Wealth Professional 1.2

JOHN CUCCHIELLA INDEPENDENT TAKES ON THE COMPETITION PERFECTION PERSONIFIED THE IDEAL ‘FEE CLIENT’ REVEALED WWW.WEALTHPROFESSIONAL.CA ISSUE 1.2 | $6.95

LEADER OF THE PACK LEARN FROM THE NO. 1 ADVISOR

TOP

ADVISORS

CANADA’S BEST FINANCIAL ADVISORS REVEALED >>

Cover_IFC.indd 1

09/01/2014 2:13:36 PM

r r o w

c a p i ta l

m a n a g e m e n t

P R O U D LY P R E S E N T S

E Q U I T Y

F U N D S

FUNDS

Veronika HirscH

exemplar canadian Focus portFolio 5 Year : 11.7% | 3 Year : 7.2% | 2013 : 24.1%

alex ruus

exemplar leaders Fund

5 Year : 16.3% | 3 Year : 12.0% | 2013 : 28.9%

exemplar Yield Fund

2013 : 12.4%

micHael underHill

exemplar global inFrastructure Fund 2013 : 20.6%

exemplar timber Fund

2013 : 31.4%

Experience. Intelligent Investing.

www.exemplarfunds.com

Commissions, trailing commissions, management fees and expenses all may be associated with Exemplar Funds and Portfolios. Unless otherwise stipulated returns stated are in Canadian currency for Series A shares or units. Investors should read the full prospectus before investing. Except as otherwise noted the indicated rates of return are the historical compounded total returns including changes in the share or unit value reinvestment of all dividends or distributions and do not take into account the sales, redemption, distributions or optional charges or income tax payable by the unit holder or shareholder that effects of the compound growth rate and are not intended to reflect the future value or returns on investment in the Fund or Portfolio. Past performance may not be repeated. Funds and Portfolios are not insured or guaranteed by the Canada Deposit Insurance Corporation (CDIC) or any other insurer. Exemplar Portfolios or Funds are subject to risks of loss of capital and income and their values change frequently.

Exemplar Portfolios involve a high degree of risk. Investors may lose a substantial portion or even all of their investments.

Cover_IFC.indd 2

09/01/2014 2:13:42 PM

CONTENTS

6 | News Analysis 13 | Focus forum 14 | Big Interview John Cucchiella, head of Retail for Dundee Goodman Private Wealth, talks competition and independent value-add

FEATURES 34 | Watch Your Step!

Fee-only veterans are sharing key insights on making a smooth transition 38 | The Best SEO In Life May Be Free A no-cost SEO strategy may be the best way of growing your outreach and your revenue for 2014, writes expert Maggie Crowley 42 | Succession Planning When it comes to succession planning, an advisor is ‘in tough’ if he or she ignores the basics of maximizing business value 45 | Client Communication Blogs, newsletters and videos are pushing advisors into the brave new world of digitization. But don’t forget old-school communication, warns Anders SormanNilsson

38 48 | Client Relationships There’s no getting around the fact that customers like to do business with people they actually like. Here’s how to be likeable 52 | 8 Sales Screw-Ups You Can Avoid Doug Mathlin explores how avoiding common missteps can boost sales and energize your business 56 | Casting Light on Compensation If a growing number of advisors have seen the light about fee-based compensation, an even larger number have doubts about making it work. It can

COVER STORY The time has come to recognize the country’s finest planners as we unveil Wealth Professional’s inaugural chart of the top 50 financial advisors in Canada

issue

1.2

TOP

ADVISORS JANUARY 2014 | 1

01-05-Contents_EditorsNote.indd 1

09/01/2014 1:53:21 PM

CONTENTS

59 | Content Marketing Here To Stay Content marketing might be the latest buzzword, but what does it mean 62 | A Day In The Life

62

64 | The Client’s Take ‘Good-bye.’ It’s not what any independent advisor wants to hear from a decades-long client. But here, from such an investor, is a very personal explanation for making that move

52

Follow us on Twitter.com/ Wealth_ProCA Join the industry discussion at Wealthprofessional.ca

2 | JANUARY 2014

01-05-Contents_EditorsNote.indd 2

09/01/2014 1:53:49 PM

719_3

719_3_DundeeGoodman_NT.indd 01-05-Contents_EditorsNote.indd403

3/10/2013 PMPM 09/01/201411:32:57 1:53:28

CONTENTS / EDITOR’S LETTER

NO LAUGHING MATTER “Abandon all hope, ye who enter ... 2014.” Now that’s a novel way to greet the new year! It’s also the pessimistic but heartfelt quip of one financial planner forecasting market conditions for all advisors this year — including you.

Obviously, he was referencing a laundry list of industry gripes – from meagre returns on the TSX to CRM reforms and what he calls the all-out assault on embedded commissions. Happy New Year? Happy New Year, my eye!

COPY & FEATURES EDITOR Vernon Clement Jones WRITERS Sophie Nicholls, Mark David CONTRIBUTORS Peter Bowman, Justin da Rosa, Nikki Heald, Doug Mathlin, Anders Sorman-Nilsson, Marta Stiteler, Cralg West

ART & PRODUCTION GRAPHIC DESIGNER Joenel Salvador SENIOR DESIGNER Alicia Chin

SALES & MARKETING NATIONAL ACCOUNTS MANAGER Dane Taylor ASSOCIATE PUBLISHER Trevor Biggs GENERAL MANAGER SALES John MacKenzie MARKETING AND COMMUNICATIONS Claudine Ting PROJECT COORDINATOR Jessica Duce

CORPORATE PRESIDENT & CEO Tim Duce OFFICE/TRAFFIC MANAGER Marni Parker EVENTS AND CONFERENCE MANAGER Chris Davis

Editorial enquiries vernon.jones@kmimedia.ca Advertising enquiries dane.taylor@kmimedia.ca Subscriptions tel: 416 644 8740 • fax: 416 203 8940 subscriptions@kmimedia.ca KMI Publishing 312 Adelaide Street West, Suite 800 Toronto, Ontario M5V 1R2 wealthprofessional.ca Copyright is reserved throughout. No part of this publication can be reproduced in whole or in part without the express permission of the editor. Contributions are invited, but copies of work should be kept, as IB magazine can accept no responsibility for loss.

– or rather his.

But I hope my discouraged friend is reading this issue of Wealth Professional magazine. In fact, I’ll see he gets a copy. Our list of Top 50 Advisors, starting on page 18, is as inspiring as it gets. It’s also a salute to professionals who’ve stared down market challenges, set their sights on success and soldiered on to claim that higher ground by fiscal year-end.

All 50 on the WP ranking – irregardless of book size – closed 2013 by building on past success. Their winning performances are evidenced by strong growth in AUM and client numbers but also revenue. Those kinds of strides are testament to the many man- and woman-hours spent on the job building investment portfolios and financial plans for clients at the same time educating them on the market conditions that dictate those decisions.

Busy or not, so many on the list also found time during fiscal 2013 to give back to the communities they serve as professionals but also citizens. Indeed, it’s WP’s honour to present their stories for your inspiration, along with key features designed to help you — hopefully! — claim greater success.

Cheers, Vernon Clement Jones Editor

CONNECT

Contact the editorial team:

vernon.jones@kmimedia.ca

4 | JANUARY 2014

01-05-Contents_EditorsNote.indd 4

09/01/2014 3:13:18 PM

We’ve Written the book on active management.

We call it the Dynamic coDe. The Dynamic Code is a collection of maxims that aren’t just rules we live by. They are a unique expression of our active management philosophy. The Dynamic Code is embodied in our process, and enacted by our people. It’s what we’re known for and what sets us apart.

See how we put The Dynamic Code into action.

Visit Dynamiccode.ca Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P.

01-05-Contents_EditorsNote.indd 5

09/01/2014 1:53:40 PM

NEWS / ANALYSIS

POLL

COURTING GAY AND LESBIAN CLIENTS

NUMBER OF CANADIANS USING TFSAS

2012

48%

ADVISORS PICKING SIDES A number of advisors are stepping up to endorse a controversial Supreme Court of Canada ruling viewed as ushering in a new day for mutual fund investors.

“Many investors often think their interests are secondary to the big companies controlling the investment business,” writes Peter Watson, an Oakville, Ont., financial planner, on the heels of the pivotal ruling that rejected attempts by AIC and CI to block an investor class action suit. “Here, in my opinion the ‘little guy’ won the battle by a convincing margin. Justice did prevail for the individual investor.”

Investor advocacy groups were the first to applaud the December ruling, which allows the suit to proceed and will ultimately see the court rule on the contentious issue of the so-called market timing of mutual funds.

More surprising, say analysts, are the number of advisors – a group often caught in the middle for these disputes – speaking out.

The 7-0 decision is an indisputable rejection of arguments by mutual fund giants AIC Ltd. and CI Mutual Funds as they sought to forestall the suit.

Last year, the Ontario Securities Commission found that those mutual fund providers – along with three others – erred in allowing some investors to engage in “market timing” practices that effectively hurt other investors.

The class action alleges that the practice of shortterm trading activity designed to take advantage of perceived discrepancies in the price of stocks costs them a collective $400 million.

The suit will go ahead despite the fact that AIC. and CI along with three others have already paid more than $200 million in settlements.

Advisors such as Watson are keeping a watchful eye on the showdown, expected to come as early as this year.

“There are two aspects to the December court ruling: fairness and protection. Fairness was given to individual investors against the powerful force of several large investment firms,” he writes in an opinion piece. “The more significant factor is the question of whether this ruling is a shift towards better protection of the interests of individual investors.”

37%

COURT CASE

“Are you looking to grow your number of high-net-worth gay and lesbian clients?”

It’s a simple question that WealthProfessional.ca asked hundreds of readers over the last three months and the answers may capture the ambivalence of industry professionals even as they hunt for new opportunities.

NO

YES

49 51 ARE ADVISORS DRIVING A CANUCK CRAZE? Exactly what’s behind the growing demand for Canadian IPOs? Or should the question be “who?”

The latest PwC numbers point to a whopping 50 per cent spike in funds raised last year through initial public offerings. That translates into a year-over-year jump from $1.3 billion in 2012 to $2.7 billion by the close of 2013.

According to PwC, all 30 IPOs last year were for Canadian exchanges, with six of those coming on the market in the last quarter.

That $2.7 billion may disguise the decline in the actual number of issuers. They fell from 62 in 2012, but raised a meagre $1.8 billion despite being twice as many as 2013’s number of IPOs The more than double the amount raised last year speaks to growing demand from investors but also their advisors, who nonetheless continue to grapple with the home-country bias of their clients.

Still, advisors will have to continue hawking opportunities outside Canadian equities in order to meet the return-on-investment expectations of their clients.

While Canadian Tire’s REIT was largely seen as the darling of IPOs last year, coming to the TSX at $10.01 on Oct. 23, it closed at little more than $10.90.

2013

6 | JANUARY 2014

06-09_New.indd 6

09/01/2014 1:54:39 PM

WEALTHPROFESSIONAL.CA

PUTTING A PERIOD BEHIND PONZI SCHEME INDUSTRY PLAYERS ARE HOPING COMPENSATION FOR EARL JONES’S CLIENTS WILL END THE PUBLIC RELATIONS NIGHTMARE

Built: 1/2/14 – SM

TFSA ACCOUNT HOLDERS PLANNED TO CONTRIBUTE:

$3,625 IN 2013 (AVERAGE) OR

ONLY 65%

OF THE NEW $5,500 LIMIT

06-09_New.indd 7

IT MAY BE A CODE. BUT IT PRODUCES SOME GREAT NUMBERS. Cecilia Mo embodies the Dynamic Code applying active management to everything she does – her opinions, process and philosophy. Look no further than her impressive results for proof.

Colours: CMYK

Bleed: 4.375" x 11.375"

V.O.: Trim: 3.875" x 10.875"

Safety: 3.125" x 10.125"

Pub: Wealth Professional File Name: 1016290P-DF_DYN-290-2D

1016290P – DF – Dynamic Funds – Half Page – Cecilia Mo

Ad#: DYN-290-2D - REV1

Advisors have their fingers crossed, hoping bad press associated with Canada’s answer to Bernie Madoff is now behind them following a $12 million payout to clients of the unregistered fraudster.

In February, Montreal’s Earl Jones will enter the third year of an 11-year sentence, handed down in 2010. But the ordeal for the 158 clients he pleaded guilty to defrauding of an estimated $40 million is only now coming to a close.

RBC has now mailed cheques for a total of $12 million to his former clients, the result of the bank’s $17 million out-of-court settlement to end a class action suit. (Some $5 million went to the attorneys behind the law suit.)

Jones’s clients had alleged the RBC branch in Beaconsfield, Que., should have been aware the advisor was exploiting his personal account to fraudulent ends.

Unregistered, Jones billed himself as the ultimate financial planner, using a Ponzi scheme to promise returns of 10 to 12 per cent and to rope in former clients as well as friends, family and strangers.

He was ultimately exposed as a fraud, but the case has blackened the industry’s reputation among many retail investors – something advisors are now hoping will end.

“I think the timing of his case was so close to the Bernie Madoff scandal in the States that the Canadian industry took a hit in terms of its reputation, just like American advisors did,” says Mark Levesque, a financial planning veteran in Montreal’s west end. “I think that the settlement and the final payment of victims will help to restore client confidence in the system. That has not really been the case in the U.S.” Jones’s victims received about 45 cents on every dollar lost through his fraud. Now five years on, Madoff’s victims have only recouped an estimated 7 per cent of the collective $65 billion owed them.

See how Cecilia Mo puts The Dynamic Code into action. Visit Dynamic.ca/cecilia

* Assumed portfolio management as at October 2011. All information shown for Series A units to December 31, 2013. Dynamic Value Fund of Canada inception date: July 1957.

Dynamic Value Balanced Fund inception date: February 1992. Dynamic Canadian Value Class inception date: February 2001. Dynamic Dividend Advantage Class inception date: December 2011. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing.

The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 AssetJANUARY Management2014 L.P. | 7

09/01/2014 1:54:45 PM

NEWS / ANALYSIS

CROSS-COUNTRY

CONSUMER CONFIDENCE (Q4 2013) All regions of Canada are showing stronger consumer confidence since the darker days of early 2013, according to research from Investors Group and Harris Decima. That news is good for advisors across the country as they continue to grapple with the biggest aftermath of the great recession: investor caution.

Still, not all advisors are seeing the purse strings on investible assets loosen. Optimism, like so many other things in Canada, appears to break down along regional lines.

BRITISH COLUMBIA

79.7%

MANITOBASASKATCHEWAN

90.7%

ALBERTA

NATIONAL AVERAGE:

ATLANTIC CANADA

95.0%

QUEBEC

ONTARIO

85.0%

81.5%

80.3%

84.4%, UP 7 POINTS (FROM Q1) FEES

A FIX FOR MUTUAL FUND FEES? DON’T BLAME INVESTORS FOR ALL THEIR MISTAKES, WARNS NEW RESEARCH Adam Smith — the father of free-market capitalism — might not have approved, but a new study suggests regulators may ultimately need to step in to keep mutual fund fees in check.

“The limited attention our subjects paid to fund fees casts doubt on the claim ... that market competition renders judicial oversight of fees unnecessary,” write Jill E. Fisch and Tess Wilkinson-Ryan, authors of a University of Pennsylvania study ferreting out the root cause of investor mistakes. “Even if investors are told that fees matter, our small study suggests that they may under-estimate the importance of small fee.”

That’s one of the more controversial findings of the study exploring among other things the extent to which inattention to fees might be the result of limited investor financial literacy.

In a two-minute questionnaire, researchers asked subjects to estimate the difference between two 30-year investments of $10,000 with an average (before fees) rate of return of 8 per cent, one with a 1 per cent fee and the other with a 2 per cent fee.

The correct answer is approximately $20,000, but the median response was $3,000, and almost 40 per cent of subjects underestimated the effect of the fee by an order of magnitude.

While a lack of investor education is, indeed, a factor, the more innate “insensitivity” of investors to minor fee differences and the big differences they can have is much harder to deal with, conclude Fisch and Wilkinson-Ryan.

What’s more, it recommends greater regulatory oversight of the management and other fees that funds apply to investor accounts.

“Although the (study’s) instructions stated that fees were important, it neither told investors why nor quantified the effect of a small fee differential,” reads the report.

“The relative insensitivity of investors to economically important fee differences suggests a market failure and one that cannot readily be addressed by (the current) focus on expanded disclosure.”

TFSA TROUBLES

81% Canadians unaware of the new TFSA contribution limits

89% Canadians unable to identify TFSA-eligible investments

8 | JANUARY 2014

06-09_New.indd 8

09/01/2014 1:54:48 PM

WEALTHPROFESSIONAL.CA

TALK TALK

TFSAS PUT INVESTORS AHEAD OF THE GAME, BUT DO CANADIANS REALLY GET THEM? A BMO STUDY SHOWS THAT MORE CANADIANS HOLD TAX FREE SAVINGS ACCOUNTS, BUT LACK THE KNOWLEDGE NECESSARY TO REAP THEIR BENEFITS

06-09_New.indd 9

Built: 1/2/14 – SM Colours: CMYK

Bleed: 4.375" x 11.375"

V.O.: Trim: 3.875" x 10.875"

Safety: 3.125" x 10.125"

Pub: Wealth Professional File Name: 1016290P-DF_DYN-290-3D

1016290P – DF – Dynamic Funds – Half Page – Noah Blackstein

Ad#: DYN-290-3D - REV1

More Canadians may have tax-free savings accounts than ever before, according to a recent BMO report, but that doesn’t mean they actually know how those financial planning tools work.

