Distributors’ Summit coverage

Advisor.ca content editor Vikram Barhat reports live from the Advisor Group’s 2011 Distributors’ Summit in Niagara Falls, Ontario. The conference ran from Tuesday, May 31 and through Thursday, June 2.

Read Vikram’s coverage below:

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That’s it for my coverage from Niagara Falls. The 2011 Distributors’ Summit now concludes. I’d like to thank our sponsors for helping us host a top notch event. I hope you enjoyed reading about the conference as much as I enjoyed reporting on it.

Click through below for What’s in Store for Self-Regulation? with Joseph Groia, principal, Groia & Company, Toronto.

What’s in Store for Self-Regulation? Speaker: Joseph Groia, principal, Groia & Company, Toronto

11:28 We are going to enter a period of less clarity. The future of SRO is unknown. To some extent it is going to be a political decision. And I hope we will see, after a period of turbulence, a better regulatory system going forward than today. Although, I won’t put my money on it being better, but rather more interesting. Thank you.

11:25 Securities commission doesn’t do a good job of regulating the hedge fund market. We spend far too much money on useless compliance created by SROs. What you are going to see is a national commission that’s not really national.

11:20 I expect an Ontario specific national agency that’s not national at all. I think we need to see every single dealer in this country participating in an SRO agency. I now see the dealers in this room doing a far better job of discharging their duties than in the 1980s.

11:15 We are going into a period of change, but not necessarily a good change. I don’t think we are going to see a national enforcement agency. They will put more emphasis on dealer liability and responsibility.

Consolidation Update Speaker: Chris Reynolds, CEO & President, Investment Planning Counsel Inc., Toronto

11:12 All of this will lead to consolidation. I don’t want to change, but I know I’ll have to. Thank you very much for your time.

11:11 We are moving to a new age of regulation. It won’t get better worst Advisors are now having hard time differentiating themselves. Dealers need size and scale to compete. Most importantly, dealers without manufacturing capability is not a sustainable business model.

11:08 Who will survive? There is the megazoid, firms that has deep pockets and cash flow. They will thrive. On the other extreme are the niche shops. Niche is not small. They are servicing market that people don’t want or understand. Niche players will continue to thrive.

11:05 Even advisors have a lot more responsibility today. They are held responsible for client relationship. This means if their recommendation to client goes down, they are held responsible.

11:03 Today we have all kinds of things we have to do. We are about to issue helmet cams so if anything that goes wrong, we are there. We became technology shop. Anything goes wrong, it’s our fault.

10:59 The dealer economic model of our business has not changed in 20 years. We actually charge less for services today, because we compete on price. Resultantly, value proposition drops. It is a dysfunctional business model. Advisors’ goal is to get paid highest amount of money with highest level of service. As dealers we want the exact opposite.

10:56 Branding is a big thing these days. Brand to a consumer means trust, stability and somebody I can do business with. We have done grave injustice in our business with non-branding. Competition has ramped up their game; they are all over the internet.

10:54 You have to have deep pockets whether or not money is coming in. Advisors are getting very sophisticated.

10:52 In any client relationship, what does a client (advisor) want from the dealer? Everything! What do they want to pay? Nothing. As a result of this disfunctionality, only big companies are able to survive because they are making money on volume.

10:49 Survey after survey, say Canadian consumers want advise. The challenge is they are not sure where to get it. What they really want is a great experience in financial planning.

10:47 Competition is not only coming from the banks, it’s coming from young advisors. Internet will change competition in our industry. It will bring transparency; allow the ability to compare advisors. This will set the bar higher by causing more competition.

10:45 Low growth market leads to consolidation for size and scale.

10:43 The problem with aging advisor base is that they don’t want to change the way they do business. Some of them don’t even have computers in their offices. Some of them are using them only to keep their door open.

10:41 You can argue it’s a low-growth market. But the reason why it’s so is the aging advisor base. There’s no new blood. When advisors hit a certain age and certain book size their ambition wanes. But they refuse to retire.

10:39 The light at the end of the tunnel is the national regulator. If we move to national regulator I fully support it and I think it’s good for all of us. We pray to two gods; MFDA and IIROC. We’d rather just pray to just one. It would make more sense going forward to merge the two into one.

