When Jane Blaufus suddenly became a widow after her 39-year-old husband was killed in an accident, it was her financial advisor she leaned on the most.
Taking her by the hand, he led her through some of the toughest decisions she would have to make in her adult life. “Driving me to appointments, taking me to meetings. Writing the cheques out for me because I was in so much shock, my brain couldn’t comprehend what day it was or how to string two words together. Even taking my daughter and me to the movies when we had to get out of the house,” says Ms. Blaufus, who has since remarried.
“The joke in my household is he’s the second-most important man in my life - with my husband’s permission. I trust him implicitly. He’s been my advisor for 25 years and now my daughter’s advisor for the last 10.”
As a bestselling author, international speaker and business coach with 25 years of experience in the financial services industry, today Ms. Blaufus coaches advisors on how to stand out when building their practices. Remembering that the industry is primarily based on relationships – and always will be – is key to long-term success, she says.
“To build trust with your clients, you must get to know them and deliver on your promises,” she says. “When my husband passed away, I would never have thought of calling a 1-800 number for a robo-advisory – I wanted someone with a heart and pulse, who would wrap their arms around me and give me a hug if I needed it.
“Anyone can walk in peddling a product, but what people really want is the human touch.”
In contrast, many financial advisory relationships consist merely of a product pitch followed by a sale; there is little talk of goals and no service standard to let clients know when they can expect to hear from their advisor next.
These are only some of the weaknesses Kurt Rosentreter identified when he began his career in the financial industry. So he built a practice to counteract them, handing the reins back to his clients.
“Very often clients are quickly pushed into buying products with very little financial education. We slow the process down to teach them money management – from who our team is, to how your money is protected, to our range of services and how we get paid,” says Mr. Rosentreter, senior financial advisor at Manulife Securities Inc. “We not only explain it over and over again but also have it on a written PDF that we give them.
“You might think, ‘Doesn’t that everybody do that?’ The answer is no. Not even close.”
Mr. Rosentreter’s clients are also provided with formal documents called engagement letters which outline the nature of services to be provided, the extent of communication they can expect, a goal-based financial plan, and their fees.
They are given a choice of five ways to pay fees: an hourly rate, flat fees, commissions, investment counsel asset-based fees or a blend of two of these four approaches. Fee levels are visible, discussed regularly, and based on services provided.
“All clients know what they will get, what they pay and how to change it if they want to. But it’s not about driving the fees as low as they can go. No one wants the cheapest doctor and it’s no different for financial advice. They will pay more if they are getting more," he says.
“Sadly, advisor compensation in Canada is often tied to what they sell the client. This creates a severe bias that can lead to the wrong advice. We have worked how to attach fees to value of service and expertise and move it away from the commoditized area of products and performance.
“As a result, we can create a client experience worth paying for regardless of what happens in the stock market.”
Other crucial elements to building a trusted relationship with clients are precise execution and follow-through. “Accessibility and responsiveness are key; I’m available at all times to meet our clients’ financial needs and ensure my business phone is always answered during market hours – so they never have to call back a second time,” says Harrison Keenan, senior vice-president and portfolio manager at Toronto’s Echelon Wealth Partners.
“I always follow up to ensure inquiries and requests have been completed correctly, providing timely updates on investments as warranted as well as monthly or quarterly updates on performance.”
In addition, Mr. Keenan and his team spend a great deal of time researching the market and will even identify the best third-party money managers for certain investment strategies that they are unable to effectively manage themselves.
Advisors willing to offer greater care and personalization will stand out in a crowd offering largely what financial advisor Galen Nuttall calls “double-double advice.”
“If I pull up to the drive-through and ask for a double-double, that’s what I’ll get, no questions asked,” explains Mr Nuttall, who works in Belleville, Ont., for Freedom 55 Financial.
“But what if I have a sensitivity to caffeine I’ve never explored, what if I’m waking up in the middle of the night because of this double-double? I wouldn’t expect the person at the drive-through to help me figure this out, but if I talked to a dietitian, I would certainly expect them to get to the bottom of how what I’m eating is affecting my health.
“Advisors have the option to go the double-double route without asking any questions, but they might not be doing what’s best for the client. Or they can be the dietitian and figure out what they’re hoping to accomplish, get to the core of the issue and put a plan in place that’s more likely to impact the client for the better.”