The importance of taking a long-term approach but staying current

The importance of taking a long-term approach but staying current

The importance of taking a long-term approach but staying current When the COO of Questrade, Stephen Graham, analyses the wealth management industry, he likes to step back and take a long-term approach. Over the past few of decades, increasing numbers of Canadian consumers have sought help with the long-term management and investment of their money, driven by people changing jobs more often and having fewer pensions.
 
“The responsibility of managing personal wealth falls more to the individual today; that’s a long-term trend and one that’s not slowing down,” Graham says. “It’s been very positive for the industry because there’s an increasing need for advisors and that’s not going to change, although certain aspects of it will.”
 
A second part of Graham’s long-term wealth management outlook concerns the baby boomer generation moving into retirement and, at some point in the not too distant future, passing their wealth onto the next generation; a generation that has less opportunity for wealth accumulation. “In the modern day, wealth planning and retirement planning is critical,” Graham says. “It’s one of the biggest challenges people have: making sure they don’t outlive their money. That gets further accentuated by the fact that we’re all living longer.”
 
Another key trend that Graham has noticed shake up the industry is to do with where consumers invest their funds. “It’s a global market now, and you cannot just invest in the companies you know or those within the domestic market,” he says. “Some of the markets outside Canada, and North America, have strong growth, so you can’t disregard those. Investors and advisors need to have a more global perspective in terms of how they manage and invest money.”
 
“Diversity doesn’t mean the TSX anymore; it’s a global approach across different asset classes. You need to help your clients get comfortable with diversification in both asset classes and regions.”
 
Graham encourages advisors to ensure that a client’s portfolio matches their risk tolerance. He also thinks that the conversation around fees is only going to intensify. “In a low rate environment your returns are more important and thereby fees become much more important, too” he says. “That’s why we’re seeing a large shift from embedded compensation to a more fee-based approach.”
 
“CRM2 puts much more responsibility on advisors to be transparent. In some countries, trailer fees have disappeared and that’s had a very negatively impact on the number of advisors. Moving to a fee based model is a trend that will continue.”


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