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To truly understand the complex needs of immigrant investors, the routine onboarding processes or ‘template’ discovery documents advisors typically use to get to know their clients will not be sufficient, warns Cindy Reid-Shelton, president and chief executive of Intent Planning Group Inc. in Winnipeg.kate_sept2004/iStockPhoto / Getty Images

For financial advisors looking to serve the needs of immigrant investors, getting a firm grasp on their cultural sensitivities – especially their relationship with money and finances – is a critical component to meet their complex needs.

Wilkie Kam, vice-president, senior investment advisor and associate portfolio manager with the Wilkie Kam Investment Advisory Team at BMO Nesbitt Burns Inc. in Vancouver, understands just how important this task is.

As an example, Mr. Kam, who immigrated to Canada from Hong Kong more than 30 years ago, points to his mother. Although she is always appreciative of the gifts she receives for her birthday, he’s noticed she’s especially thrilled when she receives cash.

That “cash is king” mindset is among the many subtle nuances of Chinese cultural beliefs surrounding money and wealth with which Mr. Kam, who provides culturally appropriate financial advice to a clientele that’s more than 50 per cent Chinese, is well acquainted.

Such advice could include explaining the virtues of diversification beyond real estate to other asset classes, says Mr. Kam. “A lot of new Canadians from Asia are fixated on real estate, and that is in part because China’s stock market has gone nowhere in the past 12 years.”

Mr. Kam is persistent about not only filling the gaps in his clients’ financial literacy and financial plans, but also in asking the right questions to save them money in the long run.

“In the [Chinese] culture, many people feel it is unseemly to flash their wealth or show their money. They feel they should not reveal everything about themselves, even to the advisor who is handling their money,” he says. “When we do financial planning with them, we really need to dig deep.”

Getting a firm grasp on immigrants’ full financial picture is a key task when helping these clients. Recent studies show that there has been a 70-per-cent increase in average wealth among established immigrants in Canada during the past two decades.

Namely, the wealth of the average established immigrant family rose noticeably to $1.06-million in 2016 from $625,159 in 1999, according to a Statistics Canada study published in April.

To truly understand the complex needs of this growing demographic, the routine onboarding processes or “template” discovery documents advisors typically use to get to know their clients will not be sufficient, warns Cindy Reid-Shelton, president and chief executive of Intent Planning Group Inc. in Winnipeg.

“Those kinds of process-driven systems – no matter how fine-tuned – may not apply to newcomers for whom the discovery process is even more crucial. Their needs and goals may be very different from our own or what we experience with our ‘typical’ clients,” says Ms. Reid-Shelton, a certified financial planner.

“Because there are things we may not understand, advisors must refrain from making assumptions or stereotyping. Start the relationship carefully and respectfully by asking questions to help you understand their personal attitudes toward money, their goals and circumstances,” she adds. “You will need to ask more questions than you normally would and listen more carefully to the answers. It’s important to venture beyond active listening to empathetic listening. To understand and not just to respond is the key.”

For example, prospective clients – depending on their country of origin, in which there might not be a stock exchange or free-floating currency – might be much more attracted to alternative investments such as private equity rather than fixed-income products such as bonds.

“Clients from other cultures might also be more entrepreneurial and risk-prone,” says Marco Zaino, vice-president and portfolio manager at Echelon Wealth Partners Inc. in Montreal. “Because they have made a decision to establish themselves in a whole new country, they may be more open to taking on new challenges.”

Advisors should also educate newcomers to Canada on the benefits of registered investment vehicles such as registered retirement savings plans, registered education savings plans and tax-free savings accounts as many weren’t likely available in their country of origin.

However, before opening such accounts for clients, you need to “do your homework” first, says Ms. Reid-Shelton. “All the tax implications for foreign or dual citizens should be investigated before opening these accounts, as they may not have the same tax advantages. There may be also adverse tax consequences for these clients if they invest in typical financial products like mutual funds and [exchange-traded funds].”

Advisors may also want to brush up on tools and resources available to new immigrants and seek opportunities for partnerships wherever possible, such as with immigration lawyers and government agencies.

“At Echelon’s Quebec office, we collaborate with the [province’s] Ministry of Immigration[, Diversity and Social Inclusion] to enable investors to establish themselves in the province via the Quebec Immigrant Investor Program,” says Mr. Zaino. “Our holistic approach caters to all the needs of our clientele: schools, real estate, investment management, tax planning, foreign exchange and more. We have a network of service professionals who [take care of clients’] needs while we quarterback the relationship.”

Enoch Weng, a financial security advisor at Freedom 55 Financial in Vancouver, knows first-hand how valuable an advisor could be during this process. When he immigrated to Canada from Taiwan in 1995, he relied mostly on word-of-mouth and personal research to guide him through financial decisions.

“As an immigrant, to be given hope and timely advice during this period of uncertainty is priceless. Working with an advisor helps newcomers avoid making mistakes such as falling into speculation traps or losing all their savings because they heard it from a friend who heard it from another friend. It also saves them a lot of time,” says Mr. Weng.

“I would’ve loved to have sat down with an advisor early on and get walked through the principles step-by-step,” he adds. “I would’ve saved a lot of time and headaches had I done so – not to mention increased my tax savings and overall wealth.”

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