How to save your clients from themselves

How to save your clients from themselves

How to save your clients from themselves After Rob McClelland graduated from business school, he spent the first six years of his working life as a regional manager at Hudson’s Bay, where he initially imagined a very different career trajectory. “I was planning on opening my own retail store, but the recession hit, so I decided not to do it,” he said. “At that point, a friend of mine suggested I try financial planning.”

He joined a small financial firm in 1991, working as one of two assistants to a seasoned mutual fund industry veteran. While he felt a connection with the business, he felt that the firm wasn’t right for him moving forward.

“At the beginning of ’92, I made the transition to a firm called Equion, which eventually became Assante Capital Management,” he said. “It was a much better fit.”

It was such a good fit that McClelland has been working under the company banner for almost 26 years. He worked his way up from senior financial advisor to his current position as founder and president of the McClelland Financial Group of Assante Capital Management.
 
He has always found satisfaction in establishing a plan for clients to get to retirement. Of course, that involves coordinating several moving parts, which McClelland enjoys immensely. “That’s always the most fulfilling aspect of what I do: putting an actual financial plan in place for them, determining what their goals are, building a portfolio, reducing their tax bill, and getting them to stick to their plan,” he said.

He has learned, however, that clients will be tempted to abandon even the most solid plan when markets behave unusually. “I still remember back around 1999 through 2000, when we went through the tech boom and bust,” he said. “People were so greedy that they changed their strategy completely to try and capture the returns of the ‘new economy’ and the internet that didn’t really exist. “

That was McClelland’s first major exposure to greed and its effects. Some clients watched their neighbours get rich and became envious; others confronted him, saying they’d have their teenage children choose the stocks they should invest in. “But they did it at the wrong time, near the peak of the market,” he said. “That was a very good lesson for me: you have to stick to your plan, stick to what you believe in.”

That experience prepared him for the events of 2008, when clients panicked over potential losses. “That was fear operating then. Anyone who was down in Florida at the time watching CNN daily thought the world was ending and wanted to take their money and run … You just had to show conviction and say ‘No, this is our strategy; we’re not deviating from it.’”

To create strong plans for his clients, McClelland has committed to being the best financial planner he can be. But unlike some who may seek to beat others in the industry, he adopts a less competitive approach.

“The secret for me was to spend time each year going and hearing other financial advisors talk about what was working for them,” he said. “A lot of the people attending those events were the same people, time and time again. And they also happened to be the best advisors in the business … because they were learning from each other. All you needed to do was get a couple of good ideas, take them back and apply them to your own practice, and it paid for the event.”

In terms of changing his own practice, he sees two trends that need to be considered. “I used to take my financial plans to age 90, but in the last couple of years, I’ve changed a lot of them to age 95,” he said, addressing a projected increase in Canadian lifespans. “Most clients are still in a good position by then because their spending tends to slow down once they get into their 80s.”

The second trend is the rise of the robo-advisors. While they aim to attract clients with an emphasis on low fees, McClelland is choosing to focus on something robo-advisors have requested regulatory exemptions from: the know-your-client process.

“We’ve started using a tool called Communication DNA, which basically breaks our clients up into four different types of people,” he said. “I could have one client who wants all kinds of details on their portfolio, the market, and all of that; the next client may just want to talk about their kids. A system to determine what type of client each person is helps you put in place a more customized communications strategy for each client.”

This next-level approach to KYC is likely inspired, at least partly, by a mindset that McClelland chose to adopt around 12 years ago and has stuck to since.

“I decided that the only boss I’d have is my client… It’s not the company I work for; it’s not me,” he said. “It doesn’t mean you always have to do what your boss tells you to do, though; sometimes your boss wants to do some crazy stuff. The most important person to make money is the client, and if the clients make money, you’ll do fine.”


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