ROAD TO SUC­CESS

Ad­vi­sors fo­cus on put­ting plans in place for both them­selves and their clients, clients and need help from their firms to en­sure they’re headed in the right di­rec­tion

Investment Executive - - FRONT PAGE - BY FIONA COL­LIE

Ad­vi­sors need help from their firms to en­sure they’re headed in the right di­rec­tion.

fi­nan­cial ad­vi­sors un­der­stand the im­por­tance of plan­ning for the fu­ture — at least, fi­nan­cially speak­ing — and more and more of the ad­vi­sors sur­veyed for In­vest­ment Ex­ec­u­tive’s 2018 Re­port Card series are look­ing to their firms for help in cre­at­ing road maps for both ad­vi­sors’ fu­ture and that of clients.

In fact, the re­sults of this year’s Re­port Card series in­di­cated that ad­vi­sors are put­ting var­i­ous plans in place — such as a suc­ces­sion plans for their busi­nesses and fi­nan­cial plans for their clients — more than ever be­fore. And ad­vi­sors are es­pe­cially ap­pre­cia­tive when their firms pro­vide the right sup­port to en­sure all these plans are head­ing in the right di­rec­tion.

“Here, the ex­ter­nal tagline is ‘life well planned.’ In­ter­nally, it’s ‘life well lived’ — and [the firm’s man­age­ment] re­ally en­cour­ages that [last bit],” says an ad­vi­sor in On­tario with Toronto-based Ray­mond James Ltd. “They re­ally en­cour­age [be­ing a] fully well-rounded in­di­vid­ual be­yond just the busi­ness. [And they also of­fer] sup­port for grow­ing your busi­ness. For me, that’s a pri­or­ity.”

In the case of suc­ces­sion plan­ning, ad­vi­sors de­pend on their firms for sup­port more and more when think­ing about re­tire­ment. In fact, the per­cent­age of ad­vi­sors who re­ported they had doc­u­mented suc­ces­sion plans in place this year was 46.7%. Al­though this still is less than half of all ad­vi­sors, the long-term trend is no­tice­ably pos­i­tive — only 27.3% of ad­vi­sors re­ported hav­ing doc­u­mented suc­ces­sion plans in 2009.

In­deed, hav­ing a suc­ces­sion plan in place — and get­ting help from the firm in that process — is be­com­ing more im­por­tant for ad­vi­sors. Over­all, ad­vi­sors gave the “firm’s suc­ces­sion pro­gram for ad­vi­sors” cat­e­gory an av­er­age im­por­tance rat­ing of 8.7, also a sig­nif­i­cant in­crease from 7.5 in 2009. (See story on page 18.)

“[Hav­ing this sup­port] is very im­por­tant be­cause the [ad­vi­sor] pop­u­la­tion is ag­ing,” says an ad­vi­sor in On­tario with Lévis, Que.based Des­jardins Fi­nan­cial Se­cu­rity In­de­pen­dent Net­work. “We have to get the younger gen­er­a­tion into this thing so there’s a seam­less flow.”

Of course, the main fo­cus for any ad­vi­sor is his or her clients — and, in­creas­ingly, that means cre­at­ing full fi­nan­cial plans for those clients. In­deed, the per­cent­age of ad­vi­sors who re­ported that they cre­ate fi­nan­cial plans for their clients has in­creased steadily, to 85.1% in 2018 from 77% in 2009. In fact, ad­vi­sors pointed out that their firms have in­vested re­sources in this area, such as hir­ing ex­perts and pro­vid­ing soft­ware. (See page 17.)

“They give us the soft­ware that we need and good sup­port. It’s ro­bust enough, for sure,” says an ad­vi­sor in Bri­tish Columbia with Toronto-based Royal Bank of Canada. “[The plan] is printed up pro­fes­sion­ally and bound. Clients re­ally like [the pre­sen­ta­tion].”

Al­though a fi­nan­cial plan acts as a client’s map to re­tire­ment, clients still need check­points along the way to make sure they’re on the right path. Ac­count state­ments are one way clients can check on their plan’s progress. How­ever, many ad­vi­sors ar­gued that their firm’s client ac­count state­ments, which have been up­dated to re­flect the en­hanced per­for­mance and cost dis­clo­sure re­quired as part of the sec­ond phase of the client re­la­tion­ship model (CRM2), are not very use­ful to clients.

