financial advisor explaining investment plan to couple on laptop at office desk

Canada’s largest banks are placing greater emphasis on offering holistic plans to branch-based clients, but some of the financial advisors working with those customers remain dissatisfied with the financial planning support they receive, according to the results of this year’s Report Card on Banks.

In general, the advisors surveyed acknowledged that their banks are investing more resources into planning tools and quality training, as well as access to expert support. When asked to rate their banks’ “support for developing a financial plan for clients,” they gave their institutions an overall average performance rating of 8.6, up 0.1 from last year.

“We’ve got a team that’s very easily accessible with a ton of knowledge when it comes to planning,” says an advisor in Ontario with Toronto-based Canadian Imperial Bank of Commerce (CIBC). CIBC’s performance improved in the financial planning category year-over-year. It was rated 9.4 vs 8.9 in 2018, and the bank nabbed the top spot in the category ahead of Toronto-based Royal Bank of Canada (RBC; rated 9.3).

However, when asked to rate the importance of support for financial planning, the surveyed advisors gave an overall average rating of 9.4, also up 0.1 from last year. That resulted in a satisfaction gap (the amount by which the importance of a category exceeds its performance) of 0.8, which matches the category’s satisfaction gap from the 2018 and 2017 Report Cards – suggesting a persistent trend. (In 2016, the satisfaction gap was wider, at 1.1.)

This gap matters for the Report Card on Banks in particular because, while the percentage of advisors’ clients on average who had financial plans varied by bank, 100% of respondents this year said they do financial plans, as in 2018.

As one advisor in Ontario with Toronto-based Toronto-Dominion Bank (TD) explains, “I’m audited [on] provid[ing] financial plans for clients, so the expectations are high.”

Even so, TD received the lowest performance rating in the financial plan category for the second consecutive year: 7.8 in 2019, down from 7.9 in 2018. A TD advisor in B.C. says, “[There] could be significant improvements [by] having quality financial plans on the books as opposed to just slapping together financial plans.”

David Terry, vice president and head of TD Wealth Financial Planning, says TD has recently introduced new financial planning technologies and initiatives that have caused “disruption in the short term, [but] will pay off big-time in the long term.”

The bank has launched a new client relationship management program, for example, alongside a new “discovery tool” that incorporates elements of behavioural finance. It’s also rolling out technology to help planners communicate with clients remotely, including by sharing documents on screen, Terry says.

Advisors at several banks cited inadequate training as an impediment to creating solid plans.

“We’re not utilizing the [financial planning] program to all of its ability – you need the training,” says an Atlantic Canada advisor with Toronto-based Bank of Nova Scotia, even while the bank was rated 0.1 higher than last year, at 8.4, for its financial planning support.

Other advisors said they would benefit from quicker response times from in-house experts. “The number of support people isn’t quite enough in the area,” says an advisor with TD in Ontario. “If you need an answer, it takes too long.”

Like the advisors surveyed, bank executives see the growing value of financial planning. Several leaders told Investment Executive that clients are best served by having a financial plan, and that they’re committed to supporting advisors to create plans for a greater share of clients. Across all banks, the Report Card found that only 59.4% of in-branch bank clients have a plan, although individual percentages ranged from 44.5% at Montreal-based National Bank of Canada (NBC) to 87.1% at TD.

TD isn’t the only bank making changes. CIBC is developing a digital financial planning tool for its Imperial Service platform that will allow clients to do goals-based planning and tracking both online and in-branch with their advisors.

“That’s going to be a game changer for us,” says Kathleen Woodard, senior vice president of delivery and operational effectiveness, personal and small business banking, at CIBC.

At RBC, the bank plans to expand its MyAdvisor online tool by including a financial planning program called Your Future by Design, according to Michael Walker, vice president and head, mutual funds distribution and RBC Financial Planning.

One thing all banks have in common is they encourage or require advisors to have, or be working toward, a financial planning designation, such as certified financial planner (CFP), personal financial planner (PFP) or registered financial planner (RFP).

At CIBC, Woodard says, “We know the importance of [financial planning] designations for our clients.” Depending on their level of training, the bank requires its senior financial planners to have the CFP or PFP designation, or both.

At TD, all financial planners either hold the CFP designation or are in the process of getting it, Terry says. Likewise, at NBC, all branch-based planners have or are acquiring the Institut québécois de planification financière designation.

This focus appears to be yielding results. In the 2019 Report Card, only 28% of surveyed advisors who do financial plans indicated they did not hold at least one of the major financial planning designations, down from 39% in 2018, 35% in 2017 and 41% in 2016.

April-Lynn Levitt, a business coach with The Personal Coach in Waterloo, Ont., says she’s not surprised that more advisors may be seeking out financial planning designations, particularly in light of evolving client expectations and the push among regulators for greater professionalization in the industry.

“The way the industry is going, at some point it might become a mandatory requirement to have some sort of [financial planning] designation,” Levitt says. “I encourage people to get it all the time because I find it makes them a better advisor overall.”