financial future after covid-19 / DrAfter123

This article appears in the June 2021 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.

Ratings for the 11 firms included in Investment Executive’s (IE) 2021 Dealers’ Report Card held steady in this year’s research.

Outside of one firm — IG Wealth Management — the dealers included in each of the last two Report Cards saw little year-over-year change in their IE ratings (the average of all their category ratings). The average IE rating even hit a 10-year high of 8.3.

Similar to last year, the top-performing categories were “freedom to make objective product choices” (9.6) and “ethics” (9.4). The “quality of product offering” (9.0) category ranked third, up from sixth place a year ago. (See Dealers strive to meet advisors’ product needs.)

The categories with the highest importance ratings also were the same as a year ago: product freedom (9.8 in 2021), ethics (9.7) and “back office & administrative support” (9.4).

The firms with the highest IE ratings in this year’s Report Card generally were the front-runners in the categories deemed most important by advisors. This group included Carte Wealth Management Inc. (with an IE rating of 9.1), Peak Financial Group (8.9), Assante Wealth Management (Canada) Ltd. (8.8) and Sterling Mutuals Inc. (8.8).

Carte Wealth saw significant year-over-year improvement (defined as an increase of 0.5 or more) in four categories, including “leadership stability,” which received a rating of 9.8, up from 8.9 a year ago.

“[Carte Wealth is] still small enough that we’re not just a number,” said a Carte Wealth advisor. “You can be heard and they respond quickly.” (See Leadership tested during challenging year.)

Advisors with Assante said the firm allows them ample freedom and independence, but also that the full-service dealer needs to evolve its services continually to stay ahead, such as its financial planning tools.

“Assante is an excellent firm. However they still need to evolve and understand that not all business models and practices fit in a square peg,” said an Assante advisor in Quebec.

Meanwhile, a Sterling advisor praised their firm’s tech tools: “I appreciate them being ahead of the curve on technology. It’s been a tough year, and I’ve grown my business significantly.”

There was insufficient data to rate Peak in last year’s Report Card, but the firm’s 2021 IE rating of 8.9 was up significantly from 8.1 in 2019. Even amid the pandemic, advisors were optimistic. “I like the freedom and the closeness,” said a Peak advisor in Quebec. “They are listening to our needs [and] reacting quickly, all [while] leaving some freedom.”

IG Wealth also had a standout performance, with its IE rating rising to 8.6 from 8.0 in 2020. The firm improved significantly in 15 categories. The largest increase — a full two points — was in the “mobile technology support” category, which received a rating of 8.8, up from 6.8.

Some IG Wealth advisors said improvements are still in progress for their smartphone apps, but an IG advisor in Quebec said there’s “lots of support from head office” for mobile technology.

“If you are someone who wants a holistic approach to your advice, IG can’t be beat,” said an IG Wealth advisor in Alberta, speaking about the firm overall.

Despite the generally positive reviews, advisors did criticize their firms. Although 35 category ratings rose significantly in this year’s DRC, 16 fell by 0.5 or more (in 2020, 70 category ratings rose significantly and only 10 slipped).

The categories of “social media support” and “business development support” (renamed from “firm’s marketing support for advisor’s practice”) had some of the weakest average performance ratings (7.5 and 7.6, respectively) and the lowest average importance ratings (7.3 and 7.7, respectively), similar to a year ago.

Advisors surveyed this year reviewed their priorities against the backdrop of the pandemic. Nearly two-thirds of Report Card categories (17 out of 29) saw their importance averages fall compared with 2020. Furthermore, the importance averages of five categories dropped significantly. For example, the importance rating for corporate culture fell to 8.2, down from 8.8 a year ago.

“This last year has been really busy and it’s hard enough to focus with all the things that have gone on,” said an advisor in B.C. with Desjardins Financial Security Independent Network (DFSIN). That advisor added that they’d prefer work flexibility and autonomy over efforts to boost culture going forward.

Advisor books also are changing. Average book value dropped 5.4% compared with a year ago to $66.3 million, while the number of client households served dropped 7% to 206. Yet average client households were wealthier, continuing a trend that also was seen in 2020. (See Assets under pressure.)

