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The Ideal Advisor

What characteristics make up the "ideal" advisor? From proactive and open communication to fee disclosure and client education, FORUM's survey of high-net-worth clients tells us which advisor traits are most important in today's economic climate. By Deanne Gage

The ideal advisor. It's a loaded phrase. What does it mean, anyway? One client may conjure up an image of a well-dressed, competent professional who has the appropriate credentials. Another may picture someone who is friendly and takes the time to listen to his financial concerns. And still another may value an advisor who's big on heavy-duty contact, especially during times of market volatility.

Others want — and expect — it all. As one high-net-worth investor told us: "These are the characteristics one would like to see in a financial advisor: honesty, availability, initiative, intelligence, common sense, and a sense of where and when to draw the line between conflict of interest and the interest of clients. Warren Buffett has said that [when doing business with someone,] look for integrity, intelligence and energy. And if the first one is not present, the other two are worthless."

Without question, ideal means different things to different folks. But as the results from FORUM's informal survey of high-net-worth (HNW) investors indicate, there are underlying qualities that all great advisors share.

The ideal advisor … is a great communicator


FORUM's poll of 40 high-net-worth clients identifies the attributes that all great advisors possess

Over 45% of respondents said it was important that their financial advisor have a designation

When it comes to fee disclosure, 55% felt that this was very important

Open and honest dialogue is one of the most important attributes, as indicated by 84% of clients

42% clicked on "true" when it comes to wanting their advisors to educate them on difficult financial topics; 38% chose "very true"

65% of respondents rated understanding a client's life and financial goals as a key quality

"This is hardly a shock. Who doesn't want superb communications? Eighty-four per cent of HNW investors felt an open and honest dialogue was crucial. But what does it mean to be a great communicator? After all, most advisors have vastly improved their contact, especially since the 2008-2009 economic downturn. But consider that we're all petrified about global debt levels and what that means for our markets. The problem with most market-focused communications is they create even more anxiety for clients since the information rarely relates back to clients' unique financial situations.

"We all tend to get caught up in how gold's doing and what's going on in another country when really it needs to be about what's happening on the ground in that client's life," says Susan Misner, founder of Golden Girl Finance in Winnipeg.

Instead, the conversation needs to be more "Do I or will I have enough money to retire?" says Sucheta Rajagopal, a CFP and investment advisor with Hampton Securities Ltd. in Toronto. While the investment portfolio may be down 10 per cent, perhaps the client is still tracking to retire ahead of schedule since they only need a certain rate of return, she explains. "Advisors need to think about what the client needs as opposed to whether they're meeting benchmarks," she says.

There's also the jargon factor. Harvey Roff, a retired business owner in Toronto, loves the fact that his advisor "makes things so clear by talking in terms that I understand." But consider what another affluent client told FORUM about his otherwise top-notch advisor: "He is so brilliant that he sometimes has trouble explaining things in a way that I can understand." It's unfortunate, but not everyone has the ability to speak in layman's terms. If you fall into that category, what can you do?

Dawn Hawley suggests bringing in a team member who can relate. "In a team, you leverage on individual strengths," says Hawley, a financial planner with the Angus Watt Advisory Group at National Bank Financial in Edmonton. Her own role in her group is working with clients to develop financial plans. "It's great to have a team member who cuts to the chase and says to the client, 'Okay, we've looked at this very thoroughly and the bottom line is this … I understand from listening to you that these are your goals, so here are some solutions — we can do this or we can do that. I've prepared a step-by-step outline.'"

Alternatively, Derek Moran concentrates on listening. "It's the best way to have a conversation with someone," says Moran, a registered financial planner (R.F.P.) with Smarter Financial Planning in Kelowna, B.C. "Clients aren't going to be annoyed if they're talking. It's our job to ask really good questions and listen. How can there be confusion if they are the ones talking?"

More food for thought: a person's learning style may be different from your own, says Rajagopal, who recently received a certificate in teaching adults. "We tend to teach people the same way we learn things," she explains. For example, she used to simply provide handouts to clients, asking them if they have any questions. She found that didn't work so well. "Clients need to have different ways of having information exposed to them, and that's why I now do lunch-and-learns. A group of people come, some ask questions, and those who are shy may benefit from the fact that someone else is doing the asking." She'll do slides for those visual clients and talk for those who would rather hear her interpretation.

As for actual contact, survey your client list regularly to get a handle on expectations. However, be careful what you do with the results, says Julie Littlechild, president of Advisor Impact in Toronto. "Clients may say it's important that [their advisor has] the right frequency of contact, which might lead you to think, 'If I just sat with my clients one more time a year, they would be more engaged,'" she says. "But that's not really true because it's also about the quality of the meetings, and whether the advisor is focusing on what's important to that client."

Seeking feedback isn't for the faint of heart. An industry consultant suggested advisor Chris Ball start a client advisory council, a group of clients who would regularly provide suggestions on how he can enhance his business. "I didn't jump at the idea right away," admits Ball, a financial planner with Assante Financial Management in Halifax. "Most people don't like to hear what they're doing wrong."

But he gave it a try, getting 12 clients of various demographics and situations to participate in semi-annual meetings. His first meeting was impeccably timed: mid-September 2008. He ended up nixing his agenda and focusing the meeting on communicating in tough times. The results surprised him. Ball had impressed the council with his approach to communication — he has a regular newsletter, website and blog. And as for ways to improve, Ball had spent considerable time planning unique client appreciation events. Turned out the clients could care less; they preferred educational seminars where they could better grasp financial issues. "From that, we implemented quarterly update seminars," he says.