The annual TFSA report found that almost half of Canadians (48 per cent) are using TFSA accounts – up 23 per cent from 2012. Surprisingly enough, though, 89 per cent can’t identify eligible investments and 81 per cent are unaware of the new annual contribution limit.

That means advisors need to work extra hard to help their clients understand these accounts and their benefits.

“Being unaware of some of the specific rules around the TFSA can potentially lead to complications down the road,” said Christine Canning, head of BMO’s Everyday Banking Products, in a release. “For instance, those who over-contribute will be required to pay a tax of one per cent on the amount in excess of the limit. This can really add up, so it’s essential that Canadians stay up to date on the specifics of the account.”

The study, conducted by Polaris, also found that of the $5,500 revised annual contribution limit (up from $5,000), account holders plan to make an annual contribution of $3,625 this year. Used most often as a means to save for retirement or as a source for emergency funds, those aged 65 and older are more likely to have this type of account than any other age group in Canada, the report states.

Canadians feel the freedom to make withdrawals at any time, tax-free are the top benefits of these accounts. Other TFSA benefits identified in the study include: No minimum contribution required to open an account, no income tax paid on investment returns earned in the account and ability to hold a wide-range of investments.

“When first introduced in the 2008 federal budget, the TFSA was described as a ‘tax policy gem’ that was good news for the country,” said Canning. “Given the impressive adoption rate, it’s clear that Canadians tend to agree.”

IT MAY BE A CODE. BUT IT PRODUCES SOME GREAT NUMBERS. When it comes to his Dynamic U.S. and Global Growth portfolios, award-winning portfolio manager Noah Blackstein’s active management approach produces impressive numbers.

See how Noah Blackstein puts The Dynamic Code into action. Visit Dynamic.ca/noah

All information shown for Series A units to December 31, 2013. Dynamic Power American Growth Fund inception date: July 1998. Dynamic Power Global Growth Class inception date: February 2001. Dynamic Power Global Balanced Class inception date: July 2008. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. The indicated rates of return are the historical annual compounded total returns including changes in unit value and reinvestment of all distributions and do not take into account sales, redemption, distribution or optional charges or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of JANUARYL.P. 2014 | 9 its owner, used under license, and a division of 1832 Asset Management

09/01/2014 1:54:53 PM

milton, Ont. NEWS / IDEAL FEE CLIENT

GETTING INSIDE THE HEAD OF THE

IDEAL FEE CLIENT Some of your clients may have already volunteered to make the switch from paying commission to paying fees, but how does an advisor identify others ideally suited to that newer model?

Industry analysts are pointing to growing demand for the fee model as more and more global regulators push for an end to embedded commissions and Canada appears ready to follow their lead. Some of your clients may have already made their decision, but for the average advisor, the question remains, which of the others to convert first, if at all?

That’s where WP’s anatomy of the ideal

fee-based client comes in. We’ve cobbled together industry research – including Canadianspecific data and the analysis of advisors on both sides of the fence. All told, it should help steer you toward the clients most willing and, indeed, able to make the leap from transactional to fee. Where experts seem to agree is that the latter model isn’t for everyone – based on any and everything from their age to their assets – so be careful.

IDEAL AGE

A BREAKDOWN OF FEE CLIENTS BY AGE (WITH HOUSEHOLD ASSETS OF $250K $500K)

THE ANATOMY OF THE IDEAL ‘FEE CLIENT’

40-64 years old

Under 39

Female

1ST

First-time client

Professional or management type

40 to 64

Business owner

(small- to medium-sized)

Advanced-degree holder 65 and over

High-income earner

(annual income >$250,000) 10 | JANUARY 2014

10-13_Ideal Client.indd 10

09/01/2014 1:55:44 PM

WEALTHPROFESSIONAL.CA

WHICH CLIENTS ARE HOT FOR FEES?

8.3 8.0

Higher education

7.7

Older

7.0

Female

6.6

Married

6.3

7.8

Built: 1/2/14 – SM

Higher income Professional or Management Business owner/ self-employed

V.O.:

8.5 Pub: Wealth Professional

Higher net worth

Ad#: DYN-290-4D - REV1

9.0

5.0

WE MAY HAVE WRITTEN THE DYNAMIC CODE. BUT OUR ACTIONS SPEAK LOUDER THAN WORDS.

(2010 Advisor Survey Report, Fee and Commission Models)

Self-directing clients

File Name: 1016290P-DF_DYN-290-4D

FEE ADVISORS DISSECT THE IDEAL CLIENT

Colours: CMYK

Safety: 3.125" x 10.125"

On a scale from 1 to 10, advisors rate each client demographic on how likely they are to prefer fees

1016290P – DF – Dynamic Funds – Half Page – Marc Andre

4.0

-Leslie Gardner, Money Coaches Canada, Kamloops, B.C.

Bleed: 4.375" x 11.375"

Trim: 3.875" x 10.875"

“A lot of my clients are in their 50s, and they have between $250,000 and $500,000 worth of assets; perhaps a bit higher if their houses are included. Most of them are looking to learn more about where all their investments are, and they don’t want to be sold anything else. They just want to know what’s going on, is this the best idea and what other directions they should perhaps be going in.

Some of my clients are also trying to decide whether or not they want to be self-directed, or be just a little self-directed instead of fully self-directed. Most of them are professionals and know something about finances, and are not completely in the dark. They also don’t have a lot of debt; most of them have taken care of all their debt, and are now just looking at where they can put their money to get the best returns based on when they want to retire.”

Active management is in Marc-André Gaudreau’s DNA. His drive for success and expertise in high yield and credit investing has helped separate his suite of Dynamic funds from the herd.

See how Marc-André Gaudreau puts The Dynamic Code into action.

Visit Dynamic.ca/marc

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.

Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. JANUARY 2014 | 11

10-13_Ideal Client.indd 11

09/01/2014 1:55:50 PM

NEWS / IDEAL FEE CLIENT

FEE ADVISORS DISSECT THE IDEAL CLIENT cont’d...

Family-minded

Organized person

“My definition of a perfect client is someone who is serious about their finances. In many instances, this can be age-based. At around the age of 50, we’re not living in the moment anymore; we’re living in the future because we’re only 15 years from the classic retirement age. Both spouses have to be on board if we’re going to make some significant changes to their behaviours around their finances. It’s always good if there’s one strong person in the relationship who will help pull the weight sometimes while we train the other person.”

“Perfect fee-based clients are people who are ready to take control of their finances, and they know that they have someone who works on their team to help them do that, which leads them to success. They also need to be fairly coachable and willing to get a little organized. A lot of the people who I like to work with are either getting married or newly married because I see that as the start of less stressful future and a stronger family life. One of my passions is helping people who are new out the gate with combining finances and getting them on that path.”

-Avraham Byers, Breakthrough Personal Financial Trainers, Toronto, Ont.

-Shelley Maher, Shelley Maher Financial, Hay River, NWT

Proactive person

$500K+ club

“Often, my clients are in a transition, and they are looking to get an independent, unbiased opinion, so they tend to be more proactive people.

The reason why I say this is because the people who are not proactive are usually happy to have the hidden fees, and the people who are prepared to pay a fee are the more proactive clients.”

“I would say that the ideal client tends to be higher educated, has a better understanding of value, and is open to paying for advice rather than expecting it to be free. They tend to be wealthier people, have a family, are 45 or more years old, have assets of greater than $500,000, and as a result, are more inclined to pay for this service.”

-Frank Wiginton, A Better Quality of Life Financial Consulting, Toronto, Ont.

-Kathy Waite, Eureka Investor Guidance, Craven, Sask.

Deep thinker Gender group “My financial planning clients are in their late 40s and early 50s, and are well-educated. In other words, they have some kind of post-secondary education. They are either in upper-level management if they are an employee, or they have a successful business that they’re running, but it’s usually a small to medium-sized business. For the most part in my practice, I deal with women, and they seem to be more open to having a plan.”

-Judith Cane, Money Coaches Canada, Ottawa, Ont.

Late bloomers “In theory, anyone can be a good client.

However, those in the later stages of their lives are a little keener to start their financial planning. As they approach the age of retirement, they want to make sure that everything is in order.”

-Mike Gomes, Ironshield Financial, Etobicoke, Ont.

“The ideal fee-based client is one who understands what it is that they are looking for, and the difference between fee-based and traditional financial planners. Traditional planners are all product-driven, meaning that depending on the company you go to, there are specific products available, and the planners are trying to sell those products. Fee-based planners don’t do this. Because the clients are paying a fee, there would be more of a willingness to do the homework they are given to do and stick to the advice they get, and whatever the planner tells them to do.”

-Charmaine Huber, Money Coaches Canada, Barrie, Ont.

12 | JANUARY 2014

10-13_Ideal Client.indd 12

09/01/2014 1:55:55 PM

NEWS / FORUM

WEALTHPROFESSIONAL.CA

About time!

1016290P – DF – Dynamic Funds – Half Page – Dana Love

- Doug McCaw

Trim: 3.875" x 10.875"

- Kevin Cahill

File Name: 1016290P-DF_DYN-290-5D

Completely agreed, Doug! We need more passionate people to stand up and say “Enough is enough.”

Consumers know the difference between a general practitioner doctor and an oncologist, yet few know there is a huge difference between someone who has a mutual fund licence and someone who has gone on to get their Certified Financial Planner.

I think that the most important point here is the need for formal education for all of the advisors whether it is CFP or CLU or just a good education program by the insurer. Also, each advisor should be a member of Advocis.Would you go to a doctor, whether a GP or oncologist, if they didn’t belong to the Canadian Medical Association or at least the provincial counterpart? Yet you can get a licence to sell life insurance or sell mutual funds with very little training. I don’t think you even need a licence to handle money products like GICs, etc., and there is no need to be associated with an industry professional association that works on behalf of the public and the professional.

-Meredith Swanson

WE MAY HAVE WRITTEN THE DYNAMIC CODE. BUT OUR ACTIONS SPEAK LOUDER THAN WORDS. Colours: CMYK

Safety: 3.125" x 10.125"

Investors are calling for restrictions on what industry professionals are allowed to call themselves, according to a consultation update from the Canadian Securities Administrators (CSA). Say, for example, you wanted to use the title “Financial Advisor,” you’d have to do more than sell mutual funds.

Understandably, WP readers were quick to comment.

Dana Love brought a world of experience in active management when he joined Dynamic in October 2013. Access his global expertise through the recently launched Dynamic Global Balanced and Dynamic Global Equity Funds.

See how Dana Love puts The Dynamic Code into action. Visit Dynamic.ca/dana

Bleed: 4.375" x 11.375"

V.O.:

Pub: Wealth Professional

WHAT’S IN A JOB TITLE?

Ad#: DYN-290-5D - REV1

Comments from WealthProfessional.ca on the news stories making waves in advisor waters

Built: 1/2/14 – SM

FORUM FORCES

Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.

Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Dynamic Funds® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. JANUARY 2014 | 13

10-13_Ideal Client.indd 13

09/01/2014 1:56:01 PM

THE BIG INTERVIEW / JOHN CUCCHIELLA

THE INVESTMENT ADVISOR:

CONCIERGE

OF THE FUTURE

The industry lost 13 independent firms in 2013 through buyout, merger and, ahem, attrition. But those in the game are still attracting and retaining advisors. John Cucchiella, head of Retail for Dundee Goodman Private Wealth, talks challenges, compensation and, yes, competition Wealth Professional: Forgive us for starting at the deep end, but what’s the future of advice-free investing, and is this something advisors need to worry about?

John Cucchiella: I can’t speak to the future of advicefree. Obviously, it’s a viable business for a lot of organizations. I think in the end, it goes back to the ancillary services that advisors provide to their clients.

It just can’t be solely about the investment strategy or the portfolio management, and I think they have to provide their ancillary services to their clients if they’re going to compete. In the end, I think advisors have to be the concierge of that relationship. We often hear in the industry about how we should be the COI of those relationships. I call it the “concierge.” So when clients are looking to purchase a home, or purchase a vehicle, or find a grade school for their kids to go to, my view of that is the advisor should be the point person for that because of the massive contacts and relationships that the advisors often have in the marketplace. So having somebody go to the advisor and say “I really need some help. I’m looking for a private school for my son or daughter, or a great camp for my kids,” they should be that contact point because of the network that advisors generally have.

WP: In WP’s first issue, one of your competitors conceded that it’s increasingly hard for independent firms to compete against big banks. What the best argument for a top advisor moving from the bank to an independent?

JC: I’m not a bank basher; there are great advisors all over. In the end, I think it comes down to what the advisor is looking for in an organization. Independents have a tendency to offer more of an open architecture environment, a little bit more freedom in terms of how they want to build out their practice. And that’s one of the benefits of being with an independent because it truly is more of an entrepreneurial environment than at your traditional large organizations.

WP: Andrew Marsh also told WP that scale and brand is everything. What are your thoughts about independents achieving scale to compete with the banks?

JC: It’s as much about quality as it is about quantity in this business. We at Dundee Goodman Private Wealth have so far focused on attracting and supporting top quality advisors. We believe that we can compete and be profitable using this approach.

14 | JANUARY 2014

14-17-CUC.indd 14

09/01/2014 1:56:31 PM

WEALTHPROFESSIONAL.CA

“I’m not a bank basher; there are great advisors all over. In the end, I think it comes down to what the advisor is looking for in an organization.”

DECEMBER 2013 | 15

14-17-CUC.indd 15

09/01/2014 1:56:39 PM

THE BIG INTERVIEW / JOHN CUCCHIELLA

We see our competition as less with the banks and more with other independents. Also, through the research we’ve done with Canadian investors, they too want the choice of independents.

WP: Where does Dundee Goodman see its growth coming from in terms of advisors – investment counsellors or IIROC dealers?

JC: We’re going to continue on the growth path

WP: Where do you see the industry in the next five years, after CRM is fully implemented? How will independents survive? What will happen to the role of the advisor?

JC: At the independents, advisors have a greater

that we’ve already opted to take, and that is by selecting individual advisors that we want to work with, maintaining that close relationship, and picking out who we feel are the best advisors who form the best relationships with clients. In the end, it really is all about client relationships and bringing those clients on board. Do we look at other opportunities? Of course. Could it be an acquisition, could it be a group of advisors? We would absolutely look at things like that if they were to ever surface.

likelihood of being able to offer unbiased advice and to provide whatever solutions make sense for the clients. Many of our advisors are portfolio managers and charge fees, rather than commissions. Our clients are already well aware of what they are paying for and how they are doing in terms of performance.

And we want to encourage the kind of relationship that is in line with this.

WP: Where do fiduciary standards play in to all of this? How can portfolios be structured in the best interest of the client?

JC: Advisors who act as discretionary managers on a client’s account already act in the best interest of their clients because of the unique role they play and the relationship they have as portfolio managers. By allowing advisors to do what is in the best interest of the client (first and foremost) and not requiring them to favour one product over another, a firm allows the best decisions to be made on behalf of the client. Clients already know that and that is why they want to have the independents as a choice. They see the advisor who works at an independent firm as being motivated by the right things - the client’s best interest.

WP: Advisors switching from a commission to a fee-based model are running into challenges transitioning their clients. How do you see these challenges being overcome?

JC: It’s going to boil down to the services that the advisor offers. I think the ancillary services that advisors are going to have to bring to the table to earn the fee are going to be more so weighted on not just the commodity that they are providing of the actual transaction, so to speak, or the portfolio management, but more on the services they provide to these clients.

In the end, they’re going to have to earn it.

WP: DGPW recently commissioned a study on the concerns keeping advisors’ clients up at night. What was the impetus for delving into those issues?

JC: As a new firm, we wanted to know exactly what we needed to do to best service the needs of the general public. And the only way we can do that is to reach to them and ask them the questions that we did.

WP: The study reveals that healthcare needs are the second mostimportant driver of investment behind retirement itself. What do you think about that?

JC: I was actually surprised at the finding because it shocked me as well. Generally, we focus on retirement, and having the public come back and state that healthcare needs (were more important) was a surprise. It’s worth exploring further because we didn’t get into the granularity of it. But it’s definitely worth exploring further to see what’s triggering that. And I don’t know what’s triggering that. I can make assumptions, but they are solely assumptions.

WP: How does the role of the investment advisor shift if clients are more focused on their health-care needs?

JC: The reality is advisors are going to have to expand the advice that they provide. It’s not solely going to be based on investment. They’re going to have to look at talking to and articulating to their clients the insurance opportunities that lie within their practice. If they don’t, I think they’re going to miss an opportunity.

16 | JANUARY 2014

14-17-CUC.indd 16

09/01/2014 1:56:41 PM

WEALTHPROFESSIONAL.CA

INDUSTRY FORECASTING

WITH ROBERT SELLARS, EXEC VP AND CFO AT DUNDEE CAPITAL MARKETS WP: From your vantage point, how do you see advisor compensation continuing to change as the shift to a fee-based model accelerates?

Robert Sellars: We feel that the fee-based model is a more stable revenue stream for our advisors. It has a lot less volatility, which will allow the advisors to have a more stable compensation stream. We don’t feel that it’s necessarily superior in comp. to them, but we feel that they’re going to able to grow their revenue stream, which will improve their compensation.

WP: What is the future of proprietary products if investors are distrustful of them and the firms that sell them?

RS: It’s a very good question. There have been so many products that have not been successful for clients. We feel that the products we will roll out will be stable and should be able to meet the needs of our clients on a good risk-return basis.

We’re not going to try to be all things to all people. We’re going to try to meet the needs in a focused area where we feel we have expertise, and roll products out to clients to do that.

WP: As many advisors shift to the fee model, what does this suggest for the future of the industry and how clients are serviced?

