Jobs in finance: an attractive, evolving market!

Ashleay: Hello and welcome to the “In Your Interest!” podcast. My name is Ashleay and, as usual, I’m joined by my colleague Sébastien Mc Mahon, Chief Strategist. Today, for the second week in a row, we welcome Adam Elliot, president of iA Private Wealth. Last week’s episode focused on his career. This week, we’ll discuss his vision of the current job market. Hi, gentlemen. How are you?

Adam: I’m doing very well. Hi, Ashleay. Hi, Sébastien.

Sébastien: Hello, Adam. Great to have you on again. You made us think and nod and smile in the previous episode. You know, we’re both avid readers. We enjoy reading on multiple topics. It’s a great way to learn, to become more creative. So, anyone who hasn’t listened to last episode, I strongly encourage you to go take a listen. But this week, we’ll be focusing on the current job market. Anyone out there want to be an advisor? Well, I think this episode will be very interesting for you.

Ashleay: I’d like to begin by asking, how does a young person start as an advisor?

Adam: Well, Ashleay, for one thing, I’m really happy that the answer to that question is very different today than it was when I started in this business, back in 2000. When I started out, it was what we call the “meat market.” As a financial advisor, you would have probably been at a firm where you went through a rookie class. You were given a phone and a phone book, and you were expected to hit an asset target by the end of your first year and your second year and your third year and then you were probably dropped off of a small salary into 100% commission. And for every successful rookie advisor there were five, maybe ten who didn’t make it. So, it was really, really tough and pretty ruthless. Back then, it was more of a sales culture than a financial advice culture. Thankfully, starting in the business today is much better supported. It’s less of a sales culture. I’d say it’s a lot more professional. There are still some companies out there that have rookie classes, but I would never encourage somebody to start that way. I always encourage young people looking to become financial advisors to start as an associate on a great team. Put in your time, take your courses, make sure you attend client meetings and get recognized by clients as being useful. Don’t just be stuck behind the scenes in administration, even if you have an administrative role. And if you want to become an advisor, I’d say be a student of markets, and, more importantly, recognize that to be successful in this business is really more about understanding client psychology than it is about trying to add alpha through your investment analysis in individual securities.

Sébastien: This has been a theme of this podcast since day one: the role of the advisor is not so much about picking the right fund or the fund that’s going to deliver all of that alpha; it’s really about the relationship with your client and how you can help that human being achieve their long-term objectives. You know, this is a long-term relationship. So, as you say, there’s a lot of psychology involved there. This is a very important role that has a huge impact on a client’s overall life. It’s not just their financial life, it’s their overall life that you’re influencing. You have to protect them from their emotions, etc. So, yeah, it’s a very underrated profession, I would say, but a very fascinating one.

Ashleay: And Adam, other than that, has the business changed in the last 25 years?

Adam: It definitely has. And not just for rookie training programs. The business of advice is much more professional today. I’d say there’s more focus on elements that advisors can control, like financial tax planning, estate planning. There’s much less focus, thankfully, on selling. Also there’s much more of a focus on having a model-based approach to investment management, but also a clear, repeatable process for working with your clients. The business used to be very commission-based, which I think presented many conflicts of interests. Today, the business is almost entirely fee-based, which I believe to be a much better and more sustainable model. I’d say the business is also much better for women, both working for head office—as I do—and for being an advisor. That “old boys club” mentality that you sometimes see in movies on finance from the 90s or early 2000s is thankfully a thing of the past, I’d say. Progress may be slower than I would have hoped, but I think it’s become a much better place for women today. A couple of other things I’d mention in terms of changes (and this is more recent): advisors absolutely have to embrace digital technology, just as our clients have. How they engage with their clients has changed from a technology perspective. I’d also say, from an investment perspective, you can’t ignore the rise of passive investments and low-cost ETFs. There’s been a lot of pressure on active management, for good reason in some cases; in other cases, where active management deserves fees that are being charged, it continues to do very well. I’d say there’s some pricing pressure on the business today. I’d say clients are better informed today than they were 25 years ago. Clients are not looking to be sold; they’re looking for good, unbiased financial advice. If I think of the advisory practices that we have at iA Private Wealth, the best advisory practices today are team-based with specialists. When I started, it was very common for advisors to work solo, with maybe one admin support. And advisors, I’d say, used to be generalists. Today, I’d say high-net-worth clients in particular expect to work with advisory teams that have really specialized skills in financial planning, and other specialists in tax planning, portfolio management, etc. so it’s a more specialized team-based business than it was in the past.

Sébastien: Yeah, and we did do an episode a few weeks back with Pablo Carrera on tax planning. And this is, again, one of the underrated skills sets. I completely agree, team-based with specialists. A client can get much more for their money when they work with a great team.

