TWO DI­REC­TIONS

Af­ter a rough show­ing in 2017, BMO Nes­bitt Burns and Sco­ti­aMcLeod faced very dif­fer­ent as­sess­ments from their ad­vi­sors this year

Investment Executive - - CONTENTS - BY FIONA COL­LIE

Two firms that were pum­melled by their ad­vi­sors in last year’s Re­port Card now are on op­po­site paths.

THE FOR­TUNES OFTWO BANK-owned bro­ker­ages, BMO Nes­bitt Burns Inc. and Sco­ti­aMcLeod Inc. (both based in Toronto), took dra­matic — and op­pos­ing — turns in this year’s Bro­ker­age Re­port Card.

Nes­bitt’s ad­vi­sors rated their firm higher by half a point or more in 16 of 33 cat­e­gories and rated their firm l ower by that same mar­gin i n only two cat­e­gories. In ad­di­tion, the firm’s “IE rat­ing,” which tal­lies the av­er­age of all of a com­pany’s scores, also rose by half a point.

This pos­i­tive trend fol­lows a dis­mal show­ing in 2017, when ad­vi­sor dis­sat­is­fac­tion with the firm came to a head, as they rated their firm lower by half a point or more in 21 of 31 cat­e­gories — not in­clud­ing the “IE rat­ing” and the “over­all rat­ing by ad­vi­sors,” which dropped by that same mar­gin last year.

“There was pretty much a palace re­volt and the firm’s [ex­ec­u­tives] didn’t want to [lis­ten to ad­vi­sors], but they had to,” says a Nes­bitt ad­vi­sor in British Columbia.

Nes­bitt ad­vi­sors have seen a fair bit of change at their firm since last year’s Re­port Card was pub­lished, in­clud­ing the in­tro­duc­tion of An­drew Auer­bach as head of the bro­ker­age. Auer­bach took on the role of ex­ec­u­tive vice pres­i­dent and head, pri­vate client di­vi­sion, in Fe­bru­ary 2018, six months af­ter Charyl Galpin left the firm to be­come chief reg­u­la­tory of­fi­cer, wealth man­age­ment, with Bank of Mon­treal (Nes­bitt’s par­ent).

Be­sides a change in man­age­ment, some of the in­creases in Nes­bitt’s year-over-year rat­ings point to a change in mood among the bro­ker­age’s rank and file.

For ex­am­ple, Nes­bitt’s ad­vi­sors rated the “firm’s re­cep­tive­ness to ad­vi­sor feed­back” at 6.6, up from 5.2 in 2017. Al­though ad­vi­sors noted that there’s still much room for im­prove­ment, man­age­ment ap­pears to be do­ing a bit bet­ter at lis­ten­ing to their con­cerns.

“They’ve taken a lot of ad­vi­sor crit­i­cism into ac­count over the past year,” says a Nes­bitt ad­vi­sor in Atlantic Canada, “and they have made some changes [as a re­sult].”

Nes­bitt’s ad­vi­sors also no­ticed an im­prove­ment in the “firm’s cor­po­rate cul­ture,” which they rated at 6.4 this year, up a full point from 5.4 in 2017. In large part, ad­vi­sors were hap­pi­est with the cor­po­rate cul­ture at their branches.

“I can only speak about my branch, but it’s an in­ter­est­ing col­lec­tion of young and more se­nior ad­vi­sors. The young guys work to­gether and the se­nior guys are there for sup­port,” says a Nes­bitt ad­vi­sor in On­tario. “I can walk into any of­fice and ask a ques­tion that will help me with my busi­ness.”

Yet, Nes­bitt’s lead­er­ship still has work to do in build­ing up the cul­ture, as many ad­vi­sors noted that ten­sions re­main be­tween them and the wider cor­po­ra­tion.

