Education builds trust with clients

By Steven Lamb | March 1, 2010 | Last updated on March 1, 2010
5 min read

You’d think a million dollars would ensure you a spot in the business books of most financial planners. Well, not if you’re dealing with Josée Dumas, investment counsellor at RBC Phillips, Hager & North Investment Counsel in Quebec City. Prospects must pass the education round before she will accept them as new clients.

Don’t panic! She’ll teach you first.

“I give them a kind of course in the first meeting. I spend about two hours just explaining to them what our industry is about,” says Dumas. Rather than being turned off at the prospect of being tested, she says clients are very receptive to the educational model of her practice. “It’s all about servicing and teaching at the very beginning, when we meet a prospective client.”

The pre-engagement discussion ranges from economics, interest rates, and currencies to bonds, stocks and tax. Clients learn the main principles that should be applied in portfolio management and the impact of different strategies. The two hours of effort she puts into client education at the outset pays off over time.

“The investment world is complex enough for most people, so I try to reach the point where the investors understand what could or should be done in a portfolio, and the reasons,” Dumas says. “I don’t just want them to trust us, I want them to understand what we’re doing and why. That’s when comfort comes and never leaves.”

Not only does the education process build trust with the clients, it also allows Dumas to assess their initial level of understanding. With a new account minimum of $1 million, she says most of her clients have a fair bit of experience in the financial markets, but she’s still occasionally surprised to discover elements they didn’t fully understand before they met her.

Once clients understand the principles of the industry, they can better understand the importance of risk and tax management—the two cornerstones of Dumas’s approach. “We aren’t threatened by competition—whatever the return on the market is—because the clients understand their portfolio.”

Dumas says her style of advice has not changed much over her 13-year career. Rather the industry—more importantly, the client—has now come around to her way of thinking.

“What you see after the recent crash of the market is that the value of advice is linked to risk management,” she says. “Risk management is much more understood by investors than it used to be. In the past, investors were more interested in what your performance was; they were chasing returns and probably forgetting about risk management.”

The importance of tax management has come to the fore as a result of record-low interest rates. In the current environment, the yield on quality bonds is so low that any fine-tuning on the portfolio management side that delivers a higher after-tax return is all the more important.

“The change in the value of advice is now linked to any nuance or detail you can add to your portfolio management,” she says.

Dumas says she has a natural affinity for finance. Prior to joining RBC Wealth Management 13 years ago, she was head of international financing at Quebec’s Ministry of Finance.

“I’ve always been attracted by finance—the more complex it is the happier I am,” she says. At the Ministry of Finance, she managed the assets as well as the currency risk of the debt portfolio, while navigating the complexities of derivative products.

Her appetite for financial complexity was well fed in this role, but the job left another aspect of her personality hungry—her entrepreneurial spirit.

“I felt I could do much more than I was doing at the Ministry of Finance,” she says. “I was really looking for a place where I could use my knowledge in finance and portfolio management, but at the same time run a business where you need leadership.” Part of the PH&N Investment Counsel’s appeal was that its structure allowed her to focus on her role as the client-facing advisor.

“I’m the link between the client and a whole team of accountants, lawyers, high-net-worth specialists, financial planners, and insurance specialists,” she says. “We have many experts to help me, not only on the portfolio management side, but also any other services linked to the management of their portfolio.”

While some advisors dismiss daily media coverage as noise, Dumas says it serves to open the lines of communication between the client and the advisor. Because the client is exposed to so much financial coverage, they often have fresh questions when they come into the office, and they are often receptive to the calming influence of their advisor. In the high-net-worth space, clients often come to a meeting with backup, typically their accountant or their lawyer. Dumas welcomes the additional expertise and says it’s important to ensure these outside professionals feel valued.

“We really treat accountants and tax experts as if they were our own clients,” she says. “Each one has their sector of specialty, and we really come together. We do everything possible to help make it easier for the accountants and tax experts.”

That includes producing custom statements focused on the areas of concern identified by the outside professional. This respect has helped her to strengthen the business, as much of the growth has come from referrals made by these centres of influence.

Dumas says the best part of the business is knowing she has helped her clients achieve what they could not have managed on their own.

“Health is the most important thing, but I think the second most important thing for people is their money,” she says. “This is where we can win their trust and do so much for them.”

“You can’t be shy if the investment process has been done right since the beginning. You can’t be shy if from the beginning you understood what your clients wanted and you did your best possible to reach their goals,” she says. “As long as it was very clear from the beginning that we understood what the client wanted, and we did our best, there is no surprise and no reason to be shy.”

Steven Lamb