A cumbersome business....

Still thinking about my thoughts published a couple days ago regarding Ms. Cornell's article, I have to really appreciate her intentions for writing it. Many Canadians don't know where to start when they realize they need financial advice. Knowing whether to use their bank branch, do-it-themselves, or using a fee-based or commission-based advisor has been likened to drawing straws.

While Onus has interviewed a multitude of financial advisors over the course of its existence, we didn't focus on the planners at banks or fee-based advisors. Rather, our energies went into analyzing the different full-service advisors in the brokerage houses. Quite frankly, it was because it was where I personally saw the difference in quality of financial advisors.

At a given brokerage house, there can be great advisors and not-so-great advisors. Every full-service broker has his or her own "book" (the roster of an advisor's clients), which is run pretty much as an independant business. It is important to note that relationship between a broker and brokerage is more of a partnership than an employer-employee relationship. The brokerage provides the analysts, the office, the support staff, and the broker provides the clients. When a commission is charged, the broker get a piece and the brokerage firm get a piece (the percentage of who gets how much is controlled by what's known as the "grid"), which is relative to how much in commissions the advisor charges. The more in revenue brought to the firm, the larger percentage of the commission kept.

What have I found? That, for one, there is a vast range between fees charged. That, this variation in fees doesn't bear a direct relationship to the advisor's competence or attention paid to a client's portfolio. That, all advisors are probably the most likeable, charming people I will ever meet.

And so it continues.....