Advisors: Get to know your newcomers

Building a strong relationship with new Canadians also can produce referrals to family members in these clients’ country of origin who are planning to move to Canada, adds Shelley Smith, financial planner with TD Wealth Financial Planning in Toronto.

This finding comes from the most recent edition of the ongoing Financial Comfort Zone Study, a national consumer survey conducted by Credo in partnership with Montreal-based TC Media‘s investment group. (TC Media publishes Investment Executive.) This edition of the survey studied how newcomers who have been in Canada for fewer than 10 years perceive their relationships with advisors, as well as these immigrants’ financial priorities.

Newcomers who have spent fewer than 10 years in Canada are less likely to trust their advisor completely and also are less comfortable discussing concerns with their advisor. Individuals who have come from countries in the Middle East and Asia, in particular, tend to be the most reluctant, according to the research.

Saida characterizes newcomers’ reluctance to be open with advisors as a sign of fear. New immigrants are in a new environment, he notes, are likely to have a young family and are very concerned about protecting the savings they have brought to Canada.

Saida reassures newcomers who consult him by communicating his firm’s long history, the number of clients it serves and his own experience. Clients become more confident in Saida and the firm when he can establish a track record in his ability to help others, he says.

This initial lack of trust among clients who are recent immigrants also could be motivating newcomers to conduct their own research about their advisors’ financial recommendations – something that newcomers are much more likely to do than established immigrants or lifelong Canadians are, according to Brandon Bertelsen, research director at Credo. However, newcomers also are more likely to have higher levels of educations than established immigrants and native Canadians, which could play a factor in newcomers’ proactive research efforts.

Building trust is enhanced when newcomers are able to understand the services they will have access to through their advisor. That is why access to information in various languages is important, says Adam Fair, director of programs at Toronto-based Prosper Canada, which facilitates financial literacy workshops for newcomers.

In addition, advisors should ensure that they are helping newcomers with the needs that are most important to those clients according to what these clients have communicated to the advisor, he adds: “If there is a disconnect between the services and the types of information that advisors are providing to newcomers than what they actually need, then newcomers are going to conclude that this isn’t a service for them.”

Credo’s research found that newcomers’ top three financial priorities are: funding education; buying a home; and ensuring that they have health care. Planning for retirement and investments are among some of the more important priorities, but newcomers are slightly less concerned with these two areas than more established individuals.

Investments, in particular, may be problematic in some cultures. For example, Islam prohibits the receipt or payment of interest, so advisors with Muslim clients might find that their clients are going to their religious leaders to seek guidance on any decisions about investing, according to Smith.

Other financial priorities that are a much bigger concern for new immigrants than for more established immigrants or Canadians include child care and weddings. The latter does not surprise Saida, who finds weddings to be a big topic of conversation with many of his immigrant South Asian clients, many of whom are determined to begin saving for their children’s possible nuptials as soon as possible. “In a lot of cases, [financial planning for a wedding] is one of the first things [these clients] bring to our attention,” he says. “Usually, that expense takes priority before planning for retirement.”

Newcomers also are more concerned about funding vacations and vacation properties, which is likely to mean that these clients would like to maintain a home in their country of origin in addition to their home in Canada, according to Bertelsen.

The online Financial Comfort Zone Study has polled 17,000 Canadians thus far. The survey is meant to gain insight into the relationships among financial advice, financial well- being and overall life satisfaction in Canadian society. Canadians are polled monthly, and the number of survey participants will increase each month.

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