Capital thinking

Capital thinking

Capital thinking As a financial advisor, it’s always pref­erable to have many strings to your bow. Graeme D. Baird realized that soon after making his start in the business as a sales rep for Standard Life Assurance Company.

“When I started with Standard Life in 1992, there was a focus towards life insur­ance,” he says. “I was lucky because a lot of the senior advisors there had started doing seminars on pensions, so I was exposed to the money business at a younger age.”

Those years of learning served him well – by 1999, he had incorporated his own prac­tice, G.R. Baird Financial Group. Nearly two decades later, the Ottawa-based business has grown to reflect the changes in the wealth management industry, stretching from investment advice and estate planning into group benefits and retirement plans.

“In essence, we have two companies here,” Baird says. “G.R. Baird Financial Group is individual wealth management, life insur­ance and estate planning. Then we have the group pension business called Baird’s Benefits Plus. That helped us to have a very diverse practice. We do quite a bit of health and dental plans for companies and group retirement pension plans.”

The multi-purpose practice Baird over­sees today is the result of the conversations he had back in those early days at Standard Life. Having proved his mettle selling insur­ance plans, his clients would invariably ask about other financial products. The fact that he could answer those questions laid the foundations for what would become G.R. Baird Financial Group.

“It unfolded that people started to ask me more questions about lines of credit or mort­gages or saving for their kids’ education,” Baird says. “That meant that although I may have been referred to a person for a specific product, by the second or third meeting, I was doing a full financial plan and was in charge of all of their financial affairs.”

A significant part of Baird’s business today is estate planning, which is a skill with plenty of value, given the demographic shift currently underway in Canada. It’s a complex process with far-reaching impli­cations, and clients who walk through the doors at G.R. Baird can expect a high level of attention to detail.

“People will look at what tax liabil­ities they have,” Baird says. “If they own a company, we need to get into the weeds a little bit and look at who the shareholders are; is there a holding company? Through that, it allows for an easy estate transfer with an efficient tax position. That may involve life insurance, or it may involve setting up a holding company, so we do bring in other professionals like accountants and lawyers.”

When it comes to the wealth creation side of his business, Baird’s approach to investing has changed over the years. The quantitative easing period that has lasted almost a decade now has led him to move away from fixed income and toward safer equities that can generate some yield.

“Traditional assets have let people down – not because they are poor investments, but because the interest-rate environment has been so low,” he says. “Because of that, you have to take on a little more risk with exposure to equities. We try to explain to people that when looking at dividend-paying stocks as an alternative to traditional bond-type investments, you almost have no choice.”

Equities do carry an element of risk, but Baird tends to direct his clients toward stocks with a long track record of solid performance. In Canada, that invariably means financials. It’s not a tough sell for clients, especially considering the alterna­tives available in the bond markets.

“Equities are easily understood by most clients – they understand that if they own part of RBC or TD Bank, they will be somewhat comfortable,” Baird says. “If you had a GIC at the Royal Bank of Canada, technically the money is sitting in the bank’s account, and they pay you 1%. If you owned stock instead, the dividend yield will be close to 4%. It is better to own stock in these companies today.”

In terms of how clients pay for his services, Baird has resisted any urge to move to a fee-based business. While many of his peers are doing exactly that, he’s of the opinion that if a practice isn’t broken, it doesn’t need to be fixed.

“We normally do embedded commissions like 1% trailers, and that is fully disclosed upfront,” he says. “Over the past 18 months, we have explained to every client how we are paid. So far it has made more work for us, but that has paid off because we are taking in more assets.”