These are uncertain times for many in Canada’s investment industry. The search for yield has been problematic and the election of Donald Trump has cast further doubt over what can be a complex industry even in periods of calm. With that in mind, we caught up with Blake Griffith, Financial Planner at Sun Life Financial
, to get some insight into how advisors can succeed regardless of the market environment.
“Advisors need to realign client expectations to today’s environment and take time to properly outline risk,” Griffith says. “With a client who needs a 7% return, 20 years ago you could have invested 100% of their portfolio in bonds, but today you’d have to have 80% in stocks and only 20% bonds, which creates a lot more risk. If advisors are exposing their clients to greater risks in search of returns, that’s a recipe for disaster.”
In fact, Griffith believes that advisors should be placing more emphasis on downside risk rather than potential returns. “If their money goes up, so be it, but if it goes down that’s going have a seriously negative impact,” he says. “The focus on downside risk is not only more important, it’s also more relevant to most clients.”
Griffith also sees a need for advisors to adopt a more holistic approach to how they build client relationships. He notices many advisors having a tendency to focus on either a solely qualitative or quantitative approach. “I think it’s important for advisors to have a good mix of both,” he says. “If you’re all data and no emotion or all emotion and no facts, it’ll make it very difficult for you to succeed. Clients today are really looking for a balance of both.”
Ensuring you’re properly educated and have the right qualifications for the markets you’re targeting is also important. “Advisors need to surround themselves with a team of experts who specialize in areas they don’t,” Griffith says. “Clients today need that interdisciplinary mix of specialists: accountants, lawyers, investment and insurance experts, and tax experts. Make sure you’re the expert on the stuff you focus on, but also have the right team around you.”
Griffith also suggests outlining a target market and then building a business around servicing that particular client base. “Different demographics have unique sets of needs and outlining that from the beginning will give much better results long-term,” he says. “Also, make sure the fees you charge are more than equitable in your client's favour, through the benefit, advice and service you provide.”
Griffith encourages advisors to analyze their unique attributes before choosing a demographic to target. “Because I’ve always been very entrepreneurial, I focused on the owner manager market. That led me to partner with a tax firm and an accounting firm that specializes in servicing those demographics,” he says. “That allowed me to become more of a specialist in that arena, which in turn makes me much more attractive to an owner manager. Once you start that process it becomes self-fulfilling.”
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