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INVESTMENT EXECUTIVE
of 12 broad asset classes — not just equi- ties, but government and high-yield bonds, private debt and equity, mortgage invest- ments and direct investments in real estate, among others.
The strategy is similar to that used by the Canada Pension Plan. Ten committee members — drawn from fields such as banking, investing and law — work with third-party asset managers to choose investments. Separating the investment strategy from the investment execution, George says, is “one of the most funda- mental differences” that Newport offers clients.
George notes the model suits the many clients who come to Newport looking for expertise that will allow them to take their own hands off the tiller after long careers. These clients, she says, are ready to let others do the work of protecting and building on the wealth they spent their careers accumulating.
“Lots of clients may have managed their own portfolios in the past,” George says, “and they have just reached a point where they now choose not to, [be it] through lack of time, lack of desire or recognition that they just don’t have access to the same kind of resources and investments [that Newport does]. We often see a point at retirement, or just leading up [to it], when clients will seek us out.”
The current crisis may be accelerating this process, George notes. “I’m finding that the pandemic is causing people to reflect a lot more,” she says. “[They are] reflecting on what’s important to them in life and, often, if they are later in their career, deciding whether they want to retire a little earlier and spend more time with family.”
Many clients have shopped around extensively among other financial institu- tions before arriving at Newport, George says. “I find the biggest adjustment for some clients is switching from a self-man- aged strategy to a fully discretionary man- aged strategy,” she says.
While some clients may raise the ques- tion of investing in a company or sec- tor that has caught their eye, the goal, George notes, is to describe the reasons for Newport’s investing and management strategies. Individual stock selections by clients may happen, she says, “but that is more on an exception basis than a rule.”
Other clients may have bank accounts that have swollen almost overnight, thanks to major life events such as receiving an inheritance or selling a business. “When you acquire a large sum of cash in a very short period of time, it can be extremely overwhelming and also [makes clients feel] a little vulnerable,” George says. For those clients, George spends time ensuring that she knows what the client is looking for and whether the firm is the right fit.
George opened Newport’s Kelowna office on her own and remains its only representative. Now, as the world of work shifts dramatically to accommodate the impact of the pandemic, Newport’s model appears to be well adapted to the uncer- tainties of the future. For example, the firm’s weekly investment committee meet- ings moved from the firm’s Toronto offices to video chats that include portfolio man- agers. All employee meetings take place in the same format on other days.
Whatever form the future of work takes, George foresees many people look- ing for, and finding, their own paths. “[The pandemic has] certainly opened my eyes in amazement to how resilient we are,” she says, noting that Newport was able to switch to remote work seamlessly. “One day, everyone was in the office and work- ing normally. Two days later, everyone was working remotely, covering clients — and [we] didn’t miss a beat.”
George’s comfort with change appears to be a quality that has served her — and her clients — well. IE
BYB October 2020 Is your practice prepared
for the “next normal”?
15
Now may be the time to reconsider your approach to marketing and client relationships
sense of purpose and articulate how you intend to make a real difference. You can do this through the causes you choose to support, the partners with whom you align, the way you treat your employees and the messages you send to clients. Most important, you must back up your bold statements with real action.
BUSINESS MODEL
The e-commerce experience has defin- itely elevated people’s perception that just about anything can be purchased or accomplished online. As a result, expecta- tions are rising for non-traditional uses of technology, from medical appointments to financial plan reviews. Advisors who use technology to offer their services to clients in real time or through self-service will make the client experience easier, more productive and more enjoyable, leading to greater loyalty and advocacy.
I also believe that many clients, as a result of their experience with firms like Amazon, will welcome a return to the one-stop shopping model, in which their advisor sits at the centre of a “financial expert ecosystem” and acts as a resource for products and services outside but related to their own area of expertise.
For example, that ecosystem might include experts in financial, estate and tax planning; life, health, and property and casualty insurance; mortgages; real estate; and so on. While some advisors currently offer several services and refer- rals, formally establishing and promoting a broader base of specialists will help you differentiate yourself.
Products and services may have to be revamped as a result of the emotional and, in many cases, practical impact of the pan- demic. I suspect many clients will want their retirement plans to include more emphasis on capital preservation, surety of income, contingency funds, family protection, and current and long-term health care.
CAUTION AND ENCOURAGEMENT
As noted earlier, our decisions about how to approach the future are based on our beliefs in the moment. The truth, however, is that we can’t forecast the stops, starts and resets that may occur, or how we, our clients and our industry will react.