10:37. I’m all for regulation as long as that protects consumers. I’m against CYA. I’m against regulation for the sake of regulation.

10:34 For the most part our industry is in a state of maturity. With some exception, it’s a zero-sum game until maturity comes.

10:33: This industry has been in a flux a long time. How many of you would say the industry is dramatically different from what it was 10 years ago. Consolidation is a natural evolution of any business.

10:30: After some furious networking, the delegate are now making their way back into the hall.

Effective Pushback Speaker: Stephanie McManus, President, Compliance Support Services, Burlington, Ont.

10:00: You wouldn’t think a horse could do that (a reference to many tricks performed by the horse in the video clip). Remember, so can the regulators. Thank you very much. A gripping session indeed, and what a way to end it.

9:57: Think of them like a horse, and you the rider. Now imagine riding a horse without a saddle or reins. A video clip is shown here to create a more vivid image of the analogy.

9:55: If it’s a big issue, arrange a meeting and talk to them, offer solutions. You need to cultivate a relationship with them just the way you do with your clients. They are one of the most important business contact you have. They can shut you down and snuff out your future business.

9:52: You establish trust by working hard, giving what they need and by solving their problem. Be patient. They don’t understand your business like you do.

9:50: Don’t put off work, do it now and it will save time down the road.

9:49: Regulators can be irrational; so listen to them, understand them. If you can’t, hire someone to do that. Identify what they are worried about and that way you can deal with it effectively and quickly.

9:47: They are tough but earning their trust is still worth working towards. it’s a culture of compliance that you must demonstrate openly that allows for trust to happen. Don’t be defensive; it’s nothing to do with you.

9:44: What is an unmanageable confrontation with a regulator? It is a confrontation when they pull out the full weight of their authority. If it gets to that point, you can’t win. Don’t ever let it get that far. Answer their concerns. Address the investor protection issue. Do it cleanly and precisely so it doesn’t come back to bite you. make sure it’s airtight.

9:42: Regulators don’t care about irrelevant matters. Strategically, if you are struggling with something when an enquiry is made, never let them see you sweat. You’ve got to let them feel you got everything under control.

9:40: You need not take things personally. Just get down to solving the compliance problem and get on with your business.

9:38: You need to establish trust and rapport with regulators. This is how you come to open the door. You also need patience and resolution and need to follow-up on an ongoing basis. Keep them in your thoughts.

9:35 EDT: If you want regulators to understand your business model and drop the prescriptive model and allow you to do business your way, you need to do a few things.

Good morning. Welcome to the final day of the conference. An impressive line-up of some top notch speakers promises a high-octane atmosphere. It will be an action packed day, to say nothing of Al Pacino live on stage tonight right here at the Niagara Fallsview Casino Resort, the venue for 2011 Distributors’ Summit. Hoo-ah!

How We’ll Serve the Client of the Future Speaker: Catherine Pearson, VP & Practice Leader, Environics Analytics, Toronto.

4:42: And that wraps up today’s live coverage of 2011 Distributors’ Summit. Another small step forward for individual participants and a giant leap for the industry. We’ll be back tomorrow morning at 9:30 EDT with the coverage of Day 3 – the final day – of the Summit. Good night!

4:40: Define those segments that are important to you. It is widely being used across industries. Financial industry is often feels it’s not relevant to them. It is very relevant and the industry needs to realize it and turn that into actionable plan that can change your business. Thank you.

4:32: There’s a big female market in the financial industry. Focus on gender specific information. Quantify untapped potential and the size of the prize.

4:30: All demographics are using social media for different reasons. They have different attitudes, beliefs and mindsets which influence their buying decisions.

4:14: The industry needs to start thinking about the end consumer and create successful customer centric model. There’s greater need to understand customer insights by looking at data and analytics.

4:12: The financial industry is responding to it. The financial market is now looking at women in a different way. They are taking the customer centricity approach.

4:10: It’s a whole new generation they have more information and they can do a lot more with it.

4:08: A look at trends among younger investors and ways distribution can help advisors reach out to younger, growing clients.

