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Some clients seek a second opinion when they are looking for a wider range of products or are concerned about the performance of their portfolio, but relationship issues with their advisor are an even bigger factor. tumsasedgars/iStockPhoto / Getty Images
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As a result of miscommunication, unclear expectations, or market performance, some clients may choose to seek a second opinion from another advisor on the financial advice they are receiving.
For advisors contacted to review existing plans, these requests are an opportunity to listen, understand, and highlight the client's experience while shifting focus from the past.
Why clients want another opinion
Daniel Frost, a financial advisor and certified cash flow specialist with Raymond James & Co.'s Frost Group in Medicine Hat, Alta., says the demand for a second opinion is a result of customers looking for a broader range of products. He said this often happens when a customer is concerned about the content of a product. Portfolio performance in difficult markets.
But relationship issues between advisor and client are an even bigger factor.
“I would argue that it’s probably 20 percent performance-based and 80 percent relationship-based,” he says. “Even if someone is looking for a second opinion, you probably aren’t communicating with them, which means they aren’t being understood.”
In fact, 59 per cent of full-service wealth management clients have a financial plan, according to JD Power's 2024 Canadian Full-Service Investor Satisfaction Study. When asked whether their advisor understands their financial goals and needs, nearly half (55%) strongly agreed. The survey found that the 45% who strongly disagreed were three times more likely to change advisors.
In one recent situation, Mr. Frost met with a prospective client who had a financial plan developed by another advisor. “The man never spoke to them again,” he said, and after leaving his clients to their own devices, he decided not to stay.
Therefore, second-opinion efforts should focus on what the customer is missing, Frost says. While it's important to understand your customer's history, such as how they've felt about the products they've owned and what they didn't like about their relationships with previous advisors, it's important to help them discover where they want to go. It is important.
For example, in addition to setting expectations for clients about what they want from a relationship, Frost says that in addition to setting expectations for clients about what they want out of a relationship, the process is designed to get clients thinking not just about the product, but also about risk, income, cash flow, and estate planning. We also use advice ratings. And performance.
Andrea Thompson, a certified financial planner and founder of Toronto advisory firm Modern Scents, says that when clients come in seeking a second opinion on their financial plans, she previously He says he recommends asking questions to his advisor and returning. their problem.
“Ultimately, they've established a relationship, and they've put in a lot of effort to this point, but in many cases, perhaps the right level of clear discussion to make the client feel confident about this issue. “It could just be that there wasn't.'' she says.
If follow-up doesn't resolve the problem, or if the problem is in another area, there may be an opportunity to intervene, she says.
For example, Ms. Thompson was recently approached by a prospective client who was dissatisfied with a former advisor and was looking for a second opinion.
She says the discussions revealed a mismatch between client and advisor that would be difficult to fix. The client felt that the advisor was not communicating well and did not understand their needs, but they did not understand that the advisor was running a business based on her model portfolio. This more general framework, she says, is unlikely to yield the customized services that address the individual needs clients were looking for.
“In this case, the second opinion is less about the plan and more about listening to the client and understanding what is actually behind the lack of trust in the relationship,” says Thompson. .
professional considerations
In most cases, it's impossible to know what discussions were had and what assumptions were used with the previous advisor, so moving forward with a second opinion requires starting from scratch, Thompson says. says Mr.
“I'm not looking at or criticizing the work of advisors as the primary mechanism for solving problems,” she says. “We develop unique relationships with our clients and seek to understand what they are missing and how we can deliver that outcome.”
Similarly, Jason Evans, an advice-only certified financial planner with Evans Retirement Planning in Winnipeg, says it's important to shift the focus of second-opinion meetings away from the previous advisor.
“I don't mean to criticize the other person's advisors,” he says. This is because there may be restrictions on the products and services they can offer. “Alternatively, the client's portfolio may not be large enough to warrant a comprehensive plan and there may not be an option to bill the client directly for the time it takes to develop the plan.”
Instead, his attention is on his clients' concerns and identifying potential problems or spots in their retirement plans where adding or adjusting details could be beneficial.
“That's my focus. And if I notice some red flags at that point, I can offer to create a plan from scratch,” he says.
“I just try to make sure my clients’ needs are met and their concerns are resolved.”
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