RS: We feel that clients are going to be served because they’re going to get an overall service model. They’re going to get a more stabilized, less transaction-based investment strategy.

There will be more ability to take a longer-term

view on how returns are going to be stable and positive for clients. That’s not to say that you can’t have environments where even with a fee-based portfolio manager, returns aren’t as great. We have just found that it’s a less volatile process for clients to be in a portfolio manager situation than a transaction-based situation.

WP: Mr. Cucchiella has already weighed in on this, but how do you see the future of independent firms and what they’ll need to do to compete?

RS: There are going to be a few independents that are going to compete and survive. The biggest determinant that has been driving independents is lack of capital. As revenues have been diminishing and margins have been squeezed, costs have gone up in compliance or with technology. We are getting some synergies out of technology because on a per-transaction basis, we can get the cost per trade lower. Those smaller firms are going to have to grind out synergies in their operations and back office with IT to compensate for the lack of revenue that is happening in the street. It’s easy for everyone to make money when the market is roaring; it’s not so easy when it’s very challenging market in the environment we’re in right now. We feel that our regulated entity has a significant amount of capital that could withstand a long market downturn and still do what’s right for our clients.

JANUARY 2014 | 17

14-17-CUC.indd 17

09/01/2014 1:56:48 PM

WEALTH P R

ESSIONAL OF

20

14

SPECIAL REPORT / TOP 50 ADVISORS SPECIAL REPORT A D V IS

OR

TOP

ADVISORS The time has come to recognize the country’s finest planners as we unveil Wealth Professional’s inaugural list of the top 50 financial advisors in Canada. In a trailblazing initiative, the industry’s top performers are finally being rewarded for their excellence

Too often the tireless and vital work that financial planners perform is overlooked in terms of recognition. Wealth Professional would like to put that right. This issue is dedicated to making heroes out of the most hard-working and successful advisors in Canada, which was the driving force behind this presentation of the top 50 advisors in Canada.

Of course it fell to you to make a submission, but what was the methodology behind the rankings? The results are purely objective and based on fixed criteria of performance. The first two aspects we ranked were the increase of assets under management (AUM) in the financial year ended October 31, 2013, and revenue the individual contributed to the business. Due to their vital role, these aspects of performance were given heavy weighting.

Other aspects ranked were client retention, new clients introduced to the business, new business as a percentage of total client base and AUM per client managed by the individual planner.

This is all designed to provide a good cross section of well-rounded planners.

Thanks to all the advisors who took the time to enter and congratulations to all those who made the cut. As part of Wealth Professional’s wider ethos to not just inform our readers, but also actively find ways to improve their business and profitably, we hope making the rankings will have a profound impact on your reputation.

We hope you enjoy the rundown and if you did not enter this year, we hope that you will do so the next time.

| JANUARY | 18 18 JANUARY 2014 2014

18-33_TOP_50(2).indd 18

09/01/2014 2:20:43 PM

WEALTHPROFESSIONAL.CA

THE TOP 50

BY THE PROVINCE Ontario: 20

Quebec: 5

British Columbia: 14

Alberta: 6

Saskatchewan: 1

Manitoba: 3

AVERAGE YEARS IN THE BUSINESS

18 YEARS

AVG. AUM GROWTH YOY (%)

GENDER DIVIDE

20%

80%

MONEY MATTERS

25

P.E.I.: 1

$1.2M AVG. REVENUE

298

40 VS. 10

AVG. NUMBER OF CLIENTS

JANUARY 2014 | 19

18-33_TOP_50(2).indd 19

09/01/2014 2:20:57 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

OR

TOP 50 Advisors OVERALL RANKING

NAME

BROKERAGE/DEALER GROUP NAME

COMPANY

AUM GROWTH REVENUE CLIENTS YOY (%) CONTRIBUTED ($) OCT. 31, 2013

1

Bill McElroy

The William Douglas Group Inc.

Manulife Securities Incorporated

87

500,000

2

LĂŠony deGraaf

deGraaf Financial Strategies

MGA - Gryphin Advantage

50

250,000

1200 225

3

Nathan Leibowitz

Assante Wealth Management

Assante Wealth Management

32

350,000

250 925

4

Anita Dalakoti

Dalakoti Financial & Insurance Services Inc.

Sun Life Financal

25

2,500,000

5

Charles Jiang

Queen Financial Group Inc.

Queen Financial Group Inc.

19

280,000

330

6

Nick Bakish

Investors Group Financial Services Inc., Financial Services Firm

Investors Group Financial Services Inc., Financial Services Firm

17

600,000

1103 115

7

Stephen Jones

Assante Financial Managment Ltd

Assante Financial Managment Ltd

34

600,000

8

John De Goey

BBSL

BBSL

49

440,000

85

9

Cyrilla Saunders

Saunders Wealth Advisory Group (SWAG)

CIBC Wood Gundy

43

1,200,000

250

10

Tim Kelly

Tim Kelly Sun Life Financial

Sun Life Financial

20

2,600,000

800

11

Gene Kim

Summit Private Wealth Inc.

Manulife Securities Incorporated

25

500,000

100

12

Don Taylor

Taylor Spies Wealth Management

Nesbitt Burns

37

1,600,000

260

13

Eva Rubinstein

RD Wealth Management

BMO Nesbitt Burns

16

850,000

450

14

Luke Kratz

Kratz Group

CIBC Wood Gundy

29

1,077,865

205

15

Chad Price

Odlum Brown Limited

Odlum Brown Limited

21

480,000

110

16

Shafik Hirani

Shafik Hirani Private Wealth Managment

Investors Group

43

4,000,000

610 725

17

Reg Jackson

JMRD Wealth Management Team

National Bank Financial

16

2,000,000

18

Peter Boronkay

The Boronkay Team

Raymond James Ltd.

25

350,000

67

19

Chet Brothers

Brothers & Company Financial

FundEX Investments Inc.

14

625,000

238

20

Rob McClelland

The McClelland Financial Group

Assante Capital Management Ltd.

19

3,000,000

694

21

Laurie Bonten

The Bonten Group

National Bank Financial

22

1,300,000

250

22

Brian McGorman

The McGorman Investment Team

CIBC Wood Gundy

31

2,295,135

345

23

Wolfgang Klein

Canaccord Genuity Wealth Management

Canaccord Genuity

29

1,200,000

190

24

Michael Trklja

CDSPI Advisory Services

CDSPI Advisory Services

11

650,000

218

25

Mike Lakhani

Tax Matters for Dentists (TMFD)

Assante Wealth Management

28

2,800,000

376

26

Paul Johnson

Johnson Legacy Wealth Management

Raymond James Ltd.

28

1,000,000

125

27

Elie Nour

Elie Nour Group

Manulife Securities Inc.

36

2,000,000

140

28

William Vastis

The William Vastis Wealth Management Group

RBC Wealth Management Dominion Securities Inc

50

5,100,000

115

29

Eric Davis

Davis Wealth Management Team

TD Wealth

25

1,400,000

200

30

Brian S. Jones

Brian Jones Wealth Management

TD Waterhouse/ TD Wealth

18

1,100,000

205

31

Rona Birenbaum

Caring for Clients

Queensbury Strategies Inc.

16

850,000

155

32

David Christianson

Christianson Wealth Advisors

National Bank Financial Wealth Management

21

1,100,000

78

33

Penny Meadows

CIBC

CIBC Imperial Investor Services

20

682,921

245 140

34

Gillian Stovel Rivers

Assante Financial Management

Assante Wealth Managememt

19

1,253,862

35

Neil R. McIver

McIver Wealth Management Consulting Group

Richardson GMP

21

1,310,000

84

36

Kevin Webber

Webber Brodlieb and Associates

BMO Nesbitt Burns

17

2,370,000

248

37

Joel David

CIBC Wood Gundy

CIBC World Markets Inc.

19

1,013,000

27

38

David Allard

Navigation Wealth Management

ScotiaMcleod

14

1,150,000

105 500

39

Ronald Rusnak

Rusnak Financial Ltd.

Manulife Securities

20

550,000

40

Amod P. Lokre

Edward Jones Investments

Edward Jones Investments

57

300,000

250

41

Jeff Watchorn

CIBC Wood Gundy

CIBC Wood Gundy

33

750,000

200 200

42

Oliver Gilbert

CIBC Wood Gundy

CIBC Wood Gundy

33

1,000,000

43

Jim Baumgartner

National Bank Financial

National Bank Financial

0

741,000

163

44

Brian Lonsdale

Lonsdale Financial Group

CIBC Wood Gundy

8

700,000

400

45

David J. Ritcey

The Ritcey Team

ScotiaMcLeod

5

725,000

221

46

Terry Heavisides

Prarieview Wealth Management

ScotiaMcLeod

13

1,558,345

380

47

Lyle Rouleau

Rouleau Investment Group

CIBC Wood Gundy

1

1,465,000

220

48

Jack Panteluk

The Panteluk Wealth Advisory Group

BMO Nesbitt Burns

8

1,200,000

210

49

Paul Hurwitz

Raymond James Ltd.

Raymond James Ltd.

0

1,040,000

215

50

Glen Lyster

Lyster Financial

SunLife

30

750,000

N/A

20 | JANUARY 2014

18-33_TOP_50(2).indd 20

09/01/2014 2:20:52 PM

TT

AA STRONG STRONG DEFENSE DEFENSE ISN’T ISN’T BUILT BUILT BY BY THOSE THOSE WHO WHO GO GO HALFWAY. HALFWAY.

RISING RATE PROTECTION RISING RATE PROTECTION With rising interest rates on the horizon, clients With rising rates on the horizon, clientshas need a planinterest to protect portfolios.

Renaissance need a plan to protect portfolios.

Renaissance has partnered with the experts at Ares Management to partnered with the experts at Ares Management to bring demonstrated, institutional floating rate debt bring demonstrated, institutional floating rate debt investment management exclusively to individual investmentinvestors. management exclusively to individual Canadian Canadian investors.

Exclusive Access to Ares Institutional Floating Rate Expertise Exclusive Access to Ares Institutional Floating Rate Expertise Help clients prepare for what lies ahead with Help clients prepare forRate whatIncome lies ahead with Renaissance Floating Fund.

Renaissance Floating Rate Income Fund.

renaissanceinvestments.ca renaissanceinvestments.ca

®Renaissance Investments is offered by and is a registered trademark of CIBC Asset Management Inc. Renaissance trailing Investments is offeredmanagement by and is a registered of may CIBCbeAsset Management Inc. fund investments. Please read the Commissions, commissions, fees, and trademark expenses all associated with mutual ® prospectus before investing.

Mutual management funds are not fees, guaranteed, their values change frequently,with andmutual past performance may not be repeated.

Commissions, trailing commissions, and expenses all may be associated fund investments.

Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated.

18-33_TOP_50(2).indd 21

09/01/2014 2:20:56 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

10

OR

Name: TIM KELLY Company: Sun Life Financial Investments Revenue: $2,600,000 Clients: 800

Q. What makes a good advisor?

A: I believe a good financial planner must be client goal-driven. This means the planner and his client share the same financial goals and objectives.

Q. What do you like most about being an advisor?

A: The satisfaction of helping people reach their goals.

Providing clients with wealth-building, asset preservation and lifetime income.

Q. What is your top tip for other advisors?

A: Listen! Listen! Listen! to your clients’ needs.

The advisor in our Top 10 with the most revenue was Tim Kelly with $2,600,000

Q. What are your top tips for gaining, and retaining, clients?

A: Client service and a disci-

Tim Kelly

plined approach to regular communication. My office is always dialoguing with clients! Recognizing their milestones and celebrating with them.

Q. What has been the biggest challenge for advisors in the last 12 months?

A: Tempering client excitement. Let’s face it, markets have been quite volatile up until last year. Clients must be reminded above-average returns cannot happen every year. It’s my job to reassure them to maintain their goals.

Q. How do you plan to adapt to the many regulatory changes that are set to affect the industry?

A: I am already adapting. My dealer and retailers have done an exceptional job of informing us about the upcoming changes. And if clients need to understand any of the changes I will be prepared for them.

Cyrilla Saunders

9

Name: CYRILLA SAUNDERS Company: Saunders Wealth Advisory Group (SWAG) Revenue: $1,200,000 Clients: 250

Q. How do you plan to adapt to the regulatory changes that are set to affect the industry?

A: We have already embraced the full disclosure of fees strategy, where for the past eight years, we disclose to each client relationship via our customized IPSs, the fees they are paying on each strategy in each account. Additionally, if the fees are intended to be used as a tax-deductible expense, we council our clients to discuss this matter with the tax accountant/advisor. In the past, as additional regulatory changes became mandatory, we have always found a way to encourage client participation in gaining knowledge.

Q. What makes a good advisor?

A: An individual who has the ability to be trusted and draw appropriate information from clients, listen carefully to their responses in both language and feeling and then be able to interpret this into a “financial plan” that is credible and easy to understand for the client. Finally, the actual implementation and subsequent timely follow-ups to ensure the path still suits is the key to success.

Q. What is your top tip for other advisors?

A: It is all about the client. Stay true to your core beliefs. Knowledge and education will always serve you and your clients well. Create a circle of knowledgeable professionals around you, both in-house and in the community you serve . . . these people will benefit your clients.

22 | JANUARY 2014

18-33_TOP_50(2).indd 22

09/01/2014 2:21:01 PM

WEALTHPROFESSIONAL.CA

8

Name: JOHN DE GOEY Company: BBSL Revenue: $440,000 Clients: 85

Q. What is your top tip for other advisors?

A: Use reasonable assumptions when doing your illustrations. In particular, if you’re using high-cost products, make sure your projections take those costs into account. If your projects cost 1 per cent less and your fees are the same, it stands to reason that your clients’ returns will be about 1 per cent higher – which is massively impactful over an investor’s lifetime.

Q. What makes a good advisor?

A: I incorporate actual empirical evidence, peer reviewed research, into my recommendations. That means using reasonable assumptions and teaching my clients about the importance of cost. I’m also a big believer in informed consent, meaning I try hard to help clients understand the trade-offs involved in the choices in front of them.

Q. What do you like most about being an advisor?

A: I like that I can help people achieve their goals – not only the financial ones – on their terms and based on their values and priorities. I get to work with people who have a wide range of perspectives and experiences. Many are experts in their fields and it is a treat to be able to work with people who

are obviously competent in their field, yet simultaneously in need of advice in something that isn’t second nature to them.

Q. What has been the best thing about the last 12 months?

A: The fact that people out there seem to “get it” now. I’ve been talking about professionalism, transparency and the alignment of advisor and client interests for over a decade now. I’m finally getting the sense that the message is taking root.

I love it when a plan comes together!

Q. What are your top tips for gaining, and retaining, clients?

A: Pay attention and stay connected. Clients need

John De Goey

to know that you’ve got their back and that you’re always making recommendations based on what’s best for them.

Q. What targets do you have for the coming year?

A: Play a significant role in getting the industry to ban embedded compensation and adopt a statutory best interests standard. Admittedly, this might take more than a year, but these are big and impactful goals, too.

Q. What has been the biggest challenge for advisors in the last 12 months?

A: Nothing springs to mind. I suspect it’ll be important to temper expectations.

The Top 50: Average AUM – Oct. 31, 2012 $107.42m

MUTUAL GAIN JANUARY 2014 | 23

18-33_TOP_50(2).indd 23

09/01/2014 2:21:02 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

7

OR

Name: STEPHEN JONES Company: Assante Financial Management Ltd. Revenue: $600,000 Clients: 115

Q. What has been the best thing about the last 12 months?

A: My investment style (a

conservative, globally diversified, tax-optimized program) has yielded tremendous result. In a year Stephen Jones where bonds are negative, and Canadian equities earn ~ 6 per cent, we have provided returns at much higher levels, using a pension style approach that incorporates both low-cost indexes provided by DFA and active management through CI’s Evolution program.

Q. What makes a good advisor?

A: A good advisor must have a servant’s attitude, and an open mind. We are here to help, using our experience, ideas, and sound judgement to present the best ideas possible. The client then decides what is best for them, and what can be done today versus tomorrow.

Q. What is your top tip for other advisors?

A: I often say that I am in “the client retention business.”

Focus on activities today that lead to clients who will be there 20 years down the road.

Q. What are your top tips for gaining, and retaining, clients?

A: I take the time to do “my homework.” This means looking at every detail of a client’s financial situation.

For example, where many advisors looks at CRA tax assessments on, I need to review the full tax return, and all of the slips. And not just for mom and dad, but for the whole family as well. This extra time allows me to make better recommendations.

The Top 50: Average number of clients lost (FY 2013) 4.7

6 Nick Bakish

Name: NICK BAKISH Company: Investors Group Financial Services Inc., Financial Services Firm Revenue: $600,000 Clients: 1,103

Q. What are your top tips for gaining, and retaining clients?

A: Being consistent in your work ethic is a main tip for retaining clients but even more so is servicing your clients and following up with those services. Following up with clients has been one of the best ways for my team and I to grow our practice and maintain our clients. Alongside those points, understanding your target clientele and where your strengths lie is one aspect that can allow an advisor to grow yearly.

Q. What makes a good advisor?

A: I have always felt listening was the main characteristic defining a good advisor. A good advisor will not only listen to his client’s needs, but will always pay close attention to detail, maintain a high level of professionalism and integrity for every client and prospect.

Q. What do you like most about being an advisor?

A: There are many aspects I enjoy but the biggest reward has always been seeing people reach their retirement goals. Knowing I played a small role in allowing people to retire comfortably has always been extremely enjoyable. In addition to that, I have always felt a great sense of accomplishment helping young professionals understand and develop ways to reach their financial goals.

