Growing Your Financial Advisory Practice | Insights for Financial Advisors, Planners and Investment Managers

As a financial planner, you become accustomed to seeing certain types of financial situations over and over again. However, some clients have very complicated and singular financial situations that can prove challenging. For example, planning for elderly parents brings out unique challenges. Business owners often have more complex tax situations. Expats who retain investments in their home country may have a tangled investment situation. Today’s guest knows a lot about dealing with some of these more complex financial planning situations and most importantly he knows how to make the client engagements profitable.

Jason Heath is one of Canada’s best-known fee-only financial planners. He is a Certified Financial Planner (CFP) with Objective Financial Partners in Toronto, a personal finance columnist for the Financial Post and MoneySense, and a regular contributor at RetireHappy.ca. Jason has been providing fee-only, advice-only financial planning since 2001 and has a particular interest in working with clients with complex planning issues. Listen to the episode to hear more about Jason’s background, how he overcame the challenges to build his practice from the ground up, and how financial planning has changed over the last 20 years.

Topics Discussed in This Episode:

Links and Resources:

Jason Heath

Jason’s Twitter

Objective Financial Partners

Quotes from Jason:

“In the past, clients would hire us for financial planning, and now I find people are contacting us for a financial plan. And I think the distinction is important.”

“It’s very interesting the conversations that I’ve had with clients over the past year that either conflict with what their accountant has told them, or they haven’t had one with their accountant at all.”

“I think it’s a practice area that should be even more developed – more family meetings going on between aging parents and their children, more children proactively talking to their parents about their estate planning and their finances.”

While Jason got his start in theatre school, he’s since found his passion offering clients truly objective advice on complex financial situations. Here we’ll cover the following key points from the show:

To learn more from Jason, including his insights into working with expats, business owners, and elderly parents, as well as the challenges of recurring income and more, catch the full episode through the link above or on iTunes or Stitcher.

Fee-only financial planning vs. fee-based investment management

There’s still confusion out there about what fee-only financial planning is, so we thought we would start by clarifying it once and for all. Fee-only planning is very popular lately in the media (and for good reason!), so it’s not surprising that folks use the label but may not understand exactly what it means.

It’s true that fee-based investment advisors do often charge a fee, but it’s typically a percentage of a client’s investment portfolio; while it’s certainly not commission-based pricing, it’s also not what we call fee-only planning.

Jason uses the terms fee-only planning, fee-only advice, fee-for-service, and advice only interchangeably to clarify what he does: financial planning advice only, for a fee.

The two keys to (profitably) serving a wide range of clients

You’ve probably heard about the importance of finding your niche in financial planning (you can hear more about that in Episode 006: How to compete and win in the Canadian HNW segment). Jason’s niche would be complex financial situations… but those can include wildly different net worths, all sorts of professions, and many geographical locations.

So how can he stay profitable when he has a range of clients with very specific needs?

Simple: it comes down to efficiency and pricing.

An efficient process is key to being profitable. For Jason, this means getting the client to do more work! Most of the data collection is done not in a lengthy billable meeting, but as homework after clients receive their engagement letter.

Jason gives his clients a detailed list of all of the documents he’ll need. Once he has everything, he can easily parse out the right information can ask for a follow-up meeting if clarifications are needed.

Hint: Jason has found this method works well, but clients almost always make mistakes in the same area: budgeting. People are really bad at estimating their actual spending! Take this into account, and make sure you discuss spending habits with your clients in person to ensure you’re getting an accurate picture.

The other part of the equation is accurate pricing. Essentially, he needs to charge for any time he spends working for a client. Jason charges a flat fee for about 90% of his work (the other 10% is hourly), so he’s gotten really good at figuring out how long different tasks take ‒ and therefore how much he should be charging a client based on their situation.

Hint: It’s easy to underestimate how long tasks will take, so account for that and plan for the unexpected. Jason finds that on any given day, he spends anywhere from one to five hours on tasks that he didn’t plan for! Make sure you have a buffer for that in your pricing.

Why the flat fee?

Jason charges a flat fee for about 90% of his work (with the remaining 10% being hourly). The biggest advantage?

Transparency and trust.

