As more and more financial advisors take a holistic approach to managing their clients’ finances, many are establishing close working relationships with their clients’ other financial professionals – namely their accountants and lawyers – to make well-rounded and informed decisions as a team.
It’s an approach to financial advising that Evelyn Jacks, president of Knowledge Bureau Inc. in Winnipeg, calls “real wealth management.” Ms. Jacks, who teaches this approach in her courses at the financial education institution, says there is tremendous value in adopting a “multi-advisory” strategy to “multi-generational wealth management.”
Ms. Jacks’ says the courses at Knowledge Bureau train advisors to recognize various life events, or “triggers” – such as marriage, divorce, job loss and death – that lead clients to seek out multiple sources of professional advice. Understanding how clients react in the midst of these events makes them easier to navigate as an advisor.
“When we take a client-centric approach and understand what those financial triggers are, then we can have a deeper, richer conversation,” Ms. Jacks says. “What [clients] need is an advisor who has the confidence and the broad and deep knowledge to understand those issues, and then ... sit together with all the financial intermediaries who are going to solve clients’ problems.”
This approach is especially important when working with high-net-worth clients, who are more likely to have several advisors with specialties in particular areas, says Dan Richards, chief executive officer (CEO) of Clientinsights in Toronto.
“[Clients who have] $2-million, $3-million, $5-million or more very often want to work with multiple advisors,” Mr. Richards said. “Clients take the view, just like they’re told to diversify their investments, that they should diversify advisors.”
Advisors who find themselves operating as part of a team of experts helping clients will find tremendous advantage in becoming their clients’ “quarterback,” Mr. Richards says. Being trusted to establish clients’ overarching financial plan and to direct their other paid professionals accordingly is something “every advisor wants to be,” he adds.
For Stefanie Keller, CEO and certified financial planner at Stellar Wealth & Tax Solutions in Winnipeg, strong and clear communication is essential to working with clients’ other specialists and making informed financial decisions on their behalf.
Ms. Keller, whose focus is to be the co-ordinator of clients’ financial lives, says that many advisors simply direct clients to their tax professionals, lawyers, or other specialists when they have questions that are out of their wheelhouse. However, in Ms. Keller’s experience, “90 per cent of the time,” clients feel too confused to follow through. Of the clients who do end up taking their questions to other trusted professionals, most run the risk of miscommunicating their advisors’ instructions.
“[When advisors] simply say, ‘Go see your lawyer, go see your accountant’ … that’s really where the gaps are,” Ms. Keller says. “That dialogue, that communication channel, sometimes is broken. And clients can’t articulate what they need in perhaps the same way that a professional [advisor] would be able to articulate it.
“The client [may be told that they] need to go update their will,” Ms. Keller explains. “But then they say, ‘Okay, what did my financial planner tell me to do? How did they say to do that? What do they actually mean?’”
Miscommunications of this nature end up being inefficient for advisors, who may have to pick up the pieces in the aftermath. But they’re also inefficient for clients, who may tire from liaising between their various financial professionals themselves.
“Clients really, really dislike having to go to different people to tell their story,” Ms. Keller says. “They want to be able to tell their story to one person, or a team that works together, and they want them to understand.”
It’s for this reason that taking a multi-advisory approach ends up leading to greater client retention, Ms. Keller and Ms. Jacks both say. And going the extra mile in the short-term helps advisors not only retain, but attract more clients in the long-term.
Namely, helping a client through major life events often gives advisors unique exposure to members of that person’s family who may someday seek out financial advice of their own.
“You will be able to get to know the whole family,” Ms. Jacks says. “Especially as people get closer to retirement, there are a lot of things that you need to do together.”
However, fulfilling the “quarterback” role when dealing with a client’s various other professionals is no easy task. For one, it can be difficult to communicate with lawyers or accountants without having a background in those areas. For this reason, Ms. Jacks suggests seeking out knowledge in realms beyond the financial.
“If you’re dealing with a family that has a significant business that’s going to be sold or turned over,” she says, “you may want to know more about restrictive covenants or share structure … you’re going to be drafting some of those non-competition agreements or power of attorney agreements, you’re going to have to know a little bit more about that. So, helping yourself to deeper knowledge is an absolutely critical part of this.”
What’s more, many professionals may be apprehensive with advisors taking on this role, making honest and clear communication difficult. Ms. Jacks says the key to collaborating with clients’ other service providers is to approach interactions with confidence and a keen desire to co-operate.
“You have to earn the trust of the other advisors around the table, and that takes some work,” Ms. Jacks says. “Getting to know those people on a personal level, to take some time to sit together and understand where they’re coming from, is really important.”