Q. What has been the best thing about the last 12 months?

A: In the past 12 twelve months my team and I have expanded and grown in various ways. I think developing new strategies and enhancing our team dynamic has had a positive influence with regards to our public appearance and has had a tremendous effect on how we conduct ourselves throughout this business.

24 | JANUARY 2014

18-33_TOP_50(2).indd 24

Q. What is your top tip for other advisors?

09/01/2014 2:21:06 PM

WEALTHPROFESSIONAL.CA

5

Name: CHARLES JIANG Company: Queen Financial Group Inc. Revenue: $280,000 Clients: 330

Q. What makes a good advisor?

A: A good advisor should love his or her job, and be

able to provide some good, solid advice. He or she should be experienced, knowledgeable, professional, holding industry standard designations, a member of a leading professional organization, and embraces continuing education and attends conferences. A good planner takes a holistic, planning based approach, designs appropriate asset allocations and follows a process for discerning the clients’ needs and offering recommendations. He or she should always be an objective and independent advisor.

The Top 50: Average AUM – Oct. 31, 2013 $142.16m

through market turmoil during the financial crisis.

I convinced them to stick to their goals and the objectives we set for them during the first few meetings.

Q. What has been the best thing about the last 12 months?

A: The market has been recovering and the leading markets in the U.S. and Europe have been performing well.

Investors are feeling better now that they see the recovery. The leading indicators in USA and Europe are relatively positive. Many new jobs have been created and the unemployment rate in the USA has been decreasing.

Q. What do you like most about being an advisor?

A: I feel great when my advice and professional

Q. What are your top tips for gaining, and retaining, clients?

A: Ultimately, service is what differentiates a good

service really helps the client to solve their financial problems and provide solutions to reach their financial goals. I feel great when I am respected for a professional job I’ve rendered to my clients. I feel great when I could guide clients, to walk them

advisor from a mediocre one. Good service will help to gain and retain clients. Good service will also help to get referrals from trusted clients. By the same token, bad service will lead to loss of clients and assets.

Charles Jiang

MUTUAL BENEFIT JANUARY 2014 | 25

18-33_TOP_50(2).indd 25

09/01/2014 2:21:11 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

OR

3

Name: NATHAN LEIBOWITZ Company: Assante Wealth Management Revenue: $350,000 Clients: 250

Q. What has been the biggest challenge for advisors in the last 12 months?

A: Interest rates. For most of our

4 Anita Dalakoti

Name: ANITA DALAKOTI Company: Dalakoti Financial & Insurance Services Inc. Revenue: $2,500,000 Clients: 925

The Top 50: Average revenue per client $6,456

Q. What do you like most about being an advisor?

A: Being an integral part of my client’s lives. Providing solutions for financial problems and realities - preparing them financially to face whatever life may throw at them. Preparing a plan to suit what the client wants and needs and watching those plans materialize through life events of the birth of a child, professional growth, promotions, marriages, teenager pains , growing older, retiring and finally passing away.

Q. What makes a good advisor?

A: A good listener with a balanced and practical approach. The planning approach should take into consideration mathematical realities of a situation and at the same time incorporate the dreams and aspirations of our clients, finding a realistic path to achieving those dreams and aspirations. Creating an achievable financial plan empowers our clients and sets them up for continued success.

Q. What has been the best thing about the last 12 months?

A: Unsolicited positive feedback from my clients is an affirmation that I am on the right track. I think that is by far the best thing that can happen to me in any given year. It did this year, too.

Q. What are your top tips for gaining, and retaining, clients?

A: Empower yourself with knowledge so that you can add value to the services you provide your client. If you don’t do that you are simply an intermediary and can be replaced by another intermediary. Do not mistake the word advisor to mean “salesperson.” I don’t believe one can replace a knowledgeable advisor — a wise client can certainly add to their repertoire of advisors, but will not replace you if you add value. It is very easy to replace a salesperson, though, because they are intermediaries. Be a knowledgeable Advisor.

portfolios that have a balanced mandate, the choice of how to structure the fixed-income aspect has been challenging. The correction Nathan Leibowitz mid-year highlighted the risk inherent in bonds. Moving out on the risk curve may mitigate the interest rate risk, but does not provide protection from market corrections. I see this as being the biggest challenge moving forward as well.

Q. What makes a good advisor?

A: A good advisor is a good friend. Getting to know and understand your client’s situation and profile is critical.

Using a needs-based approach to formulate their plan is what the clients appreciate the most as there will not be any surprises. Finally, it is protecting them from their own potential mistakes.

Q. What do you like most about being an advisor?

A: People. I enjoy the diversity of people and helping them get where they only dreamed of by taking small steps at a time. We never try to reinvent the wheel overnight. In an industry that clients have many trust issues towards, it’s nice to hear clients praising the fact that you are trustworthy and introducing you to the next generation of their families.

Q. What has been the best thing about the last 12 months?

A: Seeing the markets provide significant returns and we were still able to attract many new clients. This highlighted the fact that our approach is not only about investment returns. Our value-added approach is appreciated by clients and the referrals are starting to generate themselves.

Q. What is your top tip for other advisors?

A: Wealth management is all the craze now, but I think the most critical is to find a niche that will drive your practice and allow you to spend your time ensuring that you are up to date on all facets of their needs, not only directly related to their financial planning.

26 | JANUARY 2014

18-33_TOP_50(2).indd 26

09/01/2014 2:21:15 PM

WEALTHPROFESSIONAL.CA

2

Name: LÉONY DEGRAAF HASTINGS Company: deGraaf Financial Strategies Revenue: $250,000 Clients: 225

tion over the past two years.

Q. What is your top tip for other advisors?

A: If you listen to your clients and always put your clients needs first, you can’t go wrong!

Q. What targets do you have for the coming Q. What are your top tips for year? gaining, and retaining, A: I am looking forward to 2014, increasing the number clients? of education seminars I offer, touching base with A: I offer a complimentary concentres of influence and increasing sales to at least $300,000 of income.

Q. What makes a good advisor?

A: A good advisor listens to what the client says, or doesn’t say, and formulates recommendations to best match the client’s goals and family dynamics. A good planner is knowledgeable, trustworthy and client focused.

sultation so the client and I can get an idea if we are a good fit for each other. Once they are a client, they know they can reach out to me for guidance on any financial matter. I pride myself on ...treating clients how I would like to be treated, as a valued client.

Léony deGraaf Hastings

Q. What has been the biggest challenge for financial planners in the last 12 months?

A: The unknown of how industry changes will affect our

Q. What do you like most about being a practices and our ability to deliver comprehensive advice to all clients of all asset levels. I don’t require minimum financial planner?

A: I like the satisfaction I receive from clients when account sizes, as I believe no matter how much someone I have put their minds at ease over their retirement or estate plans. They are typically very grateful for the guidance, experience and solutions I can provide.

has been able to save, that is all they have and it is very important to them. I believe all clients deserve the same level of advice, regardless of their asset base.

Q. What has been the best thing about the Q. What are the biggest issues facing the last 12 months? financial advice industry today?

A: That it is over! Sentiment over the past year seems A: I don’t feel regulators are obtaining enough input to have been a little gloomy. I’m also happy to have my CFP studies behind me, which have been a big distrac-

from advisors in the field on how or if the industry requires changes.

MUTUAL SUCCESS JANUARY 2014 | 27

18-33_TOP_50(2).indd 27

09/01/2014 2:21:20 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

1

OR

Bill McElroy

Name: BILL MCELROY Company: The William Douglas Group Inc. Revenue: $500,000 Clients: 1,200

Q. What makes a good advisor?

A: A good advisor listens to clients and talks to them at their level. I have acquired many large clients and the complaints that they have about the previous advisor are usually one of two things: the advisor doesn’t understand what the client is looking for; the client doesn’t understand a word out of the advisor’s mouth.

If you have the credentials, you don’t have to impress the client with your jargon and a bunch of graphs and charts. The client can’t trust you if they don’t feel comfortable with you. That means listen and communicate on their level.

Q. What has been the best thing about the last 12 months?

A: A lot has happened: I bought an existing practice, moved my office to a larger location, got my CIM and qualified for Manulife’s prestigious Five-star Master Builder award. It’s been a year of change for me. I would say that the best thing has been my renewed enthusiasm for this business. It can be very exciting and fast paced if you work at it.

Q. What is your top tip for other advisors?

A: Diversify. I have built a multi-income-streamed office by focusing on the three things that are important to businessowners: Life insurance, investments and Group Benefits. When the financial markets are not attractive to investors, I always have something to fall back on. I have become the “go to” person at my clients’ company. Whether it’s a buy/sell, group benefits, pensions or the personal needs of the staff, I can help them out.

20

them money, saving them taxes or providing them with viable solutions to improve their financial situation.

Whatever it is I do for my clients, I enjoy the personal satisfaction of being appreciated for what I do for them.

ESSIONAL OF

14

WEALTH P R

Q. What do you like most about being an advisor?

A: I like helping people, whether that means making

A D V IS Q. What are your top tips for gaining, and retaining, clients?

A: I would say the number one tip is get IIROC licensed. Clients are becoming more sophisticated and want more out of their advisors. If you cannot provide them with stocks and ETFs you will surely lose them over the long term.

My second tip would be to develop and nurture as many COIs (centres of influence) as you possibly can. These people are the gatekeepers to potential new clients and if you have their blessing, you don’t even need to be a great salesperson, just deliver the product/solution.

Q. What targets do you have for the coming year?

A: I hope to increase the size of my business by a minimum of 10 per cent in assets per year not includ-

OR

There are going to be a lot of questions asked of advisors and the big one is going to be “What am I paying you for?”

28 | JANUARY 2014

18-33_TOP_50(2).indd 28

09/01/2014 2:21:26 PM

WEALTHPROFESSIONAL.CA

A: I have made a conscious effort since the tech bubble

ing market growth.

Q. What has been the biggest challenge for advisors in the last 12 months?

A: The biggest challenge has also been the biggest opportunity. Although many people are still concerned about the markets, and cash flow into the markets by the retail investor is still low, there are many potential clients out there with complacent agents. Either they are not contacting the clients or they are only reactive to client calls. Whether it was poor investment choices or home-country bias that has caused a potential client’s portfolio to perform poorly, there are so many options and alternative solutions to prove your worth to prospective clients and quickly gain their trust.

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

to invest all of my clients in either a 0% front-end fund or a fee-for-service account. I do not sell anything on a deferred sales charge basis. I think going forward, there are going to be a lot of questions asked of advisors and the big one is going to be “What am I paying you for?”

I personally feel more comfortable explaining my 1 per cent fee on a million-dollar account than I would trying to explain a 5.5 per cent upfront commission plus a 0.5 per cent trailer to any client.

Q. What are the biggest issues facing the financial advice industry today?

A: I think there are several problems out there. The biggest one is churning followed by DSC (deferred sales charge) sales method. I prefer to be transparent, our offering consists of investments we think will outperform the market and I choose the one’s that I think will benefit the client the most based on their risk tolerance. WP

The advisor in our Top 10 with the most clients was Bill Mcelroy with 1,200

MUTUAL FUNDS DONE DIFFERENTLY.

like With oUR  Nei NoRthWest tACtiCAl Yield FUNd. In an environment where yield is imperative, the  Morningstar Rated™ NEI Northwest Tactical Yield Fund has an established track record of delivering strong and stable returns since its inception thanks to our unique and active approach to fund management. It’s just another shining example of how we do mutual funds differently.

Active, tactical multi-manager approach • Alternative income strategy • Risk management focus

ComPoUNd RetURN (as of Nov. 30, 2013)

Ytd

1 YR

3 YR

si*

NEI Northwest Tactical Yield Fund

12.21%

13.20%

8.49%

8.27%

Canada Tactical Balanced

9.50%

10.94%

4.62%

--

WoRkiNg hARdeR. iNvestiNg smARteR. 1.888.809.3333 | NEIinvestments.com |

@NEIinvestments

data source: morningstar as at november 30, 2013. copyright© 2013 morningstar research inc. all rights reserved. the information contained herein (1) is proprietary to morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. neither morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. commissions, trailing commissions, management fees and expenses all may be associated with mutual funds investments. please read the prospectus before investing. mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. nei investments and working harder . investing smarter . are registered trademarks owned by northwest & ethical investments l.p.

JANUARY 2014 | 29

file name:

NWBR13147_WealthProfAds

Artist:

Nicole

date:

2014-01-02

WP 1/2pg ads

trim size:

7.25” x 5”

18-33_TOP_50(2).indd 29

description:

colours:

4

media: market/city:

09/01/2014 2:21:29 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

OR

TOP 50 INSIGHTS GILLIAN STOVEL RIVERS

Q. What makes a good advisor?

A: Use of smart technology,

sometimes more than one if it means a clearer message to the client that can create momentum and confidence.

This means the momentum and confidence also has to come from the practitioner, which in our case, we believe that means the Advisor’s team. We leverage smart planning and communications technology and software, a 4-person client process, and ultimately a dashboard based set of communication tools to explain matters to clients. The result is simplified statements of the information, clearly stated options for discussion, so that the client can select their own focused pathway forward with confidence and momentum.

TIM KELLY

Q. What do you like to do outside of the office?

A: I’m a big sports fan so I golf quite a bit in the

summer and follow the NBA and NHL during the winter- especially the Toronto Raptors and The Montreal Canadiens.

JEFF WATCHORN & OLIVER GILBERT

Q. What are the biggest issues facing the financial advice industry today?

A: We see a lot variance in

advice across the industry, however at the higher end of the advisory market, the advice tends to be more consistent and generally of higher quality. I think there are issues surrounding regulation and transparency of fees, but rather than issues we see these as making the industry better for advisors and clients. Moves toward transparency are good for our industry.

CYRILLA SAUNDERS

Q. What targets do you have for the coming year?

A: Professionally, growing my practice: AUM at

approximately $120 million, Gross production $1.7 million; encouraging my team members to attain more knowledge through education; contining to have great client retention and satisfaction. And to continue to be the rock that stays focused on the needs of both my team and our client relationships Personally: to spend more time with my family; pay attention to my physical and mental wellbeing by slowing down, practicing yoga and using my sauna on a frequent basis.

LUKE KRATZ

Q. What are your top tips for gaining, and retaining, clients?

A: Establish a belief system

based on your strongest convictions and then consistently communicate what you believe and what you stand for, letting the chips fall where they may. Many advisors fall into the trap of attempting to be all things to all people. It is much better to be all things to a set number of people – those who share your principals and value what you do for them.

JOHN DE GOEY

Q. What targets do you have for the coming year?

A: Play a significant role in getting the industry to ban embedded compensation and adopt a statutory best interests standard. Admittedly, this might take more than a year, but these are big and impactful goals, too.

CHAD PRICE

Q. What are the biggest issues facing the financial advice industry today?

A: Too much information. We

live in a world where you can watch global news 24 hours a day. You can also watch your investment portfolio by the second and that causes many investors to panic and react to breaking news which can lead to a desire to liquidate their portfolios at the wrong time.

30 | JANUARY 2014

18-33_TOP_50(2).indd 30

09/01/2014 2:21:35 PM

The New FUNDcom Better, Easier, and Mobile!

Powered by:

Celebrating 20 Years of Service

18-33_TOP_50(2).indd 31

Join us on LinkedIN or visit FundSERV.com to find out more.

09/01/2014 2:21:44 PM

14 20

WEALTH P R

SPECIAL REPORT

ESSIONAL OF

A D V IS

OR

STEPHEN JONES

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Our industry’s biggest challenge moving forwards is “fee disclosure”. We will spend the next two years, using many different methods, to show our clients our value.

LAURIE BONTEN

Q. What is your top tip for other advisors?

A: Look at the big picture and

don’t focus on the short term.

Build solid relationships with superior service. Know all the rules surrounding the industry along with the types of service and advice you can provide. You cannot control the markets so control what you can....your knowledge.

NICK BAKISH

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Adapting to the many regulatory changes that will affect this profession will happen in a few ways. Staying on top of legislation will be one of them, in addition utilizing internal and external communications and staying compliant at the minimum cost to the business.

ROB MCCLELLAND

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: Luckily we moved to a

fee-based practise in 2008 and have always provided detailed financial planning to our clients not just investment advice.

CHARLES JIANG

Q. What has been the biggest challenge for advisors in the last 12 months?

A: These are challenging times for financial

advisors, who are not only trying to navigate choppy markets but also maintain strong ties with their clients. These challenges include: increasing compliance requirements and the volatile market during the year. Increasing compliance demands and requirements force advisors to do a better job. But it is definitely good for the clients, and eventually good for the advisors and the industry. The US budget impasse and the tapering of monetary stimulus

caused market nervousness and concerns among investors.

PETER BORONKAY

Q. What do you like most about being an advisor?

A: The knowledge and

experience to strive to make a difference in our clients lives.

We cannot control the wind but we can adjust the sails to best align our work with the needs of the client. This profession gives us a clear canvas to make a financial painting for our clients.

We have the freedom on how we apply the strokes to this painting.

ANITA DALAKOTI

Q. What has been the biggest challenge for advisors in the last 12 months?

A: I’m not sure about other financial planners. I

suppose you are talking about the economic climate. Well, to me those are a given and I don’t consider them challenges -- we have good times and we have bad times, this is a historical fact.

Look at an [Morningstar] Andex Chart – a seasoned planner know how to deal with these challenges. For me, every client is a challenge and an opportunity. These are perennial challenges not restricted to a 12-month time frame. A challenge because I wish to create a plan that they can identify with and implement without taking away the their joys of living - easier said than done. An opportunity because every client is different and, in dealing with them, I get to learn skills that can be implemented with other clients.

