Advisors rate their distributors

Advisors weather economics storm by reducing spending and augmenting services, and they expect their distributors to act similarly.

A study conducted for our 2009 Distributors’ Summit found, overall, distributor-advisor relations are positive, with the vast majority of advisors (90%) noting they have a good working relationship with their distributors.

What makes a good distributor? It depends on the needs of the advisor. Those working with larger distributors say they appreciate deeper product knowledge (65%), more consistent service (61%) and the ability to provide training (60%). Smaller shops, on the other hand, are appreciated because the advisor is familiar with decision makers (58%) and the distributor can provide more consistent service (46%).

That said, there’s still room for improvement. How can distributors help their advisors better serve clients? If lowering fees or sharing costs (mentioned by 20% of advisors) isn’t realistic, advisors suggest distributors streamline their processes (18%).

Nearly all advisors (88%) rate consolidated reporting as important to their operations, and it’s the most frequent suggestion (26%) when advisors are asked on an open-ended basis what they would change about the distribution of products in their firm. The majority (55%) of advisors want dealer and MGA cooperation, although only 40% of dually licensed advisors say their distributors’ back offices are integrated with their operations.

While 30% of advisors notice a change in products or services offered by their distributors, only 4% note their distributor has improved services. Twenty-six per cent say their distributor’s cost structure has changed, causing the majority of these advisors to report a negative impact on their business. In fact, advisors associate lack of service and training with a distributor who has overstretched its ability to meet advisor needs.

What else is on advisors’ wish lists? Here are some wants advisors mentioned in our survey:

• CE credit courses (45%);
• planning services (36%);
• after-sales customer service (29%);
• will preparation (28%);
• new business follow-up (26%); and
• trust services (25%).

Clearly, continuing education and training are critical to advisors. Interestingly, 17% admit they are not selling products because they lack the expertise to offer them. Further, roughly one-third of advisors who are not currently dually licensed would be interested in assistance from their distributors to gain this certification.

Risk management could also be an area of improvement for distributors. Only three in 10 advisors feel they have enough errors and omissions coverage to cover their practices.

This online survey was conducted using Rogers Business and Professional Publishing’s advisory panel of financial advisors during April and May 2009 with 767 Canadian financial advisors, the margin of error is ±3.5%, 19 times out of 20.