Across all industries, it’s important to work with the best. Now that doesn’t always equate to the most expensive, what it does require however is an individual who is committed to staying current and educated. Far too often specialists can become complacent and when it comes to something as crucial as your finances it shouldn’t be tolerated. Make sure your advisor is giving you the best there is to offer. Listen today as Senior Financial Advisors Rob McClelland and Mike Connon identify some of the key things you should be looking for when choosing your financial advisor.
Transcription
Rob (00:00):
Hello, this is Rob and Mike from The McClelland Financial Group of Assante Capital Management, and this is Think Smart with TMFG. Today on Think Smart with TMFG, Mike and I are going to be discussing, are you working with a stagnant advisor? Mike, what is a stagnant financial advisor?
Mike (00:24):
We’ve seen them before. And remember, we used to always comment. There were some people that took on financial advising as a secondary career. It wasn’t really their career. It was something to do after they retired. And the problem with them as we watched them over the years, they never really kept up on everything, right. And they didn’t move ahead and they weren’t learning new things as they came up. It doesn’t mean you have to be young to learn new things, but you have to put yourself out there and you have to constantly see changes in the marketplace. What’s changed in our careers? We started off with … before us people just trading stocks and bonds, right? And that’s moved ahead to where it got to mutual funds, and then it moved to ETFs and move into all sorts, more advanced types of way of trading.
Rob (01:08):
The other big change has been in terms of compensation. Advisors in this country used to be compensated just on commission. So high commission, 1% to 3% on stock trades. You can’t even imagine that used to be the case. Then there was when mutual funds started to come out, they initially charged a 9% fee to get into a mutual fund. So if you put in $10,000. Right off the top, they’d take $900 away. Then we moved into what were called deferred sales charge. So the advisor would get a 5% commission, and the client paid a higher fee every year. And if they tried to get out of the mutual fund, they had to pay an exit fee to get out that mutual fund. And sometimes that fee ex, it was 6% if you got out early
Mike (01:57):
You know what’s funny, because the industry has … went to eliminate that. And do you remember when we’d go to conferences and there’d be people at the back of the room. There’d be some old guys yelling about how could they could make it illegal to go do that. It was like they were destroying their whole life, and you’d look at the back. You go, “That’s a stagnant advisor.” They haven’t moved with the times. This should have happened 10 years ago. They’re still trying to make money the old way. And it’s just not right.
Rob (02:19):
So finally the regulators have come in. They’ve eliminated the deferred sales charge now. So there’s no … You can’t charge an upfront fee. The deferred sales charge is essentially eliminated. And I think that’s been good for the industry. It took a long time for it to happen, but it has finally happened in this country. So what’s been helpful for me and certainly our team is over the years we’ve gone to numerous conferences, and these are financial planning conferences.
Rob (02:47):
The average citizen in the world would find them extremely boring. They are. And you go down and you might spend two or three days at a conference, and they would cover tax rules and insurance rules and new investments and new technologies that were out there. What I always loved is I could hear from some of the best advisors. Those were always the best conferences for me, especially if I went down to the U.S. The U.S. tends to be a few years ahead of us. Much bigger marketplace. And so I would get some great ideas and be able to bring them back to implement them on our team at The McClelland Financial Group, and that was huge for us.
Mike (03:26):
And they weren’t cheap to go to either. Generally they’d be somewhere down the states that you have to see. And they were never … the good ones were never cheap. And one other advantage that happened to those conferences is once the conference was over, you heard the speakers for the day. You sat down with a bunch of advisors that were your peers and you’d pick out the people who were really advanced in their careers, and you sit down and talk to them. And you get all the ideas and what they’re doing to their business, what they’re putting forward to their clients, how they’re adding value. And you take that back to your own practice. There were some genius ideas we got from people.
Rob (04:00):
It’s interesting. I was put in a group. I remember we all got together. There was initially I think, nine of us. And it was a study group from across Canada of different advisors. And I think there’s still seven of us in the group. We had a couple of early defections in the early years, and we’ve probably been together over 15 years now. And all we do is we get together twice a year face to face and share ideas about our business and changes and improvements and how we can deliver a better experience to our clients. And it’s been valuable. So that brings us sort of to the next topic. You and I we’ve we’ve expanded our team of advisors at The McClelland Financial Group. There’s now four of us and we’re going to be probably six advisors by the end of this year. How do we get that next generation to pick up all the knowledge that we have?
