High net-worth people are probably the most sought-after clients in the investment brokerage business. Firms create products exclusively for these clients, and advisors scramble to serve them better than their competitors, catering to their broad financial and investment needs.
In this year’s Brokerage Report Card, Investment Executive asked advisors for the first time to rate their firms’ products and support available for their high net-worth clients and prospects.
Some of the results were no surprise — on average, advisors rated the category an 8.5 out of 10 in terms of importance.
Winnipeg-based Richardson Partners Financial Ltd. placed first overall, with a 9.7 performance rating in the category. It’s also worth noting that Richardson Partners advisors hold the highest percentage of clients with assets of more than $1 million — 45% of their books — and, on average, manage the most assets per advi-sor, at $193.8 million.
“We’re a leader in that field because that’s who Richardson’s clients are,” says an advisor in the Prairies, while others note that the firm’s products and services available to its high net-worth clients — such as its private-equity investment platform — are superior to anything on the Street. “It’s our niche, and the firm is built for those individuals,” says an advisor in Quebec.
Sue Dabarno, Richardson Partners’ president in Toronto, credits this to the firm’s family wealth-management program, which she claims is superior to other firms’ programs for high net-worth clients.
“Our approach is to provide and create a dedicated team of wealth- and estate-management specialists to augment and support the advisor,” Dabarno says. “We call this a ‘defined process, supported by a comprehensive wealth plan’.”
Most investment dealers surveyed in this year’s Brokerage Report Card either have a wealth-management process — which involves support services from dedicated staffers who are experts in taxes, wills and estates, or insurance planning — or are assiduously working toward having one.
“The firm is really focused on delivering a total package to our clients, such as good third-party money managers and wealth management,” says a BMO Nesbitt Burns Inc. advisor on the East Coast.
“We provide a number of these wealth-management services. We do some insurance and we provide some tax services,” says MacDougall MacDougall & MacTier Inc. president and CEO Tim Price in Montreal. “We haven’t evolved our financial planning platform, but that would be an initiative going forward. It is in the works.”
Other companies are vigorously pursuing high net-worth clients with specialty, top-of-the-line managed products and exclusive support programs to court prospects.
Toronto-based ScotiaMcLeod Inc. ‘s Heritage Program, for example, is designed for clients with more than $1.5 million in assets. Under the program, advisors invite clients to high-profile plays, concerts and other events.
“We’ve been putting resources into that program to make sure that our clients know they are special,” says Hamish Angus, head of ScotiaMcLeod. “All the advisors have to do is invite their clients. Everything else is done for them.”
But, even though most brokerages are making an effort to woo high net-worth clients into their respective folds, advisors at several firms expressed disinterest in pursuing high net-worth clients and giving them exclusive attention over their other clients.
“It is a misunderstanding that these [products and services] need to be separate [for high net-worth clients],” says an Edward Jonesadvisor in Ontario.
Rather, the advisor adds, wealthy clients want results, just like everybody else: “They don’t need separate products; they need good advice from a knowledgeable advisor.”
In addition, the Street is filled with advisors chasing prospects with more than $1 million in investible assets, says a National Bank Financial Ltd. advisor on the West Coast who insists he is conducting a profitable practice catering to mid-range clients, most of whose assets do not exceed $1 million. “It’s very competitive now and very, very profitable” to chase high net-worth clients, the advi-sor says. “But no one is chasing the half-million-dollar clients.”
And it’s not just advisors who espouse this view; many firms simply offer clients the same service, regardless of their net worth.
“We try not to distinguish between our high net-worth and our regular clients. We give everyone the same service because everyone deserves the same great experience,” says an Odlum Brown Ltd. advisor in British Columbia.
Gordon Gibson, senior vice president and managing director of National Bank Financial Ltd. in Montreal, points out that most of that firm’s advisors manage books of clients who have an average net worth of between $300,000 and $700,000.
@page_break@In some ways, this reflects the firm’s strong regional concentration, Gibson says. “In some of the smaller cities in Quebec, the levels of affluence might be a little lower than if we just had branches in the major urban centres,” he says. “But we think that we are well equipped and well geared for advisors in that sweet spot.” IE