“[Com­pany man­age­ment] has tried to change the firm and, in the process, they’ve di­min­ished it,” says a Nes­bitt ad­vi­sor in B.C. “When you’ve lost the con­fi­dence of ad­vi­sors and you’re los­ing ad­vi­sors, I don’t see how that can sus­tain it­self.”

For Auer­bach, gain­ing back ad­vi­sors’ con­fi­dence and eas­ing that ten­sion will come through on­go­ing two-way com­mu­ni­ca­tion, both to share where the firm is go­ing and to get ad­vi­sors’ thoughts on the path Nes­bitt is on.

“[Be­ing] side by side as we set the strategy [and] di­rec­tion is re­ally im­por­tant to the cul­ture of this firm,” he says.

But as Nes­bitt aims to move for­ward, Sco­ti­aMcLeod took sev­eral steps back­ward, ac­cord­ing to its ad­vi­sors. Sco­ti­aMcLeod’s rat­ings de­clined by half a point or more in 18 of 33 cat­e­gories, as well as in the over­all rat­ing by ad­vi­sors. Last year, ad­vi­sors rated the firm lower by half a point or more in 17 of 31 cat­e­gories, as well as in the IE rat­ing and over­all rat­ing by ad­vi­sors.

Notably, Sco­ti­aMcLeod ad­vi­sors ex­pressed frus­tra­tion that man­age­ment sim­ply doesn’t seem to be lis­ten­ing to their con­cerns. On that note, the firm’s rat­ing for “firm’s re­cep­tive­ness to ad­vi­sor feed­back” dropped by half a point or more for the third con­sec­u­tive year, to 5.8 from 6.4 in 2017, 7.4 in 2016 and 7.9 in 2015.

Sco­ti­aMcLeod ad­vi­sors were quick to point out there are many ways they can share their thoughts with man­age­ment, in­clud­ing an ad­vi­sory coun­cil. How­ever, the is­sue is that ad­vi­sors be­lieve their words fall on deaf ears.

“[Man­age­ment] lis­tens beau­ti­fully, but don’t do any­thing,” says a Sco­ti­aMcLeod ad­vi­sor in B.C.

Com­mu­ni­cat­ing what the firm has done in re­sponse to feed­back, as well as con­tin­u­ing to dis­cuss its di­rec­tion, are on­go­ing tasks that can be done in a va­ri­ety of forms, from con­fer­ence calls and emails to one-on-one con­ver­sa­tions, says Rob Djur­feldt, manag­ing di­rec­tor and head of Sco­ti­aMcLeod. This com­mu­ni­ca­tion is some­thing that Djur­feldt is al­ways look­ing to im­prove upon, he says.

“[When] I’m trav­el­ling across the coun­try,” he says, “the ques­tions I of­ten ask ad­vi­sors are: ‘How do you want to hear from us? How can we bet­ter com­mu­ni­cate?’”

One thing Djur­feldt had to dis­cuss with ad­vi­sors is the firm’s de­ci­sion to lay off 7% of Sco­ti­aMcLeod’s ad­vi­sor and sup­port staff in 2016 — some­thing that con­tin­ues to ran­kle with many sur­vey par­tic­i­pants. For ex­am­ple, Sco­ti­aMcLeod ad­vi­sors once again rated the “firm’s ethics” sig­nif­i­cantly lower this year, at 7.8, down from 8.6 in 2017, in part be­cause of the down­siz­ing.

“Two years ago, [man­age­ment] sold [some] ad­vi­sors’ books to other ad­vi­sors without telling [the first group of ad­vi­sors] — then fired those ad­vi­sors,” says a Sco­ti­aMcLeod ad­vi­sor in On­tario.

Djur­feldt says the firm con- tin­ues to talk with ad­vi­sors about the firm’s di­rec­tion. Al­though ad­vi­sors weren’t happy at the time of the lay­offs, many now un­der­stand why such de­ci­sions were made.

Still, as Djur­feldt ac­knowl­edges, “It didn’t make it any eas­ier to say good­bye to friends.”

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