NATHAN LEIBOWITZ

Q. What are the biggest issues facing the financial advice industry today?

A: Being able to maintain and grow your practice while properly servicing your existing clients.

With client needs changing, and the expectation that advisors should handle all aspect of their situation – such as insurance, will planning, charity etc. you need to automate your practice and have seamless communication with all members of your team. This will be a key differentiating factor as more firms offer the total wealth management package.

LÉONY DEGRAAF HASTINGS

Q. How do you plan to adapt to the many regulatory changes that are set to affect the financial planning industry?

A: I have been proactive with clients in helping them understand their choices and what they are paying for. WP

32 | JANUARY 2014

18-33_TOP_50(2).indd 32

09/01/2014 2:21:49 PM

W

Educational Information For Investors.

Sponsored by The National Exempt Market Association and it’s members.

WHAT IS THE EXEMPT MARKET? WHO QUALIFIES TO INVEST IN THE EXEMPT MARKET? WHAT ARE KEY FEATURES OF EXEMPT MARKET SECURITIES? HOW DO YOU INVEST IN THE EXEMPT MARKET? WHAT IS THE STRUCTURE OF THE EXEMPT MARKET? ANSWERS TO THESE QUESTIONS & MUCH MORE AT:

EXEMPTEDUCATION.CA

ISSUE 4 2013

ISSUE 5 SUMMER 2013 NEMAONLINE.CA

SPRING

nline.ca ada NEMAo

e@

NEMACan

SPINOFF

F @ NEMACANADA

ISSUE 6 NEMAFALL 2013

ONLIN F @ NEMA E.CA

ST YOUR WMORARE NIGHT

THE MARKETING MOUSE TRAP

BY ZACK SIEZMAGRAF W/NEIL HUTTON|PAGE 32

US EQUITY MARKET STRUCTURE

BY THOMAS CALDWELL|PAGE 10

HOW TO L. BENTHA & CRAIG AND HOW EW EPP

UNITY

8

THE EXE MPT

COM

DERS HAPP EN, DE OR THEY TRA E HAPP EN, WHY THEM CEAS WITH THEY DEAL M

1

9

BY MATT MCKELLAR & BILL MCNARLAND|PAGE 22

ALSO IN THIS ISSUE: LITIGATION NATION

BY MATTHEW EPP|PAGE 18

CANADA

10

HOW THE EXEMPT MARKET IS HELPING REVIVE THE ECONOMY

7

ES TOG

THE GRE

MARKE

3

T

ETH ATER ER FOR GOOD - CORA PETTIP PAGE AS 28

Pg. 34

2

4

6

BY MATTH

5

Pg. 16

WHEN

ISSU E

THE OM

THE NATIONAL PUBLICATION ON PRIVATE INVESTING

PIG

P.10 S FLY WHAT’ P.14 S IN A RATE OF

1 ST AN NIV ER SA RY

RICE MAN BILL E Pg. 30 THIS ISSUE: CSA & ASC CHAIR Pg. 10 SKAUG EN BLACK CRAIG VIEW WITHTRUST BY E BY KATHLECHANGE INTER THEY AL LIANC IN GREED ES OF COMPPRIVATE CAPIT 50 SHAD THON OF HOULT Pg. 8 RYAN THE MARA DA BY IN CANA

ALSO IN

READ THE EXEMPT EDGE AT WWW.NEMAONLINE.CA/EXEMPT-EDGE

EXEM PTION - CRAIG ’S PENDI SKAUG NG ARRIV E AL

- CHRIS

TOPHE

VOEG

ELI

IN ONTA

RETURN

RIO

?

Q&A W. BREW/DRAG TT WIL ON SON

P.18

18-33_TOP_50(2).indd 33

09/01/2014 2:21:53 PM

FEATURE / CLIENT TRANSITIONING: ADVISOR-TO-ADVISOR GUIDE

WATCH YOUR STEP! Given the risk to an advisor’s book, moving clients from commissions to fees can be a bumpy road. But as Justin da Rosa discovers, fee-only veterans are more than willing to share insights on how to steer clear of danger There’s nothing quite like learning from your own when I worked as a chartered account it was a famistakes, but it may be sweeter to learn from the missteps of others. Wealth Professional speaks with trail-blazing fee-only advisors for their tips on how to transition transactional business to the fee-forservice model, an increasingly popular move as the industry faces growing pressure for commission transparency. That advisor-to-advisor counsel, we hope, will help you avoid transitioning pitfalls.

“I chose to work on the fee-for-service side to avoid the conflict of having to sell a product to make an income,” Ron Graham of Ron Graham and Associates tells Wealth Professional. “My preference was to get paid for providing advice and that’s what I do.”

For Graham, who has 26 of years’ experience as a fee-only financial planner, transitioning to that model was guided by his experience in another field operating along similar lines.

“My background is a chartered accountant so

miliar process: You would keep track of your hours and charge your client based on the number of hours you spend (on their file),” Graham says. “I was in the commission-based financial planning for just over a year, (but) I found I was providing advice and I wasn’t always getting paid for that advice or the amount of payment wasn’t in a good relationship with the amount of time I spent to get that payment.

“So I decided that I would rather get paid a reasonable amount for my time as opposed to a large commission for some and a small commission for others – I’d rather just charge for my time.”

It was a different path that led Tom Feigs of Money Coaches Canada to set up a similar practice for himself. But the impetus driving his decision-making was much the same as Graham’s; namely, the optics around the fee model and its ability to provide clients unbiased financial advice.

34 | JANUARY 2014

34-37_Transition.indd 34

09/01/2014 1:57:21 PM

WEALTHPROFESSIONAL.CA

based account compared to $870 for a transactional-based one.”

So how does an advisor go about transitioning to fee-based?

GETTING DOWN TO BRASS TACKS

“I worked in the oil and gas business for 20 years and then decided to make a career change and went ahead and took some time off and wrote all the CFP exams,” he says. “I decided that I wanted to be an unbiased, professional, independent planner because I didn’t want to be biased by certain sales of products and being biased by commission.”

They are two members of a very select group of financial advisors, those who only provide a fee for service and refuse to sell any products. But the move to introduce more fee-based relationships into a commission-based book is only expected to grow in 2014 as advisors cede to client pressure and advisors look for a hedge against any coming ban on embedded commissioning.

According to the website for Objective Financial Planners, a fee-only financial advisory firm, there are only 150 fee-only financial planners in Canada.

To put that into perspective, there are an estimated 18,000 Certified Financial Planners (CFPs), 25,000 financial planners and 90,000 financial advisors.

“That means about one sixth of one per cent of Canada’s financial advisors provide fee-only financial planning and even less are completely independent, selling only their advice,” suggests the admittedly biased website.

Still, while fee-only advisors and their transactional counterparts may be on the opposite end of the financial advising spectrum, the vast majority of industry players are now developing hybrid models for themselves, using both approaches to cater to the preferences and needs of all client types.

But the momentum is greater in one direction over the other.

“Our analysis indicates that fee-based accounts are more attractive for advisors almost across the board,” says Patrick Kennedy, VP product and client services for PriceMetrix. “The average fee-based account is 46 per cent larger than the average transactional account (and) it generates more than three times the revenue, an average of $2,900 per fee-

Although both Graham and Feigs took different paths to becoming fee-for-service financial planners, their advice on growing that type of business by transferring existing transaction-based accounts starts with deciding whether to operate independently, by opening a practice, or to continue operating under the banner of a larger firm. Graham pursued the former strategy while Feigs opted for the latter – something he believes helped immensely from the start.

“I found it very valuable to be part of a brand like Money Coaches Canada; there is so much to build – you have to build your technical skills, you have to build your marketing skills, you have to build your brand, the back office, everything,” says Feigs. “I found that if you’re breaking into the industry it’s better to associate with a group.”

Of course, doing your due diligence when choosing a firm is required – especially concerning who the clients “belong” to. Some firms may not allow an advisor to take his book of clients with him if he were to leave and set up shop elsewhere. Feigs took a different tack. “(My clients) would stay with me (if I were to leave). The way our association works (is) there’s quite a bit of trust built into it,” he tells WP. “We obviously pay a fee to the parent company for all the back office stuff and general marketing and training, but if I were to up and leave tomorrow I could take my clients with me.”

DON’T RUSH IT

T

Once an advisor is established, actively marketing and getting the word out to the public is critical in the first few years. The same rule applies for advisors who already have an existing client base; it takes time to educate those clients about the merits of fee-only financial planning, especially if they have only ever been exposed to the transactional model.

“Allow yourself a number of years – three to four years – to build your presence in the market. How do you do that? First of all you need to allow yourself time; you need to have enough of a nest egg to make this work,” Feigs explains. “You need some residual income to make that 3-4 year transition work.

JANUARY 2014 | 35

34-37_Transition.indd 35

09/01/2014 1:57:25 PM

FEATURE / CLIENT TRANSITIONING: ADVISOR-TO-ADVISOR GUIDE

A PITFALL TO AVOID

✘

A recent survey of 2,300 advisors is identifying a pitfall many are blind to – one nonetheless guaranteed to trip up those switching commission clients over to fees.

Accord to the study from the FPA Research and Practice Institute, financial advisors struggle to define who they serve, with a mere 25 per cent of those surveyed having a formal definition of their ideal client. Of those who have defined their ideal client, only 38 per cent can say that a majority of those in their book fit the bill.

Clearing up that client profile and making sure reality reflects it are key first steps for advisors as they move to transition clients, say researchers. Those advisors generally struggle to identify existing clients best suited to make the change to fees. Knowing your ideal client may allow advisors to better pinpoint those investors most prepared to make the leap and those most likely to stick around after the move.

Number two is be aware that marketing is part of your business development and be prepared to market as much as you can.

“Network with friends, family, business partners and do things like (talking to the media) to get the word out, but be patient,” he continues. “It’s a multi-year process of building your client base.”

In terms of very practical ways of organically growing the fee end of your book, Feigs believes in holding weekly drop-in seminars for people who are interested in learning more about the model. It allows potential clients to meet, face to face, their potential financial planner and discover exactly what the fee-

F-CLASS SHARES And those who want to move their clients over to a fee-based model – or even those who want to merely add a fee-based service to their transactional business – are one step ahead of the game if they already have an established business.

“It’s helpful if you’ve been in the business for a little while and you can then just transition your clients. How some advisors do this is they use F-class shares,” says Graham. “So we’re still going to provide you with the same kind of mutual fund but the mutual fund is going to charge you less fees and in exchange I’m going to charge you some fees.

“The advisor has somewhat of a choice in what they can charge for fees; in that case the advisor still has to be licensed to sell mutual funds,” Graham continues. “That’s not the way I work, but it is certainly the way that some fee-only financial planners work.”

However, advisors need to be cognizant of the very real challenges in convincing some, if not most of their clients to switch to the fee-for-service model. “(At the beginning) most of that time is spent marketing and trying to get people to understand what service you are providing and why a client would have to pay you money when they can go to the next financial planner and get the advice for free

“I find that word of mouth, face to face is the best way, and it requires many ‘touches’; people will see you in articles, Google searches, and then they’ll want to meet you to confirm what they’re seeing” for-service model has to offer.

“I find that word of mouth, face to face is the best way and it requires many ‘touches’; people will see you in articles, Google searches, and then they’ll want to meet you to confirm what they’re seeing,” Feigs says. “As part of that, to break the ice, I offer complimentary public sessions – what we call Money Mondays – every last Monday of the month. They’re one-hour workshops, giving people an opportunity to break the ice.

“People want more than one touch to understand what you’re doing and it’s hard to draw a direct line but I think it does contribute.”

because that is the perception,” Graham says.

And the hard work doesn’t stop at marketing.

Advisors have to continue to build business after the initial portfolio of clients is established.

“I maintain it by (having) my current clients referring me, I get referrals from awareness with our articles and websites, presence in publications and also from business networks such as accountants, real estate specialists (and) business brokers,” says Feigs. “Gotta get out there and get in peoples’ faces and get the word out that you’re available.”

However, while a certain amount of public education is required, the transitioning advisor also has to dedicate herself to active learning.

The fee-for-service advisor “needs to be, in my

36 | JANUARY 2014

34-37_Transition.indd 36

09/01/2014 1:57:30 PM

WEALTHPROFESSIONAL.CA

opinion, much more of a generalist and know a lot about a lot of different things rather than a lot of information about a very specific product,” says Graham. “As an example, income taxes would be a good thing to know about; many advisors know a lot about income taxes, but quite a few spend very little time learning about it.”

Advisors also need to learn about life insurance, including critical illness, disability and long-termcare coverage. It’s an area of education that commission-based advisors may not worry themselves with because they aren’t directly compensated for having that sort of knowledge and expertise, Graham believes.

“Somebody who sells stocks and bonds may not necessarily know much about insurance because, up to this point, they haven’t been compensated for that, but if you move into the fee-only realm you may get questions about that and you’ll need to know information to pass on to the clients,” Graham says.

For Feigs’s part, developing a deep understanding of how cash flow works is the most essential skill a fee-for-service advisor can add to his repertoire.

“Cash flow, retirement planning and tax planning are the top three to get started with,” says Feigs. “You don’t need to go as deep as an accountant but planning ahead and planning an investment approach over the course of someone’s future (is essential). Cash flow is the underpinning of everybody’s finances.

“It’s boring because it’s number crunching and there are no (products) to sell but cash flow is so important because that’s the infrastructure to your personal finances or your business finances; you need the cash flow to ensure your plans work.”

It’s this required knowledge of a number of financial fields that sets fee-based planners apart from their transaction-based counterparts, argue advocates, suggesting that knowledge is essential to making the transition.

“Financial planning is a very detail-oriented, technical job whereas sales is more visionary and general,” explains Feigs. “Some advisors may find it a struggle to deepen the details, so it’s more about a personal preference and what you like to do. I like to work the details, which is why I like (fee-only) financial planning.”

The skill sets between the two models really are different, he continues. “If you move from product sales to financial planning, you can call yourself a financial advisor right across because of the generality of the title but you’re actually doing something quite different.”

CANADIAN ADVISORS

BY THE NUMBERS What’s in a name? It’s often down to choice not certification, but here’s the breakdown:

CHOICE?

FEE-ONLY FINANCIAL PLANNERS:

150

FINANCIAL PLANNERS:

25,000

FINANCIAL ADVISORS:

90,000 CERTIFICATION

CERTIFIED FINANCIAL PLANNERS (CFPs):

18,000

Both Feigs and Graham agree that it is essential for an advisor to carefully toe the regulatory line when it comes to developing a plan for clients. But how does an advisor counsel clients on which products to invest in if he isn’t permitted to suggest specific products?

“I’m not licensed to sell any products so according to the securities commission, if you aren’t licensed to sell you aren’t supposed to recommend specific products,” says Graham. “The reality is that everyone wants to know what to buy and so there is some fashion in which you give guidance in what the client should do.”

In practice, Graham can suggest a number of mutual funds that have low fees and allow the client to make the ultimate decision. Graham also advises clients to invest in balanced funds and exchangetraded funds as a way to diversify a portfolio.

“I also tell them to have a balanced fund, which narrows it down pretty fast,” says Graham. “There are exchange-traded funds for some of my clients, I will suggest they buy exchange-traded funds and they’ll ask, ‘what asset allocation should I have?’”

And he takes it one step further by advising clients to divvy up their equities between investments in Canada, the United States and internationally.

Being able to provide financial planning and sell specific products is a key factor recommending the hybrid approach, point out industry veterans. “There are some financial advisors, fee only, who are licensed,” Graham says. “They may never use that licence, but they may choose to maintain that licence.

It does, in theory, allow them to give more specific advice if they want to.”

While fee-based advising has yet to gain the widespread acceptance of its transactional counterpart, advisors believe it is here to stay. And it will continue to grow as awareness spreads throughout the industry and the general public demands a higher level of transparency around advisor compensation.

Those retail clients are also adopting a self-directed approach to investment planning, a trend fee-based advisors are well positioned to take advantage of.

“We’re breaking the ice, we’re sort of the pioneers – the first 150 people who are fee for service,” says Tom Feigs. “That’s a drop in the bucket compared to the (tens of ) thousand financial advisors across Canada.

“It’s not just a fad it’s going to be a strong part of financial services. We’re building the awareness and we’re continuing to build.”

JANUARY 2014 | 37

34-37_Transition.indd 37

09/01/2014 1:57:36 PM

SOCIAL MEDIA / NO-COST SEO

THE BEST SEO IN LIFE

MAY BE FREE Here’s a little irony for advisors helping direct millions of dollars in client investments: A no-cost SEO strategy may be the best way of growing your outreach and your revenue for 2014, writes industry expert Maggie Crowley

38 | JANUARY 2014

38-41-SEO.indd 38

09/01/2014 1:59:08 PM

WEALTHPROFESSIONAL.CA

When clients type your name or firm into Google (or any search engine), what do they find? The answer to that question, and what happens next in the seconds following can have a huge impact on your success as an advisor.

Chris O’Neill, director of Google Canada, knows.

Some 86 per cent of Canadians do research online to get more information about products and services before they buy. That means, he says, your prospects, referrals and even clients are going online to learn more about you, your services and how you can help them.

The rub for advisors is those prospects, referrals and clients take very little time to arrive at conclusion about you — one that may or may not accrue to your advantage.

When visitors arrive to your website they make a quick judgement about your firm — is this company trustworthy, professional and stable? Psychologists call this unconscious decision “the trust factor” and say it take no more than three seconds to formulate.

If your website makes a negative first impression, visitors are likely to leave and not return.

So, what’s worse than being found online and creating a poor first impression with a bad website?

Not being found online at all. Firms without an online presence virtually do not exist to the 30 million-plus Canadians doing research online.