Dealers have operated in a challenging pandemic environment for more than a year now — and advisors generally approved of their firms’ efforts to navigate Covid-19.

When asked a supplementary question about their firms’ pandemic support, advisors gave an average rating of 8.9. The dealers with the highest pandemic support ratings — each above 9.0 — included Peak, Carte Wealth and IG Wealth, each of which was praised for proactive communication. (See Communicating through the pandemic.)

“From the start, we could operate remotely,” said a Peak advisor in Quebec. “Our customers did not see a difference.”

Dealers with the lowest pandemic support ratings lagged their peers overall: DFSIN had an 8.3 rating for its pandemic support and the lowest IE rating (7.3), even though most advisors acknowledged the firm tried its best. Worldsource Wealth Management Inc. had an 8.0 rating for its pandemic support and an IE rating of 7.8 (like Peak, Worldsource was not rated in the 2020 Report Card).

Worldsource advisors had mixed feelings on the firm’s pandemic support: some advisors wanted the firm to provide client letters, for example, while an advisor in Ontario said they could still operate “business as usual.”

Adapting to the pandemic wasn’t easy for any dealer, and pressures have only intensified.

“This has gone on a lot longer than anybody had originally anticipated in terms of working from home, the severity of it, the isolation [and the] lack of personal contact,” said Doce Tomic, head of wealth management with Guardian Capital Group Ltd., Worldsource’s parent company. Tomic said he’s eager to move ahead on strategic plans, such as building up the dealer’s hybrid advice tools.

Advisors also said they want to look forward, not backward. “I’m trying to get my message out more and look sharp in the future. I may be old, but I’m trying to move fast,” said an Assante advisor in Atlantic Canada.

How we did it

Research for Investment Executive’s (IE) 2021 Dealers’ Report Card (DRC) was conducted by five research journalists: Camille Côté, Emily Fox, James Gaughan, Surina Nath and Daniel Reale-Chin. This year, the researchers spoke to 502 financial advisors at 11 dealer firms from across the country: eight full-service and mutual fund dealers, and three independent dealers.

Research was conducted via phone interviews between Feb. 16 and Mar. 26, 2021, and the focus was on how advisors felt about the support services and programs offered by their respective firms. Participants were asked to provide two ratings for their firm’s services — one for performance and the other for importance — on a scale of zero to 10 for each of the 29 categories included on the main chart (this tally excludes the IE rating and Net Promoter Score). A rating of zero means “very poor” or “unimportant,” while a rating of 10 signifies “excellent” or “critically important.” Advisors were asked to provide ratings only for services with which they had direct experience, but could offer importance ratings for all areas.

Last year’s research efforts were affected by the onset of the pandemic and, as a result, Worldsource Wealth Management Inc. and Peak Financial Group were not rated in the 2020 main chart due to insufficient data. This year, both firms were rated, albeit without year-over-year performance comparisons.

As part of ongoing efforts to improve the research, the team removed four categories: “Support for developing an investment plan for clients,” “Firm’s delivery on promises,” “Online account access for clients” and “Firm’s reward/recognition program.” The rewards category was replaced with “Bonus structure,” which had previously been included under “Total compensation.” The aforementioned account access category was merged with “Client account statements.” Finally, the “client onboarding tools” category was added.

Some category names were rephrased to better reflect the service being rated. For example, “Firm’s marketing support for advisor’s practice” is now “Business development support” — this revamped category includes marketing support, as well as other aspects of business development such as coaching. The “Firm’s stability” category is now “Leadership stability.” Previously, advisors were asked to rate their firm’s financial and leadership stability; now they’re asked to focus on the stability of their leadership team.

Finally, other categories in the main chart were renamed for simplicity, but the criteria being evaluated did not change.

Each year, the team asks two supplemental questions. In 2021, advisors were asked to rate how well their firms supported them during the Covid-19 pandemic and, separately, how well their firms have prepared them for the introduction of the new conflict of interest requirements from the Canadian Securities Administrators that take effect June 30.

— Fiona Collie, Katie Keir