As the investment industry deals with unprecedented challenges, it’s critical for companies to maintain a long-term outlook, and continue building strong client relationships, a panel of industry presidents said on Wednesday.

In particular, the market turmoil presents an opportunity for financial planners to work closely with clients on making educated investment decisions, the panel members said at the Investment Counsel Association of Canada’s annual conference in Toronto. For instance, advisors should strongly discourage investors from bailing on all their investments — something many have done recently.

“That’s the worst thing you can do right now given that valuations are so attractive,” said Donald Cranston, managing partner of Cranston, Gaskin, O’Reilly & Vernon. He said advisors need to remind investors that this volatility is a short-term phenomenon.

Discussing a client’s long-term objectives and the overall purpose for their investments helps shift the focus to the long-term and fosters stronger relationships, he said.

Given the widespread uncertainty about when markets will rebound, however, challenges will prevail in client relationships going forward. The rapid plunge of the markets has many investors expecting an equally rapid turnaround, which might not be the case.

“The danger is that there is an expectation that it will correct in a very short time,” said Robert Badum, president of AGF Asset Management Group Ltd. “I’m hard-pressed to see a dramatic rebound.”

He expects poor performance from equities to continue in the next few months, and said such conditions will put client relationships to the test.

Despite the widespread challenges at hand, the panelists agreed that investment industry firms cannot lose sight of their long-term objectives. While merger and acquisition activity in the industry has slowed in the difficult economic environment, they said it’s important for firms to continue growing their business with the future in mind.

“In these times, there’s a tendency to just clamp right down and stop any investment in building business for the future,” said Cranston. “I think that’s an error.”

“If you don’t grow, you shrink. There’s no middle ground,” said Rob Vanderhooft, CEO of Greystone Managed Investments Inc.

Growth prospects for investment companies are particularly strong outside of Canada, the panelists noted.

On the topic of regulation, the panel said it would inevitably increase following the credit crisis.

“In this environment in particular, the role of the regulators is only going to increase,” said Badum. He said rather than fighting it, the best thing firms can do is to prepare for more regulation by ensuring they have the appropriate levels of staff for compliance and the skills to work with regulators.

IE