Young Guns 2015

Page 36




TARGETING THE CHALLENGES FOR THE YOUNG GUNS What are the obstructions that will challenge the next generation of advisors? The Bakish Brothers bracket the targets – compliance, cost, complexity and competition

*Performance for the five year period ending February 28, 2015. The inception date of the fund was November 13, 2007. †Morningstar Canadian Fixed Income Balanced Category. The indicated rates of return are the historical annual compounded total returns for the Class A units including changes in unit value and reinvestment of all distributions and does not take into account sales, redemption, distribution or optional charges or income taxes payable by a security holder that would have reduced returns. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. The information presented is accurate at the time of first printing, and is subject to change without notice. Management fees for Class A and Class F units are outlined in the Fund Facts and the Simplified Prospectus. Please read the Fund Facts or the Renaissance Investments Simplified Prospectus before investing. Mutual funds are not guaranteed, their values may change frequently and past performance may not be repeated. ®Renaissance Investments is offered by, and is a registered 34 trademark of CIBC Asset Management Inc.

STARTING OUT in this business more than 10 years ago, we depended heavily on our own ability, and voice, to meet new prospects. Not only was this cheap, it was a very simple process: You make so many calls. You book so many appointments. You establish so many client relationships. At the time, there was virtually no number that we weren’t able to call, and there were few restrictions as to when we could call. Add to that the minimal amount of cost of running a financial advisory business (no marketing, no inventory, no machinery) and a straightforward value proposition (basic tax savings strategies and diversification), and in hindsight, one can almost say it was easy. Of course, it wasn’t as easy as it might sound. But fast forward to today, and the landscape has changed completely. One can’t simply pick up the phone and book meetings with a simple sales pitch. Why? We call it the four Cs: compliance, cost, complexity and competition. Compliance There has been a significant and seemingly never-ending increase in the amount of documentation required to maintain a compliant practice. The days of simple client logs and KYC updates are long gone. Now, every form of communication, from email to texts, must be docu-

mented and summarized. Every recommendation must meet strict standards and should be initialed by clients before implementation. Even a sale of a small basic term-insurance policy requires letters of understanding to be signed and a comprehensive insurance ‘needs analysis’ performed. These requirements ultimately serve the client well. These measures go a long way toward providing transparency around advisor recommendations. However, they also create a taxing set of procedures for the advisor. For those just coming into the industry, staying compliant requires a significant investment of precious time – the main asset for a new advisor as they grow their book. Developing a client base today requires time-intensive prospecting and lots of footwork. The increase in compliance is an extra cost to new advisors that didn’t exist for the last generation, making those early, hard-charging years even more onerous. Compliance also extends to the marketing side of the modern practice. With the introduction of the Canadian anti-spam law (CASL) and the national do not call list (DNCL), a new advisor faces huge challenges in coming up with a pool of names to contact cheaply. There is now a new risk in getting penalized for making contact.