In a roundtable discussion, two prominent advisors reveal what works best for their firms
Finding the right service model is an ever-present challenge for any financial advisory firm.
But with decades of experience between them, Francis Gingras Roy and Rob McClelland laid out what they find most successful in a roundtable interview with Wealth Professional managing editor James Burton.
There has been a significant shift in the needs and expectations of Gingras Roy’s clients, particularly with conversations surrounding fees, as many now consider themselves able to manage their money without the expertise of an advisor.
“10 years ago, most clients were talking more about products and they weren't really aware of the fees that they were paying,” said Gingras Roy, senior investment advisor and co-owner of Diligence Wealth Management. “Today, the first thing that they talk about is fees and that they can do it themselves and pay no fees.”
In this changing landscape, Gingras Roy says advisors must justify their fees by providing broader services to clients, whether it be estate planning or life insurance services.
When McClelland was starting out as a young advisor with the Equion firm in the 1990s, the firm’s head Michael Nairne had already implemented a holistic approach with clients, giving McClelland, who is now founder at the McClelland Financial Group, a significant advantage as his career progressed.
“We were holistic right from the get-go, so that's been the easy part,” McClelland said. “The rest of the industry, which was mostly a product industry, has had to catch up to us.”
One major shift at his firm has been the subdivision of advisors, according to McClelland. He says his firm works in “pods” of two advisors, giving each client extra attention. Using this model allows McClelland to have two advisors speaking with clients, and has yielded positive results in the last two years the firm has used this system.
“We're able to deliver more value to the client in every meeting, because you've got two people doing the meeting,” he said.
Gingras Roy says that when he meets with clients, he is always with his planner, a system that allows his own expertise to dovetail with those of his planner, which he says has resulted in excellent client feedback.
With regards to newer associates on his team, McClelland says that he runs his practice “like McDonald’s,” meaning clients get the same service no matter who is advising them. He added that maintaining a shared focus means advisors are not scrambling to make investment decisions each day.
“Regardless of which advisor you're meeting with, you're going to get the exact same service,” he said. “I don't want my advisors going rogue and adding Bitcoin, infrastructure funds and private equity that I have no control or vested interest in.”
To keep key employees at Diligence, his own practice, Gingras Roy works closely with each employee, and has been considering options such as offering equity or bonuses for asset growth. But in his role with Manulife, employees are largely self-employed. He says the main issue he sees nowadays is finding young advisors who are willing to put in long hours during their first couple of years in the business.
“For the first couple years of their career … the work-life balance does not exist,” he said. “You have to put in the hours for people to trust you with their money.”
McClelland provides an annual 6% growth expectation for his advisors to achieve with existing clients as well as a 2% expectation for new clients. When advisors surpass that threshold, they get a heftier bonus, and vice versa if they cannot meet their targets. This is all part of a plan for advisors to make a smooth, incremental transition into a senior advisor position once they are ready.
Having young advisors constantly engaged and sitting in on meetings with major clients fast-tracks their growth, according to McClelland, who wants his employees to soak up as much information as they can in their early years. Within a couple of years, those same advisors are often running client meetings with little intervention from McClelland.
“The associates are sitting in every single meeting, at least for that first year and a half,” he said. “What happened when we did that is their learning curve just went through the roof because they’re sitting with clients with $5 million in tax issues and estate issues. They’re seeing the whole thing.”
Gingras Roy says his firm often outsources lawyers or accountants, as they prefer out of town experts to the ones available in Montreal. He also explained that having an in-house lawyer would require them to be an expert at nearly every facet of his firm, something he views as an unrealistic target.
McClelland uses a white labeled accountant service, as he found outsourced accounting services often did not fit with the way his firm operates. He is also looking to white label his firm’s legal side, though has no plans of insourcing.
“What I don't want to do is have to run an accounting department and a legal department and a financial advisory department all under the CIRO rules,” he said. “It's just too complicated.”
