Enhancing the professionalism of financial advisors in the best interests of the consumer



Editor's Note - Craig Harris

Chair's Message - Terry Zavitz

Profiles - Innovation at Work by Marjo Johne

Insurance - Strength, Solvency & Stability by Paul Goldstein

Ahead of the Curve - Misadventures in Beneficiaries by Doug Carroll

Ages & Stages - Challenges of Children by Lynn Biscott

Market Beat - Canada Calls by Michael R. Graham

The Leading Edge - The Joy of Conference by Carla Ayles

Advocis News


Innovation at Work

What does innovation really mean in today’s financial services sector? Marjo Johne profiles four productive industry professionals — Sheila Walkington, Vince Valenti, Roy Craik and Jason McIntyre — to gain perspective on how fresh thinking and new approaches can create breakthrough opportunities for advisors and, most importantly, their clients.

Financial advisors exist in a reality of perpetual challenges, with fluctuating markets, changing client demographics and an industry that’s constantly re-organizing and restructuring. Fortunately, the world of finance and insurance also includes many savvy minds and intrepid spirits who answer challenges with innovative ideas and confront obstacles with a driving determination to make things better.

Whether this means coming up with a new way to help Canadians get a grip on their debt, creating products that let investors keep more of their money or addressing the unique needs of a particular population, these innovators keep the industry moving forward. And consumers today are better off because of them.

In these pages, we profile four innovators whose ideas and efforts have really made a difference. There are many other innovators in this industry, of course — too many, in fact, to mention here. But we think these four profiles are a good place to start.

Sheila Walkington

Money Coach, Money Matters

If Sheila Walkington ever had any doubts about her decision to give up her role as financial advisor to become one of Canada’s first full-time money coaches, an unexpected phone call from radio broadcaster Sheila Rogers certainly put her mind to rest.

It was 2004 and Rogers, who was then host of the Vancouver-based CBC radio show Sounds like Canada, was looking to interview a money coach — an occupation so new back then that it was deemed a worthy topic for discussion on national radio. A mutual colleague put forward Walkington’s name, but the wrinkle was that Walkington wasn’t yet a money coach when Rogers called; she was still at Assante Wealth Management winding down her business as a successful financial advisor.

“I was actually planning to start my money coaching business in March but I got the call in February when I didn’t even have my new business cards because I was too busy transitioning my clients at Assante,” recalls Walkington. “It was great because I was already being interviewed as a money coach even before I had actually become a money coach. It was almost like a sign that, yes, I was doing the right thing.”

Not that Walkington needed a sign. Having worked as a financial advisor for ten years, she saw first-hand the need for comprehensive money coaching. Many of her clients at Assante were overwhelmed by debt and some were struggling with the day-to-day management of their finances.

“My clients were coming to me for investment advice but they had no one to turn to for help in managing their money on a day-to-day basis or reducing their debt,” says Walkington. “ As a financial advisor, I was spending some time with my clients on cash flow and goal setting, but the problem is that financial planners are not compensated for this time and not all financial planners want to do this kind of service.”

Today, Walkington’s Vancouver-based money coaching business — which she aptly named Money Matters — is a thriving practice that serves about 20 clients a month. Unlike investment clients who generally remain active clients for years, Walkington’s money coaching clients work with her for about four to five months, with the odd one coming back briefly to revisit financial goals.

The work is time-consuming, says Walkington.

“I spend 10 to 12 hours with my clients and that’s just working on cash flow,” she says. “Another key component of what I do is helping my clients deal with the psychology of money, helping them shed their negative attitudes and motivating them to get a grip and stop sabotaging their financial goals.”

It’s not always easy, says Walkington. Clients are often edgy when they first come to see her and some have told her they felt physically ill from the financial stress.

Coaching couples can also be particularly challenging since partners often have opposing views about money, says Walkington. 

As a pioneer money coach, Walkington had no business model to follow so she conceived her own, coming up with service packages that range from $1,200 for three meetings and coaching over four months and up to $2,500 for four meetings over four or five months. The rates are higher for clients who are self-employed or have more complicated finances.

