FAIR Canada applauds Saskatchewan’s OBSI bill
"Landmark" legislation is significant step forward in protecting investors, organization says
By James Langton |May 28, 2024
2 min read
News and resources for Canada's top financial advisors
(November 6, 2003) Through the bear market, some clients have decided to seek out the comfort they felt in an earlier time, when GICs provided more than enough income and they could be bought from two or three locations at every major urban intersection. High GIC rates are gone, probably for good, and it’s getting harder and harder to find a convenient bank branch. Nevertheless, banks are beginning to cut into the edge independent advisors once held.
So said Andrew Gardiner, regional sales manager for MRS, the combination fund dealer and trust company owned by Mackenzie Financial, to an audience of advisors at the Independent Financial Brokers of Canada fall education summit in suburban Toronto. As evidence, he pointed to MRS’s own inflows and outflows. Right now, MRS is processing 1,550 transfers a month to the banks or the bank-owned discount brokerages. Two years ago, it was the opposite, with 2,000 accounts a month transferred to the independent advisors’ MRS services.
“If we lose those accounts, that means the independent financial advisor has lost those accounts,” he says.
Why the change? In part, Gardiner says, “the independent financial advisor was never given any respect by the bank channel.” Now, however, “[the banks aren’t] going to sit idly by and let you keep those assets.”
For independent advisors to survive, they have to learn how to “poach” bank clients, just as the banks are now poaching an advisor’s clients.
As clients go back to the banks, it’s critical for advisors to learn what the banks’ strengths are, and equally, what weaknesses they can leverage off of. Gardiner thinks a major reason clients are returning to the banks, apart from poor markets, is that some advisors are experiencing a breakdown in their relationships with clients. Citing a recent survey by the Financial Planning Standards Council, he notes that roughly 85% of what clients desire is actually within the control of the advisor.
That poll, published last month, ranked what clients look for from their advisors. Service was the most important, at 55%, followed by knowledge and advice, at 30%. Performance was relatively unimportant, at 11%.
But service, knowledge and advice are all areas where the bank branches have improved. Banks already have an established reputation with products designed for the conservative investor — the $480 billion GIC market. But they’ve been leveraging all aspects of their customer relationships, so that credit card holders get marketing material about investments or insurance on a timely basis.
The effect? The banks, Gardiner says, “have come a long way in marketing. They’re excellent now. If they have you for one thing, they’re going to try to work it” so that clients buy a range of bank products.
Portfolio solutions
One way they’re drawing clients in is by marketing what Gardiner calls “managed solutions,” basically portfolios of mutual funds, rather than individual funds. “They’re moving people into more defined, scientific portfolios,” that, as balanced product offerings, should be able to avoid the blowups investors have recently experienced.
That’s something, he argues, independent advisors will have to match. And they will have to look over their shoulders at improving service levels at the banks. “You’re not just dealing with a teller who’s going to put you in a mutual fund.” They’ve hired financial planners, he notes, adding that the bank branch compensation structure has changed to encourage the in-house investment specialists who also have a broader supply of products to draw on. “The distribution and supply lines in our business are completely muddled. Everyone is selling everyone else’s product.”
For the banks, what that adds up to is a consistency of approach that independent advisors will have to equal, essentially by turning themselves, just like the banks, into a brand. “You have to figure out a way to brand yourself and develop consistency,” Gardiner urges advisors. One way is in building portfolios. “Either you develop your own portfolio and have a standard game plan for every client that comes in or, if you don’t want to build them, there’s a whole host of products out there.”
To build a rota of portfolios, begin with a risk questionnaire that segments clients, he suggests, into preselected portfolios. The advantage, Gardiner says, is that “you streamline your process, and you can brand yourself.” By contrast, “if you have 200 clients, and each has a different fund, you’re not branding yourself.” Successful branding depends on repeatability, which, in turn flows from consistency.
As an example, Gardiner cites the problem of following 40 different mutual funds. “No one can stay on top of 40 funds. You’re going to have to go out and find yourself a good resource tool,” such as provided by fund analytics companies like Morningstar. For the intrepid independent advisor, then the question is how much time that costs and whether that time would be better spent elsewhere — in prospecting, for example.
