Created an in-house, integrated team of specialists who collaborate and look at all elements of a client’s portfolio in conjunction is becoming more common in the financial services industry.anyaberkut/iStockPhoto / Getty Images
While many Canadians still have several financial-services providers to address their investment, insurance and financial planning needs, an increasing number are opting for a single wealth manager that offers a full-service approach.
A “one-stop shop” is not yet the standard in the financial services industry, although it’s moving in that direction. According to Ernst & Young Global Ltd.’s 2019 Global Wealth Management Research Report, clients, on average, maintain relationships with five different types of financial services providers – not including multiple relationships with the same firm. However, the report also states that the greater number of relationships with financial services providers has led to “increasing complexity for the client.”
Sue Derlago, vice-president and senior financial planner at MLD Wealth Management Group, part of Canaccord Genuity Wealth Management, in Calgary, says the advisers on her team were once those individual practitioners. They worked in silos as specialists in their own areas. But after noticing a gap in how this method was serving clients, they decided to change their approach about eight years ago.
The firm created an in-house, integrated model, building a team of certified financial planners, discretionary portfolio managers, and insurance and trust/estates specialists who collaborate and look at all elements of a client’s portfolio in conjunction.
“We’ve seen an evolution of our work with clients and we’re now firm proponents that you need to be looking at everything to give the best possible advice,” Ms. Derlago says.
She says that has changed from the past as her team used to look solely at the investment picture and leave the other aspects for other experts, but that wasn’t creating the best result for the client.
“Once we bring them through our process [now] ... it creates a lot of peace of mind,” Ms. Derlago says.
Indeed, Benjamin Felix, portfolio manager with PWL Capital Inc. in Ottawa, says wealth management continues to evolve into a model that considers all aspects of a client’s financial life rather than focusing exclusively on investments.
“As wealth management moves more toward being completely about the client’s overall situation – including their investments, insurance, financial plan, their individual preferences – it makes a ton of sense to have one relationship with somebody who really knows the client and their circumstances well,” says Mr. Felix, whose firm follows an integrated approach.
“When you’re giving advice on everything, [you can look at how] paying off mortgage debt [or] funding a permanent life insurance policy might affect the asset-allocation decision,” he adds.
Although this approach is beneficial for clients who have accumulated significant wealth or for business owners with complex needs, anyone can find value in working with a single wealth manager, says Bruce Ferman, head of investment management at BMO Private Wealth. The organization employs a holistic approach to wealth management through multidisciplinary teams of financial professionals from the BMO Private Banking and BMO Nesbitt Burns Inc. divisions.
In addition to the convenience of not having to meet with multiple advisers, Mr. Ferman says it eliminates the need for clients to explain their background and goals to each adviser, making the process more efficient.
“When you work with one trusted adviser who has the ability to pull a team together, you’re able to learn more about the client [and you get to] know that person and their family better,” he says. “Better information leads to better decisions and ... better client outcomes.”
Another benefit of a holistic approach is that it precludes clients from having to connect the pieces of their financial situation – a task that many don’t have either the training or time to undertake, says Ngoc Day, a fee-only financial adviser at Macdonald, Shymko & Co. in Vancouver.
“You have the investment [adviser] doing [something] over there and you have somebody else [doing something] over here – and there’s no connection [between the two],” she says. “How would the client have the expertise to say, ‘Yeah, this is working’?”
From an adviser’s perspective, the model could lead to deeper, often multigenerational relationships with clients.
For example, Ms. Derlago says her firm is working with several three-generational families seeking expertise in all areas of wealth management across several life stages.
“Having a team with different areas of expertise has allowed us to do that. The twenty- or thirtysomething individual has different needs and requirements for advice than the person who’s 85,” she says.
Ultimately, for advisers who offer a holistic approach, success depends on clients being fully on board with their philosophy and understanding why it’s important to tie all components together and how one area can affect others.
“If we’re going to do our jobs well and be in a position to provide [clients with] the best advice, we need to understand all the moving parts. And once we walk clients through that, they start to understand and see that benefit,” Ms. Derlago says.