [and] a lot of inefficiencies.”

CI Assante stated in an email that it has “invested in process automation of back-office functions and a fully electronic onboarding platform.” Today, more than 90% of new account openings and know-your-client updates are done electronically, up from 20% in spring 2022.

Like CI Assante, Investment Planning Counsel Inc. (IPC) had a significantly lower IE rating this year: 8.1, down from 8.6. IPC’s performance results dipped significantly in 10 categories, with the largest drops associated with technology and business development.

IPC’s goal is to help advisors grow based on “quantitative and qualitative reviews of the advisor’s business,” said Sam Febbraro, executive vice-president of advisor services with IPC and president and CEO of Counsel Portfolio Services. That process includes in-depth book analysis that assesses whether an advisor is using the correct technology package from the firm, as well as the advisor’s focus, team and processes.

Several advisors lauded the overall culture at IPC, but also raised questions about the dealer’s future following the announcement in April that Canada Life Assurance Co. would purchase IPC from IGM Financial Inc.

“The culture is positive. Most of the leadership is positive. It’s clear to see where their motivations may lie,” said an IPC advisor in Ontario. Still, “this is a question all about timing” as advisors were still “digesting” news of the Canada Life acquisition, the advisor added.

Investia Financial Services Inc., the only firm with a positive year-over-year IE rating and performance results, still could not escape criticism of its back-office and compliance team — but advisors placed the blame outside of the firm. An advisor in the Prairies said that performing administrative tasks or trades efficiently is hindered by industry-driven processes.

“You want to do stuff for clients quickly but, at the end of the day, you’re bogged down by paperwork,” they said. “If [the rules weren’t] as onerous and restrictive, I find the financial planning community would do a better job in looking after our clients.”

10 most important categories to advisors

Freedom to make product choices: 9.7

Quality of product shelf: 9.3

Advisor’s experience with back-office tools & services: 9.1

Compliance relationship & support: 9.1

Total compensation: 9.0

Receptiveness to advisor feedback: 8.9

Client onboarding tools: 8.9

Succession program: 8.8

Leadership team: 8.8

Branch manager: 8.8

How we did it

Research for the 2023 Dealers’ Report Card was conducted by seven research journalists: Aneesh Chatterjee, Emily Fox, Roland Inacay, Tiana Kirton, Diane Lalonde, Alisha Mughal and Serge Rousskikh. The researchers spoke with 461 investment and/or mutual fund advisors across Canada who worked with 11 dealer firms. These included full-service and mutual fund firms, as well as independent, mutual fund-only firms.

Research was conducted via telephone interviews held between March 2 and April 24. For the full methodology, go to investmentexecutive.com/drc2023.