Sometimes, the recipe for success is leveraging off someone else. And that’s what many of the financial planning firms in this year’s Planners’ Report Card are doing in their recruitment efforts: they are relying on the Big Six banks to train industry rookies on their behalf.
“We take the banks’ advisors when they’re ready to do the job on their own,” says Joe Canavan, chairman and CEO of Toronto-based Assante Corp. , who cites the cost of training and the high failure rate of training advisors as the reason for that strategy. He notes that banks see half of their recruits walk out the door after three years and 80%-90% leave after five years. “Who wants that?” he asks.
Of course, the banks can afford this because they have deep pockets. But the few independent firms that recruit and train rookies find training to be expensive.
Lévis, Que.-based Desjardins Financial Security Independent Network pegs the cost of training an advisor at more than $100,000, while Burlington, Ont.-based Berkshire-TWC Financial Group Inc. puts the cost at $50,000-$75,000 per advisor.
Besides DFS Independent Net-work and Berkshire, the only other firms actively recruiting rookies are Winnipeg-based Investors Group Inc. and Mississauga, Ont.-based PFSL Investments Canada Ltd.
Nevertheless, recruiting newcomers to the industry and training them from scratch does have its benefits. In particular, the firm’s culture is instilled in advisors from the get-go. The trick, however, is ensuring that the firm recruits people who will take to the business and be happy with the firm and its business model.
“We take a broad, open view during the recruiting cycle,” says Kevin Regan, executive vice president of financial services at Investors Group, “including discussion of varieties of tools and techniques, so that someone coming in knows what the business is all about and we know what they’re all about — which means there’s a match rather than a hope and a prayer. Our recruiting, our model, has been successful and we’re very good at it.” He cites the “good performance from people coming into this as a second career and the amazing performance from people who are literally fresh out of school.”
PFSL seems to be particularly good at recruiting and training, with its advisors giving their firm the highest score on delivery of promises made when they were hired, at 9.5 vs the overall average of 8.2.
The focus at PFSL has been on recruiting those who are looking for a second career — those who are tired of the “rat race,” as Jeff Dumanski, president and chief marketing officer, puts it. “We look for those who want to advance in a new career and are passionate about doing something different,” he says. “It’s a chance for them to work with friends and family, provide them with services and make an impact on them, as well as help out and be an integral part of their communities.”
PFSL is also looking for young people, with a new campaign for recruiting what Dumanski calls the “FYIs” — those who are fresh, young and independent. “We recognize that some of us are getting older and there’s a whole new generation behind us,” he says.
Although there’s a greater focus on bringing on those new to the business, PFSL also hires experienced planners. As such, it also scored highest on transition support, at 9.2 vs the 7.2 overall average.
Although PFSL doesn’t provide signing bonuses or specific cash transition support, it assists incoming advisors by helping them bring their existing clients into the fold and moving the advisors up the payout ladder quickly.
Other firms do offer cash or signing bonuses, but more often than not, it’s a transition allowance. “Transition can take anywhere from six months to 12 months and you don’t do as much business as a result. The transition bonus is to make up for lost revenue,” explains Canavan of Assante’s assistance.
Four of the companies surveyed were found to be lacking in their transition support to incoming advisors — and all had low ratings to show for it. Regina-based Partners in Planning Financial Services Ltd. (5.9), Waterloo, Ont.-based Manulife Securities International Ltd. (6.0), Assante (6.2) and Calgary-based Portfolio Strategies Corp. (6.2) all ranked well below the 7.2 overall average.
@page_break@”There was absolutely no support — zilch,” says a Partners in Planning advisor in British Columbia; another in Saskatchewan adds, “There was no cash; they only gave a bit for advertising.”
Says a Portfolio Strategies advisor in Alberta: “It was a long distance to the branch manager, and I didn’t receive the training and support I felt I needed.”
Regardless of whether firms target new or experienced advisors, all have their own pitch. At PFSL and Investors Group, the pitch is to offer incoming advisors “the ability to influence the lives of clients positively,” says Regan.
However, Ken Rousselle, president and CEO of Markham, Ont.-based Professional Investment Services (Canada) Inc., doesn’t think “there’s any one thing you can pitch to an advisor today that will sell them on a company,” he says. “It’s about everything you do, that’s what you sell on. If you’re a one-dimensional company, I don’t think you are going to succeed in this business. We like to think that we are well planned out, that we have a number of areas that will appeal to an advisor — everything from our compensation models to our share-ownership plan to our unique business model. Those are all things that would appeal to advisors, depending on what they’re looking for.”
PIS believes it has a completely different philosophy from most financial planning firms. Its Australian parent, Professional Investment Holdings Group, was founded by a small group of advisors and accountants, and it “is not run like a proprietary company-owned distribution company,” says Rousselle. “We focus 100% of our efforts on advisors and on building their businesses.”
PIS is working on building relationships with a team of more than 200 accountants, Rousselle adds, “who want to be part of our business model and perhaps have relationships they are not leveraging to the extent they could be. We could leverage for them.”
George Aguiar, president and CEO of Toronto-based GP Wealth Management Corp. , says it’s the input advisors have in the business that attracts them to his firm. “It’s the accessibility to management,” he says. “Advisors have a lot of say in the shape of services and products we make available. It’s a part of our culture.”
But while that may be so, GP Wealth Management scored lowest on delivery of promises (7.2). “It promised a lot of things that didn’t come through,” says one advisor in Ontario.”
For most other firms, it’s “independence” and “an entrepreneurial environment” that are the big selling points for advisors. The question is what this means. And there usually isn’t much detail to distinguish one firm from another. IE