Providing the complete tool box

For advisors JoAnne Anderson and Stephen Koury, putting clients at the centre of their practice seemed the obvious way to go as they moved to a fee-based model. The business partners spoke on the subject at last week’s Advocis conference in Victoria.

The Mississauga, Ont.-based advisors — former Advisor of the Year winners who joined forces in 2001 to form the Wealth Management Centre — have a unique practice, balancing their respective personalities and business aptitudes.

Anderson leads clients through the strategic financial planning or non-product part of the process. She isn’t registered to sell investments but says because their clients pay them directly she can afford to the spend time that other advisors might not be able to provide, let alone be compensated for. Working under the same wealth-management umbrella, Anderson says the only yardstick they measure their success by is the client’s best interest.

Koury’s strong suit lies in the investment side, managing client’s portfolios, helping them understand risk and gain optimal returns. “We have a very unique process. One of the main differences is we have delegated the responsibilities. We specialize in our particular areas and we’ve become very, very good at them,” he says.

Under the fee-based model, clients pay the advisors directly without compensation from any of the companies they deal with. Avoiding front-end load charges or trailer fees removes bias, they believe.

“We felt this was the best way to achieve that. When you can take out that bias, that’s where you can give a client extra value because you’re looking at a whole different range of different types of products.”

The team’s comprehensive wealth management approach is highly integrated. From the time the partners sit down with a client in the discovery process through the end of the procedure, they know everything about the clients’ financial situation. “We have to,” says Koury. “Because of the way we structure our wealth management process we need to know every aspect of what they have in their portfolios, what they do with their cash flows, their tax situations. Most of the clients we deal with we have 100% of their assets because it’s integrated into our portfolios.”

Where the partners don’t specialize, they look to centres of influence on the insurance or estate-planning side, matching clients with proficient lawyers and accountants where necessary.

Anderson says their model has allowed them to build deeper client relationships, going beyond finances. “Once clients tell me about money they’ll tell me about pretty much everything else,” she says. “I know where the skeletons are in the closets; I know who is faithful to their spouse and who isn’t.”

Anderson and Koury also make it a point to keep in constant touch with clients. “All of us have heard that the main reason clients leave is because they never hear from advisors. We hear that from clients all the time when they first come in: ‘The only time I hear from my advisor is when he wants more money.’ And clients are suspicious about that.”

The pair’s client-centric approach has attracted more high-net-worth clients to their business model. “I inadvertently ended up with a high-net-worth practice,” says Anderson.

“I didn’t mean to. I started off a practice that reflected who I was in my 30s and 40s, and as we started doing this, the size of the clients’ assets that we were dealing with became larger and larger.” She attributes this to the comprehensive nature of what they do, the ability to drive down costs, and because their practice appeals to people who want to preserve capital rather than grow it. “For many of those people return isn’t as important to them as capital preservation.”

And a number of new premium clients have come on board as the firm’s reputation grows. “Studies have shown that when clients are facing a life transition event, particularly if it includes sudden money, they tend to change advisors — because they don’t think that the advisor that they’ve been dealing with can deal with them in a new situation,” Anderson explains.

“People in transition are in a steep learning curve and they very often have a deadline, particularly if it’s something like a severance package or something arrives and they have to learn about it quickly,” noting these clients are often looking for an independent, objective approach without the underlying hint they’re being sold a product.

And forging deep client relationships builds extraordinary client loyalty, says Anderson, noting that it’s rare a client jumps ship. “We almost never lose a client unless they die or divorce and only one of them gets custody of us,” she jokes.

Filed by Heidi Staseson, Advisor’s Edge, heidi.staseson@advisor.rogers.com

(06/20/06)

Heidi Staseson