Banks are fail­ing to live up to ad­vi­sors’ ex­pec­ta­tions.

Sur­veyed ad­vi­sors said much work is re­quired in some key ar­eas, such as sup­port for tax plan­ning, com­pen­sa­tion, pen­sions and tech­nol­ogy

Investment Executive - - FRONT PAGE - BY FIONA COL­LIE

canada’s big six banks are strug­gling to live up to their branch-based fi­nan­cial ad­vi­sors’ ex­pec­ta­tions in some crit­i­cal cat­e­gories, rang­ing from com­pen­sa­tion pack­ages to wealth-man­age­ment sup­port ser­vices and tech­nol­ogy tools, ac­cord­ing to the re­sults of In­vest­ment Ex­ec­u­tive’s ( IE) 2017 Re­port Card on Banks.

“The [tech­nol­ogy] sys­tems are slower; pro­ce­dures take longer,” says an ad­vi­sor in At­lantic Canada with Mon­treal-based Na­tional Bank of Canada. “Pro­duc­tiv­ity has re­ally gone down on a lot of lev­els. There’s a dis­con­nec­tion be­tween man­age­ment and peo­ple on the ground: ex­pec­ta­tions can­not be met; sales tar­gets can­not be hit.”

The banks’ fail­ure to meet ad­vi­sors’ ex­pec­ta­tions is ev­i­dent in the sig­nif­i­cant “sat­is­fac­tion gaps” — the dif­fer­ences be­tween the over­all av­er­age im­por­tance and over­all av­er­age per­for­mance rat­ings — in cat­e­gories in which ad­vi­sors rely upon their banks, such as “firm’s to­tal com­pen­sa­tion,” “sup­port for tax plan­ning” and “tech­nol­ogy tools and ad­vi­sor desk­top.” These cat­e­gories gar­nered some of the largest sat­is­fac­tion gaps in the sur­vey, rang­ing from 1.3 points to 2.0 points.

In the case of tax plan­ning sup­port, five of the six banks’ per­for­mance rat­ings in the cat­e­gory dropped by half a point or more year-over-year. As a re­sult, the sat­is­fac­tion gap for this cat­e­gory is the third-widest in the sur­vey.

Ad­vi­sors at the banks are able to dis­cuss taxes with clients only in the broad­est of terms and are, there­fore, de­pen­dent on their banks to pro­vide ac­cess to tax ex­perts. How­ever, ad­vi­sors of­ten find them­selves hav­ing to re­fer clients to third-party ac­coun­tants be­cause the banks’ spe­cial­ists are avail­able only through cum­ber­some call cen­tres or to clients who qual­ify as high-net worth. (See story on page 14.)

“I just send clients over to their ac­coun­tants,” says an ad­vi­sor in On­tario with Toronto-based Bank of Mon­treal (BMO). “I guess I could go through pri­vate wealth, but they’re get­ting a bit more picky about who you can send to them.”

The re­sults of this year’s Re­port Card also re­veal ad­vi­sors’ dis­sat­is­fac­tion with their chang­ing com­pen­sa­tion and pen­sion plans.

In fact, ad­vi­sors with Bank of Nova Sco­tia and Cana­dian Im­pe­rial Bank of Com­merce (CIBC), both based in Toronto, and Na­tional Bank re­ceived the low­est or much lower rat­ings in the “firm’s to­tal com­pen­sa­tion” cat­e­gory as a re­sult of re­cent changes to ad­vi­sors’ pay struc­tures.

“I’m not at all im­pressed with how they did the salary cut,” says an ad­vi­sor in Que­bec with Na­tional Bank. “I know the mar­ket is tough. But when em­ploy­ees are used to a cer­tain salary, that’s an enor­mous change. Maybe they could have done it a dif­fer­ent way. I don’t know how, but it was re­ally dras­tic.” (See story on page 14.)

As well, ad­vi­sors were not pleased with changes to their pen­sion plans and, in fact, the sat­is­fac­tion gap for the “firm’s suc­ces­sion/re­tire­ment pro­gram for ad­vi­sors” cat­e­gory was tied for the fourth-widest in the Re­port Card.