Consider this example: During a meeting with a client, you realize you’ll probably need at least two more hours to get a complete picture of their situation. You invite them to come back next week to finish the conversation then. If they’re paying you hourly, it could be easy for them to wonder if you’re deliberately extending the process to squeeze more out of them. With a flat fee system, they know you’re spending more time on them for them ‒ not so you can line your own pockets.

With a flat fee ‒ whether for a specific service or as a yearly retainer ‒ both you and the client know and agree to the full cost early on, so there are no surprises.

Hint: In his engagement letters, Jason always includes a disclaimer that if something truly unusual and unexpected comes up, he may have to charge more. Again, the key here is no surprises!

That’s it for now, but make sure you catch the rest of the episode where Jason really gets into the nitty-gritty of different financial situations. Subscribe on iTunes or Stitcher, too, and make sure to sign up below to get new episode notifications straight to your inbox.

Insurance is an important part of financial planning and wealth planning. Technology can help insurance brokers more effectively bring useful products to their clients, which can in turn help those clients maintain and protect their wealth. Today’s guest understands how cutting-edge technology can help advisors streamline processes, manage tasks, and discover unexpected efficiencies. Most importantly, he recognizes the importance of maintaining a human touch in the process.

Aly Dhalla is the CEO and Co-founder of Finaeo, a startup that was created to help insurance advisors thrive in a digital world. Finaeo provides advisors with a digital tool-kit and an on-demand concierge back-office. This enables advisors to create what Aly calls the Bionic Advisor – a human advisor empowered by technology. Listen to the episode to hear more about what Finaeo is all about, what a bionic advisor looks like, and how technology impacts the advisory field now and in the future.

Topics Discussed in This Episode:

Links and Resources:

Aly Dhalla

Finaeo

Finaeo Waitlist

Quotes from Aly:

“Our vision and mission is to empower advisors around the world with technology that makes their lives easier.”

“I think technology is a great solution to do the same activity over and over again without making a mistake. And effectively, that’s compliance.”

“Go back to your last five sales, go back to your last ten clients, and ask yourself: which one of these ten did I go above and beyond for?”

We haven’t spoken much about insurance yet on the podcast, so we’re thrilled to have Aly lend his expertise to the show. Here we’re highlighting our favourite points from the recording:

To learn more from Aly, including his rock-solid planning process, his best on- and offline client acquisition strategies, and more, listen to the full episode through the link above, or on iTunes or Stitcher.

What the heck is a bionic advisor?

Don’t be fooled: we’re not talking robo-advisors here.

Aly defines a bionic advisor as a person (yes, a real human person) who is empowered by technology and leverages it to their advantage. Bionic advisors aren’t about to be replaced by robo-advisor technology; instead, they use that technology to cut out inefficiencies so they can spend more time actually serving their clients.

Like us, Aly believes that human advisors are essential to Canadians’ financial well-being. However, advisors who aren’t making the most of all the technology available to them are being left behind. That’s why he stepped in with Finaeo: to arm advisors with the best technology possible and help them do good by their clients.

Hint: Think about the biggest time-wasters in your practice. Do you wish you could easily identify serious prospects and weed out the tire kickers? Or more quickly find appropriate products for your clients? Find out what technology or service is out there that can help you solve these problems.

How technology will impact advisory business

Aly identified three ways in which technology can change (and is already changing) the financial advisory space:

Aly’s advice for advisors who want to scale their business

Aly speaks to us in the show about what differentiates the best financial advisors from the rest of the pack. However, he also thinks it’s a mistake to see yourself only as a financial services provider: he wants you to remember that first and foremost, you’re an entrepreneur in the financial services industry. The following three tips can help you scale your financial advisory business, but they’re also relevant to anyone running their own business:

Hint: Here’s another area where technology comes in really handy. Find out what data you need to collect to know if you’re on track to reach your goals, and start tracking!

To learn more from leaders in financial advisory business, make sure you’ve signed up below to get an email every time a new episode comes out. Don’t forget to subscribe to the show on iTunes or Stitcher ‒ and definitely listen to the full episode to catch everything Aly has to share about technology in the financial advisory space.

With 27 years of experience in the industry, today’s guest Rona Birenbaum explains the importance of technology in the financial services field, as well as how financial planners can stay relevant through all the changes. Rona is an honours graduate of York University’s Business School, a CFP, and an insurance advisor. In 2000, she founded Caring for Clients, a premier fee-only financial planning firm. In 2016, she started Viviplan, a low-cost, fee-only financial planning fintech company that’s the first of its kind in Canada.

