This is Globe Advisor’s weekly newsletter for professional financial advisors, published every Friday. If someone has forwarded this newsletter to you via e-mail, or you’re reading this on the web, you can register for Globe Advisor, then sign up for this newsletter and others on our newsletter sign-up page. For more from Globe Advisor, visit our homepage.

Many investors in their 20s and 30s are reluctant to seek professional financial advice, either feeling they don’t have enough assets to qualify or believing they can do better on their own.

Online brokerages have also aggressively targeted the Generations Y and Z demographics to invest independently using their less expensive online platforms.

But professional advice can be beneficial for many younger Canadian investors. Globe Advisor spoke recently with Jennifer Leathem, a wealth advisor and client relationship manager at Nicola Wealth Management Ltd. in Vancouver, about how Gens Y and Z, their parents – and advisors – can help younger Canadians take advantage of professional financial advice:

What are some common misconceptions younger investors have about getting professional financial advice?

There’s often a misconception of what services a professional advisor provides. The perception is that investing assets and managing a portfolio are the extent of what an advisor does. But advisors and firms specializing in a comprehensive approach and portfolio management are only a segment of what they can provide. Investors in their 20s and 30s often find more value in financial planning and risk management than in asset management.

How can parents help and hinder their children in this demographic who are seeking financial advice?

Recommending your children meet with a professional advisor early in life is the best help parents can give. Parents may have an existing relationship with an advisor they could be introduced to, even if they are not in a position to work together yet. Also, as parents age, there are many family planning benefits that come from an advisor who works with multiple generations, such as succession and estate planning.

The greatest hindrance is, potentially, parents giving their children advice, even if they have been successful financially. Financial success can be emotional, which makes it very personal, and there are many reasons why one strategy will work for one person and not someone else, even within the same family.

For example, in Vancouver, pushing children to purchase real estate (both personal and investment) is common as parents have likely seen significant gains over the past two decades. While real estate can be an excellent investment, it needs to be done in the context of other factors, especially considering it usually includes using leverage.

How can advisors attract and retain this younger demographic?

The best way to attract them is by asking for or accepting personal introductions. As part of their services, advisors should be open to working with the children of existing clients and recommending it as part of an overall family strategy.

Also, don’t rush the process with a new, younger client. Patience is key. Enter the relationship with the intention for it to be long-term. Potentially, this means initially spending time that does not generate income, but in most cases, long-term relationships become great clients for any advisor.

This interview has been edited and condensed.

– Brenda Bouw, Globe Advisor reporter

Must-reads from Globe Advisor this week

How to use permanent life insurance to create tax efficiency in estate planning, grow a business

Permanent life insurance is considered one of the last tax-efficient ways high-net-worth (HNW) Canadians can protect and pass along their wealth, but a new survey suggests more advisors should be discussing the option with clients. An IG Wealth Management study released on Wednesday shows almost nine in 10 (88 per cent) HNW Canadians plan to pass their estate to the next generation. Yet, just more than half (54 per cent) have a permanent life insurance policy. The survey also shows that only 17 per cent of HNW survey participants, which include 500 Canadians with more than $1-million in investible assets, consider themselves to be “very knowledgeable” about the tax advantages and benefits of life insurance on their estate. Brenda Bouw reports.

Is increasing risk tolerance in portfolios to make up for recent drops in valuations a good idea?

A recent survey from technology solutions provider Ortec Finance reports that most Canadian wealth managers believe more clients want to increase their risk tolerance in hopes of boosting the returns on their investment portfolios. But some advisors counter this would be a disastrous choice for clients. “We like to remind clients that these financial plans typically take a very long-term outlook,” says Darcie Crowe, senior wealth advisor and senior portfolio manager with Crowe Private Wealth at Canaccord Genuity Wealth Management Canada in Vancouver. “It’s important not to increase risk tolerance aggressively to make up the short-term retraction and inadvertently put yourself further behind if the markets were to see a further downturn in the year ahead.” Deanne Gage explains how advisors are handling client queries about portfolios.

Why this money manager is holding more cash than ever in a ‘very unstable’ market

Ryan Bushell is holding more cash in his client portfolios than he ever has in his almost 20-year career – at around 10 per cent right now – owing to a combination of high interest rates and economic uncertainty. “We aren’t running from the equity market; we’re just taking our time investing any new capital,” says Mr. Bushell, president and portfolio manager at Newhaven Asset Management Inc. in Toronto, who oversees about $120-million of his firm’s $270-million in assets. The cash is earning around 5 per cent in high-interest savings funds while Mr. Bushell waits for better opportunities to invest in select stocks at cheaper prices, which he believes could be coming. Brenda Bouw asks what he’s been buying and selling.

A pricing model is not a value proposition – here’s how to create one

One of the most common ways advisors and financial planners introduce themselves to prospective clients and explain their business is around how they’re compensated. Whether it be fee-based or fee-only, fee-for-service, or any other model, this approach is backward and, in most cases, indicative of a lack of a well-defined value proposition. Where else in the professional world do we see this kind of behaviour? The answer is pretty much nowhere. Jason Pereira explains how advisors can best define their value proposition.

How to remain financially resilient after losing your job

The moment is one many wealth advisors are increasingly familiar with: the phone rings; on the other end is a distressed client who has just been laid off – a casualty of corporate downsizing. The client is in shock, angry, and gripped by fear about what the future will hold. How will they provide for their family? Will they still be able to manage their mortgage payments? Amid concerns of a pending recession and corporate downsizing, 2022 was a year of widespread layoffs. This trend has continued with major companies and banks shedding thousands of jobs this year. Alexandra Horwood shares advice on how to best assist downsized clients.

Also see:

Retirement is ‘the hardest job’ this Alberta senior has ever had

Why setting up for intergenerational wealth transfers now could secure advisors’ practices

Why sector selection, not location, is key to real estate investing

How family charters can avert conflicts and help navigate the future of assets

Investors look for signs of recession in Canada’s GDP in this week’s Advisor Lookahead

What you and your clients need to know

A guide to starting CPP and OAS benefits when you retire – and yes, it’s on you to do that

Contributions to the Canada Pension Plan (CPP) while you are working are arranged sensibly so that they’re made without you having to do a thing. Retirement is different. It’s up to you to contact the federal government’s Service Canada offices to start CPP retirement benefits. If you forget or are distracted for an extended period by events, you could potentially lose thousands of dollars in benefits. There’s no automatic enrolment for CPP retirement benefits until age 70, Employment and Social Development Canada (ESDC) says. If you haven’t applied by age 70, Service Canada will enroll you as long as it has sufficient information on your age, CPP contributions and tax filings in hand. Otherwise, it’s on you to apply. Rob Carrick provides more details.

Travellers, the best time to book flights and hotels is now. Why sales are not always worth it, and other tips to save money

You’ll find different answers if you search for the best time to book travel. Some sites claim the best time is a specific number of days before your departure date, while others believe the time of day matters more. While these findings may be true when comparing thousands of data points, it’s not practical information for consumers when there are so many factors that influence the cost of your booking. Barry Choi explains.

– Globe Advisor Staff


By admin

Leave a Reply

Your email address will not be published. Required fields are marked *