High net-worth clients are sought after by financial advisors because of the lucrative size of their accounts, but these clients have complex financial planning needs and require specialized expertise.
The results of the 2011 Brokerage Report Card suggest that, in terms of providing the services and products that HNW clients require, a couple of boutiques stand head and shoulders above other brokerage firms, while a couple of the bank-owned firms are laggards — or even losing ground.
The overall average rating in the “products and support for HNW clients” category was 8.1, a slight improvement from the 8.0 average in 2010. However, the category was given a higher importance rating of 8.6 by advisors, so there is room for firms to improve in terms of meeting advisors’ expectations — and to help advisors with the increasingly complex needs of their aging wealthy clients. In fact, this higher importance rating indicates a gap between the way some advisors would like to be supported by their firms and the level of support they are actually receiving.
The firm with top performance rating in the category was Toronto-based boutique brokerage Richardson GMP Ltd. The firm’s roots are in helping HNW families grow and manage wealth successfully and also plan for intergenerational transfer of that wealth. Thus, the emphasis on serving this niche has permeated the firm’s culture.
Next in line were Toronto-based RBC Dominion Securities Inc. and Winnipeg-based boutique Wellington West Capital Inc. , respectively.
Conversely, Toronto-based TD Waterhouse Private Investment Advice, and Vancouver-based national independent Canaccord Financial Ltd. had the two lowest ratings in the category. As well, Toronto-based BMO Nesbitt Burns Inc. , saw its rating decline by more than half a point from last year.
What makes Richardson GMP stand out is that it has a culture of entrepreneurship and innovation — and, as a result, the firm strives to provide a framework in which advisors can establish their preferred type of practice. Approximately 40% of the firm’s advisors also operate as portfolio managers, which gives them the ability to provide discretionary portfolio management.
The high number of portfolio managers among advisors reflects how experienced and seasoned the typical advisor at this firm is, says CEO Andrew Marsh. “I think we’re leading-edge, from a flexibility and policy perspective, without risking reputational challenges,” he says. “So, it’s very much a partnership between what we have to do as discretionary advisors [and] supporting those portfolio managers in how they want to manage their portfolios.”
As a boutique firm, Marsh says, Richardson GMP can be more nimble and flexible in supporting its advisors. There is also a broad range of investment products — and advisors can take advantage of the steady flow of public stock underwriting and private placements generated by affiliate firm GMP Capital Inc. , although there is no pressure to do so.
Richardson GMP also offers products geared specifically toward HNW clients, such as alternative investments and products that invest in real property and private equity.
In addition to products managed by affiliates, Marsh says, Richardson GMP is “open to really smart products created by other people that we put on our platform after a proper due-diligence process that gives our advisors a better arsenal of high-quality and innovative investments to talk to their clients about.”
Apart from the investment products, there is also a comprehensive web of support from the firm’s lawyers, accountants, estate planners and insurance specialists. Says a Richardson GMP advisor in Quebec: “We have in-house strategists and tax planners in the HNW space to serve our clients with a comprehensive, holistic approach.”
Adds Marsh: “Our access to investment ideas, coupled with our strengths in wealth planning, is a powerful combination.”
DS also has invested heavily in meeting the comprehensive wealth-management needs of its HNW and ultra-HNW clients with the creation of the RBC Wealth Management Canada group. This team of 175 people helps DS advisors offer value-added financial planning services in areas such as tax and estate planning, philanthropy, business succession and insurance.
“This group is highly accredited,” says David Agnew, DS’s CEO and national director. “Really, it is a highly qualified team of professionals who deliver a level of integrated wealth management that was only available to the most affluent families in Canada in the past.”
DS advisors are thrilled with this group, says an advisor in British Columbia: “It’s not just about me explaining things to clients. These experts offer support and are behind me. It adds credibility.”
Although Canaccord, for its part, lagged in the HNW category, that firm has been making strides in developing this area and anticipates that its advisors will recognize its efforts in next year’s survey, says John Rothwell, executive vice president and managing director, and president of Canaccord Wealth Management.
The firm is also encouraging advisors to obtain portfolio-management qualifications in order to serve sophisticated clients better. “In the past 18 months, we have been re-engineering our HNW services and building out the product shelf, and these efforts are starting to get traction,” Rothwell says. “We are working diligently to make sure resources are available to advisors, and to have HNW solutions in place to meet the growing needs of clients.”
Advisors with TD Waterhouse, for their part, are unhappy with the firm’s HNW support for a variety of reasons. However, some say, the firm is starting to make some progress. Says a TD Waterhouse advisor in Ontario: “They’re working on this area. That’s ultimately where we want to be, so it’s crucial that we get the company’s support.”
Indeed, Mike Reilly, the firm’s president and national sales manager, says that its Investment and Wealth Planning System program was introduced about a year ago. This includes software to evaluate clients’ financial needs as well as investment projection tools. Services cover wills and estate planning, philanthropic activities, business succession, retirement and financial planning, and investment management. Various professionals are available to provide direct support to advisors and clients.
“A lot has been done in terms of HNW in the past couple of years, but it’s not yet at full maturity and it’s still a work in progress,” Reilly says. “There are a variety of building blocks, and we’re in the training and socializing phase. It takes time for advisors to make it part of their everyday practice, and there still may be some dots that need to be connected.” IE