A number of studies have proven that investors who work with financial advisers do better than those who don’t. The key to reaping those benefits is finding the right adviser, someone you can work effectively with over the long term.
“You are the CEO or the co-CEO of your family, and your financial adviser is your personal CFO,” says Carol Lynde, president and chief operating officer of Bridgehouse Asset Managers and a director of the Investment Funds Institute of Canada. “They help you make the informed financial decisions that enable you to achieve what is really important to you and your family. The right adviser delivers tremendous value.”
How do you know when the fit is right? To help, Bridgehouse has developed a series of tools called The Value Dialogue, including a video with financial advice expert John Bowen that outlines the six drivers of a successful financial advice relationship. “The whole point is to give investors confidence and control over their selection process, setting the tone and expectations for the relationship,” says Ms. Lynde.
The six key adviser characteristics are:
Character: Do they demonstrate self-discipline and integrity?
Chemistry: Do you feel a connection?
Caring: Do you feel they are empathetic and care about you and your goals?
Competency: Do they have the necessary skills and knowledge?
Cost effective: Do they deliver good value?
Consultative: Do they use a collaborative process that makes you feel as if you’re working together rather than being told what to do?
The video also provides seven questions investors can ask to help determine the presence of these characteristics in initial interviews.
“John doesn’t pull any punches, encouraging investors to ask hard questions about the adviser’s background, capability, what services they offer – and what processes they use to deliver those services and create a great investor experience,” says Ms. Lynde.
A relationship with a trusted adviser becomes even more valuable during times of high market volatility, she adds. “We’ve seen from the Dalbar Quantitative Analysis of Investor Behaviour that investors tend to buy high and sell low, because they get caught up in the kind of heightened negative news we’re seeing now.
“Advisers are coaches who reinforce the fact that what’s happening today in the market has very little to do with their clients’ individualized plans.”
An effective adviser relationship is about far more than money, she emphasizes. “It’s about maximizing the probability of achieving dreams – putting your kids through university, buying a retirement home at some point, going on a trip every other year.
“Whatever your dreams, once you find the right adviser, he or she can help you achieve them.”
To view the video, visit bridgehousecanada.com/the-value-dialogue-investor-home
Some of the services that dealer firms provide:
- Process transactions
- Prepare quarterly statements and other reports
- Review productS
- Quantify your financial goals
- Understand the amount of risk you are comfortable with
- Identify suitable products
- Review your investment performance and progress toward your goal
- Supervise your accounts
- Ensure products are suitable for you based on the information you provide about yourself
- Review your adviser’s recommendations
The longer people receive advice, the more their wealth grows – by as much as 2.7 times more than households that do not access advice. (Center for Interuniversity Research and Analysis of Organizations, 2012)
BOOSTING THE ECONOMY THROUGH FINANCIAL ADVICE
People with financial advisers save more, which not only prepares them better for retirement, but fosters long-term economic growth, according to a 2014 Conference Board of Canada report.
Building on data that proves that households with a financial adviser are more disciplined and accumulate higher savings than those without, the study suggests that boosting the number of Canadians receiving advice can have a substantial long-term economic impact.
While domestic savings enable individuals to prepare for retirement, the report assumes that at least a portion would be invested in Canada. The resulting economic potential – including additional profits, wages and tax revenues – would contribute to higher investments and income.
The conclusion? A 10 per cent increase in the number of households using advisers could boost the size of the economy by more than $2-billion by 2060.