This article appears in the September 2022 issue of Investment Executive. Subscribe to the print edition, read the digital edition or read the articles online.
When Andrea Thompson announced her plans to leave a Bay Street brokerage and start an advice-only financial planning business, she was met with skepticism.
“People who don’t understand this particular segment of the industry will try to convince you not to do it. I had people tell me I wasn’t going to make any money and why should I bother.”
But Thompson, who holds the CFP, CLU, CHS and chartered retirement planning counselor designations, forged ahead. In January, she launched Modern Cents, a Mississauga, Ont.-based virtual company.
Thompson, who charges only for advice — and provides no product sales or investment management services — describes her business model as “advice only.” She doesn’t believe the terms “fee-based” or “fee-only” describe her service accurately.
Creating an independent practice that offers only financial advice felt like the right move to Thompson, who wanted to assure clients they would experience no sales pressure while working with her.
“I want to make financial planning more readily available to average Canadians,” Thompson said. “It’s something I feel very strongly is an underserved market that really needs help. A lot of Canadians are just in a state of not knowing where to go and not knowing how to get to the next step within their lives.”
Thompson brings a wealth of experience to her new role. She spent more than 16 years with Raymond James Ltd., first as an associate estate planning advisor, and later as a senior financial planner on the private-client solutions team, working behind the scenes to provide financial advisors with financial plans for clients with at least $500,000 in assets.
During Thompson’s last seven years at that company, she was on the client-facing side. As part of a wealth team, she was a senior financial planner who focused on cross-border issues.
Thompson stepped away from Raymond James for a year in 2011 to join Richmond Hill, Ont.-based Apri Insurance Inc. as a consultant, but found the role wasn’t a good fit: “It wasn’t for me because I didn’t believe in selling insurance just for the sake of making a commission.”
Thompson had her eye on advice only financial planning for the past 10 years. During her later years at Raymond James, she saw a growing need for that kind of service.
“A lot of prospects would come in the door in our business and they were just looking for advice and they had nowhere else to turn, especially in the cross-border space. But they didn’t always want to move their assets over to our firm to get access to the planning services we provided,” Thompson said.
“It just kept coming up over and over again where I [thought], ‘I think there’s something to this. This is now something that people have an appetite for,’ whereas perhaps 10 years ago, they didn’t even know this was available.”
Modern Cents serves clients of all ages, but they’re predominantly in their 30s, with some in their 20s and 40s. It’s a shift from Thompson’s clientele at Raymond James, who typically were between 55 and 70.
These younger clients are looking for options that exist outside the traditional system, she said. They’re more comfortable with do-it-yourself investing and robo-advisors. Thompson said she’s “agnostic” regarding any client’s asset level.
About 60% of Thompson’s clients deal with cross-border issues. Some of those clients are what she calls “accidental Americans.” They might never have lived or worked with the U.S., but are deemed to be American because of a parent, or because they lived in the U.S. at an early age.
Thompson also works with clients who immigrated to Canada from the U.S.for a job, or have a U.S. employer who allows them to work remotely in Canada. Many of her clients work for big tech companies such as Alphabet Inc. (Google), Meta Platforms Inc. (Facebook) and Microsoft Corp., and transfer to Canada without fully understanding the taxation system here.
In the latter case, Thompson helps clients understand where their U.S.accounts fit into the Canadian landscape and looks for pitfalls they might encounter when they keep accounts in the U.S. For example, clients who have built up retirement accounts in the U.S., such as IRAs and 401(k)s, often want to know what to do with them when returning to Canada.
She helps answer questions such as “Can these accounts be moved to Canada? What should clients do or not do with the accounts before moving to Canada? Can clients continue to contribute to the U.S. accounts while in Canada?” She also works with a client’s existing wealth-management team to help them understand what living in Canada will mean for their clients, especially as U.S. tax filers. Thompson frequently connects clients with professionals who specialize in law, accounting, real estate and mortgages.
At Modern Cents, the most popular service is a comprehensive financial planning consultation, a three-month process that includes a discovery meeting followed by a series of phone calls.
“I came upon three months because that seemed to be how long most of my engagements were running in the beginning,” Thompson said. She can run four or five client meetings in that time frame.
Thompson also offers project based consultations to help clients focus on a particular issue. For example, a recent client experienced a layoff and wanted an expert to review their severance package and explore insurance options.
She also provides hourly consultations and will soon be introducing an annual service model for clients who want to establish a long-term relationship.
Thompson credits an advice only planner’s forum, offered by the Financial Planning Association of Canada, as “tremendously” helpful in getting her started.
“We’re all here propping each other up, which is really nice in an industry that’s often competitive.”
Thompson recommends the forum to those planning on launching an independent practice. She also recommends advisors clarify exactly what they will offer and who they will serve: “What I learned early on in this journey is that having a niche is ultimately what’s going to make you stand out from other planners.”
More important than a sense of clarity is confidence, she added.
“That’s nine-tenths of the battle of being an entrepreneur and being self-employed,” Thompson said. “You have to be sure and confident in yourself during times when you really only have yourself to lean on, especially in the early days, when it’s all new to you.”