The ideal advisor … understands my needs

Again, we've all heard this theme before. So why does it keep coming up with clients? Ninety-four per cent of our HNW investors highly rated understanding life and financial goals as a prerequisite for an advisor. Well, consider Randy Ambrosie's example. It's 4:45 p.m. on a Friday before a long weekend. Your family keeps calling you, asking when you will be home since you're leaving for a cottage later that evening. You're just about to head out when the phone rings. It's your client. Do you pick up or let the call go to voicemail or your assistant?

"If it's a client who's in your sweet spot, of course you're going to pick up the phone because that client is so meaningful to you," says Ambrosie, president of Oakville, Ont.-based Accretive Advisor, a company that helps investors find great advisors. (Since the company's inception in December 2009, Accretive has completed 1,400 advisor/investor matches.) "As the client is further and further away from your sweet spot, there's less likelihood that you're going to take that phone call."

Therein lies the problem. Fit does correlate with truly understanding client needs, but most advisors have clients who are less than ideal for them. If you find yourself saddled with clients who don't fit the focus of your practice, you're less likely to jump to do business with that person — which isn't fair to you or the client.

What's bugging you?

FORUM asked high-net-worth clients what they don't like about their advisor. Here's what some of them had to say:

• There's a conflict of interest between how they are paid versus my best interest (life stage fit, superiority of product, personalized to my needs, etc).

• She acts like she has no time for me. She doesn't get back to me when I have a question.

• He does not always speak in layman's terms.

• I get too many emails.

• He doesn't take the time to explain things thoroughly.

• He doesn't learn from mistakes and justifies his actions as "unforeseeable events."

• I'm not able to reach him in difficult times, and he provides responses that I think are general to his client list.

• He may retire before I am finished with his services.

• There's not enough contact.

• There's a lack of communication and very little interest in my goals.

• I'm just a number [to my advisor].

How did you end up with less-than-ideal clients? Perhaps you inherited them. Maybe they were ideal clients at one point but you changed focus. But more likely, you took them on as a favour to one of your ideal clients. Not surprisingly, since when clients search for a great advisor, they often ask friends, family and even neighbours. Their thought process usually doesn't run any deeper than this: "If Jake is happy with his advisor, I will be too."

The reality is simple. "Just because clients share a fence with one another doesn't mean they share a common financial situation," Ambrosie says. "They likely have different service expectations, communication styles and responses to stress. Neighbour One may have huge debt while Neighbour Two may have inherited money from his grandmother, paid off his house and built a large investment portfolio."

Ambrosie recommends advisors figure out who constitutes their ideal client and convey that message to all clients and prospects. To help investors and advisors find each other, Accretive developed a matching system with questionnaires that both parties fill out. They cover everything from location preferences and contact expectations to personality and investment philosophy. Advisors pay a fee to go through Accretive's rigorous process, which includes a complete regulatory once-over, a business review, and a client audit (essentially an in-depth client satisfaction survey of all clients), which is run by Littlechild. Advisors need to pass Accretive's process if they want to be exposed to the company's database of 50,000 investors who have at least $100,000 in investable assets.

"We feel it's our responsibility to show the investing public the best of what the Canadian advisor community has to offer," Ambrosie says.

The ideal advisor … is honest about his fees

Ever hear prospective clients say their former advisors never charged for their services? Or that the advice was always "free?" Here's your chance to educate them about how front-end and back-end load mutual funds really work, and the differences between commission, fee-for-service or fee-only advisors. Fessing up on fees is rated as important or very important to 94 per cent of our HNW survey respondents.

And the more assets the client has, the more cost-aware he or she is, Moran says. "More clients are learning that costs of products can come down," he explains. "They're learning about exchange-traded funds (ETFs), management fees, permanent life insurance and the expense. Let's face it: these individuals have a lot more choice, too. They can go anywhere, unlike someone who only has a small amount of assets."

All the more reason to set yourself apart by explaining to clients what they are paying for and the various products available at different price points.

The ideal advisor … has impressive credentials

Having one or more professional designations goes without saying, according to 77 per cent of our survey of HNW investors. But there's also the matter of staying current with tax changes and other items occurring in the industry. "I don't think you can sit back and say, 'I've done this course so I don't need to do any more,'" says Hawley. "I always need to continue to learn."

Moran concurs and attends the annual R.F.P. Symposium — where like-minded financial planners work through an actual financial plan — as a way of staying educated. "The product shelf is always evolving. Every time a budget comes out, you have to look at things differently because things [are constantly changing]. Stuff you used to do just doesn't apply anymore."

Susan Misner took education to a whole new level. She had managed a $100 million practice — mainly older business owners — but was frustrated that wives would never come to the meetings with their husbands ("They're just not interested in this stuff," she was always told when prompting the men). She wondered if there was a way to raise women's awareness of — and interest in — finances.

Then, in 2008, the economy went south. Suddenly, women marched into her meetings — "which I found fascinating," Misner says. "A lot of women said 'I'm interested in finances but I just haven't found anything that engages me. It's all very intimidating. And at the end of a long day after I've done all the things I need to do, [reviewing finances] is probably not the first thing I'm going to do.'"

This feedback became the brainchild for her new company, Golden Girl Finance, which aims to engage and educate women and then connect them with financial services firms. "Whether they take a lead or supporting role, we want them at the table," Misner says.

The ideal advisor. Yes, it's a loaded phrase, but definitely an obtainable goal. After all, what advisor doesn't want all her clients raving about her services?

Deanne Gage is a freelance writer in Toronto. She can be reached at deannegage@gmail.com. If you would like to receive a PDF of this article, please email kdoucet@advocis.ca.