Advisors have always been focused on business-building initiatives given the competitive nature of the investment industry. Yet, the COVID-19 pandemic has intensified efforts around gaining an edge in the marketplace.
That’s because long-standing practices around connecting with clients and prospective clients, adopting and using technology, or attracting and retaining staff have changed. At the same time, there are other considerations advisors need to take into account that have become more important than ever.
These include building teams to take care of the next generation of clients who will inherit assets from their families, knowing how and when to switch dealers, setting up a succession plan, managing capacity, or serving a niche clientele, among others.
Here are 10 articles on practice management-related issues advisors should read:
An estimated 51 per cent of advisors in the U.S. reported below-average results from their typical prospecting efforts as they made the transition to remote work last year, according to a Fidelity Investments survey conducted in May 2020. Advisors have to get creative with how they build out their client rosters as traditional opportunities for meeting new clients organically shut down. In the U.S., advisors who have adopted a “multi-channel” approach to prospecting after the start of COVID-19 saw the best results, the survey says.
Some advisors may be waiting to connect with clients’ millennial and Generation Z children until they’re closer to inheriting their parents’ wealth or further down the road on building their own. Yet, recent research shows that now is the ideal time to form trusted relationships with clients’ younger family members – not only to help them grow their financial confidence but for advisors to ensure the long-term sustainability of their practices.
While many Canadians have turned to their advisors during the pandemic to address concerns about market volatility and their financial futures, some advisors are also reporting a record-breaking year for new clients seeking financial advice – many of them for the first time. For example, Trixie Rowein, portfolio manager and founder with the PAX Portfolio Advisory Team at Raymond James Ltd., where she is vice president in the private client group, says she and her team in Edmonton have taken on more new clients during the past year than any other year in her two decades as an advisor.
Almost one in five advisors (17 per cent) in Canada are very or somewhat likely to change dealer firms in the next five years, according to a recent survey. However, there are risks to doing so. A U.S. study by Cerulli Associates Inc. found that advisors who switch dealers lose an average of 19 per cent of client assets under management. “Don’t just make a move to make a move,” says Paul Delfino, senior vice-president and associate portfolio manager with The Delfino Group at Raymond James Ltd. in Kanata, Ont.
Technological know-how has become a focus for those in the investment industry who are hiring associates and advisors since the pandemic began, says April-Lynn Levitt, a business coach for advisors with The Personal Coach in Oakville, Ont. “You have to have that as a given, it’s almost table stakes,” she says. “There was an office in Saskatchewan looking for an associate, and it came down to the difference between two advisors. The one it ended up hiring had a higher comfort level with technology.”
Advisors are skilled at building comprehensive retirement plans for their clients, but many are still falling short when it comes to planning for their own golden years. Almost a quarter of Canadian advisors (24 per cent) who plan to retire within the next 10 years have a complete, detailed succession plan in place, according to a recent survey. And one in five have no plan at all. That’s of concern because the “best plans” are often prepared five to 10 years out, says Thomas Raidl, chief administrative officer, private client group, at Raymond James Ltd., in Vancouver.
The struggle to manage a growing client roster and book of business is all too familiar for many advisors. Once their client bases grow in an exponential manner as referrals snowball, prospective clients multiply, and books of business spiral out of control. Overextending oneself and subsequently underdelivering on promises can cause advisors to become emotionally wrought, says Al Nagy, a certified financial planner with IG Wealth Management in Edmonton.
Camber Capital Corp., a boutique wealth-management firm in Calgary, is leveraging technology to build a better, more understandable financial plan for its clients. While the investment industry has long used software to collect and calculate data points about investors’ wealth to build financial plans, clients can be hard-pressed to glean meaning from what can be a lengthy report of charts, numbers, industry jargon, and far away forecasts. “We think traditional financial planning is broken, so we aimed to fix it,” says Rob Townsend, Camber’s chief executive officer.
The consequences of the “Great Resignation” means advisors need to reflect whether their practices are competitive enough to retain and attract new hires. “All the advisors I know are having trouble with retention and finding staff, especially those who work in administration,” says Jackie Porter, a certified financial planner at Carte Wealth Management Inc. in Mississauga. “We’re trying to figure out how to be competitive and offer an attractive package so we can attract the right people.”
Former professional hockey player Kent Manderville is a private wealth advisor and director of IP Private Wealth’s Hockey Family Office in Ottawa, which was established in January to provide hockey professionals and their families with wealth management services. He sees his role as helping players grow and protect their wealth for the long run. “What I want to do is make sure the guys get a fair shake.” Many professional athletes have specialized coaches for playing, sleeping and nutrition, but not their finances, which Mr. Manderville thinks doesn’t make sense given their unique circumstances.
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