Wealth Professional Canada named Rona a Woman of Influence in Financial Services and one of the top 50 advisors in Canada for three years running. Rona is also a guest personal finance columnist for both The Globe and Mail and The Medical Post. Hear what she has to say about her two businesses, how she builds relationships with clients, and how she’s using technology to help bring financial planning services to more Canadians.

Topics Discussed in This Episode:

Links and Resources:

Caring for Clients

Viviplan

Rona Birenbaum

Rona on Twitter

Quotes from Rona:

“The idea and the concept is to use technology to bring down the cost of delivering that advice.”

“What really sets us apart, and what I think needs to set anybody apart in a service business is the degree to which they get to know their clients, understand the unique attributes of their clients, can relate to their clients on a very personal level.”

“The journey of a startup is never a straight line, so there needs to be an alignment of mission and values.”

When you listen to Rona talk about her work, you’ll notice that her mission is to help as many Canadians as possible with their finances. This includes the impact her two companies are making, as well as the volunteer work she does with Junior Achievement to bring financial literacy to Toronto schools. In this episode she is no different, offering wonderful advice and motivation to our listeners ‒ so make sure you catch the whole show. Below, we’ve collected some key points from the recording:

For more on Rona’s planning philosophy, how she engages clients, the challenges and opportunities that Viviplan is facing, and more, listen to the full episode through the link above, or on iTunes or Stitcher.

Why Viviplan?

There’s no question that Rona’s first company, Caring for Clients, is successful; in fact, Wealth Professional Canada named them the top independent firm in 2017. But then, why found another company in the financial services space, and a robo-planner at that?

It all comes back to the spirit captured in the name of her first company: caring for clients.

Rona felt that one on one, the scale of her impact was limited. She and her fellow advisors have only so many hours in the day and can only help so many people. As she puts it, “the idea and the concept is to use technology to bring down the cost of delivering that advice.” She wants to make financial planning available and affordable for everyone.

Viviplan will allow her to reach even more Canadians and help them plan their finances at a price point that’s at about a quarter of traditional fee-for-service planning. For those looking for short- or long-term planning that’s affordable and a little more hands-on on the client’s part, Viviplan can be a great option.

While they’re still working on funding to build the technology and automate more of the processes, she’s hoping that eventually, consumers will be able to play with their data and projections themselves and really take planning into their own hands, with a little less involvement from a financial planner.

How financial planning will evolve in the future

So will robo-planners like Viviplan take over the market and replace human financial advisors once and for all?

Rona doubts it, and it’s certainly not her intent. In fact, Viviplan’s most popular plan includes a conversation with a financial planner ‒ she understands as well as anyone the value of a person who can connect the plan to the client’s context and help them understand how to implement it.

She likens financial planners to doctors: sure, we all have access to tons of medical information on the internet, but does that mean doctors are going out of business anytime soon?

Of course not!

Right now, a lot of planners’ work still revolves around working with data: gathering it, inputting it, manipulating it, and so on. That work will become pretty well automated with time, so planners’ roles will shift to connecting with, understanding, and educating their clients ‒ and this is something consumers are seeking out more and more!

Moving forward, planners’ work will be more centered on interpreting data, understanding how it relates to the client’s context, helping the client understand it, and providing ongoing motivation and support to implement the plan.

Way more fun than data entry, right?

Rona’s three tips for getting started with fee-based financial planning

If you’re just getting into the financial planning business, or maybe you want to move from traditional commission-based advising to fee-based planning, Rona has three key pieces of advice for you:

Hint: You’ll also want to decide before you start whether you want to do the planning yourself or bring someone in to do it for you ‒ it might make sense to hire someone else to build the plans if you’d rather focus strictly on your relationship with clients

   3. Keep learning: Stay up to date on the latest in the industry, keep learning from experts,             and be open-minded. Financial planning is full of exciting changes and challenges, so stay           flexible and be ready to adapt as needed.

To make sure you keep your finger on the pulse of the industry, make sure you’re subscribed to the podcast on iTunes or Stitcher, and sign up below to get new episode notifications directly to your inbox. Also, don’t forget to listen to the full episode to catch all of Rona’s wisdom and advice!

