Financial advisors place a great deal of importance on working at dealer firms they believe are stable places at which to run their practices. Therefore, many advisors surveyed for this year’s Dealers’ Report Card were feeling a little unsteady about their firms’ stability as these companies go through significant transitions, from acquisition to new strategic direction to reorganization.
In fact, much like in years past, advisors gave the “firm’s stability” category an overall average importance rating of 9.2, good for the fourth-highest importance rating in this year’s Report Card. However, advisors at five of the 11 firms rated their dealers’ performance in this category lower by half a point or more compared with 2017. These significant drops resulted in an overall average performance rating of 8.6 this year, down from 9.0 in 2017.
In the case of Lévis, Que.-based Desjardins Financial Security Independent Network (DFSIN), its advisors rated their firm’s stability at 8.3, down from 9.5 in 2017. Many advisors emphasized that the parent organization is on solid ground financially, but pointed to DFSIN’s reorganization of its branch network as a major reason their sense of stability declined.
“Right now, [the firm is] shrinking the number of offices it deals with,” says a DFSIN advisor in Ontario. “I’d like to see why they’re making these changes.”
DFSIN is consolidating its branch network outside Quebec to eight locations from 28, says Michael Rogers, senior vice president, independent network sales and distribution, with Desjardins Financial Security Life Assurance Co. For example, rather than having three offices located in Ontario (London, Windsor and Hamilton) with different approaches and management structures, those offices are merging into DFSIN’s Southwestern Ontario Region financial centre.
“The offices that were there still will remain open,”Rogers says, “but we’re going to partner up those financial centres and take what we call the ‘best of breed’ – the best processes, the best approach, the best people – [into a] new hub.”
Toronto-based HollisWealth Inc. also is going through changes, which are related to Quebec City-based Industrial Alliance Insurance and Financial Services Inc.’s (IA) acquisition of the firm from Bank of Nova Scotia last year. HollisWealth’s advisors said that although they appreciate the strength of the IA brand, the transition has been rocky; so, they rated their firm’s stability at 8.0, down significantly from 8.9 in 2017.
“[IA’s management team] is trying hard. [The outcome of the acquisition] is almost too early to say. I’m not worried; it’s a great firm,” says a HollisWealth advisor in Ontario. “But my concern is for the employees. We’ve lost a lot to stress leave. The conversion was rough – by far, the worst I’ve been through.”
Richard Legault, president of Montreal-based Industrial Alliance Securities Inc., under- stands that the transition resulted in significant change for HollisWealth advisors. Furthermore, although IA brought over many HollisWealth support staff as part of the acquisition, these individuals must learn new policies and procedures.
Says Legault: “[Absorbing HollisWealth] was one of the largest and more complex integrations in Canada, and there have been very significant changes to [HollisWealth’s] systems.”
Advisors with Winnipeg-based Investors Group Inc. also have seen their share of change. After the appointment of Jeffrey Carney as president and CEO in 2016, Investors Group shifted its focus to more holistic financial planning.
As a result, the firm reduced its advisor roster and takes a more targeted approach to recruiting while emphasizing advisor teams. At the regional level, some managers moved back into the advisor role and others left the business.
Because of all of the changes at Investors Group, many of its advisors rated the firm’s stability lower this year, at 8.9 from 9.4 in 2017.
Says an Investors Group advisor in British Columbia: “[There have been] too many changes, [and] too much coming down the pipeline.”
Meanwhile, some advisors at Richmond Hill, Ont.-based Global Maxfin Investments Inc. and Calgary-based Portfolio Strategies Corp. worry that their firms may not be immune to the consolidation trend among small dealers.
“Everyone’s on thin ice right now,” says a Global Maxfin advisor on the Prairies. “You never know [which firm] is going to be the next to be bought out or taken down.”
Although some advisors with Portfolio Strategies shared a similar concern, others pointed to the departure of the dealer’s chief compliance officer and its vice president of operations in 2017 as reasons for their concern.
“That year was pretty bad; we had two senior employees walked to the door,” says a Portfolio Strategies advisor in Alberta. “Things are shaky right now; we’ve had a lot of changes.”