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If there’s anything Tony Mahabir discovered after teaching the advanced certified financial planning course at Humber College in Toronto for the past six years, it’s that the modern family is a very hot topic with students.
“There’s about 20 to 30 per cent of the class who come from blended families or a unique situation,” says Mr. Mahabir, who is also chairman and chief executive officer of Canfin Financial Group of Companies in Toronto. “And it’s amazing that when I’m describing some of the issues these families face, I get so many students nodding their heads.”
Forget the so-called “nuclear” family with a mom, dad, two-and-a-half kids, a dog, and a minivan. Today’s modern Canadian family might just as easily include multiple generations living in one home, same-sex couples who have tied the knot, single parents, blended families, common-law partners, those who have married strictly for convenience, those who are together but living in different countries for much of the year, or any number of other permutations.
That also means forget cookie-cutter financial, investment, insurance, or estate plans. With so many differing complexities, financial advice needs to be bespoke. But advisors and other experts in the financial services industry are not finding it that easy to pull off.
A recent survey from multinational professional services firm TMF Group and the Society of Trust and Estate Practitioners (STEP) found that almost three in four participants (71 per cent) across multiple service-oriented industries (lawyers, tax advisors, accountants, wealth managers) see the rise in the complexity of family dynamics as a challenge.
Families break down or even start suing each other over generational differences, out-of-date language in estate plans and wills, and cross-border tax conflicts when various family members live in different jurisdictions.
“People typically get into relationships by following their hearts first, and they’re unaware of the unintended consequences of such a relationship and the additional layer of complexity it creates,” Mr. Mahabir says.
The industry itself is part of the problem though, he continues. Advisors are being trained as though families were more traditional, and even if some areas of the country are training with more up-to-date material, that body of knowledge isn’t uniform across Canada.
Then, there’s the issue of inclusiveness and diversity. Mr. Mahabir himself is half of a multi-racial marriage. He’s also Hindu while his wife is Catholic.
“Our views on money are different. In many cultures, children have a huge obligation to their parents,” he says.
Yet, few advisors have the cultural background to appreciate fully where clients are coming from money-wise.
As such, Jillian Carr, a financial advisor who specializes in the veterinarian market with Steady Gait Planning Inc. in St. Albert, Alta., is also adamant that advisors need to step up to meet the needs of the changing family.
Some of those who have been in the industry a long time may have grown complacent with their long-time clients. The problem with that is clients age and eventually pass away. That’s why it’s important to be open to working with new clients with untraditional family structures.
“If an advisor is not willing to pivot as the world changes, then they’re going to hit a lot more roadblocks and not be as prepared as they could be for some conversations,” she says.
Can younger advisors fill the gap?
Ms. Carr, who is 39 years old, is convinced that the new, younger generation of advisors coming up through the ranks are positioned better, overall, to help these clients. They’ve either lived similar experiences or their friends have.
“Same-sex marriage is a normal thing for them,” she says.
Ms. Carr points to her friends, who decided to have a child together despite not being in a romantic relationship. Although they’re not technically clients, she’s talked to them about the importance of legal agreements, wills, and insurance. Today, they’re all set.
The trick is to meet clients where they are and truly listen to them if you want to be prepared to give recommendations. Mr. Mahabir says that’s part of what know your client is all about.
“You need to talk about the soft stuff,” he says. “What are your views? What are your philosophies? How do you envision success? And if you were in a relationship, would you keep your stuff separate?”
That last question can be a tricky one. Traditionally, advisors are trained to speak to both spouses as equals in the relationship. But with so many couples now keeping their accounts separate, ethical conundrums can develop for the advisor if one party wants to keep some money secret. Mr. Mahabir says he’s had to walk away from some profitable clients or risk crossing ethical lines.
But while complex families can be complicated from a financial planning point of view, Ms. Carr says she’s is okay with that, adding she feels great satisfaction when she’s made a positive difference in her clients’ lives.
“It makes our business more interesting. You’re becoming more exposed to how people are choosing to live,” she says. “Being a financial advisor, you’re in the business of people. So, it’s really about understanding people and being there for them.”
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