Clients want more from their advisors

Just offering investment advice to your affluent clients doesn’t cut it anymore. These days, wealthy Canadians want their advisors to help them with everything from picking the right stocks to succession planning.

Peter Watson, president of Oakville-based Peter Watson Investments, discovered as much after surveying 34 accountants and lawyers about what type of planning clients want. He found out that most clients with assets of $1 million or more aren’t happy with their financial advisors, as many of them are focused on investments rather than an overall planning approach.

“Clients want comprehensive wealth management,” he says. “They want to talk about what’s important to them, and that’s not always a hot tip on an investment.”

He says more clients are leaning toward the family office type of experience. They want financial independence, proper retirement planning and tax-efficient solutions, but they don’t want to go to three different people to get it.

“They’re not used to being comprehensively served,” explains Watson. “They may have investments, but they also want to know how they are going to work with a second wife and her kids, how they can transition out of a business and into retirement and how they can afford their lifestyle.”

Thane Stenner, managing director of Stenner Investment Partners of GMP Private Client L.P., is seeing more high-net-worth clients seeking out family offices like his. He agrees with Watson that many advisors are investment focused and that clients want additional services. “A lot of advisors are too investment-based … because that’s how compensation flows.”

The demand for more services stems from the baby boomers who want someone to help them get ready for retirement. “What’s happening is that demographically we’re right at the earliest stages of a significant amount of succession planning,” says Stenner. He adds that clients are also more educated about financial planning.

Despite Watson’s findings, Keith Sjögren, director of strategy for Toronto-based Investor Economics, says comprehensive planning isn’t what every wealthy client wants. “The concept of a quarterback is true for a certain segment of the wealthy, but not true for 100% of them,” he says. “There are plenty of affluent entrepreneurs and professionals that act as the quarterback themselves, and they seek out experts they’re comfortable with rather than relying on one person to do that for them.”

Investor Economics has statistics to back this up. In a survey it conducted a few years ago, the organization asked around 400 high-net-worth clients who the advisor was in their life. Instead of answering their lawyer, accountant or financial advisor, many said themselves. “They went hunting for that one person to take charge of their financial life. There was a feeling that no one person could possibly represent the highest level of knowledge in all financial disciplines or had access to individuals that the client might consider experts,” says Sjögren.

Clearly, an all-inclusive advisor isn’t for everyone, but Stenner and Watson suggest that advisors take a good look at focusing their practice on the total wealth experience. Why? By offering more, clients will be happier, invest in additional products and, most importantly, bring in referrals. “Take a proactive leap, and that’s how you’ll be compensated,” says Stenner. “As you move up the wealth curve, you end up finding that the number of relationships goes down, but the depth increases.”

More advisors are cluing in to the benefits of setting up a family office, but it’s been a slow process, says Sjögren. “The needs of the high-net-worth are more complex versions of your needs and my needs,” he explains. “But we have not seen the emergence of a strong fee-only wealth management industry in Canada.”

Of course, Watson’s survey isn’t suggesting advisors help every client with succession planning; he says a family office really works only for the wealthy. “There has to be a certain size of client; otherwise, advisors can’t afford to do that. We get paid on a fee-for-service basis. A $400,000 client will get what a $400,000 client can be economically given.”

Filed by Bryan Borzykowski, Advisor.ca, bryan.borzykowski@advisor.rogers.com