James Carney offers the view that as markets and circumstances change, answering one question remains at the core of an advisor’s work
James Carney, Senior Wealth Advisor at Carney Lyster & Associates of IG Private Wealth Management in Burlington, sees one question sitting at the core of almost every client conversation. Whether they’re worried about market valuations, asking if they can help a child with a down payment, or wondering if another vacation is in the cards this year, Carney knows that any information he provides also needs to answer the question of, ‘am I going to be okay?’
The way that question is manifesting in Carney’s practice, and across Canada, is changing as inflation, longevity, unique market dynamics, and even shifting geopolitics raise a host of different concerns. While the details of those questions change, Carney insists that advisors need to ensure they answer the core question diligently and comprehensively ensuring clients know and feel that they will be okay even as their lives change.
“When you really try to dive a little bit deeper into that question, people want to know if their money is going to outlive them or are they going to outlive their money,” Carney says. “What-if scenarios are always run in our practice. We're modelling situations in pretty much every review meeting to incorporate what is different from the prior year or the year before that.”
Putting today’s concerns into an existential answer
Many of the concerns and questions that Carney is hearing now stem from the ‘good problem’ of strong market returns and unanticipated wealth. With many of his older baby boomer clients now wealthier than they had anticipated at this juncture, they’re seeking outlets for that excess capital. Sometimes that’s a lifestyle change: increasing monthly income or taking a few extra trips during their ‘go-go’ years. Sometimes it’s a gift for the next generation, helping kids with a downpayment or grandkids with education expenses. In those cases, Carney says that it’s his job to show his clients what’s possible and what those possibilities might mean for their overall financial and wealth plans.
Other concerns that Carney hears are more tied to existential areas of worry than opportunities for newly-won wealth. Inflation has become a growing area of client concern since the end of the COVID-19 pandemic, forcing a reassessment of assumptions in financial plans. By quantifying higher inflation assumptions in the plan, however, he can help show clients that even at a higher persistent rate of inflation they can still be okay.
Longevity is also a growing area of concern, with Canadians living longer and requiring more expensive healthcare later in life. Carney says that some of his clients have seen their parents become centenarians and they’re asking if their plan accounts for a longer lifespan than they anticipated. He notes that in addition to remodelling financial plans to account for higher inflation, his team has revised client longevity estimates past age 90.
Clients will also raise concerns about the state of the markets today, which Carney says are often informed by the news they consume. They might come to him asking if AI is a bubble or if stocks are currently overvalued. While he engages on those points, he ensures that all his answers to client questions remain rooted in their plans and their personal expectations. He can show them just how an AI bubble bursting would impact their portfolio, and why the portfolio is constructed with a view that downturns are an inevitable feature of investing. Tempting as it might be to get into the weeds on P/E multiples and earnings reports, he makes sure that any market conversation begins and ends with that client’s plan.
A process for plan-based reassurance
Carney believes that when advisors face questions and concerns from their clients, the rush to reassure can open them up to oversights and mistakes. Just telling a client that they can take an extra vacation each year or pay off their child’s mortgage might feel good, but Carney says advisors must ensure they are clear with clients about what those decisions mean for their plan. Even if it doesn’t change the fundamental answer to ‘will I be okay,’ Carney will show clients exactly what different decisions will mean for their net worth, their expected returns, and their total portfolios each year.
Any reassurance that Carney provides is also rooted in a portfolio construction process aimed at resilience. He works with clients to set budgets and monthly cash flow expectations. He moves assets into low-volatility asset classes that can cover their needs for periods as long as three years. He ensures appropriate exposure to growth assets all while getting clients psychologically ready for the prospect of a market downturn. He factors in sequence of returns risk and the unique tax conditions that clients are faced with to ensure any shifts in circumstance, macro or micro, can be navigated smoothly.
That kind of planning work requires a comprehensive skillset. Carney says that his own early experience earning the CFP and Chartered Life Underwriter designations has proven valuable in his ability to serve clients with complex needs. Even when he won’t be the person executing on an estate planning strategy, for example, he knows enough to highlight issues and make the valuable referral, both because he understands those systems and he understands the client’s plan.
“The more you know about the client, the better,” Carney says. “So if you can get really entrenched and build and foster a relationship with your clients and really getting to know them on a very personal level, that is going to be your huge value proposition.”