Ashleay: Yeah. And what do you think about robo-advisors and in what context should we use them?

Adam: I have to be careful with my answer here because my wife is actually president of a robo and digital advice platform for one of the Canadian banks. I believe robo-advisors do have a place. I have no issues with robo-advice, even though I’m head of a firm of personalized advisors. I think they can be an excellent, low-cost solution for many young clients, in particular. I think they’ll probably continue to gain market share, especially with young people. And they will take market share from advisors that don’t demonstrate value to their clients. What I notice is that people value personalized advice. If you’re paying for personalized advice but you’re not getting it, I think those are the advisors who are at risk of losing clients to a robo-platform. And as people become wealthier and their financial affairs become more complex, we notice that many of these clients who might have started on the robo or the digital side will then turn to personalized advice from a full-service firm.

Ashleay: Got it.

Sébastien: I spend a lot of time discussing with our mutual friend Louis DeConinck, who heads Investia. And one of the things I always mention is that now that AI is here, now that you’re able to subscribe to ChatGPT or some other algorithm, you can have it handle a part of the load, maybe communicating with clients or doing some analysis for you, and you can become like an “influencer.” By that I mean, you outsource to technology but spend more time trying to influence and give personalized advice to your clients. So how do you see the integration of AI in this field? And should new advisors think more like “influencers” or not?

Adam: I think maybe there’s sort of two questions there, Sébastien. I can tell you, at iA Private Wealth, for example, we are already investing in AI capabilities for advisors. We want to increase their ability to provide more personalized advice to their clients, and perhaps just as importantly, we want to use AI to minimize the amount of time they spend on administrative duties and more time on personalized advice with their clients. So, from my perspective, they should be using AI to help set up some of their marketing pieces, for example, but then making sure they edit them to make sure they’re more personalized to their clientele. I think AI provides a good foundation for a lot of the work, but you need to make sure to verify it carefully before sending it out to clients. Similar to the investment management process: I think you can use AI increasingly there and some of the asset managers that our advisors use are integrating AI, including at iAGAM, as you know, Sébastien. You mentioned social media. For sure, most of our younger advisors, but many of our more senior advisors as well, have embraced social media strategies. Today, LinkedIn is still the most important overall for them. But this is evolving, and we’re seeing advisors finding new clients on Facebook, on YouTube and even on TikTok, for example. And I think the way Gen Z and millennial clients find an advisor to work with today is very different than the way advisors built their practices and found new clients in the 90s and early 2000s. The digital expectations of Gen Zs and millennials are much higher and their communication preferences are different. Their access to information is much better, but there is also more noise and unhelpful advice to block off in order to find trusted, expert advice from unbiased sources. This is where our advisors come in.

Sébastien: Yeah, and with the rise in the psycho pop and stuff like that, everyone’s looking for the key advice, the hack that will change everything. So, there’s a lot of noise out there. There’s also a lot of value for an advisor to add.

Ashleay: Yeah. I was going to ask Adam, what’s your vision of the value of advisors?

Adam: Well, for a start—and hopefully I’ve made this clear—advisors have had to up their game: their value proposition from 20 years ago was much less complex, much less all encompassing than it is today. I mean, the value proposition for the best advisors at our firms—or elsewhere—is really to provide unbiased, objective, customized advice through a team of experts that help their clients not only manage their investments, but as I mentioned, they have to focus on tax and financial planning that is highly personalized to their clients, while providing a consistent and repeatable level of service that matches the highest levels of service they see in other businesses. This could be, for example, modelling not only on financial planning businesses but finding examples at the best restaurants or hotels around the world. Several of our advisor teams, for example, spend as much time continuously improving their client experience as they do selecting investments. And do you know why that is? Because the investment management side of this business has kind of been solved. But meeting rising client expectations is a continuous process of improvement. And that won’t change. So, our advisors really have to raise their game to meet those rising client expectations.

Ashleay: Amazing. Well, that concludes today’s episode. A big thanks to you, Adam, for sharing your vision of today’s job market and the evolution of advisor work and being with us today for a second podcast. And thanks to you too, Sébastien, and to our listeners.

Sébastien: Thank you, Ashleay, and thank you, Adam, for being here. It was a pleasure.

Adam: You’re very welcome. Thanks, Sébastien. Thanks, Ashleay. I appreciate you inviting me on.

Ashleay: And to our listeners, don’t hesitate to drop us a line if you have any questions, and we’ll talk again next week. Loved this podcast? Want to know more about economic news? Follow our “In Your Interest!” podcast, available on all platforms, visit the economic news page on ia.ca or follow us on social media.