Businessman standing in front of the panel with financial statistics

It’s already that time of year when Canadian investors receive their annual statements from dealers. I know some advisors are concerned their clients will see negative returns on those statements (as most of us will) as well as just how much those returns cost them, in dollars and cents. Right?

Actually, no. As an industry, we historically got that wrong. Fees don’t pay for returns; they can’t. Times such as now demonstrate why that’s the case — and make us grateful that’s the case. It’s not easy to tell a client that you and your firm got paid for their negative returns.

In fact, what fees pay for is your advice as well as a basket of services that you and your firm provide — through good times and bad. Your clients should understand that. How you demonstrate the value of that advice will be key as clients assess whether they received value for the fees they paid.

This is especially true today. I recently read an article about online investing firms and their popularity with investors. These platforms are cheap and easier than ever to use.

However, not all investors are flocking to online brokers — at least not with all of their investments. Perhaps they recognize they don’t have enough time or knowledge to manage their investments, or perhaps they just don’t trust themselves. Regardless, they are becoming choosier about advisors. Why pay an advisor when they could just invest themselves?

In addition, fees remain a major concern for investors, according to a report from FAIR Canada. Despite the extra reporting provided by CRM2, almost two-thirds of survey respondents said they didn’t understand the fees they pay, and over three-quarters said they felt they were paying too much. This is not good news for our industry, and certainly not for any individual advisor whose clients feel that way.

As a result, advisors need to be clearer about the value they provide for the fees clients pay, and that value has to be more than access to products that online brokerages provide so readily and cheaply.

Here are six services to consider that clients will value:

1. Goal setting. Help clients identify and articulate their goals. Clients often have no idea how much they need to achieve their goals. While it’s relatively easy for them to establish how much they’ll need to buy that boat, it’s much more difficult to know how much they need to retire — either in their investment basket or as annual income. There are many variables, including lifestyle, inflation, returns and even lifespan. Clients need your help to tackle the variables and set clear goals.

2. Holistic advice. This is a term I’m sure you’ve heard; it’s a focus for much of our industry. But what does it mean? Holistic is defined as when “the parts of something are interconnected and can only be explained by reference to the whole.” Holistic financial advice can be viewed as advice that includes a plan for all life stages and takes every aspect of a client’s financial life into account.

Clients are interested in advice and a plan that will help improve their overall financial health and well-being; they’re not interested in only buying investments or insurance. As their trusted advisor, you can provide one-stop shopping for all-encompassing financial advice. They will value your holistic approach, whether or not you and your firm can sell them all the products that help meet their financial needs.

3. Financial planning. Speaking of plans, if you don’t have a financial planning designation, have you considered getting one? Does your firm have a department that helps prepare financial plans or investment plans? Of course, just plugging basic information into planning software will not necessarily produce a great outcome for a client, or a great plan. But having a disciplined and thoughtful approach to capture and understand a client’s hopes and dreams, and to produce a plan to help achieve them, will be welcomed by clients.

4. Measure progress against goals. Goal setting is not a one-and-done activity. First, goals change as life changes, and they need to be re-evaluated regularly. Second, clients want to know how they’re doing against their goals. Are they on track? Do they need to do something differently (save or invest more, consider their time horizon)? This is a great conversation to have with clients. It’s good for them, and it’s good for you: besides helping clients, this conversation will often help unearth other services or products that you can provide.

Many firms offer technology that makes it easy for a client to see their progress against goals. Don’t be intimidated by that tech. If you provide proper value, technology simply serves as a starting point for a great client conversation.

5. Regular communication. One of the most important jobs of an advisor is supporting clients through market ups and downs. I’m sure that reviewing their 2022 performance reports has caused some investors to worry. Others will be tempted to try to time the market, selling to avoid the uncertainty and volatility.

The best thing you can do is stay in touch with clients, help them focus on returns beyond last year, and comfort them by showing them they remain on track with their plans or recommend necessary adjustments to their portfolios. Don’t be afraid to communicate. There is no such thing as overcommunication, especially in volatile markets.

6. Fee transparency. CRM3 is coming this spring. The regulators will unveil new rules requiring additional cost reporting for investment funds as well as segregated funds — they call it “total cost reporting.” We don’t yet know the details of the new rules, but it’s clear there will be more disclosure of costs that weren’t covered by CRM2.

It’s always good to be transparent with clients about the fees they pay and the value they receive for them. With more fee disclosure coming, it’s critical to start those conversations if you haven’t already. Don’t wait for another layer of fee disclosure to hit your clients as you cross your fingers that they won’t see it. Embrace fee transparency; your clients will thank you for it.

Susan Silma has a deep understanding of the client perspective informed by extensive client research, and supports advisors in meeting evolving client needs by incorporating technology and holistic advice.