Howard Dixon grew up in England and came to Canada as a W.H. Rhodes scholar in 1961. He holds a joint honours degree in physics and applied mathematics from the University of London, and he earned a Certificate of Education at Cambridge. He had a career in education before beginning his financial training as a rural agent for Mutual Life of Canada. He opened his own financial planning practice over 30 years ago in 1987, worked for two years as a senior financial consultant for MD Management starting in 1994, and became a Registered Financial Planner in 1996.

In addition to running his practice, Howard has also taught CFP courses at the University of Victoria and created a certificate-level course called Financial Plan Development. Howard joins the podcast today to discuss retirement income planning. Listen to the episode to hear what Howard has to say about the financial planning process for retirement income planning, the importance of cash flow during retirement, and why retirement planning is an ongoing process.

Topics Discussed in This Episode:

Links And Resources:

Howard Dixon

Dixon, Davis & Company

Quotes From Howard:

“The most common question is ‘I’m 55, how much money do I need to retire?’”

“What I’m really doing is I’m doing a business plan for a personal situation.”

“It still startles me how many Canadians, at the age of 50, have credit card debt.”

Howard estimates that retirement income planning constitutes 65-70% of what his firm does, so you can be sure he knows his stuff. Before checking out the full episode above, have a read below where we’ve compiled some keys points from the recording:

For more on the topic, including identifying just how much a client will need in retirement, tapping into home equity, dealing with insurance, and more, listen to the full episode through the link above, or on iTunes or Stitcher.

The art of estimation

So, is retirement income planning more of an art or a science? You might be surprised to learn that Howard sees it at 75% art (the personal side) and 25% science (the numbers side).

Why?

As a rule, we tend to act on beliefs, not fact. You can give two people all the information at your disposal, and they will still interpret that information and act on it in different ways.

However, with experience, you can learn what people tend to do in retirement and begin to understand patterns around behaviour. Over time, you can make the entire process more predictable and perhaps even a bit more scientific.

The two biggest mistakes advisors make when it comes to retirement income planning

With all his experience in the field, Howard has seen some pretty big mistakes. The following top his list:

1. Lacking appreciation for the way tax works

You might be thinking, “No surprise there!” It can be hard to keep up with ever-changing tax laws.

However, taxation is usually employees’ biggest expense, so you can hugely impact a client’s financial situation just by helping them save on taxes. It’s simply the most efficient way to find some extra money to invest, and it’s one that you may be missing out on.

It’s not just about saving money, though. When Howard was just starting his business, he first sought out clients by offering income tax help; to this day, Dixon, Davis & Company still file income tax returns for clients who want the service. Howard recommends it because doing someone’s taxes can really give you a complete picture of how they’re investing their money.

Hint: If you’re not offering this already and you’re able to, try offering this service to clients, and let us know about the insights you gain!

2. Telling clients what to do

Howard sees financial planners as similar to doctors in many ways. When treating patients, doctors never suggest a single course of action. Instead, they outline all available options, lay out the pros and cons, and let the patients choose.

Sure, there will be situations where you feel you know what’s best. But, coming back to the idea that retirement planning is often more of an art than a science, there’s very rarely a single correct option for a client. Even you are coming into the process with your own philosophy and biases, and despite your expertise, you can’t make a choice for your client.

Hint: This is especially true when making big, permanent decisions; an ideal financial plan is flexible, so tread carefully with irreversible options like annuities.

Howard likes to say this to clients: “Thinking the way you think, and knowing what I know, here’s what I suggest you consider.” Give clients the information they need, and then let them make an informed decision according to their philosophy.

Hint: On the topic of client philosophy, you’ll likely find that as you grow your practice, you’ll eventually be in a position where you don’t have to accept every client that comes your way ‒ you can select clients based on how well their philosophy aligns up with yours. John Page covered this idea of client fit in our fourth episode, Conducting Your First Client Meeting in a Way to Maximize Conversions.

We hope you enjoy this episode with Howard, which you can hear by clicking the link at the top of this page. To make sure you never miss an episode, subscribe to the show on iTunes or Stitcher, and sign up below to receive an email every time a new episode goes live.

John De Goey is a portfolio manager at Industrial Alliance Securities. He’s also an author and a recognized Canadian authority on the subject of professional, transparent, and evidence-based financial advice. John has received numerous awards for his contributions to the financial planning field, including the Donald J. Johnston Lifetime Achievement Award. He’s also been named one of the top 50 advisors in Canada by Wealth Professional magazine.

