The quest

Prepare for the unexpected. That’s the lesson I grudgingly learned six years ago when my father succumbed to cancer. We had four days from firm diagnosis to his passing. It wasn’t enough time to say goodbye, let alone sort out an entire life.

Thankfully my father, a project manager in the oil and gas industry and tactician by heart, handled all the legal aspects before he died, including a signed will, a power of attorney, and a list of all the bonds, equities and other investments he held. The final piece, however, was a verbal promise from me and my brother to take care of our mother; no matter what.

We had to concede the family philosophy of selfsufficiency would not help us determine how to invest nearly $1 million in proceeds from life insurance and pension payouts. Overwhelmed, and with little time, we sought recommendations from our lawyer, who reluctantly offered up the names of two Calgary-based investment firms.

Five years later, as our mother turned 64, we sought to seriously examine her financial realities and life priorities. I’d begun working in financial publishing and my mother started pushing to move closer to my brother in Vancouver. The convergence forced my brother and me to admit our mom needed a financial advisor.

If we’d been graded on our handling of our mother’s finances up to this point, we’d receive an F. In the better part of five years, not once had we verified that our mother actually had a will—she thought she did, but we found it was just a power of attorney. We also learned the person we took to be a planner was in fact an investment counsellor—well versed in stock picking and portfolio creation. We also had no real idea of her true medical condition, nor did we have a strategy for the payment of long-term disability care. We needed help.

Like many potential clients my age, the first place I looked for a financial planner was on the Web. My search produced a list of criteria. We needed a planner who was:

› Comfortable with all investment types (not just mutual funds); › Experienced in volatile markets; › Committed to an investment discipline (we weren’t out to beat the market); › Comfortable communicating and working with an older woman, and a widow; › Able to appreciate and incorporate family members when necessary; › Transparent about fee structures; › Able to provide a written financial plan as a separate entity from the investment portfolio; › Willing to communicate, unprompted, with our mother; › Willing to offer advice on decisions that had a financial impact on my mother’s portfolio; and › Male.

This last condition was kept secret from my mom. While she would vehemently disagree—having raised her children to believe in equality—my brother and I had noticed she’d reverted to the lessons of her upbringing, and begun believing women “needed to be taken care of.” My brother and I agreed the best way to find a professional for our mother to rely on, and give her and us peace of mind, was to exclude female advisors from our search. This was not a time to try and change her attitude.

Based on these needs, I short-listed six people and presented it to my family. All of them had a good shot at becoming my mother’s first real financial planner.

Our next move was to conduct preliminary interviews that let all three family members meet and assess each planner—it was the financial services’ version of speed dating. At these initial meetings, our family assessed the education and work experience of the planner. We also determined investment strategy experience as well as basic product knowledge. Additional questions revolved around fee structure, services offered à la carte versus comprehensive packages, and the ability to communicate with their prospective client (our mother) as well as her children. The process also allowed the planner to ask us questions, or provide additional information to help determine if we were the right clients. Based on the results of these interviews, we would request a follow-up meeting where more details—such as investment philosophy, specific fees to expect based on our case, methods of communication and next steps—would be discussed.

FIRST IMPRESSIONS COUNT Don Johnston, the former president of the Financial Planners Standards Council, once said professionalism isn’t a foot race, but rather a well-thought-out series of accomplishments geared toward gaining the confi- dence of the public. But a client’s definition considers the intricacies that make up the slow, successful marathon of a long-term advisor/client relationship. The intricacies include: how he displays his education, experience and investment philosophy; the level of comfort and confidence in his fee structure; willingness to provide current testimonials; the ability to provide comprehensive planning coverage, rather than cursory financial planning attached to an investment strategy; personal attributes; and, most importantly, communication style.

Based on those criteria, we found the experience with each advisor to be quite different. So, here’s our perspective as clients, with the names and details of each advisor changed to preserve privacy.

Two attributes weighed heavily against Don Duck.* He did emphasize he was a second-career financial planner, with a strong mathematical background, but it was his affiliation with one firm that we found difficult. We found it hard to believe he would not simply opt for house-brand products when creating my mother’s plan. Duck appeared capable, but as a client with a larger-than-average portfolio, my mom needed an advisor who wasn’t tied to one company or product—whether the tie was real or perceived. We appreciated Duck’s disclosure and his rationale for this affiliation, but his candour did little to assuage our concerns.

