Build clients’ industry confidence by addressing their fears, frustrations

Name:

Tim Daniel

Occupation:

Retired engineer and soon-to-retire teacher; pilot and sailor

Location:

Nanaimo, B.C.

Age:

60

Has an advisor?

Yes, for two years. He previously invested on his own.

Portfolio details:

50% conservative, 25% in “less conservative” investments and 25% in “more risky” ones. “The idea is to still have the opportunity to make some money in the portfolio,” he says.

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This article is part of the Advisor Edge 20 Ways to Be a Better Advisor feature package, published in the June 2018 edition of AE. Click here for more tips, and to learn more about our 20th anniversary.

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As a long-time investor—and previous DIYer—Tim Daniel chases returns so he can reach his retirement goal. But don’t peg him as unrealistic: he has his eye on consistent 5% to 6% returns.

Further, more Canadian investors relative to their global peers say investment professionals should generate returns better or similar to benchmarks (86% versus 78%), per the CFA Institute’s 2018 global survey. In fact, more than half (53%) are likely to leave firms that underperform.

Even so, he’s not convinced he’ll achieve even that.

“The market is stacked against the individual investor,” he says, adding that lack of access to level-two data is part of the problem.

The data, by showing the number of orders at a particular price, for example, would be useful for assessing stocks, he says. But it’s expensive.

Further, Daniel finds he’s been constrained in the past by rules around registered investments. “There used to be some rules around investing in RRSPs that didn’t allow you to protect yourself,” he says, referring to previously disallowed put options. “Buying a put is an extremely powerful form of insurance on an investment,” he says, and he would have appreciated being able to do so when travelling abroad for several months without consistent internet access in the early 2000s. (The Income Tax Act was amended in 2004.)

Though he hopes his advisor of two years will get him closer to his goal, Daniel sometimes thinks about going solo again. “Now that I’m close to retiring, one of the options I’m considering is taking a few courses, becoming a more professional investor and getting access to level-two data.”

That intent is, perhaps, indicative of Daniel’s perception of the markets as a rigged game. For clients who continually assess whether their portfolios check all the boxes, consider reassuring them by delving into regulatory details and informing them of tax, industry and rule changes.

Advisors should also consider whether questions are left unasked, including those about regulatory requirements and industry standards. Daniel offers an example: “What happens if [my advisor]’s company becomes insolvent?” he asks. “What happens to the money?”

While he hasn’t asked his advisor for regulatory details, the question lingers. Says Daniel: “Given what I’ve seen happen to what I thought were really good companies, could that happen to a financial company? I don’t see why not.”