'Goodbye.' It's not what any independent advisor wants to hear from a decades-long client. But here, from just such a client, is a very personal and candid explanation for making that move.
2013 saw a growing number of clients flock from independent advisors to those toiling for the Big Five. 2014 won’t likely buck that trend.
Some argue the phenomenon prevails due to the aggressive acquisition strategy of banks, which have, over the last five years, gobbled up independents like candy. But, what is the real reason behind highly sought-after, well-heeled investors taking flight and building nests elsewhere?
One veteran client’s candid answers may surprise you and convince you to rejig your own approach.
An investor for much of his adult life (initially in GICs), Jon Nicholls, 68, is no rookie when it comes to his financial goals and the tools to achieve them. The Niagara-on-the-Lake resident, and former owner of a medium-sized, Toronto multimedia firm, understands the industry and its fluctuations. In his 30-odd years of investing, he’s taken risks and has sought valuable guidance from an advisor since 1985.
The secret to selecting an advisor
“The real key about having an investment advisor is someone who really understands what your goals are, is a strong enough person to tell you whether or not your goals are realistic, and who has a strong enough personality to be able to guide you along an agreed path and not allow you to get sidetracked along the way,” explains Nicholls.
For more than 20 years, he settled down with an established Toronto-based independent investment firm. A friend’s wife was vice-president there, cementing the trust so vital to any business relationship.
“I gave her (his advisor) some money to invest purely on the basis that I met, liked and knew her, and also because I’d heard good things about (the firm),” he says. “Frankly, I was happy, based purely on the fact that the money just kept coming in. For many years my investments showed reasonably consistent growth. The occasional bad year was followed by an exceptionally good one, so despite the fluctuations, I was getting what I thought were above- average returns.” (continued.)
More than earned interest
Beyond the bucks, Nicholls valued the firm’s intimate, entrepreneurial spirit and candour. He was able to speak directly to the firm’s top dog about what strategies he had in mind and why some investments weren’t doing so hot. “If there was a down time … I was able to call up (the president), talk to him, and get his feelings about it,” he says.
But the saying is “all good things come to an end”: In Nicholls’s case, it began with his advisor’s resignation. He was the passed along to a junior advisor lacking the experience necessary to handle his portfolio. Furthermore, Nicholls felt uneasy about the firm’s direction, and three years ago he walked.
“I felt like it was a massive organization that really didn’t care about its clients,” he explains, adding that he felt he missed out on high-risk investments offering superior returns. “I was disappointed and I rapidly began to divest, moving money elsewhere.”
With help from Scotiabank, Nicholls transferred his funds and never heard from the firm again.
“They didn’t say anything. They didn’t even contact me to say ‘sorry to see you go,’” he says.
From an independent to a bank
According to Nicholls, the bank offered him the resources and expertise that he was seeking. He values the once-a-year meeting to make sure his investment strategy aligns with his financial goals, the monthly telephone check-ins and random meetings to discuss any issues that arise. Most importantly, though, Nicholls has started making money again.
“Making money is always the top priority. But when your investments are not going up, like in today’s environment, it is very tough to get a decent return,” he says. “So, it really is very important now for an investment advisor, in my opinion, to form very close relationships with their clients and keep them informed, listen to what they’re saying, and make sure they help their clients. They’ve really got to be advisors now, rather than just salespeople, which is all they had to be at one time.”