The other drawback was his lack of experience in financial products outside of mutual funds. After all, it was the lack of breadth of our current investment counselour, Jim Lee,* that prompted our search. We weren’t unhappy with Lee’s performance— despite market upsets, he’d maintained a consistent, risk-adverse portfolio. But our objective was to find someone who could provide a more comprehensive plan and then tie my mother’s investments into that plan. Duck’s mutual fund-only background took him off the short list.

KNOW YOUR CLIENT Another problem we encountered during initial interviews was a tendency of some advisors to talk about what they can do for us, prior to ascertaining what we wanted and expected. While my initial e-mails outlined the general details of my mother’s situation, it provided no insights into her goals, fears, or concerns— all aspects necessary to shape a financial plan. In a third of the interviews, the advisors asked absolutely no questions of my mother. That meant any solutions offered were made based solely on the size of mom’s portfolio.

Two interviews that stood out for my family, because of their excellent communication skills, were the meetings with Jonas Jones* and Amit Rao.*

Jonas Jones was a CFP and the president of his own independent financial planning company in the west end of Toronto. While his stated ideal client is an individual (or family) with at least $500,000 to invest, and in the accumulation to pre-retirement phase, he agreed to meet with my mother, a widow who lives off her investments.

Of the two other advisors we spoke to, a few aspects stood out. But not in a positive way. One extraordinarily educated advisor appeared to dismiss the role my brother and i played in our mother’s life. While neither of us even pretends to have control over her finances, we do have quite a large part to play in her life decisions. During the meeting with Jonathan prince,* an Ontario-based RFP with clients across the country, he explained two aspects of his admittedly biased perspective that we were simply uncomfortable with: › He aimed to be our mother’s advisor, to the exclusion of truly understanding her inability to consistently make decisions by herself; and › He did not believe our mother could maintain or even grow her portfolio, but rather, had to come to terms with its depletion. While the latter may be true, it was too harsh for my mother—she hoped she could leave something to her kids and to the church. The other extreme was an advisor we met in his home office. Our family had to compete with a television that was never switched off, and found the office space doubled as his daughter’s play area.

Jones had good credentials, but it was his industry experience that made the difference during our meeting. Not only had he been in the financial planning business for almost 20 years, he’d spent more than a decade as a fee-for-service planner—and had actually successfully transferred his entire client base (save two) from paying commissions to the fee-for-service structure.

Probably the most remarkable aspect was how well Jones negotiated the potentially awkward first meeting into a mutually informative and positively comfortable experience aimed at finding solutions. He did this by providing a brief introduction to the business, himself and his staff and then immediately shifted focus onto my mother.

Through gentle, probing questions he got a better sense of her current economic condition, her reason for seeking a financial planner, and a general idea of her concerns. His primary tool for this verbal exploration was a three-page multiple-choice/ short-answer questionnaire, which he handed to her after an initial conversation about her goals, and asked her to take 15 minutes to fill it out while in his office.

While my mother was a bit overwhelmed at the prospect of answering a number of the questions—“Please rate your investment knowledge” was one that baffled her—she found the process enlightening and it helped her focus. And Jones closely watched interactions among my family members. I found many advisors were unaware of how staged or strained the family was during certain questions. There were times, for example, when my mother was asked about future goals and responded with answers that were fantastical, at best. Beautiful accounts of living in Italy, or becoming a studious Christian volunteer in an African convent. While she may dream, the fact is she probably never will do those things. Various health conditions—including a weak heart—forced her to reduce stress, and she often found travel stressful. Even her more-than-realistic goal of relocating to Vancouver was frequently postponed.

Jones, however, was able to catch a glimpse of my mother’s superficial answers and the children’s concern. By asking her to write down answers on a questionnaire and then probing further, he got to her real concern: That she would outlive her money and have to rely on her children for boarding and care— particularly in the face of terminal or debilitating illness.

JUST LISTEN The second advisor to use probing questions, and thereby offer advice based on my mom’s specific needs, was Amit Rao.

Rao was, by far, the youngest advisor we agreed to meet. At 30, he was also the least experienced, with only five years in the industry. Yet, I had insisted he be part of the interview process because he came highly recommended by a colleague. The irony: Rao was, by far, the most capable in communicating effectively with my mother.

Within the first five minutes of the initial interview, Rao was able to creatively identify how each of us differed in our communication styles. He also determined our hopes and concerns, by asking a series of simple value statements before a series of open-ended questions. For example, he asked my mother to pick her most important priority out of a list: Peace of mind; good returns; growth in principal, etc. Her answer—peace of mind—gave him the option to explore more of her concerns.