In today’s episode, John will be talking about the assumptions advisors need to make when developing financial projections. Tune in to the episode to hear what John has to say about the key assumptions an advisor needs to make before developing any financial projections and advisors’ biggest mistakes when making assumptions. John will also share some information about his upcoming book.

Topics Discussed in this Episode:

Links:

John De Goey

John on Twitter

Projection Assumption Guidelines

The Professional Financial Advisor III: Putting Transparency and Integrity First

Quotes From John:

“The thing that I think is most important, and this is where the rubber hits the road, is the rate of return that you should be expecting when you actually do these projections.”

“I don’t think it serves anyone’s purpose to be unrealistically optimistic.”

“The mistake that advisors make is that they enable clients to do whatever the client thinks is easy, without giving them the reality check of doing what is necessary. “

We’re sure you don’t want to miss a minute of what John has to say, so make sure you listen to the full episode above. Below, we want to focus on three big mistakes to avoid when making assumptions:

For more on what key assumptions you need to consider, how lifestyle expenses vary by age, and why John’s calling BS on the financial planning industry, listen to the full episode through the link above or find it on iTunes or Stitcher.

Mistake #1: Not deferring CPP

While John emphasizes the uniqueness of each client’s needs, there is one piece of advice he thinks every Canadian should consider: deferring CPP until age 70.

First, let’s consider some of the reasons the vast majority of people don’t defer their CPP. It might mean having to:

These options can certainly seem daunting, but consider the payout. For every month that an individual defers his CPP, he gains an extra 0.7%. Over a year, that’s 8.4%, and waiting until 70 means gaining a 42% increase on his CPP payout. Where else can you get that kind of return, risk-free?

This option needs to be on the table for every client you work with.

Mistake #2: Enabling poor behaviour

One major advantage of working with a human financial advisor over working with a robo-advisor is the focus and discipline she can provide for clients. As an advisor, you’re supposed to keep your clients accountable and ensure they stay on track to achieve their dreams.

But are you really doing that?

Saving is the factor individuals have the most control over when it comes to their finances, and that’s where advisors really need to be stepping up to help clients pick a realistic savings rate. However, John sees a lot of advisors dropping the ball on this crucial point.

As he puts it, “The mistake that advisors make is that they enable clients to do whatever the client thinks is easy, without giving them the reality check of doing what is necessary.” A comfortable savings rate may not actually allow clients to accomplish their goals.

It’s not an easy conversation to have, but John says it’s essential to be realistic with clients and use projections to actually help them see the effect of their current savings rate. Give them the truth about where they’ll end up based on their current behaviour, and don’t let them off the hook just because it’s easy. Then, help them explore how they can cut down on costs, invest more aggressively, and save up the money they will need in the future.

Hint: One area in which you can start holding your clients’ toes to the fire? Begin by making sure they’re not letting TFSA or RRSP contribution room go unused. Then, get them focused on shrinking any gap they have as much as possible.

Mistake #3: Not considering costs

This is the big one. The major no-no. The eighth deadly sin.

Remember when we said we were coming back to rate of return?

According to John, the biggest mistake financial advisors make in projections is not incorporating cost into the rate of return.

Most advisors will tell clients the nominal rate of return of an asset class, but that leaves out the cost of the product, management, and advice; it also fails to account for inflation.

Sure, it can be tempting to tell a client that you can get them 7 or 8%, especially if everyone else is doing it. You want prospects and clients to feel optimistic about their future (and about how you will help them get there!). You definitely don’t want to be promising less than the other guy.

But as John puts it, “What you call less optimistic I call more realistic.” While it might make clients happy at first, consider where faulty assumptions can get them in the future. A false sense of confidence now can lead to huge problems for clients down the road.

In fact, John expects that a crisis may occur in Canada, and even around the world, precisely because advisors and planners haven’t been accounting for costs and inflation when creating projections for their clients.

Hint: Be open with prospects and clients about why your calculated rate of return may be lower than someone else’s ‒ they’ll be grateful for the education and see you as more trustworthy and reputable.

That’s all for this time! Check out the full episode to catch all of John’s experience and advice. Don’t forget to sign up below to get new episode notifications straight to your inbox, and subscribe to the podcast on iTunes or Stitcher.