Even if some clients do require special attention, Gardiner suggests putting “B” and “C” clients in managed portfolios. It saves scarce advisor time, but, in putting clients into four or five preselected portfolios, the advisor establishes a repeatable process that also increases client contact. Instead of tailoring an individual client report every quarter, it’s a matter of writing a standard e-mail about the performance of five portfolios, and, to boost service, sending them out once a month instead of once a quarter.
Advisors can’t do everything, but since service figures so large in client satisfaction, they should set out what they can do with clients. Gardiner calls this a “client bill of rights.” “Every client who walks in, you sit down and tell them[what to expect from you],” he advises. But the advisor “must prepared to live up to it.” The net benefit is that “now clients know exactly where they stand.”
A similar process applies to investment policy statements, which rein in investor expectations. To the degree advisors use third-party portfolios, they can rely on the investment policy statements supplied by fund companies to set out client-advisor expectations. “Now you’re on the same page,” Gardiner says. “The idea is always to create the sense that this is how I do business.”
Consistency buys referrals
To compete with the banks, Gardiner also suggests that advisors actually let clients know what services they offer. “If you’re mainly on the mutual fund side, do your clients know you do insurance?” he gives as an example. “The more things you do for a client — there’s no magic number, say three things, insurance, wealth management and estate planning — then the likelihood of that client leaving diminishes.” What’s more, he says, “the more things you do for a client, the better referrals will be,” especially if the advisor stops referring clients to banks for services they can’t offer.
“There’re tons of suppliers out there,” he explains, and price points are not always the issue. Indeed, “If you sell yourself on price, you’re always going to lose.” Other competitors will step in. Service should be the focus, and by and large, advisors should be able to sell themselves on service far beyond what the banks, as nimble as they’ve become, can do.
Such service might mean more frequent portfolio reports. But it could mean building a board of directors composed of half a dozen top clients. At very least, that should improve service levels, as top clients give feed back on what they like. Beyond that, “it makes top clients feel they are part of your business,” and what’s more, “you get to know what your clients are really thinking.”
That’s not something the banks can get.
Filed by Scot Blythe, Advisor.ca, sblythe@advisor.ca.
(11/06/03)
(November 6, 2003) Through the bear market, some clients have decided to seek out the comfort they felt in an earlier time, when GICs provided more than enough income and they could be bought from two or three locations at every major urban intersection. High GIC rates are gone, probably for good, and it’s getting harder and harder to find a convenient bank branch. Nevertheless, banks are beginning to cut into the edge independent advisors once held.
So said Andrew Gardiner, regional sales manager for MRS, the combination fund dealer and trust company owned by Mackenzie Financial, to an audience of advisors at the Independent Financial Brokers of Canada fall education summit in suburban Toronto. As evidence, he pointed to MRS’s own inflows and outflows. Right now, MRS is processing 1,550 transfers a month to the banks or the bank-owned discount brokerages. Two years ago, it was the opposite, with 2,000 accounts a month transferred to the independent advisors’ MRS services.
“If we lose those accounts, that means the independent financial advisor has lost those accounts,” he says.
Why the change? In part, Gardiner says, “the independent financial advisor was never given any respect by the bank channel.” Now, however, “[the banks aren’t] going to sit idly by and let you keep those assets.”
For independent advisors to survive, they have to learn how to “poach” bank clients, just as the banks are now poaching an advisor’s clients.
As clients go back to the banks, it’s critical for advisors to learn what the banks’ strengths are, and equally, what weaknesses they can leverage off of. Gardiner thinks a major reason clients are returning to the banks, apart from poor markets, is that some advisors are experiencing a breakdown in their relationships with clients. Citing a recent survey by the Financial Planning Standards Council, he notes that roughly 85% of what clients desire is actually within the control of the advisor.
That poll, published last month, ranked what clients look for from their advisors. Service was the most important, at 55%, followed by knowledge and advice, at 30%. Performance was relatively unimportant, at 11%.
But service, knowledge and advice are all areas where the bank branches have improved. Banks already have an established reputation with products designed for the conservative investor — the $480 billion GIC market. But they’ve been leveraging all aspects of their customer relationships, so that credit card holders get marketing material about investments or insurance on a timely basis.
