So how would you know that you're working with one of the best financial advisors in Canada? Wealth Professional Canada purports to tell you who the top advisors are, but in my opinion their methodology measures the exact wrong criteria. Their ranking measures what is good for the advisor and the firm, not what is good for their clients.
What would you call a person whose job it is to sell products on which they make a commission? If you said salesperson, you would be correct. It might say "Wealth Manager" or "Financial Advisor" or even "Trusted Advisor" on their business card, but you must learn to ignore their titles and the "national brands" and "trusted institutions" they represent. These are the tools of distraction and misdirection!
All the metrics in the rankings are about the advisor and have nothing to do with the client, making these the top 50 salespeople in the industry, not the advisors who are serving their clients at the highest levels.
From the report: "The average client count among the Top 50 is 378, although those offering discretionary management were likely to have considerably fewer clients. The majority are also now operating on a fee-only basis, which represents something of a sea change from the days when commissions were the compensation model of choice."
First, let's break down the double speak. "Fee-only" IS a commission! To be excessively clear, a percentage of assets under management IS a PRODUCT for which COMMISSIONS are charged.
In fact, it was invented as a way of combating the high-integrity advisors who charge a simple flat fee for advice only. They take no commissions on products.
Second, let's look at the reality of how well clients are being served. These advisors have hundreds of clients. Some have over a thousand clients. When do they have time to serve these clients if growing their client base or their Assets Under Management (AUM) is their highest priority?
If they work an average of 250 days per year and have 1,000 clients that means their total time allocation per client PER YEAR is ¼ of a day. That's a total 2 hours per client, per year! Even if they had just 250 clients, that's only one day per client. To design, manage and give unbiased advice about their entire financial life? Simply Impossible.
The financial services industry views success as Assets Under Management. Bigger is always better. The scary part is many consumers support the madness because they just don't know better. Advisors say this aligns their interests with yours, but it's just a commission, plain and simple. So the more assets they gather, the greater their commissions. They will tell you about the brilliant "money managers" on their team who are looking after your assets, but guess what? Those brilliant chaps are ALSO getting a percentage of your money in the form of hidden fees… and not disclosing these fees to investors is legal in Canada.
Look at this silliness from Wealth Professional Canada. "WPC has streamlined the criteria for the Top 50 list – those who maintained and added the most assets over 2017 are ranked the highest. While an advisor's abilities can't be measured by book size alone, this typically offers a good indication of how they are performing."
That's just plain crazy talk. It is an indicator of how well the market is performing and how good a salesperson they are. Assets Under Management has nothing at all to do with client goals and outcomes.
Advisors should be ranked by the quality of the client experience, the client achieving their goals or the client getting their entire financial house in order. Their fees should include things like creating an overarching financial strategy, creating a separate plan for every client goal, tracking client progress on each goal and alerting clients whenever they are off-track to their goals, making course corrections, ensuring that wills, trusts and estate plans are in place and are funded (50% of trusts are never funded). It should also include tax planning and preparation to ensure that taxes are minimized, annual insurance audits and adjustments, and most importantly, ensuring that the client is actualizing their ideal financial future and living a better life.
Isn't this ranking nonsense a little backwards? It really has to make you wonder who has your back.
Dean Kendall is a Financial Organizer in Calgary, handling all of the financial affairs for a select group of clients who value unbiased quality advice for one simple flat fee.
His latest book is Stop Paying Hidden Investment Fees!
Click here for more information: https://ideal-life-experience.ca/publications
In addition, Dean is a 3X Canadian National # 1 Amateur, a 5X Canadian National #1 Professional BMX rider, downhill mountain biker and an avid snowboarder. He is an expert at winning. Let him show you how to win the money game. You can reach Dean at firstname.lastname@example.org or Phone 403-543-7226.