Improving Advisor Statements Speakers: Vince Valenti, President, Independent Planning Group, Ottawa, Ont and George Aguiar, President and Chief Executive Officer, GP Wealth Management Corporation.

GA I don’t think consolidated statements has competitive advantage. Presentation ends.

VV I’m sure there are other business advantage of added client contact. It will further deter fraudulent activity. Ultimately it provides advisors and investors a more robust communication platform. It won’t happen overnight but it will happen.

VV We would never put an advisor in a headlock, so if they don’t want to send a consolidated statement we won’t force them to.

VV We do have to have consolidated statements. we are moving in that direction. I think there will be work for advisors on the integrity of data.

VV we will be charging for quarterly statements. E-delivery is not and can not be free. Every dealer I know is going to be charging it back. That forces advisors for fee-for-service operation, which is a nominee platform. I think we will start to see the shift and quarterly statements are imposed.

GA We have an advisor committee and we have touched on the subject of increased cost. There is this notion that if it’s internet, it’s free. E-delivery systems cost money and require some sort of cost recovery system. Not sure if electronic delivery is any cheaper than paper delivery.

VV More clients will accept e-delivery of statements in the time to come. Age will certainly matter, but people of all ages are going online and that will also protect the environment.

GA The first step of reporting that’s imposed is basic information. But there will come time when clients will start asking for more information like ROI information. It will be absolutely critical to get these data right.

VV Quarterly statements are not an easy thing to do. You can certainly separate information that’s not part of these statements.

GA We anticipate clients will be calling and asking questions about their statements. We have online access to accounts and quite a few clients prefer them in electronic format.

VV Consolidated statements are going to be a big burden on advisors going forward. It is an unnecessary evil.

Valuing Your MGA Speakers: Cameron Jacox and James Hilton, Managing Partners, Jacox-Hilton Producer Consulting.

JH: Let’s face it, our industry is facing enormous change. There will be a lot more regulation going forward. In the end, we need to see if the change will be led by our industry or the regulators. Thank you very much.

CJ: Life insurance is one of the oldest industries in the world. Margins here are still a lot higher than other industries.

CJ: Book or MGA acquisition offers tremendous growth advantages. Vertical integration is the way forward. You can also incentivize advisors to buy books.

JH: Servicing policy holder is no longer an obligation, it’s a tremendous opportunity. Equip advisors to bring value to the client.

CJ: Maximizing the value of MGA. Periodic valuation can increase profit margins. The way to drive traffic is through organic growth. You can either cut cost or grow revenue. Cutting cost can potentially reduce quality of service.

JH: We need to be able to adapt to new regulations. MGAs also have retention issue. When the book is transferred to a close colleague, attrition rate drops. We want to look at the books and determine the stability behind it. Most advisors are hard working people but we still need to focus on lapse rates.

CJ: Go as deep as client and policy structure. Look at internal growth opportunity.

CJ: MGA valuation should be advisor based. It is impossible to get an accurate price. But looking at advisor level can give a deeper perspective. For serious MGA evaluation, advisor level evaluation is a must.

CJ: The market place has really reached the end of the commoditization cycle.

JH: It’s important to be aware that things will change in this unpredictable environment. The risk is now higher than before. MGAs don’t operate in a vacuum and doesn’t operate only on cash flow basis.

1:15: We are back on. Hearty lunch, now some food for thought.

Developing New Managers Speaker: Jeff Hughes, GAMA International, Falls Church, Virginia.

11:54 A firm’s strategy for growing its distribution management and developing effective succession planning will determine if it will succeed in adapting to and adopting a changing landscape. Thank you! Session ends.

11:52 Teaming increases productivity, assets and revenue. And provides opportunity for individual growth.

11:50 The organization must be transparent. Build open relationships between team members. Create a conducive climate. Build trust through communication. Achieve an alignment between the organizations vision, strategy and culture.

11:49 Trust is key to forming a productive group. Prevent miscommunication, have a clear vision, mission, a strategic and tactical plan for effective performance.

11:47 Mastery of the sales is key to becoming a successful agent. Build the right habits and incite confidence.

