InFocus: CRM2 Insight

Steps to success in the wake of CRM2

Steps to success in the wake of CRM2

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Any advisor who fails to adapt how they do business after CRM2 is going to be at a competitive disadvantage. Clients are going to expect their advisors to become full service, and those who do not offer a suite of services and products are at real risk of losing their clients altogether.

“If your client goes to a different firm for a service that you don’t offer, you’re letting a competitor in the back door to take that client,” explains Tony DeThomasis, President of DeThomas Financial Corp. “That competitor may do a great job with their estate planning or income tax. It’s then not much of a stretch for the competitor to say they’ll look at the other aspects of the client’s investment portfolio. Advisors are under real pressure to become full service.”

All of the talk around CRM2 has been on advisory fee disclosure and how advisors can remain competitive in the new climate. Advisors can only do so much to explain their worth to clients, and DeThomasis believes that advisors are going to have to offer much more than just money management expertise to justify their fees. “The advisors must be able to offer low cost investment options, financial planning, income tax and tax management, estate planning, insurance and retirement planning,” DeThomasis says. “Advisors must be able to offer these services as lost leaders in an attempt to retain clients.”

DeThomasis also believes that, in order to remain successful, advisors need to properly explain the cyclical nature of investment success to their clients. Regardless of whether you’re a rookie advisor or a renowned investment manager, all investments go through a cycle and only a few can achieve peak performance at any one time. “Advisors are going to have to do more than just create great portfolios,” he says. “The whole industry is about performance, but all advisors go through a cycle where they don’t perform as well as expected, whether that’s to do with style of investing or something out of their control, like the financial crash of 2008.”

Advisors should stick by their well thought out strategies, even if they underperform for two or three years. “Look at your whole portfolio and, as long you’re not too heavily weighted in one area, you should be able to ride it out. If you have enough conviction, you should be adding to that investment,” DeThomasis says. “It’s hard to get that message across. Stick with the style unless something material changes. Stick with it and buy more; not enough people to do it.”

In the lower fee, uncertain environment post CRM2, advisors are going to have to do whatever they can to provide client success. Not doing anything rash, and sticking to proven strategies, is one essential part of achieving this.
 

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DeThomas started in 1987 with a single office and four advisors. Today De Thomas manages over $1 Billion of assets with advisors and offices located across Canada. Even though we have grown in size, we continue to manage our business as if it were still a single family office. Each employee and advisor is valued and treated as family, where everyone has the opportunity to contribute and share their ideas.