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With a potential recession looming, advisors are taking different steps to weather the storm. For some, difficult economic times aren’t about cutting back but taking advantage of key opportunities to contact clients and prospects and invest in long-term growth.
As the Bank of Canada forecasts economic growth to stall toward the end of this year and into the first half of 2023, short-term confidence among business owners in the financial services sector, as measured by the Canadian Federation of Independent Business’s Monthly Business Barometer, is on the decline.
With an index reading above 50 indicating owners expect their business’s performance to be stronger over the next three months, those in finance, insurance and real estate were the least optimistic of all sectors over the short term in November, at 35.6.
The wealth management industry has been facing challenges for much of the year with the market downturn, says Grant White, managing partner of Endeavour Wealth Management and portfolio manager and investment advisor with iA Private Wealth Inc. in Winnipeg. But now is the ideal time to invest back into the business – even though it isn’t easy.
“It’s the hardest time to invest more money into growth because there’s just less of it,” he says. “Revenue is down on your existing assets, but these are the times when those growth opportunities are there.”
As others pull back on advertising, Mr. White says his firm is focusing on expanding its marketing budget to reach new clients in order to provide behavioural coaching and timely education and advice on the recession and market recovery. He thinks there hasn’t been a better opportunity to do so since 2008.
“It’s just a more active communication piece because if you’re not doing that, I guarantee your clients are thinking about it and it’s causing them stress,” he says.
“If somebody else is willing to provide them that kind of [information], they might look to make a move.”
With the broader industry shifting to increase connectivity with clients, Mr. White says his firm is also continuing to invest in technology to provide clients with more intuitive portals and applications that improve the wealth management experience.
“It’s not going to be there before the recession hits because there’s a lot of development to do, but that’s where the technology is going and we have to start … [on] what’s going to be needed in the next 10 years,” he says.
Some smaller advisory firms’ commitment to growth during the recession is similar to broader long-term trends within the business community. A recent KPMG LLP survey of small and mid-sized business leaders found more than 80 per cent of them are optimistic about their company’s growth over the next few years despite concerns about the overall economy.
Business as usual
For Elke Rubach, founder and principal of Rubach Wealth Holistic Family Advisors in Toronto, the recession is not a time for cutting back, but for business as usual by sticking to the strategy, keeping it simple and remaining disciplined.
“Bring finances back to who you are, what you want to do, [and] what’s right for you. What’s your spending, are you aware of where your money’s going?’ she asks.
“All those things that we do all the time, we do the same for the business. I’m not going to cut systems, because that keeps us running.”
She adds that she’s not cutting staff because she’s promised clients that there would be service.
“I plan my business for the long run as opposed to for the next year,” Ms. Rubach says. “If you stick to your values and your promise to your clients, you will be fine.”
Julia Chung, chief executive officer, partner and senior financial planner at Spring Planning Inc. in Vancouver, has been through several recessions throughout her career, but this is her first in the advice-only planning space.
The common feature for all types of financial services during tough times, she says, is that when clients are scared, they are looking for reassurance rather than a guarantee.
“They want to feel secure and none of us have control of what’s going on in the markets and the economy,” she says. “But we do have control over how we react to it, what choices we make and that’s the value of what we’re bringing to our clients.”
At the same time, during difficult economic periods, some businesses take a knee-jerk reaction and cut in areas they don’t feel are necessary to stay afloat, namely staffing and marketing, Ms. Chung says. That’s where the opportunity lies for advisors willing to take a chance and invest in their business.
“If everybody else has stopped marketing and you know their clients are starting to wonder if they’re in the right place, the best thing you can do right now is marketing,” she says.
“If everybody else is cutting staff or can’t find staff, that means their customer service is dropping.”
Meanwhile, If a practice can hang on to staff and even increase staff, their customer service and experience will improve, she adds.
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