“It’s a big chunk of money, I know,” says Walkington, who also offers her services by phone. “But I’ve seen people spend $1,000 or more a month than what they actually earn, so it’s really worth it because it helps them get back on track financially.”

To support her work, Walkington created tools that make it easier for clients to identify their spending patterns and needs. At the same time, she started offering tele-classes and developed workshops exclusively for women.

The demand for Money Matters’ services is now so high that Walkington decided to launch an associate program this month where she and a colleague will train aspiring money coaches.

“Basically we’ll be training them to become associate money coaches for Money Matters,” says Walkington. “We’re getting so much demand that we’re having trouble keeping up, so this way we can expand across Vancouver and even across the country.”

Money coaches and financial planners make perfect partners, says Walkington. In fact, some clients have found her through referrals from their financial planners. In turn, Walkington has referred a number of her clients to financial planners.

“Money coaches are a good complement to financial planners, so I get a lot of referrals from financial planners who may not have the skill set or the interest to do money coaching,” she says. “But in the end, it’s really the clients who benefit from this partnership because they’re getting the best of both worlds — investment advice and day-to-day money management.”

Vince Valenti

President, Independent Planning Group

The day after his company, the Independent Planning Group, officially became a dealer in 1995, Vince Valenti realized there was a yawning gap between what advisors needed to run their businesses more effectively and the actual technology that existed in the market.

“When I looked at back office systems everything was in DOS mode and the technology hadn’t caught up with the times,” recalls Valenti, whose company is based in Ottawa. “I figured there had to be a better way.”

Before becoming a financial advisor, Valenti had worked for 11 years at Mitel Networks Corporation, a communication solutions company in Ottawa. So it wasn’t exactly a stretch for him to design and develop a backend system tailored for advisors.

Working with three partners, Valenti created Winfund software — technology designed to help advisors better manage and grow their business by providing immediate access to consolidated client information and reports. Built-in automated functions would also reduce many of the repetitive tasks advisors and dealers would normally have to do as they choose, track and purchase funds and process commissions.

Advisors and dealers pay a user’s license fee which gives them access to Winfund, says Valenti. The software resides online while advisors’ data, including client information, stays on the advisor or dealer’s server.

Valenti and his partners released the first Winfund product in May 1997. Their business plan had set a break-even target of two dealers in the first year.

“In our first year, we had 30 dealers and advisors and in the second year another 35,” says Valenti. “Within three years we had 100 dealers using Winfund.”

So what was it about Winfund that turned the heads of so many advisors and dealers and enticed them to put a fresh-off-the-drawing-board product to work for their businesses?

“It’s all about having access to information when you need it,” says Valenti. “Quick access to consolidated client information means advisors can manage their clients’ investments more effectively and do their jobs better.”

The pay-as-you-go pricing program was also a big draw for advisors and dealers, since it translated to relatively low and predictable monthly fees. But Valenti said this fee structure was challenging for Winfund owners, who were essentially financing the company’s growth. So when Mackenzie Financial Corporation came knocking with an offer of cash in exchange for a stake in the company, Valenti and his partners agreed and sold Mackenzie a 40 per cent interest in Winfund.

Valenti sold all his stakes to Mackenzie in 2003.

“It was a good marriage,” Valenti says of the relationship with Mackenzie. “My partners and I knew that Winfund would be successful but it was growing so quickly we couldn’t keep up with the financial commitments of the company and Mackenzie came just at the right time.”

Of course, Winfund’s success should come as no surprise to those who know Valenti. He was, after all, the person who came up with the idea of selling no-load mutual funds in 1992, just two years after he made the switch from technology professional to financial advisor.

“It was such a huge success,” recalls Valenti. “We were bringing in millions and millions of dollars through a direct mail system.”

In fact, Valenti’s no-fee approach to mutual funds was to successful that the dealer he was working with at the time asked him to stop selling the no-load fund because other advisors were getting upset. Valenti didn’t comply and was to find another dealer.