The effect? The banks, Gardiner says, “have come a long way in marketing. They’re excellent now. If they have you for one thing, they’re going to try to work it” so that clients buy a range of bank products.
Portfolio solutions
One way they’re drawing clients in is by marketing what Gardiner calls “managed solutions,” basically portfolios of mutual funds, rather than individual funds. “They’re moving people into more defined, scientific portfolios,” that, as balanced product offerings, should be able to avoid the blowups investors have recently experienced.
That’s something, he argues, independent advisors will have to match. And they will have to look over their shoulders at improving service levels at the banks. “You’re not just dealing with a teller who’s going to put you in a mutual fund.” They’ve hired financial planners, he notes, adding that the bank branch compensation structure has changed to encourage the in-house investment specialists who also have a broader supply of products to draw on. “The distribution and supply lines in our business are completely muddled. Everyone is selling everyone else’s product.”
For the banks, what that adds up to is a consistency of approach that independent advisors will have to equal, essentially by turning themselves, just like the banks, into a brand. “You have to figure out a way to brand yourself and develop consistency,” Gardiner urges advisors. One way is in building portfolios. “Either you develop your own portfolio and have a standard game plan for every client that comes in or, if you don’t want to build them, there’s a whole host of products out there.”
To build a rota of portfolios, begin with a risk questionnaire that segments clients, he suggests, into preselected portfolios. The advantage, Gardiner says, is that “you streamline your process, and you can brand yourself.” By contrast, “if you have 200 clients, and each has a different fund, you’re not branding yourself.” Successful branding depends on repeatability, which, in turn flows from consistency.
As an example, Gardiner cites the problem of following 40 different mutual funds. “No one can stay on top of 40 funds. You’re going to have to go out and find yourself a good resource tool,” such as provided by fund analytics companies like Morningstar. For the intrepid independent advisor, then the question is how much time that costs and whether that time would be better spent elsewhere — in prospecting, for example.
Even if some clients do require special attention, Gardiner suggests putting “B” and “C” clients in managed portfolios. It saves scarce advisor time, but, in putting clients into four or five preselected portfolios, the advisor establishes a repeatable process that also increases client contact. Instead of tailoring an individual client report every quarter, it’s a matter of writing a standard e-mail about the performance of five portfolios, and, to boost service, sending them out once a month instead of once a quarter.
Advisors can’t do everything, but since service figures so large in client satisfaction, they should set out what they can do with clients. Gardiner calls this a “client bill of rights.” “Every client who walks in, you sit down and tell them[what to expect from you],” he advises. But the advisor “must prepared to live up to it.” The net benefit is that “now clients know exactly where they stand.”
A similar process applies to investment policy statements, which rein in investor expectations. To the degree advisors use third-party portfolios, they can rely on the investment policy statements supplied by fund companies to set out client-advisor expectations. “Now you’re on the same page,” Gardiner says. “The idea is always to create the sense that this is how I do business.”
Consistency buys referrals
To compete with the banks, Gardiner also suggests that advisors actually let clients know what services they offer. “If you’re mainly on the mutual fund side, do your clients know you do insurance?” he gives as an example. “The more things you do for a client — there’s no magic number, say three things, insurance, wealth management and estate planning — then the likelihood of that client leaving diminishes.” What’s more, he says, “the more things you do for a client, the better referrals will be,” especially if the advisor stops referring clients to banks for services they can’t offer.
“There’re tons of suppliers out there,” he explains, and price points are not always the issue. Indeed, “If you sell yourself on price, you’re always going to lose.” Other competitors will step in. Service should be the focus, and by and large, advisors should be able to sell themselves on service far beyond what the banks, as nimble as they’ve become, can do.
Such service might mean more frequent portfolio reports. But it could mean building a board of directors composed of half a dozen top clients. At very least, that should improve service levels, as top clients give feed back on what they like. Beyond that, “it makes top clients feel they are part of your business,” and what’s more, “you get to know what your clients are really thinking.”
That’s not something the banks can get.
Filed by Scot Blythe, Advisor.ca, sblythe@advisor.ca.
(11/06/03)