Every website on the Internet has a goal of ranking No. 1 for related search terms, but very few succeed.

While your site doesn’t need to rank on top to generate traffic, it’s vital that it appears on the first page of a search engine’s results page because searchers rarely scroll past the first page of results.

Full disclosure: you can buy a winning, first-place spot using pay-per-click advertisements but Internet users are about 40 per cent more likely to click on organic results (translation: links that are not paid for).

How can you make sure your advisor website ranks organically in search engine results? The answer is all about search engine optimization (or SEO) and if that’s a term that scares you, you’re not alone. Many advisors are uncomfortable with the concept for one underlying reason: a lack of knowledge and understanding of what SEO is and how it works. So, here’s my attempt at explaining the func-

“Search engines favour websites with more inbound links and give them a higher ranking” tionality of SEO and how to improve your advisor website’s search ranking.

Search Engine Optimization is the process of improving the visibility of a website on a search engine’s results page. The earlier and more frequently a site appears in the search results list, the more visitors it will receive.

Two key factors come into play in order to improve your advisor website’s SEO: off-page SEO and on-page SEO. Off-page SEO refers to optimization strategies outside of your website’s design. The biggest element in off-page SEO is getting other quality websites to link back to your site. Conversely, on-page SEO consists of strategically placing your most important keywords within the content elements of your actual website pages.

W

OFF-PAGE SEO:

Search engines rank websites that they believe are authoritative and relevant. One way search engines measure relevance is by analyzing content on a website based on the number and quality of other webpages that link back to it. Think of it like votes: each link back to your website counts as one vote; the website with the most votes gets ranked higher by search engines, and finally, as a result, the site is more likely to appear first on the results page (and, ultimately, win more traffic).

Search engines favour websites with more inbound links and give them a higher ranking. The more inbound links you have, the more important and relevant your site must be, thus, the higher you’ll rank. Because link building is mostly out of your control, it isn’t an easy feat. But when it’s done right, it’s worth the work and creates very lucrative results for your advisory firm.

So, how do you increase the number of websites that link back to your site? Here are ideas you can use to take action:

JANUARY 2014 | 39

38-41-SEO.indd 39

09/01/2014 1:59:12 PM

SOCIAL MEDIA / NO-COST SEO

TAKE ACTION Create high-quality content that others find valuable and useful. When visitors find information that is helpful and relevant, they are likely to share it. When people begin sharing links to your high-quality content, your website becomes relevant to search engines. The easiest way to share valuable content on your website is in the form of a blog.

1

Maggie Crowley is the B.C.-based digital marketing coordinator at AdvisorWebsites.com.

The firm is focused on delivering websites that push the boundaries on online presence for financial industry professionals through tracking, analytics and content management.

Begin guest-blogging. Seek out opportunities to write articles for well-established online publications.

Your audience will begin to view you as an expert and you’ll naturally create buzz around yourself and your site. (Don’t forget to include a link back to your advisor website – it will fit nicely with your bio).

2

Submit your website to online directories. This is an easy one. Even online directories like the Better Business Bureau and YellowPages.com count. Another quick win: make sure all of your social media outlets link back to your site.

the content of a website dramatically enhances the odds of ranking higher in the search engine results page. Tie the keywords in with local terms in your page titles, URLs, tags, pages and blog posts.

The best way of deciding which keywords to target is to imagine yourself searching for a financial advisor using Google. Think about what words and/or search phrases you would use. Get into the mind of your audience: think about the jargon it uses as well as its problems, interests, associates, locations, education level and more.

If you’re having trouble getting in that headspace, Google can help. Begin typing your search terms into the search box, and let the search engine recommend

B I

I

T

3

ON-PAGE SEO: The other part of SEO takes place within the pages of your website. Properly optimizing your on-page search engine ranking takes time and consistency.

One of the simplest, yet most important, ways to improve your search engine ranking is to optimize the keywords within your website content. What’s a keyword? Here’s an easy definition of the term: Keyword: a search term typed into Google (or any other search engine) that searchers use to describe what they’re looking for.

The most important place to include keywords is naturally throughout the content of your site (including your blog). Google uses those search words (or keywords) to identify what people are looking for online. From there, the search engine works to match a searcher’s keywords with those keywords used within websites (like yours) to determine the ranking of search results.

When marketers use the term “long-tail keywords,” they are talking about a very targeted search phrase that contains at least three words. Long-tail keywords are what searchers actually type into Google when performing a search. Here’s an example: Keyword: advisor; money; planning Long tail keywords: how to find a financial advisor; advisors in Toronto; tips from a financial advisor Using specific and descriptive keywords within

some long-tail variations: Now that we know how and why SEO is important, how can financial advisors put it into practice? The number one way to increase your SEO strategy is to start a blog. Blogging helps advisors establish online credibility by sharing high-quality information that both search engines and your target audience love.

In fact, companies that blog receive about 55 per cent more website traffic than companies that don’t blog, in part because of the huge impact blogging has on high search engine ranking. In our next article we’ll outline more benefits of creating and maintaining a financial blog and its relationship with SEO.

P

BLOG VS. NO BLOG

55%

WEB VISITS

T

40 | JANUARY 2014

38-41-SEO.indd 40

09/01/2014 1:59:20 PM

WP1.

BUILD YOUR WEALTH IN REAL ESTATE $239 AS LOW A

S

Promo Co de WealthP :

Inform yourself at

The International Centre, March 22-23, 2014

SESSIONS YOU CAN’T AFFORD TO MISS • Learn how to maximize your profit and expand your investment portfolio from the industry leaders. Including Brad Lamb, CMHC, University of Toronto and Queens University • Find the right Joint venture partner at our JV Networking Reception

• Get the best Mortgage, Lending & Finance Halifax Montreal solutions for your income property • Gain fresh perspectives and new strategies with fellow investors like you at the Industry Knowledge Exchange

We go where the market takes us. Join us to start your journey!

Brad Lamb

• Discover unknown U.S. & International Property Bargains

PLUS

• Get recognition for your investment success at the most sought-after awards in the industry

• Learn to exploit the current investment environment at the Industry Leader’s Round Table

REGISTER ONLINE NOW! Get 20% off the full delegate pass if you register before February 14

2014

• Canada’s Largest Seminar Program and expo • Unique networking sessions

WIN A $60K

• Passive & Turnkey solutions

INVESTMENT PROPERTY

• $1000’s in investing tools

T: 1-855-283-2721

E: registration@kmimedia.ca

www.theinvestorforum.ca

toronto.theinvestorforum.ca Platinum Sponsors

WP1.6_FullPg_IFTO.indd 1 38-41-SEO.indd 41

Gold Sponsors

Lanyard Sponsor

Exhibitors

Awards

03/01/2014 09/01/2014 1:58:57 1:59:23 PM

BUSINESS STRATEGY / SUCCESSION PLANNING

SUCCE

PLA When it comes to mapping out an exit strategy, an advisor is ‘in tough’ if she ignores the basics of maximizing business value for prospective buyers

Most business owners go into business planning to maximize the value of the business and extract that value (most often by selling) when they exit. But the research tells us most don’t have a plan or strategy around how to do this and therefore often fail to either maximize or extract the value or both.

Achieving a successful outcome centres around both internal and external factors.

INTERNAL AREAS When it comes to internal areas, the question to ask is “what are the key things we can focus on to ensure our business is valuable, attractive and saleable?”

In my experience, there are eight key areas to focus on when answering this question: 42 | JANUARY 2014

42-44_BizStrat_SuccessionPlanning.indd 42

09/01/2014 1:59:55 PM

WEALTHPROFESSIONAL.CA

ESSION

ANNING 1

Size Simply put, size does matter. There is plenty of research supporting the fact that businesses with a turnover of $5m or more nearly always sell at higher multiples than their smaller counterparts.

While I am not in favour of growth for growth’s sake, designing your business to grow to at least this level of turnover will maximize value.

2

Business model Is your business operating under a boutique or scale model and, even more importantly, is every aspect of your business aligned with your model? This includes: • • • • •

customer service online presence the people you employ your pricing strategy your marketing materials: I recently met a financial advisor looking after high-net-worth individual clients who was extremely good at what he did and as a result charged a premium.

But he then gave me a business card on very flimsy paper that looked like it had been printed as cheaply as possible

3 4

Revenue Recurring revenue is vital. Do you have clients on long-term retainers, extended contracts, or some type of residual income trail?

Sales and marketing Your business needs to be able to generate new business, leads and, ultimately, sales without relying on either your or a key person’s skill and sales ability. All businesses need a sales and marketing machine.

5

Systems Save yourself time, effort and money: not only are systemized businesses far simpler to run, far less stressful and generally far less risky, but they are also more valuable.

Inadequate planning in this area can cost you a large percentage of the sale price in taxation

6

Employees Do you have an employee incentive plan whereby employees are rewarded based on performance? This could either be a profit sharebased plan, or ideally an employee share ownership plan. This substantially reduces one of the key risks for buyers – that your employees will exit when you do!

JANUARY 2014 | 43

42-44_BizStrat_SuccessionPlanning.indd 43

09/01/2014 2:00:01 PM

BUSINESS STRATEGY / SUCCESSION PLANNING

7

Corporate governance and compliance Corporate governance and compliance is often ignored by business owners as either something only large firms need to worry about or something that’s simply too hard and far too boring.

Focusing on this area can add considerable value (particularly when we look at attracting the right type of buyers), as well as reducing risk.

8

Owner dependence The business must be able to run independently of your involvement.

For example, you must be able to leave for two months for a holiday in Europe without contacting the office, while the business maintains, continues and even improves its performance in your absence.

EXTERNAL AREAS When it comes to external areas, the question to ask is “what do we need to prepare to attract the right buyer (who will pay more)?”

Having bought and sold several businesses over the last 15 years, there are several factors that stand out to me when answering this question:

1

ABOUT THE WRITER Craig West is the president of the Exit Planning Institute and a strategic accountant with over 20 years’ experience in advising business owners. His practice, Succession Plus, provides mentoring, advice and strategy for clients looking to prepare their business for a successful exit.

He is currently working on a PhD in Business Succession and Exit Planning.

Strategic buyer For every business there is a strategic buyer who will pay more for your business simply because they benefit more than most other buyers. The most common example of this is complementary products and services.

2

Information memorandum (IM) document It is amazing to see the number of businesses, which are otherwise quite valuable, whose owners are prepared to sell up on the basis of a cheap, home-made flyer-style document. A well-prepared IM will be able to attract and convince the right buyer.

3 4

Tax planning Every exit has several different elements of taxation. Inadequate planning in this area can cost you a large percentage of the sale price in taxation.

Due diligence and documentation Many transactions fall over at this point, but this can actually be used to assist in improving the value of the business. If all of your documentation is complete, accurate, up to date

and demonstrates a well-managed business, it will support your value proposition, not detract from it.

5

Negotiation Being in a position to create some competitive tension by attracting several of the right buyers is a good start, but the conduct of the negotiations and discussions leading to the actual sale is very important aspect of the process.

6

Legal agreements Often business owners are concerned that legal agreements will scare off the buyer, but this is very rarely the case.

Far more importantly, legal agreements need to be structured to protect you after the sale – particularly around the key issues of any warranties, assurances provided, and also any event or finance included as part of the sale terms.

The business must be able to run independently of your involvement

7

Corporate advisors Business owners should not try to sell without the best advice. Well-represented businesses are generally taken far more seriously and are perceived to be far more valuable than those without representation.

A corporate advisor who has a reputation for selling good-quality businesses automatically positions your business in that category.

Importantly, post-exit, you also need assistance with asset protection, estate planning and ongoing investment planning. The change from business owner to self-funded retiree is substantial.

KEY OUTCOMES The correct implementation of the items outlined above will achieve two key outcomes: maximize the value of the business and successfully extract that value upon exit.

44 | JANUARY 2014

42-44_BizStrat_SuccessionPlanning.indd 44

09/01/2014 2:00:06 PM

WEALTHPROFESSIONAL.CA

CLIENT COMMUNICATION: DIGITAL VS. TRADITIONAL As blogs, newsletters and videos become normal modes of client communication, advisors are heading into the brave new world of digitization.

But old-school communication is just as key to connecting with a client’s enduringly emotional heart, warns Anders Sorman-Nilsson

JANUARY 2014 | 45

45-47_Client Communication.indd 45

09/01/2014 2:00:34 PM

BUSINESS STRATEGY / COMMUNICATION

We are entering a world of digital disruption: the idea that everything that can be digitized will eventually be digitized. This includes the customer service and marketing touchpoints that are essential tools for investment advisors seeking to win the hearts and minds of tomorrow’s investors.

Digital disruption is a force to be reckoned with for those professionals, but it doesn’t mean that everything that can be digitized should necessarily be digitized. It’s essential to pay careful attention to your communications mix so that you don’t throw out the traditional baby with the traditional bathwater. While the digital world represents a shiny new penny that is key to engaging with the customer’s increasingly digitized, rational mind, old-school communication remains vital to connecting with the client’s enduringly traditional, emotional heart.

The digital world disintermediates the relationship between financial and bricks-andmortar investments and the end consumer, and that consumer is increasingly doing their due diligence digitally. This means that you run the risk of being digitally disintermediated unless you start providing more value to the customer. Think robo-advisors, but also think about fighting that threat a new way.

Digital is phenomenal for attracting new clients, and traditional is great for retaining existing clients.

Thus, you need to become a thought leader in the way that you provide informational, rational value to clients’ increasingly digital minds, while still connecting with them emotionally.

To be able to compete with digital comparison portals and to protect yourself against digital disintermediation, it’s critical that you figure out which touchpoints you should digitize and which ones you shouldn’t digitize. This isn’t a choice between either the digital or the traditional channel.

Instead, you must go “digilogue.” Here’s how:

PROVIDE VALUE TO DIGITAL MINDS

website. Create a four-two-one digital content schedule: blogging four times per month, sending two digital newsletters per month, and creating engaging and educational video content at least once per quarter.

For example, an advisor in Coal Harbour, Vancouver, could create a four-two-one digital content schedule to provide informational value to clients’ (and prospective clients’) digital minds, while also boosting his or her Google rankings. It would look something like this:

FOUR-TWO-ONE DIGITAL CONTENT SCHEDULE

BLOG

1. “The impact of the central bank decision on property values in Coal Harbour” 2. “A cost-benefit analysis of cashing out existing investments to transfer those funds into the Coal Harbour market” 3. “Do’s and don’ts when using RRSP-eligible investment to buy Coal Harbour property” 4. “Top 7 questions about REIT investment alternatives” DIGITAL NEWSLETTER

1. “3 tips to ensure a good equities-real estate portfolio mix” 2. “Coal Harbour property trends – why the time is right!”

VIDEO

1. Interviews with current clients now switching up their portfolios to allow for Coal Harbour investment

Put your industry thought leadership and professional expertise on the digital line by creating a great blog, newsletter, and well-designed, interactive

It’s absolutely necessary to make each tangible traditional encounter with current and prospective clients world class 46 | JANUARY 2014

45-47_Client Communication.indd 46

09/01/2014 2:00:41 PM

WEALTHPROFESSIONAL.CA

BEING SEEN You must be seen in the digital world. Your prospects need to start trusting you as a thought leader in the digital world before making an approach to see you in the traditional world. In the digital world, where clients are doing their digital due diligence, offering engaging content is king.

Creating search-engine-optimized, localized content that can be easily accessed by a prospect via mobile devices will be key to your success in winning digital minds. For example, have content on offer that your clients can view while they’re walking up the street in your area and checking out property.

Big deals are usually still sealed with a handshake. There is something about the ritual of signing on the dotted line … that the digital world still cannot mirror.

CONNECT WITH TRADITIONAL HEARTS While it is critical that you, as an advisor, are digitally accessible and provide value to digital minds, you also have to ensure that you connect deeply with traditional hearts. Traditionally and enduringly, most transactions take place in the traditional , faceto-face world. Big deals are usually still sealed with a handshake. There is something about the ritual of signing on the dotted line with a Montblanc pen, for example, that the digital world still cannot mirror.

It’s absolutely necessary to make each tangible traditional encounter with clients, and prospective clients, world class. If a client, or prospective client, decides to spend traditional , face-to-face time with you, you must show incredible respect for the time they invest with you by connecting deeply with their traditional hearts.

In June 2013, when I spoke at the Million Dollar Round Table for global financial advisors and insurance professionals in Philadelphia, I gave the following recommendations. Have a think about them:

RECOMMENDATIONS • Scenario planning and consulting on a one-on-one basis with your client: My financial advisors at Sentinel Wealth do this incredibly well. We sit down each quarter face-to-face and revisit goals and the long-term plan. They provide me with hindsight, insight and foresight based on our plan, while providing a sense of partnership during these conversations.

• Writing a handwritten card: This will remind the client of their investment and savings goal, or congratulate them on goals achieved. When I was working with mortgage brokers who sold Advantedge products, one broker said that handwritten notes was his key way of adding traditional value and ensuring he retained his clients’ loyalty.

• Hosting investment and financial literacy workshops for clients and their friends: This is a great way of adding value to existing relationships, while also building a pipeline of trusted referrals.

• Speaking at industry conferences: This will boost your personal brand and thoughtleadership credentials, and harness your financial networks (accountants, mortgage professionals, stockbrokers, banks, etc.) both for speaking opportunities and face-to-face introductions. If you become a trusted advisor and thought leader within the industry, the likelihood is that the industry will talk about you.

This in turn can generate positive PR and recommendations.

There is a time to be digital and there is a time to be traditional. Financial services professionals must ensure they find the correct blend. Digital is phenomenal for attracting new clients and for boosting your own digitally amplified branding, while traditional can be great for building enduring trust, retaining business and closing deals.

