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.
Advisors surveyed for Investment Executive’s 2021 Dealers’ Report Card were largely content with their dealers’ product shelves and their freedom to recommend products to clients.
The “freedom to make objective product choices” category had a performance average of 9.6 this year, up from 9.3 in 2020. Furthermore, the “quality of product offering” category had a performance average of 9.0, up from 8.8 in 2020.
Advisors at the firms that led these categories were most interested in product flexibility and freedom. For example, advisors with Carte Wealth Management Inc. gave the firm’s product shelf a 9.5 rating this year, up from 9.1 in 2020, and said the firm is receptive to adding new products.
“If you have something that’s not on the approved list, [you can] send a call out to compliance and they’ll respond right away,” said one Carte Wealth advisor.
Carte Wealth was in a three-way tie for the highest rating in the product quality category with Portfolio Strategies Corp. and Peak Financial Group. Advisors at the latter two firms also said product freedom is the norm.
“[Portfolio Strategies president and CEO] Mark Kent is always trying to expand things,” said an advisor with Portfolio Strategies. “I’m fully independent, so I can do what I want to help my clients.”
A Peak advisor in Quebec said product freedom “is a major point” in the firm’s favour: “There is no pressure of any kind. I have my freedom.”
Portfolio Strategies received a 9.9 rating for product freedom, up from 9.7 last year. Peak also received a 9.9 rating, but was not rated in last year’s Report Card due to insufficient data. Advisors with Carte Wealth gave their firm a 9.8 rating for product freedom, unchanged from 2020.
Robert Frances, founder and CEO of Peak, said open architecture has been key to the firm’s success. “For years, we’ve been giving advisors training on nominee accounts and fee-based accounts” and adding products such as ETFs, he said.
Portfolio Strategies also is seeing growth in these areas. “Our nominee and fee-based [accounts are] growing,” Kent said. “We’ve gone from maybe 0% nominee to 25% in just three to four years.”
At the other end of the ratings were IG Wealth Management and Desjardins Financial Security Independent Network (DFSIN) — although both firms showed improvement from last year.
IG Wealth advisors rated their product freedom favourably at 8.5, up significantly from 7.4 a year ago. The firm’s product offering was also rated 8.5, up from 8.0 in 2020. An IG Wealth advisor in Ontario said the firm has made “tremendous strides,” while an IG Wealth advisor in B.C. said the product shelf is “getting so much better.”
IG Wealth launched its iProfile managed portfolios last June and added new discretionary models in March. Brent Allen, senior vice-president of financial services distribution with IG Wealth, said the iProfile program offers mass-affluent and wealthy clients easier access to private credit and liquid alternatives, for example.
Allen also noted that more than 2,000 advisors have taken IG Wealth’s ETF course. “As products change and evolve over time, we want to evolve as well,” he said.
DFSIN had the Report Card’s lowest rating for product quality for this year at 8.4, an improvement from 8.1 a year ago. The firm had a solid rating for product freedom, however (9.4, up from 9.3 in 2020).
Many DFSIN advisors said they had everything they needed to serve clients. Still, a DFSIN advisor in Ontario said, “I think [DFSIN] could expand some things and add more [products] for us,” such as ETFs.
“Alternative funds are part of the game plan during the year and ETFs, as we go along, will probably be added,” said André Langlois, president of DFSIN.
More dealers offering ETFs
Sterling Mutuals Inc. and Investia Financial Services Inc. introduced ETFs this year — a development welcomed by advisors with both firms.
Sterling received a 9.3 rating for its product shelf and 9.6 for product freedom, both essentially unchanged from 2020 (all ratings were given prior to the ETF launches). One of the firm’s advisors said they were “very excited” about ETFs coming to Sterling.
Nelson Cheng, Sterling’s CEO, said the firm wants to give advisors “as many tools as possible to make sure that they [remain] competitive.”
Investia’s product offering was rated 8.9, up from 8.5 last year. The firm also had an improved rating for product freedom, which was 9.6 this year, compared with 9.5 in 2020.
“ETFs will allow us to lower our fees and make us more competitive for high-net-worth clients,” said an Investia advisor in Quebec.
In addition to launching ETFs, Investia has a product committee working on bringing liquid alternative funds to the dealer, said Stephane Blanchette, the firm’s chief compliance officer.