Rao also showed us his tremendous capacity for patience by allowing each of us to finish our thoughts (and sentences). Then, he would allow a brief pause before calmly addressing each point. The response style made each of us feel integral to the process and left us with the impression he truly heard our concerns and understood our goals. It was through this M.O. that Rao, the fifth advisor we spoke to, was able to learn of my mother’s continued confusion about the role of a financial planner. This confusion was actually preventing my mother from buying into the notion that she needed a full-scale planner and not an investment councilour.

As soon as Rao realized this lack of buy-in he offered my mother a simple, yet effective, way of looking at the different roles within the investment universe. Through the use of drawn diagrams—a tool my mother responds to well—he showed her the four essential components: estate planning, tax strategies, wills and probate, and finally investment advice. Only then did my mother fully appreciate how exposed she really was with her current lack of a plan.

SECOND CHANCE Then, there was Tony Morris,* the planner who belonged to an independent firm based in Toronto. His initial interview rated quite poorly with my family—due to his high-energy style that prompted him to talk more than listen.

The only reason we even agreed to a second meeting was because he offered it free of charge as a way to drill down to some details. While my mother is bright, she can easily become overwhelmed with too much information. At the same time, she worries she’ll make a bad decision due to lack of information. Morris’s frenetic style and exaggerated assurances left my mother tired and confused. Had it not been for Morris’s colleague, their use of graphically simple but effective visuals, and Morris’s offer to meet again to go over details, he would have lost our business that afternoon. Instead, we agreed to schedule a second interview. It was, after all, free.

Based on our second interviews we improved our short list of what we expected in a financial advisor:

› Competent and capable with various investment products; › Ability to communicate with my mother—patient enough to create and maintain a safe place for her to ask her questions, and get advice on life decisions that had financial impact; › Capacity to meet with my mother—preferably face to face—regardless of where she lives. this criterion includes the ability to use communication technologies other than the internet; and › Independence—either because the firm itself is independent, or because there is clear evidence the advisor’s decisions aren’t impacted by his corporate affiliations.

After much consideration, our family found itself with a tough decision. We wanted to work with two advisors: Amit Rao and Jonas Jones.

Despite the perceived limitations of Rao—young, less experienced, af- filiated with a bank—we felt he possessed the intangibles that were on our list of essential qualities. He had endearing enthusiasm and was ready to become the first point of contact for my mother in any life matter; this, combined with his ability to meet with my mother face to face, regardless of her place of residence (Toronto or Vancouver), and his access to advice from a pool of bank specialists prompted his climb to share the top spot on our short list.

The irony, however, is that his talents were not unnoticed by other firms. In the time it took us to complete initial screenings, he had accepted a position at an independent firm that specialized in a specific investment strategy and model. We explored the possibility of continuing a relationship, but it became apparent his new role wouldn’t let him fully focus on being a client-facing fi- nancial planner. Rao was removed from our list.

The other advisor to feature prominently on our short list was Jones. From initial contact to follow-up, Jones and his office personnel had always emphasized the need for a plan, rather than investment of the portfolio.

Jones provided an à la carte option— where we could pay for portions of the plan—or a comprehensive plan that provided insight and overview on everything (from estate and taxes to goal setting and daily living). Jones had even offered us the option of creating a plan—at a cost of roughly $3,000— independent of any other investment advice. If, however, we opted to move the investments to his firm, we could deduct this fee plan from the overall fee.

The problem, now, was motivating my family to proceed. While the initial advisor interviews had taken place in the fall, we still found ourselves without a planner—or a plan—at the end of February. Life had taken over and my mother, unprompted, was delaying the decision—an act that would also put off the move out West.

It might seem as if we’re back at square one. But we don’t see it that way. The process helped my family better assess the fears, concerns and goals of each member; we also learned that a financial plan had various components, of which investment was but one. As the one family member with any direct connection to financial practices, my only option was to make one last effort; to impress upon my brother and my mother that we needed a plan, and we needed to pay the planner to create it. If we could spend $5,000 every few years on a vacation, we could spend $2,000 to $3,000 on my mom’s peace of mind.

And that’s exactly what we’ll be doing— seeing a lot more of Jones, a financial planner with the guts to push the plan, not the portfolio.