I recently got back from a few days in Vancouver. It was my first trip to the West Coast and I have to say I noticed some differences in the attitudes of the financial professionals with whom I sat down and talked shop.
First and foremost, the absence of Bay Street bravado was refreshing. At the end of every meeting, I was asked who I’d be seeing next, and every response was met with, “She’s great,” or “You’ll like him,” and “Please say hello for me.” The high level of mutual respect was palpable.
I also found a greater concentration of advisors who’d bought into the idea of charging fees for their services. They consistently told me a fee model is the simplest way to get clients to comprehend the value of their advice. Some advisors I spoke with hadn’t yet made the switch, but all were seriously exploring the option; nobody wrote it off.
Further, unless they farm out execution work to third parties, all these advisors have models for dealing with the incidental commissions that come in from placement of insurance policies, funds, or other investment products. Some credit the commissions against the fee, others rebate up to a set point, and still others opt for a full-disclosure model, which spells out any monies that flow to an advisor during the plan-fulfilment process. The logic for the last group is that disclosures separate execution from the advice, so the client better understands the work an advisor does.
All these advisors share something important. Each is thinking hard about the compensation issue. Each is looking for ways to emphasize the perception of the advisor’s professionalism. It’s always top of mind. And a big driver of their thinking, I discovered, is the need to network with other centres of influence in their clients’ lives—lawyers, accountants, estate specialists—all of whom are compensated by flat or hourly fees.
This desire to keep pace with other professionals also manifests in a drive for designations, although many dismissed what they called “add-on credentials” and suggested a conversion of some newer courses into continuing education for advisors already holding CFPs, RFPs, or similar high-level letters.
The commitment of these West Coasters is admirable. But that’s not to say there isn’t more than one path to professionalism. What are your secrets for dealing with conflicts of interest that inevitably crop up in a business where your duty is to handle someone else’s money? We’d love to hear.