Although financial advisors’ dissatisfaction with their dealer firms in many categories increased year-over-year, a closer look reveals that firms are delivering quality financial products for advisors to sell, as well as giving their advisors the freedom to sell the products they consider to be the best fit for their clients.
Specifically, advisors gave their firms overall average performance ratings of 8.8 and 9.3 in the “quality of firm’s product offering” and “freedom to make objective product choices” categories, respectively. These ratings ranked as the third-highest and highest such average, respectively, for all categories in this year’s Report Card. These rankings are notable because these two categories ranked in the top five in importance to advisors’ businesses.
In the case of Toronto-based HollisWealth Inc., its advisors rated the firm lower in many categories year-over-year because of the challenges related to Quebec City-based Industrial Alliance Insurance and Financial Services Inc.’s acquisition of HollisWealth from Bank of Nova Scotia last year. However, the strong ratings of 9.0 that HollisWealth’s advisors gave their firm in both categories were not in spite of the change of ownership but because of it. Many of HollisWealth’s advisors said they believe that they now have a greater level of independence than under Scotiabank.
“[The level of freedom] is night and day. Before, if you were selling something that wasn’t a Scotiabank product, somebody would call you and ask you why,” says a HollisWealth advisor in Ontario. “Now, [IA’s management] leaves you alone to do your job.”
Richard Legault, president of Montreal-based Industrial Alliance Securities Inc., says that permitting that independence is part of IA’s strategic focus for wealth management.
“The goal is for [an advisor] to sit in front of a client and be able to say that the product he or she offering is the best product [for the client],” he says.
HollisWealth advisors’ only concern was that some products they had used when Scotiabank owned the firm aren’t on IA’s shelf. In turn, Legault says, IA’s product review committee is in the process of doing due diligence on all the products beyond “regular mutual funds.”
Says Legault: “It’s our responsibility as a firm to make sure the products that are being offered meet certain criteria.”
Advisors with Markham, Ont.-based Worldsource Wealth Management Inc. also went through changes this year that affected their perception of the firm. Ill-timed changes to the firm’s technology platform left advisors reeling, but the broad product offering was the saving grace for many. Worldsource advisors gave their firm ratings of 8.8 in the quality category and 9.2 in the freedom category.
“[Products on offer] is probably one of the most wonderful reasons to join Worldsource,” says an advisor with that firm in Ontario. “My platform is completely open.”
Richard Rizi, senior director of investment services with Worldsource Financial Management Inc. (the division of Worldsource that falls under the Mutual Fund Dealers Association of Canada’s purview), says the firm takes pride in its offering and plans to fortify its product shelf this year by introducing the capacity for mutual fund-licensed advisors to sell ETFs: “Worldsource has deep roots in the independent advisor space and in supporting advisors to make independent decisions. Having a robust product shelf is absolutely part of that.”
Advisors with Montreal-based Peak Financial Group are well aware of the advantage a broad product shelf presents, as the firm is one of only a few dealers that have a platform for mutual fund-licensed advisors to sell ETFs. Peak led the pack in both product categories in the Report Card, with a rating of 9.6 for quality and 9.8 for freedom.
“Now, with ETFs being offered, you can get anything pretty much under the sun,” says a Peak advisor on the Prairies.
Overall, advisors at other dealers were happy with their product offerings – provided they have the freedom to make use of it.
“I have nobody to tell me what product I have to [sell to my clients],” says an advisor in Ontario with Toronto-based Assante Wealth Management (Canada) Ltd., which received high ratings of 9.1 for quality of products and 9.4 for freedom.
Meanwhile, advisors at some of the independent dealers that offer no proprietary products were particularly pleased with both the product shelves they can access and the freedom to sell whatever they deem to be a best fit for their clients.
“[My firm’s] strength is that it stays out of the advisor’s business,” says an advisor in Alberta with Calgary-based Portfolio Strategies Corp.
“If you have solid, statistical information for the choice [of product] you make, [management] doesn’t question it,” says an advisor on the Prairies with Windsor, Ont.-based Sterling Mutuals Inc. That firm received both praise and high rankings from advisors in both product-related categories.
Michael Stanley, Sterling Mutuals’ president, says the firm’s focus on giving advisors the independence they clamour for serves both advisors and clients well: “As soon as you bring proprietary products into the discussion, it raises issues of conflicts of interest. [Independence] is just a purer way of dealing with clients and being objective.”