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Advisor Insights

Advisor Insights

What does providing value really mean?


Date: April 11, 2017

Now that CRM2 is in full force, clients are starting to see just how much their investments – and your advice – is costing them. While you should always be providing high-value service, now that clients can see exactly where their dollars are going, you’ll likely have to work harder for your fee.

Value, though, is a subjective term. What one advisor does may be different from another, and that makes it hard for advisors to know exactly how they can up their game. The first place to start is to keep in mind that value doesn’t necessarily equal money, says Peter Bowen, Vice-President, Tax and Retirement Research, at Fidelity Investments Canada.

“The value of advice is much deeper and much broader than that,” he says. “It’s truly the whole package that a financial advisor brings to the table, which involves knowing the person’s individual circumstances and developing a long-term plan that meets individual needs.”

Help clients sleep better

On a more psychological level, it’s providing the right advice so clients can sleep better at night, says Mr. Bowen. That means helping them understand market forces and assisting them with tax and estate-planning issues so they know their wealth will be protected in the event of a downturn.

Cory Papineau, a Winnipeg-based financial advisor, argues that the responsibilities of an advisor reach far beyond even that. “Today’s advisor needs to understand behavioral psychology, and needs to have the social skills to listen critically to their clients and provide advice that is tailored to the individual’s goals,” he says.

Providing value, adds Mr. Papineau, means financial advisors need to be everything that a robot can’t be. “The actuarial math is simple and indisputable that by deferring CPP, you will have a larger income in retirement,” he says. “However, that does not take into account a whole host of variables unique to the individual, such as current and future lifestyle choices, need of income, health and life expectancy.”

Be transparent

It’s also important to be transparent, says Mr. Papineau. Be open about the total cost of investing and the service you’re providing. Don’t just focus on trailer fees, as you may have done in the past. “The current system is akin to going to a restaurant and having a price for the food, but not being told the costs of the chef and wait staff before the final bill arrives,” he says.

Clients also have to know that you are indeed adding value – so tell them what you’re doing, says Mr. Bowen. “Make sure investors are aware of the work that’s going on behind the scenes and of the fact that advisors are doing a lot to stay up to date on, for instance, tax and policy changes implemented by the government and implications of those changes,” he notes.

Advisors who only speak with clients once a year may have to book more face-to-face time, too. Show that you are indeed working for that client. Consider making more frequent phone calls, especially on time-sensitive matters, and send out emails that show you’re on top of things, whether it’s when the market turns or when tax time comes around, says Mr. Bowen.

“It’s generally good practice for advisors to demonstrate all the work they’re doing [and that] they have a plan in place to work toward, and are managing their clients’ assets to and through retirement,” says Mr. Bowen. “This deepens the trust between the advisor and the client.”

“For most, working with an advisor can improve their financial well-being,” adds Mr. Papineau. “Clients need to find a financial advisor who will be a partner in helping them succeed.”

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