mature couple with young financial advisor

High net-worth (HNW) Canadians who work with financial advisors at independent wealth-management firms are consistently more likely to ascribe positive personality traits to their advisors than HNW clients who work with advisors in the bank-owned brokerage or bank branch channels, according to research from Mississauga, Ont.-based Credo Consulting Inc.

Credo’s research comes from the Financial Comfort Zone Study, an ongoing national consumer survey that Credo conducts in partnership with Montreal-based TC Media’s investment group. (TC Media publishes Investment Executive.)

Credo researchers asked survey participants to indicate which personality traits they associated with their advisor. Those polled could choose multiple traits from a list of more than 20. Among the positive personality traits were “dependable,” “communicative,” and “consistent.”

For each of the positive personality traits listed, the percentage of HNW survey participants who checked off a positive trait was higher if the surveyed person works with an advisor in the independent channel vs with an advisor affiliated with a bank-owned brokerage or bank branch. (HNW respondents are defined as those with $500,000 or more in investible assets.)

For example, 62% of HNW survey participants who work with an independent advisor checked off “trustworthy” from the list of traits, compared with 48% of surveyed HNW survey participants who work with a bank-affiliated advisor. Fifty-seven per cent of HNW survey participants who work with an independent advisor checked off “dependable”; only 44% of HNW survey participants who work with a bank-affiliated advisor checked off “dependable.”

These gaps may be a function of differing business models among the three channels, suggests Sara Gilbert, founder of Montreal-based Strategist Business Development.

Advisors working at bank-owned brokerages or bank branches may be under “more pressure in terms of the number of clients that they need to have, the assets under management (AUM) they need to have, and the percentage growth [in AUM] they need to produce on a year-to-year basis,” Gilbert says. The pressure on an advisor to produce could result in less time available to spend on relationship-building, she adds.

Advisors working at large bank-owned brokerages or bank branches may also be dealing with more bureaucracy, further restricting the time they have for relationship-building than advisors at independent firms do, suggests Rosemary Smyth, founder and business coach with Rosemary Smyth and Associates in Victoria.

“Sometimes you have advisors moving from banks to independents, and one of the reasons they choose that is that there is more freedom at independents; they’re not constrained in a hierarchy,” Smyth says.

Sam Febbraro, executive vice president, advisor services, at independent firm Investment Planning Counsel Inc. in Mississauga, Ont., says advisors who have chosen a fee-based business model vs a commission-based model are more successful in establishing strong relationships with clients. “HNW clients appreciate objectivity and a great client experience,” he says. “This is what differentiates one financial advisor from another.”

However, part of the gap between the independent channel and the bank channel in terms of how likely HNW clients are to ascribe positive personality traits to their advisor may be a function of client perception more than reality, Gilbert says. Clients may perceive advisors affiliated with independent firms as being more entrepreneurial while viewing advisors affiliated with bank brokerage as being less so.

“The advisor on the bank brokerage side is still an entrepreneur – he or she is not salary-based – but the clients don’t understand that,” Gilbert says. (“Entrepreneurial” was not a listed personality trait in the Credo survey.)

Advisors who develop strong relationships with their HNW clients are not only more likely to keep those individuals as clients over the long term, but also are more likely to transform clients into advocates and sources of referrals, Smyth says: “You want to have your client’s confidence, and to be seen to be a professional.”

Establishing strong lines of communications, including encouraging client feedback, is essential in building strong, positive relationships, Smyth adds: “[You must be] comfortable being open and honest, and actively listen to clients. That’s not always an easy thing to do when you have a lot going on.”

Advisors should put processes in place to make sure that either the advisor or someone from the team contacts a client on a regular and consistent basis.

This can be done as part of segmenting a book of clients and establishing baseline levels of service for each segment, says April-Lynn Levitt, a business coach with The Personal Coach in Waterloo, Ont.: “If you have [client outreach] mapped out in a schedule, and it’s proactive – you’re not waiting for the client to call you – that goes a long way to building trust. [Your clients] know that you’re going to be there for them.”

Levitt also says that contacting clients for their feedback – asking them what they find valuable about your advisory service and where it could be improved, for example – is a great way to build long-term trust with the client: “The vast majority of [advisors] never do anything like that, but it’s a way to deepen that relationship and get some good feedback to take back to your practice.”