What inspired you to take up the financial advisory profession?
When I was approaching my last year of high school I decided that I needed to figure out what I wanted to do with my life. So I made of list of industries that seemed interesting. Finance was one of them. I then entered my school’s co-op program (a program that places students in the workplace for a term to get real world experience). I was placed with one of the largest stock brokers in the country and continued to work for him while in university and after I completed my undergraduate degree.
One of the major problems in India is that clients don't pay for financial advice. How can advisors convince people to pay fee?
Clients do pay for financial advice; they just don’t necessarily realize it. Advice is typically funded through the sale of some sort of product, typically investment or insurance that is buried in the price the client is paying for. This can be both dangerous to the client as embedded compensation often leads advisors to sell products they shouldn’t in order to benefit themselves and is detrimental to the long term image and value of the advisory industry.
The way to convince people to pay a fee is simple: create a service offering that is actually worth paying for, educate the people you work for as to what they are really paying for their “free” advice and be transparent.
Lastly, whatever you choose to charge, the benefit to the client has to be worth much more than what you charge them.
In our case, we typically save new clients far more than what we charge them in the first 12 months. The client is constantly reminded about what we do for them in meetings. Every step of our process reinforces that we are: helping them reach their goals, helping them make money, helping them protect their family, saving them significant amounts of tax, will be there to help their family take care of their estate, should they die or that we are keeping them on track with all of this. We have never had anyone come back demanding a refund.
Referrals remain one of the main sources of client generation for individual financial advisors. How can advisors increase their likelihood of getting referred? Is there a structured way of asking for referrals?
The most important thing to do is to ‘be referable’. If you operate like anyone else and meet needs but don’t exceed them or create a client experience that is exceptional, then why would you be referred? It starts with making the client very happy that they are dealing with you because everyone else is not as good in their eyes.
How to get referred depends on your market and the dynamics of the culture. With the affluent clients we target, studies have shown that clients don’t like to be put on the spot and asked for referrals. However, the same surveys show that clients are willing to refer business and make introductions. So essentially you have to ask without directly asking. We do a combination of things to bring in referrals:
- Let clients know that if anyone they know needs advice similar to what we have given them that we make ourselves available to client’s friends and family at no charge. We will offer to talk to them regardless of size with no pressure to do business with us.
- When given the opportunity to talk about how we are doing, we will tell a story about an interesting case we were working on. This will often trigger them to think of people they know who could benefit from the same.
- We are looking to host client appreciation events where we invite a small group of 5-6 clients to bring a friend (if possible, we utilize social media to identify and ask them to bring a specific friend with them). These events are non-business related and casual opportunity to have fun. Events such as golf, wine tastings, test drives, etc.
- We work closely with centers of influence such as lawyers and accountants to build trust so that when they see someone who could use our help, they refer us.
- We make sure that even if we don’t take on the prospect, we send them to an associate who likely will. The goal is to create a positive experience for the prospect so that no matter what the outcome is, they go back to the person who referred them and tell them how impressed they were.
- We make sure to thank referees with special gifts thanking them for thinking of us.
Please share one of the most memorable moments in your financial planning journey…
There are two that come to mind that I believe show the level of dedication we have here.
With the first case, I had a meeting booked with the client and a lawyer to update his will in a week. Then about six days before that meeting, while I was having dinner, I received a call from the client’s son saying that his father, the client, was in the hospital and had been rushed there with something that could be serious. He was stressed that his will had not been updated. I called a lawyer I work with and both of us were at the client’s bedside within an hour of the call. We updated the will and made sure the only thing he had to worry about was his health. Luckily, he recovered and is still with us today.
In another case, I received a call from the friend of a client. The client’s son had just had a serious accident and was likely to be disabled. I immediately called the client and talked to her about the situation. She was not only upset but also in a whirlwind about what needed to be done to help her son. I calmed her and told her to not worry about that as I would get back to her with instructions as to how to proceed and told her to focus on spending time with him. Over the following months we met and spoke countess times as I helped her navigate care options, government programs, insurance claims and her own cash position. Together, we helped bring a sense of control and stability to her life so that she could focus on helping her son get better. Since then he has made a miraculous recovery and she is back at work with knowledge that she is on the right path.
The people who work in this industry often lose sight of the fact that what we actually do is help people. Yes money is at the core of what we do and return numbers are often the focus of most advisors conversations, but those numbers and that money is really people’s lives, hopes and dreams. We should never lose sight of that.
What are the qualities of a good financial advisor? What is required to succeed in the financial advisory profession?
Compassion, intelligence, an entrepreneurial mindset and the ability to communicate.
Tell us about your business model and what kind of services do you provide?
At our firm we act as the personal CFO (chief financial officer) for approximately 300 high net worth Canadian families. The core of our offering takes 6-12 months to execute and is as follows:
- Financial Planning: We audit the client’s current financial situation and review goals and objectives, income, expenses, investments, insurance, tax filings, estate documents, real estate, corporations, compensation contracts, etc. (basically everything we need to look at in order to fully understand their situation). We then create a comprehensive plan to make the most of what they have and provide guidance on how to achieve their goals.
- Investment Planning: We create portfolios that are designed to help them meet their goals keeping in mind their goals and minimizing their tax situation.
- Risk Management: We review nine points of risk in the client’s life, assess their exposure to said risk, discuss the probability of the occurrence and advise them regarding which insurance products are needed to protect themselves from these risks.
- Tax Planning Review: We educate the client as to the realities of taxation in Canada and show them how much the tax planning completed till date is saving them already and then explore 5-6 other strategies that may be of interest to them. During the entire process, we co-ordinate with accountants to facilitate any record keeping or strategies that require their input.
- Estate Planning Review: We review wills and powers of attorney in order to ensure they are in order and advise the client if they need to be modified. If they do, then we will work with them to develop an estate plan prior to meeting with a lawyer who finalizes the documents.
- Progress Review: At least every six months a review is completed updating the client of how they are progressing in relation to the five stages above.
Once in place, the clients are followed up with at least every three months with a progress review. We start the process again every three years or when a major life event occurs.
Our relationship goes far beyond just these offerings. We tell clients to contact us for anything involving money that is beyond their day to day needs. We have negotiated the purchase and sale of everything from cars to businesses for clients, arranged financing for various initiatives, helped execute wills and create charities, directed them towards medical resources to aid them with health issues and helped meet countless other needs.
We charge a $5,000 first year initiation fee for the initial set up and then ongoing investment management fees that cover the cost of ongoing service. We also receive insurance commissions.
Our target clients are people who are looking to delegate much of their financial lives to us, work closely and collaboratively with us and have at least $1,000,000 to invest with us.
What would be your advice to budding financial advisors?
In most places in the world, including my country, there are companies that will hire you to be an “advisor” with no experience and limited education. Really what they are hiring you to be is a salesperson. While sales is a part of every industry, in this industry the salesperson mentality is what dominates. Unfortunately, people who don’t actually do the work of planners, deliver far less benefit to client than those who do.
My advice is the following:
- Be a planner, not a salesperson. Sales will come when people see you are providing advice that is in their best interest, not your own.
- Don’t become an advisor, until you know how to be a good advisor. Start off as an associate/assistant or in some other capacity in this industry. Use that time to learn as much as you can about different advisors practices. Figure out what you believe is a process that delivers true value to clients and how you can market yourself to those clients.
What are your future plans?
- To continue to evolve my practice to provide ever more value to my clients
- To continue to grow my business
- To continue to mentor and teach others in this industry
- To develop future generations of planners within my firm
- To advocate for positive change in my country
- And to do it all while raising a happy family