A seasoned advisor explains why she wants to see greater definition around what financial planners offer
The advisory business in Canada is suffering from an image problem. This means that each year the average age of the profession tracks upwards as those retiring are not being replaced by new entrants. The scandal that engulfed TD Bank earlier this year didn’t exactly help matters, as Shelley Johnson of the Investment Planning Counsel explains.
“I have had some people come in since this news broke and they wanted to know how independent I was,” she says. “They wanted to know if I had quotas for selling products. I can tell them I am fully independent and can sell any product across the board.”
Johnson has been with the IPC since 2002, but started her career with Prudential Insurance in the late ‘80s. Working at the firm’s head office for over a decade, she gained her CFP designation and would have regular interaction with advisors, which ultimately paved the way for her current career.
Her time with Prudential ended shortly after the firm was acquired by London Life and from there she worked with the TD Evergreen brokerage – the experience isn’t something she looks back on with any fondness.
“I threw in the towel one day because I was so disgusted,” she says. “When I see what is in the news now with the banks, I just shake my head because this has been going on for years,” she says.
In Johnson’s opinion, there needs to be a better distinction of what a financial advisor actually does. The job in 2017 is a lot more than flogging products, she says, but that’s not something the general public may realize.
“We need to make what a wealth advisor and a financial planner is clearer,” she says. “I am a full-service wealth advisor; I’m not just selling mutual funds. The client is confused about the different products, the designations and the titles.”
Aside from holding the certified financial planner (CFP) designation, Johnson is also certified as an elder planning counselor (EPC) and a registered retirement consultant (RRC). She specializes in meeting the complex needs of Canadians facing retirement, who also happen to hold the vast majority of the nation’s wealth. Baby boomers also tend to prioritize protecting their assets, which certainly needs to be taken into account when drafting an investment strategy.
“I am more of a planner, but how we make our money and are compensated is more from the investments and the products we sell,” she says. “When someone is a client, the value-add we bring to the table is the financial and lifestyle planning.”
In the CRM2 era, the cost of financial advice is easier to quantify for clients. Statements now show how much you a client pays their advisor in dollars and cents how, and if their performance merits that compensation. At this juncture, the increased disclosure hasn’t had any negative effect on Johnson’s business.
“The clients see what we make at the end of the year,” she says. “So far, we have had a really positive response. Not one client has come to me and said I didn’t deserve my fee, but they do want to know what the fund managers are doing for their dollars.”
Johnson shares that curiosity, and has shifted her investment strategy for this year. With a lot more options out there for products, there is no good reason to stick with underperforming mutual funds, she explains.
“Last year I think some of the Canadian fund managers missed the mark on the Canadian market,” she says. “Typically we have been a traditional mutual fund shop with some stocks, bonds and ETFs, but I’m really looking at changing my product shelf and evolving how we invest our clients’ money going forward.”
It is a process that won’t be rushed; rather, she will take stock of the current market and decide how her clients’ needs are best served. Central to that is the idea of value – maximizing returns for the fees you pay. Similar to greater transparency helping the advisory business, Johnson would like to see similar moves by the manufacturers.
“I’m not interested in using a flavour of the month fund; we have a strict rule in the office that wholesalers cannot come in unless invited,” she says. “If I want to use a product, I will contact the individual companies if I want to know more. What I am finding out so far is some are not being upfront about their fees.”
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