He did one better; he took out a mortgage on his home and became a dealer so he could continue selling no-loads. Soon other advisors began calling him.

“They said ‘even though I wouldn’t do it myself, I like what you’re doing and I need a home to sponsor my licence,” says Valenti. “It came to a point where the new advisor business was quickly outgrowing the no-load business so we had to make a decision as to which way we wanted to go.”

Valenti sold the no-load business to other advisors. Today, Independent Planning Group has about 200 advisors across Canada, managing close to $2.5 billion in assets.

 While he is now out of Winfund, Valenti is still very much in the innovation business. He has developed a “Virtual Office” system that sits on top of Independent Planning Group’s Winfund database and optimizes such functions as compliance, trend reports, time scheduling and path management —basically everything that a back office system won’t do for advisors and dealer.

“This is just an in-house proprietary product that gives us a competitive edge,” he says.

So will he ever stop innovating?

“Coming from the technology industry, I learned that you can never be complacent and that you must always keep improving your products,” says Valenti. “Many, many  years ago a college professor said to me ‘once you can figure out a client’s problem and develop a solution, then you’ve got a product or service.’”

“I have so much fun whenever I can solve a problem that it puts a smile on my face.”

Roy Craik

President, Retirement Compensation Funding Inc.

Being first seems to be a recurring theme in Roy Craik’s life. The president of Retirement Compensation Funding Inc., in Toronto broke new ground in 1971 when he moved away from the branch system of selling insurance and established Broker’s Insurance —a brokerage-based business model that didn’t exist in Canada in those days.

“I wanted to be able to sell my clients whatever the best product was from whatever insurance company,” recalls Craik, who left his job in 1966 as a senior trust officer and estate planner with a major Canadian trust company to get into the life insurance business. “Initially, some of the insurance companies in the branch system wouldn’t deal with me because they were still branch companies, but gradually these same companies opened up their own broker divisions.”

The same year he set up Broker’s Insurance, Craik began examining the two existing insurance products with a critical eye and found them insufficient to meet the needs of his high net worth clients. Term life insurance was fine for people who needed coverage for only five or 10 years but for those who needed longer-term coverage, the only other option at the time was whole life insurance.

But since whole life policies came with higher interest rates, Craik figured they weren’t that great either for his clients. So he began working on a solution with Maritime Life Assurance Company, the small Halifax insurance firm that became part of Manulife Financial in 2004.

The result was the country’s first adjustable single premium whole life insurance policy, a product that allowed policy holders to significantly reduce their insurance costs by paying a single premium upfront or compressing their premium payments over a few years.

“It was a very successful product and the bigger insurance companies eventually followed,” recalls Craik, who started his insurance career at Royal Trust— now part of the RBC Financial Group—where he worked summers throughout high school in the filing department.

“The other students with connections got to work in the bond department, but I had no connections so I ended up in filing,” says Craik, who launched Retirement Compensation Funding in 1986. “But I learned a lot as a file clerk because everything I filed, I read.”

Like most innovators, Craik continued to think of ways to give his clients better insurance options. He developed another version of the adjustable single premium whole life insurance, this time with a refundable premium.

“How it worked was that after 10 years the insurance company gives you back your original premium and the money left would be enough to pay for your premium for the rest of your life.”

As Craik had anticipated, adjustable whole life was a hit with wealthy investors. But the product’s successful run was halted in 1981, when Canada Revenue Agency significantly reduced the amount of money that could be exempt from accrual taxation. Craik saw his company’s income drop by more than 75 per cent as a result of the rule change.

So what did he do? In typical Roy Craik fashion, he went into creative mode and began thinking of how the adjustable whole life product could be reconfigured to offer clients similar tax shelter benefits while taking into account the new tax rules.

“We came up with corporate-owned life insurance, which is insurance on business owners or key executives of companies,” Craik explains. “When those people are ready to retire, they elect an option where they basically have the same as an income averaging annuity.”