Increasingly, you must learn to shift seamlessly between the digital and traditional worlds. In one word, you must start becoming “digilogue.”

Anders SormanNilsson is a global futurist, innovation strategist, keynote speaker at TEDx and author of the new book, Digilogue: How to Win the Digital Minds and Traditional Hearts of Tomorrow’s Customer.

JANUARY 2014 | 47

45-47_Client Communication.indd 47

09/01/2014 2:00:46 PM

BUSINESS STRATEGY / RELATIONSHIPS

CLIEN RELATIONS H HOW TO DRIVE SALES

48 | JANUARY 2014

48-51_BizStrat_relationships.indd 48

09/01/2014 2:05:53 PM

NT S HIPS There’s no getting around the fact that customers like to do business with people they actually like, and in today’s market, building effective client relationships is more vital than ever. Nikki Heald explains

WEALTHPROFESSIONAL.CA

So you think you’re pretty savvy technically, right?

You know all your stuff and have spent years acquiring skills and experience. Additionally, you know your product inside out, back to front. You believe you are the technical guru. Unfortunately, you can’t seem to hit your sales targets and don’t understand what’s going wrong…

Welcome to the world of relationship marketing – a process whereby sales are increased via the relationships you have created with others. Technical is out; rapport is in.

At a time when competition for clients is intensifying and profits are shrinking, building effective alliances has never been more vital.

The reality is that business is not business – business is personal and people do business with people they like.

HUMAN NATURE Unfortunately though, not everyone we meet in business will instantly warm to us. Human nature is such that people can be indifferent, inconsistent and unpredictable. Diversities in personality, viewpoint and needs come into play, and rolling out a generic client relationship strategy simply won’t work.

Successful sales professionals realize that their results are achieved due to a willingness to adapt to their prospect. They individualize their approach to client interactions and build unique connections.

They research, ask questions and observe to gain insight. They realize clients are not driven or motivated by the same things. Effective salespeople forgo taking shortcuts and recognize that outdated selling tips such as “always be closing” are no longer applicable.

All too often, opportunities are lost due to assumptions made or jumping in with the hard sell.

Today’s clients are seeking a business partner who assists them with the right solution and responds to their needs.

If we think about it, the very heart of the sales process should be underpinned by wanting success for our clients, rather than success for ourselves.

The underlying goal should be to understand their challenges, create solutions and add value wherever possible. So, how do relationships influence the sales process?

Effective salespeople forgo taking shortcuts and recognize that outdated selling tips such as ‘always be closing’ no longer apply

JANUARY 2014 | 49

48-51_BizStrat_relationships.indd 49

09/01/2014 2:05:57 PM

BUSINESS STRATEGY / RELATIONSHIPS

10 CLIENT RELATIONSHIP TIPS

THE STAGES OF ENGAGEMENT The cycle of sales can be attributed to various stages of engagement identified as follows.

Clients are most likely to buy from you when in the moderate and high trust zones – when rapport and credibility have been firmly established. However, time and patience must be observed in progressing through the initial stages. No one likes to be rushed into anything.

Diversities in personality, viewpoint and needs come into play, and rolling out a generic ‘client relationship strategy’ simply won’t work Each interaction you have with clients, no matter how small, contributes to solidifying and cementing the relationship. Making your clients feel valued and important is essential to a solid foundation and future business prospects. Let potential or prospective clients feel as though they have chosen you, rather than feeling sold to.

Think about how you and your team currently interact with clients in your business: • What tools do you presently have in place?

Is there room for improvement?

• Could you try something different or learn new strategies to nurture alliances?

Perhaps it’s time to take a different approach targeted specifically at implementing and boosting client engagement.

1. Invest time, energy and commitment into getting to know your client: It won’t happen overnight.

2. Be determined to focus on your client: Remember, it’s about them, not you.

3. Adapt your communication style to suit: A one-size-fits-all approach won’t cut it.

4. Find out their interests and hobbies: Create a database to store the information you learn.

5. Say ‘thank you’ in a tangible way: You don’t have to go to great lengths or expense to do this.

6. Keep in touch regularly: Look for reasons to keep yourself at the forefront of their minds.

7. Generate ideas: Be creative with solutions and provide unique options.

8. Design a shared goal and ask for their opinion: Work together to construct a collaborative alliance.

9. Don’t sell on price: Focus on explaining your value and the outcomes you generate.

10. Finally, invest in ‘interpersonal skill’ staff training: Your employees should understand the importance of complementing their technical ability with

BETTER AND BETTER Nikki Heald is a corporate trainer, presenter, businesswoman, founder of Corptraining and co-author of Views On The Way To The Top.

The interesting thing about all relationships, including those in business, is that, once established, they have the potential to get better and better. The challenge is to ensure this occurs. Ongoing contact and maintenance should form part of your overall relationship management plan to ensure that clients feel a genuine, rather than token, connection with you.

See the 10 client relationship tips box above for some tips that may assist you in building better and more effective relationships.

Remember, once you have built solid relationships, those alliances instinctively want you to succeed and are more than happy to refer or recommend you to others.

Additionally, some clients are willing to pay more for a product or service if they feel they have a personal connection in place. The decision to focus your energy on a relationship with your client is an unlimited method for increasing sales and capturing new opportunities.

50 | JANUARY 2014

48-51_BizStrat_relationships.indd 50

09/01/2014 2:06:09 PM

WP01

BUSINESS STRATEGY • BREAKING NEWS • SPECIAL REPORTS

PR OF ES WE AL TH 1.1 ISS UE

Wealth Professional is Canada’s newest source for news, opinion and analysis focused on financial advisors and investment professionals.

SIO NA

OM .AU L.CCA

TOP

BOURIS MARK ST ON CE HO VICE PRENTI THE APE VALUE OF AD TH GY STRATE SINESSTE GUIDE TO WEABU LT HP RO SINESS ULTIMA FE SS ISSTH URIOBU UEE1.1 G YO NA L.C A RUNNIN LD MCDONANE P ’S TOR LEANNELE LIAAN R STRAPL AUMA PLANNE TOP FE FEMALE

EXCLUS

IVE IN

BRA ON BUNSON SI TERVIE

W

NESS

How to busine turn your the Vir ss into an em gin way pire

S R E S I V AD !

AY D TO N IO T IP R SC B SU EE FR R U O SIGN UP FOR Y POLITE WHY COMPA ETIQUE CORRECTNY D >> >> LE TH E NEXT EVDEA RLE SECRETTTE IS YORE URVSEA GENERA NER RS NPO EA TOMOR ISWOA DVPL N AAL ROW’S TION ANLCI CI A INDUST N N A FI N FI T RY LEADER BES ’SST ’SIABE S TODA AL AD RA Y CA AUNST

SA INSURIFARI SUITS NG MOST CANADA’S EXTREM MOTOR RACE E

WEALTHPROFESSIONAL.CA • The latest news with a direct impact on you, your clients and your business • Strategies to deliver better outcomes for your clients • The latest business intelligence • High-quality video content, delivering exclusive insights • Intel on what the major players are doing • Updates on regulatory reform and products • Have your say in our polls • Tell us what you think in our forums • Coverage of industry events FOR MORE INFORMATION CONTACT: Dane Taylor, National Accounts Manager 416.644.8740 ext.249 dane.taylor@kmimedia.ca

WEALTHPROFESSIONAL.CA 48-51_BizStrat_relationships.indd 51 1 WP01_UpcomingIssues_FullPg.indd

09/01/2014 11:03:06 2:06:14 PM 11/10/2013 AM

BUSINESS STRATEGY / SALES

SALES SCREW-UPS YOU CAN

52 | JANUARY 2014

page52-55_Sales.indd 52

09/01/2014 2:07:51 PM

WEALTHPROFESSIONAL.CA

AVOID Doug Mathlin outlines common traps you’ll need to sidestep in order to boost your business and and energize your team DOING SHORT-TERM NEEDS ANALYSIS AND PROVIDING SHORT-TERM SOLUTIONS The average rate of client advocacy is low in many industries and investment advice is no different. Clients can come to realize in the first few years that their arrangements are not right for them in the long term (or their situation changes).

Unfortunately, this can create doubt about the value/ worth of the original advisor and many clients walk as a consequence. Advisors should understand the short- and long-term goals of each client to ensure that they can provide the best structure at the outset and for the future. They should also ensure that the client understands that if their circumstances change, they should meet with their advisor to discuss new strategies.

NOT EDUCATING CLIENTS THAT YOU’RE SELLING RELATIONSHIPS AND ADVICE, RATHER THAN TRANSACTIONS Most clients contact an advisor because they’ve decided they need to examine their investment needs. Advisors don’t really need to sell product; the client has already bought into that. Clients will often only focus on what they need now and not even think about what advisors really do. The advisor’s job is to fully understand their clients’ needs, provide advice where appropriate, and educate their client on how they will assist them with financial planning for the long term. I hear some advisors tell their clients that they are their “personal advisor” – which hopefully means that the client will turn to the advisor first when they next want to invest.

ONLY MEETING CLIENT NEEDS RATHER THAN EXCEEDING THEM Experienced advisors are often guilty of just doing enough to complete the transaction and not finding a way to do the 1 per cent extra.

Client satisfaction comes from needs being met; client JANUARY 2014 | 53

page52-55_Sales.indd 53

09/01/2014 2:07:52 PM

BUSINESS STRATEGY / SALES

Experienced advisors are often guilty of just doing enough to complete the transaction and not doing the 1 per cent extra Doug Mathlin loyalty begins when client expectations are exceeded. Top performers will often check to make sure that they over deliver for every client.

EXPECTING THE PROSPECT/ CLIENT TO DO THE WORK FOR YOU Sending a detailed needs analysis to a prospect who doesn’t know you and expecting them to complete it is not a good way to engage with them. First, some people will not be willing to complete it due to the personal nature of the questions, while others won’t have the information required at their disposal. Most advisors’ value propositions are about saving clients time and money. Advisors should make it easy for people to do business with them. Have someone help the client complete the fact find and you will more likely have a very pleased client who is willing to

recommend your services.

Sending a high-level fact find to identify the client and to ensure that they are a serious buyer is fine – but not by using a 10-plus page questionnaire.

NOT HAVING A SYSTEM OR PROCESS TO FOLLOW AT THE POINT OF SALE OR BEYOND IT Winging it is never a good presentation plan. Salesp e ople ne e d to be pr of e s sion a l communicators who can articulate their message clearly. Many advisors turn up to client appointments and ask, “How can I help?” and make it up from there. Take control of future meetings by setting the agenda and keep clients on track with what you are doing. You are the one being paid for this meeting, therefore you should control it.

Great salespeople have anecdotes to back up their experience and to sell their knowledge. Top-performing salespeople have a sales presentation plan and structure that they follow and have the ability to adjust it to the differing personality styles of their prospects.

Keep a record of the questions that you need to ask each client. Prepare to deliver your key messages (value proposition, your personal experience, your

54 | JANUARY 2014

page52-55_Sales.indd 54

09/01/2014 2:07:51 PM

WEALTHPROFESSIONAL.CA

referral program) and anticipate any unasked questions.

NO URGENCY TO PERFORM One of the things that advisors can do to outperform the competition is to provide a truly personal service to each client and referral partner. The energy and enthusiasm of the salesperson are the things that the client will remember well beyond the premium rate. Quickly reacting to client needs (and anticipating them) is a great way to demonstrate your care and commitment to them.

Set yourself a benchmark to respond to all client queries in less than an hour on average. Answer all inbound calls where possible. These are the little details that clients will remember.

NOT MANAGING CLIENT EXPECTATIONS One of the things that clients get annoyed, frustrated or confused about is not knowing what’s happening with their investments.

Advisors are engaged in this work all the time, whereas clients tackle this a few times in the year.

As this is a really important process for the client and is often stressful, the least the advisor can do is to keep them informed about what is happening.

It’s important to provide clients with a flow chart on how things will progress in making an investment or establishing a plan. It’s also important to stay in contact with the client directly (by phone or email).

In the early stages, it will pay dividends to call the client almost every day to let them know what is happening, to explain the next steps, and to ask this question: when would you like to hear from me again?

THE INABILITY TO SELL YOURSELF AND YOUR REFERRAL PROGRAM If you rely on repeat and referral business from clients, it is critical that you tell your clients about this. I’m always staggered by the number of advisors who hope for referrals and recommendations rather than being direct about it.

Tell your clients why you are going to do the best you can for them and tell them how you generate business (ie, client referrals). Don’t ask for specific names of people that you can call but make sure they know how to repay you for your great service

JANUARY 2014 | 55

page52-55_Sales.indd 55

09/01/2014 2:08:13 PM

FEATURE / CLEARING UP COMPENSATION

CASTING LIGHT ON

COMPENSATION If a growing number of advisors have seen the light about fee-based compensation, an even larger number have doubts about making it work. Some of those fears may be justified, writes Jason McIntyre, head of distribution at Vanguard Investments Canada Inc., but so many are not

Financial advisors are bracing for change, expecting commission-based remuneration to increasingly give way to fee-based compensation. And they expect this change to accelerate with the implementation of the Client Relationship Model reforms in Canada, themselves part of a global shift to fee-based investing.

In a recent Vanguard sponsored survey, 69 per cent of advisors said they were compensated by commission alone, whereas 21 per cent said they were fee-based only. However, these same advisors believe that their compensation structure is going to change over the next five to 10 years, with a shift away from commissions to fee-based.

We agree that the advice industry is changing and believe these changes are generally in the best interest of both clients and advisors.

VIRTUES AND CHALLENGES OF FEE-BASED From the client’s perspective, asset-based fees largely remove concern about potential conflicts of interest in the advisor’s recommendations.

From the advisor’s prospective, asset-based compensation can promote stronger client relationships and from a business standpoint more reliable revenue streams. The advisor can spend more time with clients, knowing that compensation does not depend on whether or not a transaction occurs.

There are challenges for advisors shifting to feebased compensation. For example, some clients may perceive paying fees regardless of whether transactions occur as “money for nothing.” However, this views the advisor’s value proposition through only one portion of the cost-benefit lens — his or her ability to outperform the market.

A value proposition based on performance alone

56 | JANUARY 2014

56-58-Van.indd 56

09/01/2014 2:09:27 PM

WEALTHPROFESSIONAL.CA

CANADIAN ADVISORS BY COMPENSATION TYPE:

62%

21%

10%

commission only

fee only

commission/fee

And advisors’ needn’t expect a drop in revenue.

In fact, they may see the opposite. Advisors who increased their assets in fee-based accounts by 25 per cent or more have seen revenue growth of 47 per cent over three years, more than double the average growth rate of 21 per cent. That is compared to a revenue growth of 19 per cent for advisors who increased their assets in fee-based accounts by less than 5 per cent in the same period, according to research by data aggregator PriceMetrix Inc.

COMBATING CLIENT RESISTANCE U.S. ADVISORS IN THE LEAD? 80

60

40

56% (2012)

20

59% (2013)

0

Compensation for the average U.S. advisor is increasingly fee-based and not commission (U.S. Source Data)

Jason Mcintyre

puts an advisor at a disadvantage. Not only does success depend on factors outside the advisor’s control, such as the returns from individual securities or professionally managed funds, but the strategy also can promote a horse-race mentality among clients, leading them to depart if the promised outperformance does not materialize.

On the other hand, fee-based guidance changes the conversation, creating an incentive for advisors to demonstrate how they add value beyond performance. Because compensation is more transparent, advisors can show how they add value as wealth managers, financial planners and behavioral coaches. In other words, the advisor is the alpha. As such, the advisor becomes an even more important factor in the client-advisor relationship, because the greatest obstacle to clients’ long-term investment success is likely themselves.

Depending on the structure and amount of charges, a transition to a fee-based practice may involve no change for clients, except that charges should become more transparent and potentially tax deductible.

However, advisors shifting to fee-based compensation may get some resistance from clients unfamiliar with the approach.

One way advisors can ensure a smooth transition is to start with a discussion about the advisor’s alpha concept, and emphasize that they serve as wealth managers setting sufficient savings levels and constructing diversified portfolios. No less are they behavioral coaches, inhibiting investors from making undisciplined and emotional decisions.

Advisors who successfully explain their value and fees have more time to work toward addressing clients’ needs. Clients may more readily accept a fee-based model if they fully understand the benefits.

Financial advice has never been “free,” but the costs haven’t always been clear. In the Vanguard survey, 79 per cent of advisors said clients ask them to review their compensation “rarely” or “never.”

Also remember, clients don’t necessarily define their success by merely the growth of their portfolios.

Instead, they increasingly view investing in terms of their life goals, such as college and retirement independence, and they depend on their advisor to be a trustworthy, attentive guide on their path toward these goals. It’s indication that the era of the transactional advisor is over. Another is the attention regulators are paying compensation.

In Canada, after years of discussion about the need for greater investment fee transparency, movement in that direction is accelerating with the implementation of the Client Relationship Model reforms. The new CRM regulations took effect in July and have a three-year phase-in period. They require advisors to disclose all charges that their clients pay, including trailer fees. A recent Canadian Securities Administrators discussion paper has also highlighted the issue.

What’s taking place in Canada is part of a global trend. Regulations that took effect this year ushered JANUARY 2014 | 57

56-58-Van.indd 57

09/01/2014 2:09:32 PM

FEATURE / CLEARING UP COMPENSATION

GO BIG OR GO HOME A concerted effort to grow fee business pays off 50

40

47%

30

19%

20

10

0

Advisor revenue growth... from a 25% increase in fee portfolios

IFB_HalfPgAdOutline.indd 1

Advisor revenue growth... from a 5% increase in fee portfolios

in fee-based models of investment advice in the United Kingdom, the Netherlands and Australia.