Mike (04:54):
Well, we started doing these podcasts I guess a couple years ago now. And the idea behind the podcasts was we’d always have these discussions. We’d go to Tim Horton’s. We called our Tim Horton’s discussions. We’d always discuss the same things we talked about here. And then we thought maybe we should share this with the client base. It’d be interesting for them to hear it. As we saw that was working, we started talking to John and Carlo, and they came up with the idea to do videos, a video series and call it, Ask TMFG. And just as every week we get a podcast out every week, they have to go and force himself to get Ask TMFG video out. First ones come pretty easy, but as time goes on, you have to start doing some research once you get beyond the simple things.
Mike (05:36):
And I can honestly say between John and Carlo, we have two of the most knowledgeable advisors in the industry now, because 52 weeks a year, they’re out doing research on a new subject that’s interesting and current like from budgets when they change to new tax rules, to what’s going on in the Ukraine, to what’s going on in Russia, to how mutual funds have changed to new rules. And they have to go every week, research the subject, come up with facts and put together a video. And the videos are, I think they’re great, but beyond them being great, we have this very well-educated and advanced group advisors now.
Rob (06:13):
What I think is interesting is we didn’t know how this was going to happen. This wasn’t the plan, but it’s been the benefit that we’ve seen that these two now know a ton about the financial industry. And Carlos’s been in the industry for over 10 years. But I can guarantee his product and investment knowledge, his wealth management knowledge has doubled over the last two years since he’s been doing his videos.
Mike (06:39):
Yep. Even these podcasts make us do research. Every week, we’re forced to go and look at a subject to take a deep look at number one, what we do. And second, to go look and analyze things, to go and do some research on why things happen.
Rob (06:52):
Why do you think it’s important that the professional that you’re working with continues to get better at what they do?
Mike (06:59):
Financial industry moves very fast. It’s much like the high-tech industry. If people take two years off a high-tech job. After two years, they’re going to be so far behind, they’re not even going to know what happened. The financial industry is very similar. If you don’t pay attention for two years and you just try to come back to the industry, you’re going to be way behind. So you have to keep track to keep up to date on everything you’re doing.
Rob (07:24):
It’s interesting. McClelland family’s always known to have horrible bodies. They’re always breaking down and so on. And so I use lots of doctors and dentists and chiropractors and you name it. And I always tend to work with the people that stay on top of everything. If I go to the eye doctor, he’s got the latest and greatest equipment in his office and you can tell right away. You go see someone, and if they’re using old technology, they’re behind the times. Technology is changing the way we look at everything. And that applies in our industry, in the medical industry. It’s everywhere. Even cottage rebuilding. We’re rebuilding our cottage. We’ve talked about that. All the new materials that are out there. If you’re not staying on top of it, you’re falling behind.
Mike (08:15):
It’s so different. I was thinking the other day, a lot of our clients go in and get a knee replacements. Imagine if you went into a knee replacement, the doctor handed a knee that was 10 years old to put in you. You told me he’s nuts. You never deal with it. Well, use the one that’s from 10 years ago. Nothing’s changed. It has changed, right?
Rob (08:30):
It’s changed dramatically.
Mike (08:31):
Yeah. Medical things move so quickly. Our rules change so much. Financial environments change. We used to be dealing with no inflation, right? We’re running everything for no inflation. Now we’re dealing with 5%, 6% inflation. Obviously, we have to rethink how we’re doing everything a little bit. I mean, we’re not going to go and change everything, but we can’t go and continue to do everything like we did 10 years ago, because we’re now in a different financial environment. Five years from now, we’re going to be in a financial environment, different financial environment again. Maybe tomorrow we’ll be in different financial environment, and you have to move with these changes. Interest rates have changed. Fees change. Everything changes. You have to adapt.
Rob (09:10):
You have to stay on top. That brings us to the end of another week. Thank you for joining us. This is Rob and Mike with Think Smart from The McClelland Financial Group of Assante Capital Management reminding you to live the life that makes you happy.
Assante Capital Management (09:46):
You’ve been listening to The McClelland Financial Group of Assante Capital Management Limited. Assante Capital Management Limited is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. Insurance products and services are provided through Assante Estate and Insurance Services Incorporated. This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources. However, no warranty can be made as to its accuracy or completeness. Before acting on any of the previous information, please make sure to see a professional advisor for individual financial advice based on your personal circumstances. The opinions expressed are those of the authors and not necessarily those of Assante Capital Management Limited.