Craik also partnered with Confederation Life Insurance Company to create a term insurance product that goes beyond five to 10 years. Craik said many of his clients take out insurance as collateral against a loan, but don’t necessarily want a short-term product since the premiums keep rising with each renewal. Getting whole life, on the other hand, means they won’t be able to claim their premiums as a tax deduction because of the policy’s cash value.

“So we went to Confederation Life and said to them, why can’t we have a term of 100 years?” says Craik. “That would be considered a zero cash value contract so companies could get tax deduction on their premium, which would be a big higher but over a period of time would be lower.”

Craik knew that some clients worry about not being able to pay the premium during a bad year and losing their coverage. He responded to this concern by devising a contract where the premium could be pre-paid and the money in excess of the annual premium would be put into a reserve fund.

Today, at age 71, Craik runs his company from his farm in Hockley Valley, where he lives with his wife and three dogs. He hasn’t created any new products lately but is busy mentoring the next generation of insurance professionals.

“I figure I’m just going to continue doing what I’m doing now —mentoring young people and helping my clients— until they come and take me away,” he says. “Why would I stop when I’m still having fun?”

Jason McIntyre

Senior Vice President, Sales, BMO Investments Inc.

In his role as senior vice president of sales for BMO Investments Inc., Jason McIntyre gets a constant stream of requests and suggestions for improving BMO’s processes and services.

When he heard from his sales team that some financial advisors were complaining about not being able to offer their clients a Registered Disability Savings Plan, he immediately put this item high up on his list of priorities.

“We hear daily from our sales people that they need this and they need that, so I have to prioritize these requests since we obviously can’t do them all,” says McIntyre. “But this one particular issue shot to the top as a priority.”

It was early 2009, just weeks after BMO Investments had launched its RDSP platform. Canada had made history in March 2007, when it became the first country in the world to create a registered savings plan for people with disabilities.

At the end of 2009, BMO became the first bank in the country to build a RDSP platform, making it possible finally for Canadians to buy this new investment product, designed to help the roughly 500,000 people in Canada who have a disability.

McIntyre says the market for RDSPs goes beyond the half-million Canadians with disabilities.

“There are between two and three million Canadians who have at least an arms’ length association with somebody who is collecting a disability tax credit,” he says. “So these are people who could potentially contribute to the RDSP of a spouse, parent, grandchild, or even a friend.”

Through discussions with his sales people and organizations that support and advocate for Canadians with disabilities, McIntyre confirmed a need for a system that allowed investors to purchase RDSPs through their financial advisor.

“We took that information to our product people, and then shortly after we put a team together to develop an advisor channel for RDSPs,” recalls McIntyre, emphasizing that this was not a one-man show but a team effort. “I was part of a group of people who really worked hard to define and develop a system for an advisor channel.”

Setting up an advisor channel for RDSPs was a costly proposition, says McIntyre, which may be why other banks have not done it, and it’s not exactly a big profit centre.

So what made him decide to pick out this project from his pile of priorities and put his full weight behind it?

McIntyre points to BMO’s philosophy that everyone needs a financial plan.

“If we’re going to promote that kind of thinking and be advocates of that, then we have to make sure that we’re excluding certain people,” he says. “Like any investment, an RDSP should not be looked at on an individual basis so it’s very important to be able to access this type of investment through your financial advisor.”

Being able to sell RDSPs also helps financial advisors serve their customers better, says McIntyre.

“To do their job properly, they need to be able to access all pertinent information,” he says.

Since launching its RDSP platform in early 2009, BMO has gained more than 20,000 RDSP accounts, with about 2,000 accounts sold through the advisor channel, which launched last November.

“I think it’s quite amazing to get something like this off the ground and get it implemented,” says McIntyre. “But perhaps the most rewarding aspect to this whole thing is knowing that we’re providing an important product that’s helping disabled people, and we’ve made it possible for them to access this through their financial advisor.”

Marjo Johne can be reached at marjo@marjojohne.com.