Making the client relationship personal

However, advisors whose relationships with clients remain purely professional were said to provide great value by 19% of respondents. “Advisors are continually trying to build loyalty within their client base. [The survey’s results show] that you have a greater likelihood of having a higher degree of loyalty if your clients view you as a friend,” says Hugh Murphy, managing director of Credo Consulting.

This is one finding from the survey, conducted in English and French, that is designed to gain insight into the relationships among financial advice, financial well-being and overall life satisfaction in Canadian society. The most recent results, released in early June, gauge the value that more than 7,000 Canadians place on professional financial advice. The online survey occurs on a monthly basis and the number of respondents will grow to 12,000 within 12 months.

Clients are also more likely to want to help an advisor who is a friend or family member build his or her business. Approximately one-third (32%) of respondents whose advisors are relatives say that they would be “advocates,” meaning they would definitely recommend their advisor’s services to others. More than one-quarter (27%) would do the same for advisors they consider friends. However, that number dips to 20% if the respondent’s advisor is not a friend or family member.

Trust is what sets apart advisors who are close to their clients, as opposed to advisors who keep the relationship strictly professional, says Larry Distillio, assistant vice president of practice management at Toronto-based Mackenzie Financial Corp.

“It’s a big responsibility for someone to be an advocate for their advisor,” Distillio says. “[Clients] want to know exactly how their friend or colleague is going to be treated when they send someone over to the advisor for financial planning.”

The emphasis that Canadians place on personal relationships may help traditional advisors stay ahead of their online, “robo” competition – at least, for now.

Almost one-quarter (23%) of respondents attributed the lowest level of value to online asset-allocation services, which includes robo- advisors. Compare this percentage with the 5% of Canadians who state that their female advisors provide low value or the 4% who say the same of male advisors. (Note that only 5% of retail investors indicate that they use an online financial service.)

Whether or not Canadians’ appreciation of online financial advice will remain low is too early to determine, says Sara Gilbert, founder of Strategist Business Development (www.strategist.cc) in Montreal, because the robo-advisory environment has room to grow in Canada before its full effect on the financial services industry will be felt. Gilbert suggests that the development of Canada’s robo-advisory industry is three to five years behind the U.S.

The survey also finds that a smaller slice of high net-worth (HNW) clients believe their advisors provide great value vs clients with smaller amounts of investible assets. Less than one-fifth (17%) of respondents with investible assets of $250,000 or more said their advisors provide great value, while 22% of respondents with less than $250,000 state the same.

Advisors who serve a HNW market may never receive many accolades from lower net-worth clients. HNW clients are likely to be older and have more complex financial circumstances, and thus will be more discerning about their financial advisors, suggests Murphy.

Advisors can still try to move up to this market by understanding the priorities of HNW clients, Distillio says. “It’s important to understand that wealth is a family affair,” he explains. “You’re not only looking after that individual’s money; you’re looking after their family across all generations.”

Gaining this understanding includes engaging the client’s children in conversations, understanding the charitable causes that are important to the family and preparing the family for the responsibilities that will arise in the event of a death in the family.

HNW clients are more forthcoming in providing referrals to their advisors: 28% of survey participants with $500,000 or more in investible assets say they are advocates, vs 24% of those with investible assets of $250,000-$500,000 and 18% with less than $250,000 who would definitely provide referrals.

HNW women are much more likely than their male counterparts to be advocates for their advisors. Almost half (40%) of women with investible assets of $500,000 or more would definitely provide referrals, vs 22% of men with the same level of investible assets.

When women develop a connection with an advisor, they remain loyal to them and will speak to their friends about that advisor’s skills, says Gilbert.

That is why advisors who are looking to attract women as clients, she suggests, should focus on educational events to which women clients and prospects can bring a friend.

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