The three R's: Essential tools for advisors

You may have heard of the three R's when you were in school: Reading, wRiting, and aRithmetic. They were important building blocks to your education. Without a firm grounding in these subjects, you couldn't move on to more complex studies.

In my work with advisors over the years, I've found that there are also three R's that are the foundations to success in the financial services industry. With these three essential tools, advisors can serve their clients and build their businesses.

  • Research
  • Resources
  • Relationships

Let's look at each of these in turn and how they can help you potentially enhance your business strategies.

Research

Have you ever considered how many different investment options are at your fingertips? According to the Investment Funds Institute of Canada, there were 3,409 mutual funds and 1,056 Exchange-Traded Funds available in Canada at the end of 2022.1 How about one more eye-popping statistic?Among all Canadian domestic equity funds ranked in the top quartile of performance over 12 months ending June 2020, zero maintained a top quartile position for the next two years.2 This leads to a simple two-part question.

  1. How do you do your research?
  2. Are you researching on a go-forward basis or a historical basis?

We have all seen this very simple phrase in all material on any investment solution: Past results do not guarantee future returns. While I love a good Morningstar comparison as much as anyone and have seen a ton of them, there are two issues to always consider.

  1. Asset allocation is the main driver of returns
    • Are you comparing apples to apples, or apples to oranges?
  2. Beware of the timeframe you choose
    • The story can drastically change depending on start dates

The thing is: research takes time and great research is going to take a great amount of time. This is time that many advisors tell me they simply do not have.

If you didn't need to do your own research, what areas would you devote more time to?

  • Developing clients' investment plans
  • Identifying areas to grow your practice or right-size to meet all client needs
  • Developing consistent resources that you can use quarter-in-quarter-out
  • Building deeper relationships with your partners, clients and colleagues

This is where I believe a partnership with Russell Investments can help you. Manager research is at the heart of our investment process. We hold more than 2,000 meetings a year with money managers and have a proprietary ranking system that helps us ensure our funds are being managed by the teams in which we have the greatest confidence.

For example, in 2022 we made a variety of changes to our Canadian funds, adding 13 sub-advisers and removing 10 sub-advisers.

We also have a large team of strategists who keep an eye on the global economy and provide their insights—as well as their views on which asset classes are most likely to do well in the current market environment.

Resources

I think it's fair to say that you can never have too much information if it is good information. One way to tell if the firms you work with provide resources that can help you give your clients useful information is to check their websites. Is there an education center? Do they provide client-friendly documents you can easily download? Do they produce a quarterly market outlook? How about a quarterly market review? Do they showcase their thought leadership?

Here again I believe that a partnership with Russell Investments can benefit you. We champion the important role that advisors play so we work hard to provide resources that will help you articulate your value to your client.

This can range from group calls for a quarterly economic and market review to having us join a client call to talk through a specific case.

For example, we can partner with you to present to your clients on a variety of topics that are relevant to the audience and highlight why working with an advisor—you in particular—is so important to the long-term health of an investor's wealth. Such topics could include Women and capitalize, Market updates, The Fixed Income Landscape and Guarding against mindless investing.

We also moved quickly at the start of the pandemic to help advisors adjust to the new remote working conditions and the market volatility. We launched the Conversation Center, designed to help advisors triage what mattered most for their clients, their practice and their team at a time when the world seemed to be imploding; actionable training and coaching on how to integrate the key technology that was the only viable lifeline to their clients during strict lockdowns; rapid response webcasts and client-friendly materials to help contextualize the market whipsaws for advisors and for their clients.

I may be biased, but I do believe at Russell Investments we have some of the best resources out there. Whether it's our broad set of interactive tools or proposal generators or a quarterly review with easy-to-digest charts on the given market environment, we truly have resources for almost all situations.

Interested in some of the specific resources we can provide? Reach out to your Regional Director or Regional Consultant.

Relationships

Why did you become a financial advisor?

Was it the desire to build relationships with clients and help them obtain their wealth goals or was it to try to beat the S&P/TSX Composite Index year after year? You may choose either answer or both, but the truth is that the financial advice business is built on relationships. Typically, your relationships with your clients are a leading indicator of the size of the assets you manage, while your relationship with your team determines the efficiency of your business, and your relationship with your wholesalers can provide you with a variety of investment solutions to offer your clients and business solutions to help you grow your practice.

One of the strongest relationships that you can have is with your wholesaler. A wholesaler can fulfill a number of different roles: consultant, technical expert and industry expert.

I've seen all of these play out in a variety of ways during my time with Russell Investments. I've done the simple task of helping an advisor reset their website login and walk through the resources they can access. I've joined client calls and walked through the potential solutions they could use to fit their risk profile and investing goals. I've brought on some of our industry experts to provide market insights to groups of advisors and investors.

Each advisor relationship and the way they partner with Russell Investments is unique, and it's our job to figure out how to best provide support to an advisor's practice.

The bottom line

The three R's that you learned in elementary school served as the building blocks for your education no matter which direction you chose. The three R's for advisors can serve as the building blocks for their businesses no matter what kind of clients they serve or what investment solutions they provide.

And at Russell Investments, we provide those building blocks through our network of wholesalers.

In broad terms they can:

  • Provide research you can use to better understand the markets, global events and their impact on the global economy, industry trends and best business practices
  • Provide resources you can use with your clients and to help build your practice
  • Develop deeper relationships with your clients and potential clients

I believe that financial advisors do not necessarily need better products, but they can always use better partners and that is what Russell Investments strives to be. Please reach out to us if you are interested in any of the research, resources or relationship-building materials we have available.

1 https://www.ific.ca/en/pg/industry-statistics/

2 Source: S&P Dow Jones Indices, Canada Persistence Scorecard: Mid-Year 2022. https://www.spglobal.com/spdji/en/spiva/article/canada-persistence-scorecard/