One year later, the strong advisors survived

By Philip Porado | November 9, 2009 | Last updated on November 9, 2009
2 min read

Montreal — If independent advisory firms ever wondered how they’d survive in the face of integrated financial products, they got their answer over this past year.

That was the message PEAK Financial Group president Robert Frances delivered to his advisors at the firm’s 13th annual conference in Montreal.

“What you’ve proven in surviving this is the common sense of the independent advice model,” says Frances. The stresses of the past 12 months have revealed the flaws of platforms that allowed conflicts of interest, cross-selling and abuse, he added. When the markets were rising uniformly, investors didn’t complain. But the credit crisis revealed the cracks.

By contrast, firms that developed good products — and stuck to that knitting — not only weathered the crisis, but gained market share.

The same is true for advisors who took the time to explain their role to clients. Those advisors were thanked for looking after client assets when they held losses to 20% at a time when other investors experienced drops of 40% or more.

“There’s no coincidence that you’re not just still in business, you’re doing well,” Frances says. “You have large clientele lists.”

Such a situation is made even more amazing given the financial scandals that have followed in the year since the credit crisis. Bernard Madoff and Earl Jones hurt the reputation of legitimate professionals, and created an environment in which good advisors fought an uphill battle to prove their worth.

“Being able to keep clients in this environment is not an ordinary thing,” he told the group. “Our biggest danger is to take this for granted. Your work is extraordinary and the way you’ve performed sets you apart from the entire industry.”

Frances notes U.S. statistics are finding independent advisors gaining market share in the U.S., and adds this is showing up in Canada as well. “You’re getting referrals and more money from existing clients,” he says. “The loyalty factor is there.”

He reflected pride in the fact that none of the advisors present had placed their clients in Portus, Norbourg, or ill-fated asset backed commercial paper, and applauded their good judgment. “It’s not just what you say yes to, but what you turn down,” Frances notes. “If there was ever a time for people to give up and leave the industry, it was the last year. But within our network, you’re all still here.”

While some advisors may be concerned about boomers transitioning to the payout phase of their investing lives — since that generation has led a lot of price expansion over the past three decades — he notes the so-called “Millennials” born after 1980 will provide repeat experience in terms of asset gathering and investment verve.

“They have clear line of site and they see through establishment and want relationships,” says Frances. “You’re positioned for this new market. We’re going to relive the baby boomer phenomenon and we’re going to learn from it.”


Philip Porado