Last night, a client friend of mine sent me a link from a website called "Wealth Professional". The client friend said that they just published something called the "Top 50 Advisors 2017". My immediate reaction on what this article/ranking was all about was not positive and once I read the article, I was indeed spot-on. That is to say, I bet they rank these Top 50 on what size of Assets Under Management (AUM) they have, what kind of AUM growth they have had and/or how much revenue they have squeezed out of their clients. Without even reading it, I was also saying to my client friend that I bet they mention nothing about: 1) who has the strongest risk-adjusted returns in their client portfolios and 2) who has cut the all-in costs their clients pay.
Sure enough, I was correct on all levels. Have a read on how they rank to Top 50: www.wealthprofessional.ca/rankings/top-50-advisors-2017/
Is this for real?
From the Article:
"We asked which individuals had distinguished themselves in 2016, either by increasing AUM, bringing in new clients, boosting revenue or perhaps another variable unique to that particular advisor."
"This year's Top 50 had a combined AUM of $8.8 billion, and the top 10 alone has more than $3.5 billion AUM. That makes it clear that while the advisor business is undoubtedly changing, investors across Canada are still showing their faith and entrusting their wealth management to the professionals".
Therein lies the problem with the Wealth Management business, in general. And to be sure, there are some excellent Advisors out there (some are friends of mine and I know they care more about their clients than just how much AUM and Revenue they are making for themselves and their firm).
High Rock would never make this list for several reasons:
How do I think they should measure the Top 50 Advisors? As I told my client friend last night:
Shouldn't those last two things matter most when ranking Advisors? Again, therein lies the problem with the Wealth Management business, in general. Seems the banks and dealers are more interested in increasing overall revenue (driven by Advisors gathering AUM and further boosting revenue from that AUM) than they are with the actual client's financial health.
In fact, while watching the Aussie Open last night, I saw this great Questrade ad on tv. A 30-something woman and her husband are sitting across the desk from some male Advisor and she talks about how all these fees add up over time and how it digs into their net worth. The Advisor shrugs. Spot-on.
There is an alternative.