Experienced advisor on why recent volatility has reinforced value of a goals-based financial planning business
The recent economic and health shock has reinforced one advisor’s belief in the ability to go back to basics and remember the foundational principles of the job.
Mark Slater has more than 25 years of experience and leads the Slater Financial Group at CIBC. He said the core principles of being an advisor have never been more important, as written about by inspirational coach and author Nick Murray.
Murray published The Excellent Investment Advisor not long after Slater got into the business and now publishes a monthly newsletter that Slater reads “religiously”.
“When [the book] was written, it was during a time when our business was very commission-based, transaction-based, and our value proposition was knowledge of the markets and knowledge of investments,” Slater said.
“It was about velocity of assets and most communication was done by the phone. In that book, in 1996, he said that the future investment advisor should be running a goals-based financial planning business, it should be a relationship business that’s trust-based and fee-based. Fast forward to now and you see he had a lot of foresight, and we did implement a lot of what he suggested in the early 2000s.”
Slater believes the COVID-19 crisis has proved that this goals-based financial planning approach works and lets you go back and refresh clients’ minds with regards to the two main risks advisors try to manage.
The first is the temporary market risks that come along on average every five years where you can get a 30% correction or more. Those are temporary, Slater said, and as long as you’ve got the patience and know those risks have been priced into the plan you know you’ll be ok. This will include the psychological pain of losing money which will take a while to get over but, ultimately, is not permanent.
Speaking on Purpose Investment’s podcast with Som Seif, he added: “The second risk is inflation and taxes, and the only asset class that always delivers a return above inflation and taxes is investing in a diversified basket of companies that pay dividends and whose dividends are historically about twice the inflation rate.”
After the market swung down and crashed at around a 37% drop, it soon became clear that this coronavirus was a global problem. Uniquely, this time firms not only had to worry about portfolios but staff and client health. All Slater’s team arrived at the office from the GO train or the TTC, so it was imperative that remote access was set up as soon as possible.
He said: “From a business perspective, I’ve always been a very process-oriented person and we’ve tried to build a practice that’s very professional and equally process-oriented. I think even though we’d done that for different reasons, a lot of the processes and technology that we’d already implemented really allowed us to pick up where we left off and continue to run the business seamlessly. I think our clients saw business as usual and we were there when they needed to get a hold of us.”
He added: "About six years ago we said that we were going to standardize how we host meetings, and there would be three options on how to have them: 1. In person, 2. Quarterly at our satellite offices, or 3. We’d use a video conferencing solution.
“So we were comfortable with technology, and within a few years, about half of our client meetings were already being done digitally. We, essentially, with a turn of a key, converted all of our on-going scheduled meetings to digital and it’s been pretty seamless and clients have embraced it.”