In fact, the “client ac­count state­ments” cat­e­gory was tied for the third-high­est over­all “sat­is­fac­tion gap” in the Ad­vi­sors’ Re­port Card. (That gap is the dif­fer­ence be­tween a cat­e­gory’s over­all av­er­age per­for­mance and over­all av­er­age im­por­tance rat­ings.) For some ad­vi­sors, the im­ple­men­ta­tion of the CRM2-man­dated re­forms have been a setback for client ac­count state­ments rather than an im­prove­ment be­cause of de­lays, in­ac­cu­rate in­for­ma­tion and puz­zling lay­outs. (See page 16.)

“[The firm] is do­ing ev­ery­thing pos­si­ble to be com­pli­ant with CRM2, but the state­ments them­selves are ex­tremely con­fus­ing to the av­er­age client,” says an ad­vi­sor in On­tario with Water­loo, Ont.-based Sun Life Fi­nan­cial (Canada) Inc.

Meet­ing ad­vi­sors’ ex­pec­ta­tions for ac­count state­ments may be dif­fi­cult for most firms, but it’s even harder when it comes to back-of­fice sup­port. Case in point: the “back of­fice and ad­min­is­tra­tive sup­port” cat­e­gory had the high­est over­all sat­is­fac­tion gap in the Re­port Card series this year.

Yet, there are some firms that get the back of­fice right. For the most part, the ad­vi­sors who were hap­pi­est with their back-of­fice sup­port praised their firms for hav­ing ded­i­cated staff for ad­vi­sors to con­tact who have deep knowl­edge of

the rel­e­vant in­dus­try and fol­low through on ad­vi­sors’ re­quests. (See page 18.)

“[ The back-of­fice staff ] are here in our [of­fice], and if you have any prob­lems, you can walk down the hall to talk to them,” says an ad­vi­sor in B.C. with Van­cou­ver-based Od­lum Brown Ltd. “They do great work.”

One area in which ad­vi­sors were al­most unan­i­mous in their praise was for their firm’s ef­forts re­gard­ing cy­ber­se­cu­rity. As more fi­nan­cial busi­ness is con­ducted on­line, the risks of cy­ber­hacks and the loss of busi­ness or per­sonal in­for­ma­tion in­creases, which is a big con­cern for fi­nan­cial ser­vices firms and se­cu­ri­ties reg­u­la­tors alike. As such, ad­vi­sors were asked in a sup­ple­men­tary ques­tion this year if they felt their firm’s cy­ber­se­cu­rity ef­forts were ad­e­quate to en­sure that data — of both ad­vi­sors and their clients — were pro­tected prop­erly.

The over­whelm­ing re­sponse to this ques­tion was “yes.” Many ad­vi­sors pointed to their firm’s ef­forts, from fi­nan­cial in­vest­ment to strong in­for­ma­tion-tech­nol­ogy (IT) teams and rig­or­ous pass­word pro­ce­dures that are re­quired when ac­cess­ing de­vices. (See page 16.)

“If you ever go onto re­mote ac­cess, you have to give a quart of blood to get into the damn thing,” says an ad­vi­sor in Al­berta with Toronto-based BMO Nes­bitt Burns Inc. “[The IT depart­ment] has pretty good re­stric­tions in place to pro­tect clients. [Gain­ing ac­cess] is a bit oner­ous, but it helps pro­tect the clients and the ad­vi­sor.”

De­spite a few bumps along the way, most ad­vi­sors be­lieve that their firms pro­vide a clear path ahead for ad­vi­sors’ busi­nesses by de­liv­er­ing on what mat­ters most. Once again this year, the firms in­cluded in the Re­port Card series, re­gard­less of distri­bu­tion chan­nel, have, by and large, met ad­vi­sors’ ex­pec­ta­tions in the cat­e­gories that are most im­por­tant to ad­vi­sors: “free­dom to make ob­jec­tive prod­uct choices,” “firm’s ethics” and “firm’s sta­bil­ity.”

Prod­uct choice and ethics ranked high­est over­all in both per­for­mance and im­por­tance. Ad­vi­sors praised their firms for hav­ing well-stocked prod­uct shelves from which ad­vi­sors can choose freely and for build­ing eth­i­cal com­pany cul­tures that help to pre­serve the rep­u­ta­tions of the in­sti­tu­tions, as well as that of the ad­vi­sors.

“The [firm] re­ally does pri­or­i­tize [ethics], and it has a rep­u­ta­tion for this,” says an ad­vi­sor in B.C. with Toronto-based As­sante Wealth Man­age­ment (Canada) Ltd. “With­out good ethics, this can af­fect my rep­u­ta­tion.”

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