11:45 We have a quickly ageing population. We need to work on transition to leadership. New leader should be ultimately responsible for the results, but the old leaders must be responsible for assessments.

11:44 Teams are the future follow a prescriptive approach to team building.

11:42 Establish a clear mission for the team. Teams must be selected based on individual experience, values and beliefs and by conducting behavioural interviews.

11:40 Establish an effective team. Set expectations and communicate what’s important to the organization. Set targets. Agree to disagree in team decisions and resolve conflicts directly. Reward performance monetarily and non-monetarily.

11:36 It’s time to bend the curve and create environment for more women to enter the industry. We need to make the environment gender neutral.

11:34 Women value mentorship opportunities from both men and women. Gen Y women value both career and home equally. We have to become sociologists in addition to being business people.

11:32 Insurance companies must offer technology to advisor. Customers are getting tech savvy and we need to connect with them. Then there are gender based opportunities. The industry is overwhelmingly tilted towards male. There must be more focsu on merit alone. Women should have the option of working from home. We need to explaore options to nurturing women in our organization.

11:30 To gain an X’ers trust, leaders must be able to give them the opportunity to strike on their own and show what they have to offer as an individual.

11:25 Gen X are chronologically to transition into leadership positions. We need to come up with strategy to attract and retain that generational group. Gen X feel currently overlooked.

11:28 Change. Change. Change. The most important thing for our industry to survive. The horse that got us here is not going to be the horse that will get us there. Widen the talent pool.

11:25 The future is teams. Let’s talk about how to form them and how to win with them.

New Agent Development Speaker: Chris DiSalle, Managing Partner, CMO, Complete Brokerage Services, Richmond, B.C.

10:20: Simplify the process for the agent. Ensure a bulletproof practice. Not all new agent development programmers are great. They don’t all make it. But they will throw up gems. Thank you for listening. Go Canucks Go!

10:15: Train them through a process. They will never read something you send them. Ensuring solid business practices are part of every file from start to finish.

10:12: Review initial meeting for spouse and/or business partners that weren’t at the meeting. Review priorities from meeting one highlighting their primary risks or concerns. Present and Close.

10:09: The client building process. Ask for opinion on a variety of different areas and then ask if they want to discuss anything further. Find out what the client wants. Get more involved and provide advice. Stop chasing people. The goal is not sale; the goal is the next meeting for presentation.

10:02: Create a profile for position. Design the personality aspects of role and the ultimate job description. Match profile and behaviour to job and create attractive yet accurate posting. Use Twitter, Facebook, Monster, Workopolis, LinkedIn etc. These measures are key to push more bodies through selection process to end up with more matches for success.

9:56: The problem with conventional ways of recruiting people is that it’s not enough. It won’t put enough people though the pipeline. There is need for new approach.

9:52: Most of our existing guys and new guys lack passion. If you can’t get passionate about your business get out of the way. We need to instill passion among people.

Day 2

Right-Sizing Your Broker Base Speaker: Kevin Cott, CEO, Qualified Financial Services, Toronto

9:45: In the end you would be much happier and more productive. I am very thankful that I’m in this business. Thanks for your time. The session ends.

9:43: The remaining advisors would understand their position with the firm. Add new resources and make the relationship more valuable for both parties. You must spend more time with the right people. Help advisors who want to be better, be better.

9:38: Who’s controlling your business? Make sure it’s you. Get rid of non-productive advisors and do a better job for those who write big tickets.

9:33: One of the problems associated with non-productive advisors is that sharing of knowledge becomes difficult. They can cost a lot more than they can help the firm earn. They are a drain on your resources. 80% of our business comes from 20% of our advisors. We need to keep these people.

9:25: I have a heart-pounding love for what I do. I chose to become an MGA because I could do a better of helping advisors build their business.

9:15EDT: The first session is about the get underway. Stay tuned for today’s live coverage.

Good morning. Another bright sunshiny day here in Niagara Falls. Gentle breeze blowing, mists drifting as the delegates start to troop into the Grand Hall C of the Niagara Fallsview Casino Resort, the 2011 Distributors’ Summit venue, for what promises to be another day of enriching discussions and debates.

