Too many clients pose tough choices for Canada wealth advisers

Fri Feb 1, 2013 2:42pm EST
 

By Andrea Hopkins

TORONTO (Reuters) - Canadian financial adviser Taylor Hewson said it can be little awkward when he approaches clients of his father's who haven't been contacted in years. But most of the time, he comes away with an interested investor to add to his own business.

As second-generation financial advisers in Regina, Hewson and his brother have full permission to mine his father's list of old, less profitable or neglected clients as they seek to build a partnership and plan for eventual business succession.

"Sometimes they say 'Yeah, we haven't heard from him in two or three years,' so that's a challenge for me," said Hewson, 26, a certified financial planner and member of Advocis, the Financial Advisors Association of Canada.

"But it's also a great experience to take a situation that could have ended badly if someone else had come along and taken over that client, to instead getting that relationship back."

Veteran financial advisers like Hewson's father face a classic conundrum. They are overwhelmed by a client list that is too big, and only have enough time and energy to serve the 20 percent who bring in 80 percent of the revenue. But what to do about the rest?

Some, like Hewson's father, take on a junior partner to lighten the load. Some can even sell part of their client list to a new adviser or interested buyer, which spares the need for a business partnership. But industry insiders believe the majority probably take the easy way out - ignore the problem.

"For every one of me, there are 10 advisers who are going to take the client's assets and never talk to them again, which is sad," said Heather Holjevac, a 25-year veteran financial adviser in Oakville, Ontario.

Holjevac said the deferred sales charge model practiced by some advisers - where the adviser gets paid 5 percent up front for selling investments - isn't practiced at her firm, so she's only interested in long-term relationships.   Continued...