Hav­ing a re­li­able pen­sion plan is im­por­tant to branch-based ad­vi­sors be­cause, un­like ad­vi­sors in the bro­ker­age or dealer chan­nels, bank branch-based ad­vi­sors don’t own their books of busi­ness and, there­fore, can­not live off the pro­ceeds of the sale of their busi­ness in re­tire­ment.

How­ever, most ad­vi­sors sur­veyed for this Re­port Card com­plained about the gen­eral shift to de­fined-con­tri­bu­tion pen­sion plans from de­fined-ben­e­fit plans. Fur­ther­more, Sco­tia­bank ad­vi­sors, specif­i­cally, took is­sue with that bank’s re­cent de­ci­sion to elim­i­nate the op­tion to trans­fer the com­muted value of a pen­sion at re­tire­ment and gave their bank the low­est per­for­mance rat­ing in the suc­ces­sion/ re­tire­ment cat­e­gory, at 7.4.

“With the changes, [the bank] is go­ing away from de­fined ben­e­fits [and] we won’t be able to take our com­muted val­ues,” says a Sco­tia­bank ad­vi­sor i n Al­berta. “[There are] quite a few changes that would af­fect me. It might be bet­ter for me to re­tire next year in­stead.” (See story on page 15.)

Ad­vi­sors sur­veyed for this year’s Re­port Card also were not shy about ex­press­ing their dis­ap­point­ment with the ad­vi­sor-fac­ing tech­nol­ogy avail­able at their re­spec­tive banks.

In­deed, most banks’ tech tools sim­ply aren’t up to scratch, which is ev­i­dent from the fact that ad­vi­sors gave the tech tools/ad­vi­sor desk­top cat­e­gory the sec­ond-widest sat­is­fac­tion gap i n the Re­port Card. Much of the frus­tra­tion stems from the per­ceived gap be­tween the banks’ in­vest­ments in tech­nol­ogy and the de­liv­ery time of promised up­grades.

“There is a lot of tech­nol­ogy chang­ing right now. Some­times, those changes are a bit slow,” says an ad­vi­sor in On­tario with Toronto-based Royal Bank of Canada. (See story on page 12.)

Ad­vi­sors do give credit to the banks where it’s due, though, which was the case for client-fa- cing tech­nol­ogy. In fact, ad­vi­sors were so im­pressed, by and large, with their banks’ ef­forts in this cat­e­gory that the sat­is­fac­tion gap for “on­line ac­count ac­cess for clients” is vir­tu­ally non-ex­is­tent.

“[Mak­ing] the on­line ex­pe­ri­ence re­ally op­ti­mal to clients has been CIBC’s fo­cus,” says a CIBC ad­vi­sor in On­tario. “We make sure clients have ac­cess to on­line state­ments.” (See story on page 15.)

Ad­vi­sors also gave their banks top per­for­mance marks for “firm’s sta­bil­ity” — tied for sec­ond place (with “firm’s rep­u­ta­tion with clients and/or prospec­tive clients”) in im­por­tance to ad­vi­sors — which may not be so sur­pris­ing, given that the Big Six banks are some of the old­est and most prof­itable com­pa­nies in Canada.

“We’ve been around for 200 years,” says a BMO ad­vi­sor on the Prairies. “It’s the old­est bank in Canada.”

A lengthy cor­po­rate his­tory is im­por­tant to ad­vi­sors be­cause it plays a big part of a bank’s over­all brand recog­ni­tion.

For the most part, ad­vi­sors be­lieve their banks’ rep­u­ta­tions are solid,con­fer­ring an over­all av­er­age per­for­mance rat­ing of 8.8 in the rep­u­ta­tion cat­e­gory.

How­ever, some ad­vi­sors noted that their bank’s rep­u­ta­tion — and, by ex­ten­sion, their own — has taken a hit this past year, given re­cent me­dia reports about ag­gres­sive sales prac­tices.

“There are a few things in the me­dia right now; it’s hard be­cause ev­ery­one gets painted with the same brush,” says an ad­vi­sor on the Prairies with TD Wealth Fi­nan­cial Plan­ning, a divi­sion of Toronto-Do­min­ion Bank. “We’re all guilty by as­so­ci­a­tion.”

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