Emerging Risk. Speaker: Paul Brown, Chairman & CEO, Worldsource Financial Management.

4:16: That wraps up today’s live coverage of 2011 Distributors’ Summit. I hope everyone found it as engaging and educational as I did. We’ll be back tomorrow morning at 9:15am with the coverage of Day 2 of the Summit.

4:14: The insurance companies are leading the charge. They know the devastating effects. We have to have a coordinated voice.

4:11: We all have to send the message out to the powers that be that this can’t happen. The long term financial security of Canadians is at risk and there would be impact on our industry and our economy.

4:09: If IASB exposure draft is implemented as its proposed it would be difficult to sell insurance products. We built our businesses on these products so we obviously can’t let that happen. MGA distribution would be hit hard. Advisors would shift focus to financial planning and investments.

4:04: One of the problems is the difference between financial results being projected and results being experienced. They are not the same. There are wild swings in profits and losses. I don’t know how that serves any body.

4:02: The crux of it is that in Canada there is a disconnect between asset and liability. Going forward, this would result in drastic price increase and withdrawal of guaranteed products.

3:57: We live in a global economy. We can no longer have our own accounting standards. There is a need for implementation of global accounting standards (GAAP).

3:54: Insurance companies have long term liabilities which they match with long terms assets. Insurance companies buy two thirds of government and corporate bonds and a major investor in long term infrastructure in this country.

3:50: Since 1990 long term guaranteed products have dominated insurance sales by independent advisors through MGAs Guaranteed Term To 100 and Guaranteed limited pay whole life among others.

MGA Regulation, Yes or No? Speaker: Jim Rogers, Founder and Chair Emeritus, Rogers Group Financial, Vancouver

We are taking a break and the coverage will resume at 3:45pm with a presentation entitled Emerging Risk. Speaker: Paul Brown, Chairman & CEO, Worldsource Financial Management. Back at 3:45pm.

3:35:That’s it thank you for your time and attention.

3:32:From a marketing perspective we have changed the way we have positioned ourselves. We are positioning ourselves as advisors and planners. The word advisor suggests a measure of objectivity. But in our business many are using the term advisor to market their services. They must in fact have a legitimate qualification which makes them qualified to use that title. You can’t be a professional advisor without a professional designation.

3:28:There will never be a uniform regulation of financial products. We have 13 securities regulators, 13 insurance regulators and 1 bank regulator, and they don’t even agree on the day of the week let alone serious matters.

3:24:In absence of higher oversight we as MGAs should be self regulating and beat the punch. Increased regulation of MGA firms is very likely. Get in front and take measures to ensure higher degree of consumer protection before it is imposed on you. 3:20:The securities industry standard is of suitability. Increased regulation will not stop bad guys. If you’re going to be a crook you will be a crook. The posted speed limits in our space is too high. In the insurance industry there is not enough accountability. Ontario doesn’t even have an insurance counsel.

3:16: The patchwork of provincial and federal regulations must be replaced by a single centralized regulatory system like in the UK and Australia. In the end a securities-type regulation will win.

3:13:There needs to be an MGA licensing. The MGA needs to be in the role of an oversight agency and needs to be more experienced to do their job better. MGA should be able to demonstrate that they have free capital so that consumer gets a measure of protection.

3:12:My first recommendation is that MGA and insurers put in place a client-focused compliance regime. Agents should be required to complete a detailed KYC designed specifically for insurance companies.

3:07:Rogers says he needs to emphasize the fact that all thoughts are his own.

Day 1

Tuesday, 12:52 EDT: I arrived in Niagara Falls. A crisp sunny afternoon here. Check-in and registration formalities out of the way. Even managed to catch a glimpse of the Horseshoe Falls in all its glory. All of 200,000 cubic feet of roiling water plunging 173 feet every second. Also good to know the venue has WiFi connectivity.

Now more to the point, the summit gets underway at 3:15 EDT when we go live with the coverage of some of the brightest minds in the distribution industry.

The summit kicks off with a presentation titled MGA Regulation, Yes or No? Speaker: Jim Rogers, Founder and Chair Emeritus, Rogers Group Financial, Vancouver