By Philip Porado
The following includes selections from the Advisor.ca piece “Clients Speak Up.” To read the article in its entirety, please click on Read Original Article Online.
Trust didn’t make the list.
When Advisor’s Edge set out to ask clients across Canada what they seek in their work with financial planners, we expected the usual stories about relationship building, trust, and the value of having someone to talk to when markets tank.
While we heard a little on that last item, those other nebulous concepts went largely unmentioned. Instead, clients told us they want critical analysis of investments, a full partner to participate in complex estate-planning sessions, meaningful tax savings and an advisor who can justify how and why he or she gets paid.
The clients we talked with are financially savvy, and they’re watching their advisors. Closely.
>> GET ON BOARD WITH MY PRIORITIES
Peter Mortifee, a former physician who runs the Somerset Foundation in Vancouver, is on a quest to align his investment choices with his, and his family’s, personal values—environmental sustainability, social justice and strong corporate governance.
He’s working with John Nicola of Nicola Wealth Management to reach this admittedly difficult objective, adding that when their relationship began 15 years ago, these issues weren’t on the popular radar.
“Our foundation is spending money trying to ameliorate a lot of environmental issues—forestry, marine issues—so we can’t be holding shares in forestry companies that are responsible for huge clear cuts. That’s just mismanagement of our assets.
“But, let’s say you’re running an investment pool and your team can evaluate on technical and qualitative levels. You add the [environmental, social and governance] ESG piece to that. If we want to be in consumer products, you can start with six companies and whittle it down to four, but three shine. Those are the ones you buy.
“Further, we ask, ‘Who are the people behind the wealth management company?’ If they don’t care how they make money, there’s a disconnect. There are many firms that we’d rather not be associated with because there’s a cutthroat, valueless vibe. If we see that, we’re gone.”
“I won’t invest in a cigarette company and don’t give me anything that relates to that,” she says. “I don’t want to be part of the day-to-day, but I need to know that if I have a philosophy, the advisor will listen to what I’m saying.”
>> DO YOUR JOB WELL
Doug Norris, a retired VP at an engineering, architectural and survey materials firm who lives in Toronto’s Harbourfront neighbourhood, knows when he’s being sold and subscribes to the old adage that the easiest person to sell to is a salesman.
He started buying stocks in response to provincial tax incentives benefiting people investing in Quebec companies. Upon retirement, he placed those assets with a firm which, he says, aggressively churned his account.
“I lost a bunch of money,” he recollects. “I switched over to [another brokerage] and got started but was always being sold something. Plus, I was paying 3.5%.”
That advisor told Norris she was moving him to a managed account with a 1% fee. “I had a lot of bonds, so that didn’t make sense given the management fee took too much of a chunk out of the return.” At a seminar put on by that brokerage, Norris met Cynthia Kett, principal at Stewart & Kett Financial Advisors. She started doing his taxes, developed a cash flow projection, and performed a general analysis of his financial affairs.
“Then, every time my advisor approached me with a new gizmo, I asked her to look it over.”
A few years ago, when he was considering buying UL insurance, he had Kett run the numbers and made his decision based on her math. He notes it’s worth the hourly fees when her perspective can make a portfolio more tax-efficient or ensure unanticipated needs are properly covered.
Still, he stresses, that planning relationship is special and he has very different expectations for his brokerage relationships.
Norris says he pays money managers for research he can’t otherwise obtain. In exchange, he expects them to beat the index by a couple of points. “I ask a lot of questions and make them work for their money,” he says. “I want their eyes on managing money; nose to the paper. I don’t want them doing anything else. I’d rather these advisors not dilute their thoughts.”
Client Peter Mortifee, works with John Nicola at Nicola Wealth Management in Vancouver, also looks to his advisors to produce the requisite returns without requiring his input. In fact, that frees him to focus on the philosophy behind portfolio decisions.
“We don’t sit down every year and say, ‘What are our targets for this year?’ John [Nicola] has a particular style of investing that I’ve come to admire. We have cash flow targets: we want a 6%-plus return and good solid performance. That approach is one I’m very clear about. But I don’t worry about the valuation of the portfolio year-to-year.”
>> I MAY OUTGROW YOU
If a client leaves, it’s likely nothing personal, notes Mortifee. Needs evolve and a person’s relationship with money is never static.
“Part of the reason we’ve let go of advisors in the past was because the capacity of the advisor to provide what we needed wasn’t there,” he says. “We outgrew them; not in terms of assets but in their level of sophistication. There is no endgame. It’s a process.”
As for Greg Christie, “Our prior advisor was a good guy but was strictly managing funds. And our business wasn’t as complex [then]. As it grew, we needed more expertise. The new team asked a lot of questions the other advisor didn’t—about things like insurance options; longer-term estate planning; what my family’s goals are; and working that backwards to how the business will transition [as a result].”
He adds the subject-matter experts Elizabeth Harding and her team can draw on have served him well, and he solicits counsel on both financial and non-financial matters. “The people they’re connected with are impressive.”
Difficulty getting the right results led Norris to cultivate multiple brokerage relationships. “I’d never work with just one advisor,” adding he works with three, but considers Kett his go-to. “If anything ever happens to me, I’ve told my wife to hand the whole kit and caboodle to Cynthia. And I’d rather have her in that role than a money manager. That would be deadly.
“Cynthia looked at the wills that were drawn up with a prior lawyer, tore them apart and corrected many things that had been left out.
“I like having one planner who doesn’t sell anything; who’s neutral and charges by the hour.”