Similar efforts are under way in Germany and Sweden. In the United States, where investors embrace advisors as total-wealth coaches, 59 per cent of advisor compensation comes from asset-based fees, up from 56 per cent in 2012, according to Cogent Research.

Behind this change is the acknowledgment that too many investors don’t have a clear picture of how they pay their financial advisors and that transactionbased commissions may in some cases be perceived as conflicts of interest. We expect this change to continue and for fee-based advice to grow. At first, advisors may find this challenging. However, shifting to a fee-based model also offers them a great opportunity to connect with clients in new and lasting ways.

09/12/13 11:27 AM

58 | JANUARY 2014

56-58-Van.indd 58

09/01/2014 2:09:38 PM

BUSINESS STRATEGY / CONTENT MARKETING

CONTENT

MARKETING HERE TO STAY

Content marketing might be the latest marketing buzzword, but what does it mean and, more importantly, can it add value to your advice business? One thing is certain, Peter Bowman explains, for the foreseeable future, it’s here to stay

Content marketing involves creating and sharing content in order to promote your business, retain existing clients and attract new ones. The content you create is stored on your website, which acts as your online storefront. You share your content by adding website links on your social media pages.

So how is content marketing different to traditional marketing? Traditionally, most services used a mix of television, newspaper, radio and telephone directory advertising. This provided people with the ability to find you and make an appointment. When you think about it, this is really one-way communication – your business sending a message to the marketplace. If they are satisfied with you, they may tell their friends about you and make a referral.

JANUARY 2014 | 59

59-61_BizStrat_Content-Marketing.indd 59

09/01/2014 2:10:39 PM

BUSINESS STRATEGY / CONTENT MARKETING

TRADITIONAL MARKETING VS CONTENT MARKETING Content marketing, however, is more like two-way communication. People have the opportunity to interact with you and share your content with their own connections.

CREATE AND PLACE YOUR MESSAGES

NEWS

WHY SHOULD YOU CARE? There are six reasons why you might consider adding content marketing to the marketing activities of your business:

1

The shareable nature of social media makes content marketing highly believable when it is shared and liked by your followers. Prospective clients are more likely to trust a referral from a friend than to trust an advertisement. Therefore, content marketing provides a great way to introduce your expertise to people who you don’t do business with yet. In some ways, it’s the modern version of a referral – it’s a virtual handshake.

Traditional advertising is seen by many consumers as an interruption to their television viewing, radio listening or newspaper reading.

Content marketing, given that it’s news you can use or entertainment, is more likely to engage with consumers than interrupt and annoy them.

If you’re not on social media, you are likely to be seen as old-fashioned. Once upon a time a business needed a fax number and a website just to be considered credible. The same can now be said for Facebook and LinkedIn company pages.

Tomorrow’s clients live with social media.

Teenagers today don’t know what life is like without the Internet. And although it’s medically possible, many don’t think they can live without a Facebook update or a tweet. The point here is that the Internet has changed the way we communicate and interact, not only with each other but with businesses too. If you don’t embrace change like this, you’re likely to be limiting your business’s longevity.

Content marketing is highly measurable. With inbuilt metrics within social media tools, and Google Analytics for your website, you can see how widely your content is shared and what this marketing effort and cost is bringing to your business.

Accountability in marketing is always a good thing, and content marketing allows you to assess the cost of a new client clearly.

5

• Contact you to make an appointment • Potential to tell their friends about you by verbal referral

• Contact you to make an appointment • Potential to tell their friends about you by verbal referral PLUS ONLINE THEY CAN

2

3 4

ACTIONS TAKEN BY POTENTIAL CLIENTS

• Follow you • Like you • Comment on and ask questions about your content • Share your content with their friends

6

The more content you have, the more credibility you have with search engines like Google.

Content marketing can help improve your Google rating. More and more people are going online to search for assistance rather than look through the telephone directory.

SO WHAT CONTENT SHOULD YOU CREATE? Creating shareable content is the key challenge of effective content marketing. Shareable is the key word here. Shareable content identifies a problem, helps solve a problem, entertains, or a combination of all three. By sharing this kind of content, you have the opportunity to be seen as the go-to person for help within your community on your area of expertise.

Effective content marketers avoid straight selling.

They do this because straight selling is likely to be seen as spam by an audience, then likely to ignore it.

The type of content you can create is really only limited by your imagination and your marketing

60 | JANUARY 2014

59-61_BizStrat_Content-Marketing.indd 60

09/01/2014 2:10:45 PM

WEALTHPROFESSIONAL.CA

budget. Typically though, content marketers produce things like:

• • • • • • • • •

Fact sheets Did you know... blog articles White papers Case studies How-to guides and e-books Interviews Podcasts YouTube videos Video-recorded seminars

WHICH SOCIAL MEDIA CHANNELS SHOULD SHARE YOUR CONTENT? There are new social media channels popping up every day, but the most popular ones are Facebook, LinkedIn, Twitter, Instagram, Google+ and Pinterest.

It makes sense from a content marketing perspective to create pages on the social media channels where your existing and ideal clients are. It also makes sense to have a personal LinkedIn profile so your professional network can connect to you online.

WHAT DOES IT COST? In traditional advertising (radio, newspapers, television, and telephone directories) there are usually two costs: the cost of creating the advert and the cost of advertising space itself. Content marketing only has the cost of creating the content, as all of the popular social media channels are free.

HOW DO YOU MAKE THE DECISION TO EMBRACE CONTENT MARKETING? Using the principles from my book, Service 7, here are seven questions you should ask yourself before jumping head first into content marketing:

Peter Bowman is a private marketing consultant and the author of Service 7, a book that helps professional advisors market their firms more effectively.

1

Can it add value to our business?

How you define value will depend on your business. But for most, it comes down to client satisfaction, business income and profitability. If you don’t believe content marketing can add value on these measures and your own, then perhaps it is not right for you.

Does it help us understand our clients better?

Understanding your clients and meeting their needs is certainly a key to success within any service. By connecting with your clients online, not

2

only can they follow you, but you can also keep up to date with what’s going on in their world in a non-intrusive manner.

Does it help us tell our story better and build our reputation?

Content marketing may afford you the opportunity to tell your story better over time. Articles and fact sheets can demonstrate your expertise and opinion leadership. YouTube videos are great at helping explain complex matters and sharing personal messages where traditional face-to-face communication usually works better.

Can it help us attract new clients?

As with assessing all business development decisions where you intend to make an investment of time and money, it’s prudent to ask yourself how effective this effort might be. If no one is using the telephone directory or reading the newspaper any more, then ask yourself if content marketing offers a way to connect with prospects and potential clients.

Will it help us deliver better customer service?

Not only might you be able to attract new clients with content marketing but you might also be able to service them better. Perhaps there are frequently asked questions or difficult issues you can share some insight on. Or perhaps you can offer tax-time reminders as a part of your content marketing – so you are delivering part of your service online too. Remember, content marketing is two-way communication.

Can it help us enhance our service design?

Content marketing has the ability to change the way you deliver your services. Perhaps it’s time to create an online service capability that might include an introductory client fact page and a welcome video.

Will it help us create the future, or is it just change for the sake of change?

As with all innovation, it’s important that you’re confident you are making changes within your business because it makes sense to do so. It’s also likely that your competitors are considering content marketing, too.

Given the increasingly online nature of the world we live in, content marketing isn’t going to go away.

As with all marketing initiatives, however, it’s important that you take some time to create your goals, plan your messages, select your channels and assess the results to ensure your content marketing strategy is working for the betterment of your business.

3

4 5

6 7

JANUARY 2014 | 61

59-61_BizStrat_Content-Marketing.indd 61

09/01/2014 2:10:51 PM

LIFESTYLE / DAY IN THE LIFE

62 | JANUARY 2014

62-63-ADayInTheLife.indd 62

09/01/2014 2:11:16 PM

WEALTHPROFESSIONAL.CA

Day in the life of...

Marta Stiteler, owner of Pillar Retirement Group, Worldsource Financial Management Inc., in Hamilton, Ont. 6:00 a.m. I’m up and getting ready for my 7:00 a.m.

Rotary Club of Hamilton meeting where I currently serve as secretary. Next year, I will be the VP and president nominee. Our dynamic club has raised over $5.5 million dollars for Greater Hamilton charities, including the Community Child Abuse Council, since it was founded some 27 years ago. Meetings are at the Williams Fresh Café at the beautiful Hamilton Harbour, which is undergoing a massive renaissance.

8:45 a.m. I’m now at my Waterdown office. I scan industry information for what we are likely to experience on the markets that day. I then review emails and respond in detail. If running behind, I file interesting articles from Wealth Professional and Investment Executive email bulletins for later reading. After that, I look over the day’s agenda and edit it if necessary. I then dig into my to-do file and follow up on current client activities such as in-process financial plans or correspondence. I RSVP to the upcoming Road Show for Invesco Trimark.

10:00 a.m. I meet with Pam Mirehouse, my assistant and right hand, on what she needs from me – signatures, urgent client calls, or any other critical issues. I really don’t know what I would do without Pam, who has been with me for six years. I then review client files with Pam for afternoon meetings. Should there be any holes in the prepared agenda, I request more information.

11:00 a.m. I call clients regarding any issues presented

by Pam or which I may have on my agenda. I review my client rotation to see which clients haven’t responded and require a personal phone call. I then dig up the interesting article on estate planning I had filed earlier and send it to my client email directory. I also peek at the markets for daily activity and scan Twitter for commentary.

12:30 p.m. I have lunch with a client at Acclamation Restaurant in my beloved James North neighbourhood. GTA hipsters and yuppies alike are flocking to this mixed downtown area for the affordable

Victorian brownstones, the proximity to the bay and the fabulous vibe. The meeting is an informal review, but largely more of a personal catchup on what is happening with the client.

2:00 p.m. I have a wholesaler meeting with CI Investments’ VP of Sales and Marketing Pierre Lalonde.

Pierre presents specific ideas for my client base and responds to my questions regarding the availability of lower fees for clients and enhanced tax solutions. Also on his agenda is how CI is helping to prepare advisors for the upcoming CRM2 in July 2016.

3:00 p.m. I meet with clients in our Waterdown office. Pam offers refreshments. I review and revisit the clients’ current status, portfolio and financial plan including insurance. The client decides to increase monthly RRSP contributions. Recommendations made.

Paperwork signed.

4:00 p.m. We continue the review, but the client is interested in changing plans to show retirement in two years earlier. We then do a review of the information and plan to send the updated plan via email the following day.

5:00 p.m. I review the output from the meetings and give pertinent documents to Pam for processing. I then work on and complete that client’s amendment to the financial plan. Afterwards, I digest the day’s activities and create the next day’s agenda. I also update my to-do file and Pam’s “in” file.

7:00 p.m. I will either go to Zumba or go home, where my husband Ron will have made one of his famous Crock-Pot stews.

9:00 p.m. I scan my emails, responding to any critical messages. The rest can wait until the morning.

10:30 p.m. I go to sleep to start it all over again tomorrow.

JANUARY 2014 | 63

62-63-ADayInTheLife.indd 63

09/01/2014 2:11:20 PM

LIFESTYLE / THE CLIENT’S TAKE...

THE CLIENT’S TAKE…

‘Good-bye.’ It’s not what any independent advisor wants to hear from a decades-long client. But here, from just such a client, is a very personal and candid explanation for making that move 2013 saw a growing number of clients flock from independent advisors to those toiling for the Big Five.

2014 won’t likely buck that trend.

Some argue the phenomenon prevails due to the aggressive acquisition strategy of banks, which have, over the last five years, gobbled up independents like candy. But, what is the real reason behind highly sought-after, well-heeled investors taking flight and building nests elsewhere?

One veteran client’s candid answers may surprise you and convince you to rejig your own approach.

An investor for much of his adult life (initially in GICs), Jon Nicholls, 68, is no rookie when it comes to his financial goals and the tools to achieve them.

The Niagara-on-the-Lake resident, and former owner of a medium-sized, Toronto multimedia firm, understands the industry and its fluctuations. In his 30-odd years of investing, he’s taken risks and has sought valuable guidance from an advisor since 1985.

THE SECRET TO SELECTING AN ADVISOR “The real key about having an investment advisor is someone who really understands what your goals are, is a strong enough person to tell you whether or not your goals are realistic, and who has a strong enough personality to be able to guide you along an agreed path and not allow you to get sidetracked along the way,” explains Nicholls.

For more than 20 years, he settled down with an established Toronto-based independent investment firm. A friend’s wife was vice-president there, cementing the trust so vital to any business relationship.

“I gave her (his advisor) some money to invest purely on the basis that I met, liked and knew her, and also because I’d heard good things about (the firm),” he says. “Frankly, I was happy, based purely on the fact that the money just kept coming in. For many years my investments showed reasonably consistent growth. The occasional bad year was followed by an exceptionally good one, so despite the fluctuations, I was getting what I thought were aboveaverage returns.”

MORE THAN EARNED INTEREST Beyond the bucks, Nicholls valued the firm’s intimate, entrepreneurial spirit and candour. He was able to speak directly to the firm’s top dog about what strategies he had in mind and why some investments weren’t doing so hot. “If there was a down time … I was able to call up (the president), talk to him, and get his feelings about it,” he says.

But the saying is “all good things come to an end”: In Nicholls’s case, it began with his advisor’s resignation. He was the passed along to a junior advisor lacking the experience necessary to handle his portfolio. Furthermore, Nicholls felt uneasy about the firm’s direction, and three years ago he walked.

“I felt like it was a massive organization that really didn’t care about its clients,” he explains, adding that he felt he missed out on high-risk investments offering superior returns. “I was disappointed and I rapidly began to divest, moving money elsewhere.”

With help from Scotiabank, Nicholls transferred his funds and never heard from the firm again.

“They didn’t say anything. They didn’t even contact me to say ‘sorry to see you go,’” he says.

FROM AN INDEPENDENT TO A BANK According to Nicholls, the bank offered him the resources and expertise that he was seeking. He values the once-a-year meeting to make sure his investment strategy aligns with his financial goals, the monthly telephone check-ins and random meetings to discuss any issues that arise. Most importantly, though, Nicholls has started making money again.

“Making money is always the top priority. But when your investments are not going up, like in today’s environment, it is very tough to get a decent return,” he says. “So, it really is very important now for an investment advisor, in my opinion, to form very close relationships with their clients and keep them informed, listen to what they’re saying, and make sure they help their clients. They’ve really got to be advisors now, rather than just salespeople, which is all they had to be at one time.”

Jon Nicholls, a veteran investor in Canada’s most lucrative market, is offering independent advisors his personal insights into why loyal clients jump ship and why some then climb on board the decks of the big banks. He did.

Current investment favourites: Dividend-paying stocks with strong upside potential and U.S. Fortune 500.

M Al ab Va in fo Va av eq gr De hi an ©

Past favourites: Gold and precious metal stocks.

64 | JANUARY 2014

64-OBC_A Client's Take.indd 64

09/01/2014 2:12:12 PM

VAN0

How to add $229,715 to a portfolio Start by lowering the fees. Vanguard ETF fees are 86% lower than the average Canadian mutual fund.

And that difference could add $229,715 in value to the typical Canadian portfolio over the next 20 years.

TM

Compare your mutual funds to Vanguard ETFs

vanguardcanada.ca/costcompare

Winner - Canada Vanguard Investments Canada Inc. 2013 Morningstar ETF Provider of the Year 2013 Morningstar Best Equity ETF

Morningstar Awards 2013 Š. Morningstar, Inc. All Rights Reserved. Awarded to Vanguard Investments Canada Inc. for Morningstar ETF Provider of the Year and Best Equity ETF, Canada. For further information about the Morningstar Awards, including information relating to the criteria upon which the awards are based, please visit www.investmentawards.com. Source: Vanguard calculations using data from Morningstar, Inc. as of December 31, 2012. The hypothetical examples do not represent the return of any particular investment. The example above assumes a 6% annual return of the underlying investments and an initial investment of $250,000. For the ETF MERs we used the following MERs of the Vanguard ETFs as of December 31, 2012: For Canadian equity, 0.11%, Vanguard FTSE Canada Index ETF; for Canadian fixed income, 0.26%, Vanguard Canadian Aggregate Bond Index ETF; for emerging markets equity, 0.54%, Vanguard FTSE Emerging Markets Index ETF; for global equity, 0.31%, average of MERs for Vanguard FTSE Developed ex North America Index ETF (CAD-hedged) and Vanguard S&P 500 Index ETF (CAD-hedged); for international equity, 0.43%, Vanguard FTSE Developed ex North America Index ETF (CAD-hedged). The rate of return is used only to illustrate the effects of the compound growth rate and is not intended to reflect future values of a Vanguard ETFTM or returns on investment in a Vanguard ETF. MERs for the Vanguard ETFsTM are as of December 31, 2012, and are based upon actual audited expenses including waivers and absorptions. Without waivers and absorptions, MERs would have been higher. Vanguard Investments Canada Inc. expects to continue absorbing or waiving certain fees indefinitely, but may, in its discretion, discontinue this practice at any time. The MER for the mutual funds is the average MER for Series A Funds as of December 31, 2012. For more detailed information visit, vanguardcanada.ca. Š 2014 Vanguard Investments Canada Inc. All rights reserved.

VAN064_Q1_229_WP_8.25x10.875_rev1.indd 1 64-OBC_A Client's Take.indd 65

14-01-032:12:24 12:33PM PM 09/01/2014

719_3_DundeeGoodman_NT_female.indd 40 64-OBC_A Client's Take.indd 66

3/10/2013 11:33:30 PM 09/01/2014 2:12:31 PM