Why rookie advisors can no longer go it alone

An industry veteran weighs in on why it’s harder than ever for freshly minted professionals to succeed

Why rookie advisors can no longer go it alone

Having been in the field of financial advice for over 20 years, Reg Jackson certainly has a thing or two to say about how the business has changed.

“For the most part, I started as a stand-alone advisor in the mid- to late ‘90s, when it was possible to be a rookie and ultimately be successful,” said Jackson, Senior Investment Advisor and Vice President at JMRD Wealth Management with National Bank Financial. “While the success rate for rookies was low back then, there was ‘success’.”

But a series of unfavourable trends have brought that success rate closer to nil than ever. Some, such as the ongoing compression in fees, the commoditization of information, and the increasing number of incumbents and new players crowding into the space are arguably interrelated through the explosion in technology.

“Social media and the trend toward putting everything online — including information that only advisors used to have access to 20 years ago — have also raised clients’ expectations,” Jackson said. “Aside from competing with all other advisors for prospective clients, the rookie today also has to contend against online robo-advisors and other resources that enable DIY investors.”

He also sees a growing reluctance among both firms and wealthy prospects to invest their time and capital working with new blood. Clients aren’t looking for stock brokers anymore; they want a full and complete holistic approach to their finances. Firms, meanwhile, are more reluctant to hire rookies and implement expensive training programs. All of that, in Jackson’s view, means specializing and joining a team has gone beyond being valuable to being mandatory for young advisors.

“Clients are looking for more and one person, especially a fresh advisor, cannot be an expert in every area,” he said. “Successful teams have experts running the gamut of wealth management services that clients with complex financial situations require. A young advisor with a specific skill set would be an attractive addition to the team.”

Working across three locations in London, Waterloo, and Toronto, Jackson’s team includes four portfolio managers and expertise covering portfolio management, risk management, retirement income, financial planning, estate planning and insurance. He spends the bulk of his time on the pre-investment stage wherein the wealth plan is just being put in place, while other team members spend far more of their time on investing to meet the goals of their client’s plans.

”On a team level, having a wide range of designations across the different members is critical,” said Jackson, who holds the CIMA, CIWM, FCSI, FMA, and HBA designations. “Designations show dedication, smarts, ability, and expertise — all qualities that clients like to see from people who manage their money. And the fact that they require continuing education to be maintained means the holders are continually improving their knowledge and expertise.”

Still, a lack of knowledge about the industry leaves too many investors unable to differentiate good advisors from bad ones. He thinks something should be done so it’s harder for people to present themselves as an investment professional — an objective Ontario recently took a step toward with its consultation on the regulation of financial planners. Equally important are public education on designations, the risks of investing, and what they should ask when seeking financial advice.

Based on his own experience, Jackson also has a few thoughts on how clients view bank-run brokerages and independent firms. “Retail clients feel a sense of comfort and stability with a bank-run brokerage,” he said. “Bank-owned firms have built-in backstops in case ‘bad’ things happen. Retail clients also like the idea of seeing bank branches and can equate those branches with the brokerage, meaning those that approach independent firms typically go through a longer education cycle. But while the Canadian banks are trusted and secure, independent firms tend to move more quickly on things and perhaps be more entrepreneurial, making them a valuable option.”

Despite the competitive edge they get from people’s sense of security, even bank-owned firms have to recognize the need to respond to disruptions from technology. Taking a view that it brings more value than competition, Jackson expects robo-based tools to be made available to his team — a welcome move as both bank-owned and independent practices face rising expectations.

“Today’s client and tomorrow’s client will be miles apart in terms of their needs,” he said. “I fully expect to be working as a Financial Advisor in 10 years, but my job description and the products and services being offered will look very different.”