Despite the uncertainty, we must pre- pare ourselves as best we can. Given the topics described above, here is what I would suggest today:
1 Go far beyond investment knowledge,
risk profile and portfolio design to bet-
ter know your client.
2 Narrow your client segmentation
based on common characteristics.
3 Align products and services with the emotional and practical needs of each
segment.
4 Create a unique and compelling story,
and tell it with passion.
What we do know, above all, is that given the current uncertainty, we should strive to do what we have always done — build trust with clients by making their experience the best it can possibly be. This will require agility, adaptability, open-mindedness, patience, persever- ance and courage. IE
George Hartman is CEO of Market Logics Inc. in Toronto. Send questions and comments regarding this column to george@marketlogics.ca. George’s prac- tice-management videos can be viewed on investmentexecutive.com.
l BY GEORGE HARTMAN
GEORGE HARTMAN
COACH’S FORUM
I appreciated your recent column on how to make business decisions in light of the Covid-19 pan- demic. Determining
office space requirements has been par- ticularly relevant to me at this time. After reading that column, I am now confident I already have the right size and configur- ation for the foreseeable future.
You also suggested that this was a good time for us to reimagine our businesses in key operational aspects such as marketing, client relationships and business model. I know you couldn’t fit all of those topics into one column, so I am hoping you could expand on your thoughts.
First, congratulations on determining that you have the office setup that best suits your business going forward. As for the
other topics you ask about, please note that I am not a social scientist, but have always been a “student of the business.”
As such, I am interested in how financial advisors, financial services organizations and clients make decisions and respond to change. Although the financial servi- ces industry has always had to deal with change, the rate of transformation today is exponential and the final outcome very much unknown.
However, we cannot let that uncertainty stop us from making the best decisions we can, based on what we believe to be true today. If the world around us doesn’t unfold as expected, we may have to rethink ear- lier choices. With that caveat, here are a few things currently bobbing about in my head.
CLIENTS
Clients today are not the same as they were six to nine months ago. Although much of the world appears to be on a slow pivot from managing the Covid-19 pandemic toward recovery and reopen- ing economies, the fear of contagion and the stress of personal and global economic uncertainty have altered the way clients will behave, perhaps for years to come.
An obvious example is the use of tech- nology. Many clients have now acceler- ated their adoption and trust of digital interaction. I believe this will have a permanent impact not only on our reli- ance on technology, but also on the vel- ocity of its development. As the use of technology expands, manufacturers will accelerate their designs and upgrade capabilities beyond what many of us can
even conceive of today. Financial advis- ors and financial services organizations are, therefore, going to have to commit to significant and ongoing investment in both current technology and subsequent generations of technology to meet the demands of their clients.
The objective of technology use should be building trust and confidence in the advisory process and relationship. Undoubtedly, clients now have a different view of the world. However they have been affected by the pandemic, they feel the need for a greater sense of health and financial well-being, safety and quality of life for their families. If you can help your clients feel more in control of their lives, you will be rewarded with loyalty and advocacy.
MARKETING
Old marketing methods won’t work any- more. It will be a long time before current or potential clients will show up at a sem- inar, client appreciation event or other in-person business development activity.
Webinars, online town-hall meetings and personal YouTube educational channels will become the new mass-marketing regime. Social media and “influencers” will replace traditional advertising. Google, Facebook and LinkedIn will be the primary sources of referrals. Potential clients will first research, then want to interview advisors via video to assess fit before establishing a relationship.
Differentiation has always been a chal- lenge in a world in which many consumers believe that all advisors offer essentially the same products and services, charge the same fees and make the same promises. To overcome this perception, your marketing must become more personalized to smaller, defined slices of the broader market.
This will require a narrower approach to client segmentation. In order to capture the interest of particular subsets of a client base, you will require a deeper understand- ing of their unique beliefs, interests, social networks and specialized needs to make your messaging relevant and compelling.
You can get this knowledge through research — through formal and informal client surveys, community involvement, academic analysis, etc. — then create highly focused client personas. Just as potential clients will want to know about you prior to connecting, you should want to ensure that prospective clients fit a target market through your own data-gathering activities.
Another consequence of the pan- demic has been heightened awareness and appreciation of corporate values. You must, therefore, communicate a strong
“Coach’s Forum” is a place in which you
can ask your questions, tell your stories or
give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.
ADVISOR SAYS:
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