The following blog was written by Tom just before his surgery, from which he is recovering well.

Dan Richards is a name you may be familiar with. He has been in the wealth management industry for years and currently operates his own consulting firm called Strategic Imperatives Ltd. He has actively written and been quoted in the media. My posting today relates to the regular column he writes for the Investment Executive.

Late last year Dan did a two-part series on ‘baby boomer’ clients. As he says, “Boomers will be very different retirees.” These columns were aimed at advisors and what they need to do to effectively service the boomers. From extensive research he conducted, he identifies 5 traits that these clients will have:

1. They want it all.
2. They are inclined to question authority and are unwilling to accept what they are told at face value.
3. They are reluctant to give up control.
4. They want to keep their options open.
5. They actively seek out good value.

I don’t know if Dan has got it all right or not, but his traits are consistent with what I observe. Given how impactful the boomers have been on all aspects of our society (housing, entertainment, travel, Mick Jagger’s career), it’s a topic all investment executives have to pay attention to.

At Steadyhand, we feel we’re pretty well positioned for the boomer retirees. I’ll even be bold enough to score ourselves against the traits mentioned above.

They want it all

This is where Steadyhand doesn’t hold up. We have a limited product line (5 funds) and a distinct investment philosophy.

We also don’t promise anything with regard to short-term performance or provide guarantees that investors won’t lose money in a particular quarter or year.

Steadyhand: 1 out of 5

Questioning authority

Steadyhand is all about challenging conventional wisdom and entrenched industry practices. As we’ve said repeatedly, we don’t think the Canadian wealth management industry is a good enough standard to compare ourselves to.

Steadyhand: 5

Reluctance to give up control

Dan provides lots of examples of what he means here, including:

  • Boomers are more involved in the decision making;
  • They are less likely to defer to an advisor than previous retirees;
  • They want more frequent and open communication;
  • They are more inclined to go on-line and see how their investments have done;
  • They want a streamlined financial plan that clearly lays out the options … not a 60 page document; and,
  • They want open and transparent communication of compensation and other details.

Steadyhand scores well here. We require that investors make their own decisions, with our help when required. Our communication is frequent and as transparent as we can make it. We’ve got an active website that has been designed to be informative and simple. And finally, on each account statement, we show our clients what they paid us last quarter in dollars and cents.

It’s interesting to note that the hottest sellers in the market today are the pre-packaged products such as target date balanced funds, WRAPs and structured notes. To me, these products cede control to the provider. They generally require the investor, with the help of an advisor, to make a choice at time of purchase, but after that the product is on autopilot (regular rebalancing, adjustments for aging, monitoring managers).

Steadyhand: 5

Keep options open

There is nothing mutual fund investors hate more than deferred sales charges (DSC) that prevent them from making changes when they want to. While DSCs have been on the decline in recent years, lots of the new investment and insurance products still have a DSC element to the commissions, which makes it difficult for investors to extradite themselves before the product matures.

At Steadyhand, we want our clients to have a long-term plan and stick to it. If they do want to make changes, however, there is no fee or commission to switch between funds or make a redemption. Nothing...ever.

Steadyhand: 5

Quest for value

I’m glad to hear that the boomer retirees are going to be more conscious of value. Investors in their 40’s and 50’s today are so busy with life that they’re happy to turn their affairs over to an advisor that they are comfortable with. When I ask them what they’re invested in and what they’re paying, they often don’t know. They are just relieved that they’ve found someone that can take care of it for them.

Dan forecasts, however, that for the boomer retirees, traditional relationships will be less important than ever before. The boomers won’t necessarily be disloyal, but they will speak with their feet if they don’t feel they’re being treated well or returns aren’t there.

Providing top-notch money management at a reasonable price is what Steadyhand is all about. And our fee structure rewards clients that stick with us and grow their assets here. As their account grows, the fee is reduced and if they’re with us more than 5 years, it is reduced further.

I haven’t given us the top score on this trait only because I acknowledge that there are lower priced options out there, namely exchange-traded funds. But for truly active management, Steadyhand has few peers.

Steadyhand: 4

We know Steadyhand is not for everyone, but we designed our firm around some of the trends that Dan identifies. Specifically, increased client involvement and a more acute awareness of value are both in our sweet spot.