Advisor explains how he engages with a new generation stepped in DIY rhetoric designed to breed a mistrust of advisors
We’ve all seen the ads. Unsubtle and shot like a soap opera, a piece of stilted dialogue tells investors that if they use an advisor the money lost to fees will keep them from achieving their goals. While the ads might make you cringe a little bit, they’ve proven their effectiveness as a marketing tool. Moreover, they fit into a wider media ecosystem telling investors — especially young investors — to do it themselves. On TV, social media, and even Reddit, young people are being told that an advisor’s value isn’t worth it when an app can give them low-cost access to investment vehicles.
Sonny Wadera addresses the premise of these ads directly. Wadera is the Senior Mutual Funds Advisor at Kelson Wealth Management with iA Private Wealth and as his practice has grown, he has taken on more young clients who are familiar with low-cost trading apps. He explains how through a combination of communication, data, and demonstrated value he has undone some of the negative biases that these ads have created in his clients. He explained how individual advisors and the industry as a whole can work to show just how far their value extends beyond the distribution of financial instruments.
“We say that there’s a difference of value. Those commercials talk about when someone buys an expensive product, but they don’t talk about the inexpensive products that an advisor can provide, and they don’t talk about the value an advisor adds there,” Wadera says. “That’s the disconnect, and we try to bridge that highlighting the two issues here: one is buying financial instruments, the other is the value we add on top of that.”
Wadera regularly cites research data from firms like Vanguard which shows that people who work with advisors tend to be wealthier and more confident in their retirement. That people who work with an advisor are better able to navigate the complexities of investing in Canada. He also tells the story of his own family’s struggles and how an advisor helped them at a very hard time.
Wadera’s father passed away suddenly at age 52. His mother was left a widow at age 46 with no work experience in Canada. His father had some disability insurance and some life insurance, but an immigrant widow and sudden single parent was left to navigate the complexities of Canadian insurance, tax, and inheritance regulation.
There was no professional on hand to help them navigate. Wadera became an advisor to provide that help, so that other Canadians wouldn’t be in the same situation his family was in.
His work now hinges on financial plans, a key element of the modern advisory value proposition. He describes iA Private Wealth as a planning firm that does investment management, risk management, and tax strategies. Planning is at the core of their value proposition and he sees the whole advisory business moving in the direction of better and more comprehensive plans.
The beauty of a plan is that it prepares for different market environments. Where DIY investing feels like a timing game. Bull markets spark some confidence, but give some investors pause about buying more, fearing they’re buying near the top. Bear markets erode confidence, and even those saying ‘buy the dip’ end up paralysed by a fear that things can go lower. An advisor with a financial plan can demonstrate that even when markets hit highs, they tend to exceed those highs within three to five years. They can also show how any investment fits into the wider plan, creating a sense of confidence and comfort.
While timing the market may not be a winning strategy, advisors should consider timing their approaches and conversations to align with clients’ major life events. When young DIY-oriented clients first buy a house, get married, or have a child, these are moments when an advisor can step in and demonstrate all the ancillary value they can provide beyond just the distribution of financial instruments.
As advisors work more and more with DIY-oriented clients, or clients trained to distrust advisors by ads and social media, Wadera says that advisors need to meet clients where they are. He believes advisors need to embrace technology and show their proficiency. That means using secure portals, respecting online privacy, and using seamless platforms to gather crucial information. Fundamentally, though, they need to demonstrate value.
“Cost is an issue in the absence of value,” Wadera says. “If your clients don’t perceive value in what you’re offering them, they’ll always complain about the cost. If we could demonstrate that there is tremendous value then they’re not going to care about the cost that much.”
