Advice for the rest of us

(January, 2006) Over the years, the advice industry has moved upmarket. I remember a time when all you needed was $25,000 in investable assets to get started with a reputable advisor. Now, many advisors (especially at brokerage houses) have account minimums. The lowest figure I’ve personally heard is somewhere in the neighbourhood of $150,000.

One trend we’ve written about extensively is streamlining your practice to focus on the 20% of clients who generate 80% of the revenues. And hey, you’ll get no arguments from me. You run a business and it’s difficult to increase your revenues with people who have few assets.

Then there’s the time factor: Why deal with more clients when you barely have time to see the ones you have now? Still, something really troubles me. What are the options for people who don’t have much savings but need financial advice? Arguably, clients with more modest incomes need the most help, whether it’s setting up an emergency fund, paying off the mortgage or making plans for the future.

In some smaller communities, it’s these people who form the majority of the population, so advisors must take on such prospects. But where do people with modest incomes go for advice in urban areas?

The easy answer is “the bank,” where someone will sell them some mutual funds and help them set up RRSPs or RESPs. This in itself is hardly financial planning. And you usually need some assets to even meet with a bank’s financial planners.

I started thinking about this issue after a recent interview with Sean Jackson, CEO of Meridian, Canada’s third largest (and Ontario’s largest) credit union, with $4 billion in assets. You see, Sean believes a financial plan is a basic necessity for every Canadian, just like clean drinking water.

Sean comes from a working-class background and understands what it’s like to struggle financially. His parents never owned real estate but they both worked hard at their jobs. He believes they could have saved for a down payment on a home if they had a financial coach working with them.

Sean brings this “advice for the rest of us” philosophy to Meridian, and he’s made it a priority to have an advisor work with more of the credit union’s 187,000 members. What a refreshing change — an executive who actually sees value in working with average Canadians!

Regardless of a client’s financial situation, any member can deal with a financial planner, who is required to have the CFP designation. So, what’s the catch? Sean wants more share of wallet from his members. Meridian, the result of a recent merger between Niagara and HEPCOE, already receives high trust ratings from members, and the strategy is to extend that trust by offering them financial advice.

“Although some of their assets are small, our proposition is that financial planning is good for them and they’ll continue dealing with us,” Sean explains. In an industry shaped by profits and targets, it’s nice to know that some people are providing good advice to those who don’t meet the required account minimum.

Carmela Harnum is one such advisor. A 2005 Advisor of the Year Award recipient, Harnum “helps anyone who wants help and who is interested in helping themselves achieve a goal. It’s good for the soul.” I couldn’t agree more.

Deanne Gage is editor of Advisor’s Edge deanne.gage@advisor.rogers.com