The true value of a trustworthy financial security advisor



Andrew Gardner: [00:00:05] Well, hello, my name is Andrew Gardner. I'm the senior regional sales director for savings and investment at Beneva for Southwestern Ontario. And I love what I do because I get to work with the best and brightest financial advisors across my region, and we really try to work hard to make sure that we're moving Canadians onto the best financial footing that they can find. And my role is to work directly with financial advisors to try to create happy clients, because we know that happy clients means a happy practice.

Voice-over: [00:00:36] You have questions?

Question: [00:00:38] You know, there are so many tools that I can use on the web. Why would I need a financial advisor?

Question: [00:00:44] How can my financial advisor add value to my savings and investments?

Question: [00:00:49] As a financial advisor, what are the top arguments I could use to showcase my expertise?

Voice-over: [00:00:56] We're here to answer them.


Catherine Duranceau: [00:01:00] Hi! Welcome to the Beneva podcast, Ask the Experts. I'm your host, Catherine Duranceau. Today we're diving into a topic useful for many people: the importance of a financial advisor. We all have access to so much information on the web. So why exactly should people choose a financial advisor? Hi, Andrew. So you know the market perfectly well and are very familiar with the numerous options that you could find on the web. What do those tools all have in common?

Andrew: [00:01:29] Well, it's interesting; there's no shortage of them. There's lots and lots and lots of different tools regular individuals can access. And there's lots of places to get knowledge. Right now, one of the things that's common for pretty much anything – this isn't just natural to our industry, but pretty much everywhere else – is that individual people, non-financial professionals, people in the general public, they're constantly being marketed to. So any time there's like a tool or something that you're able to access, especially if it's free, the old saying is, “If it's free, then you are the product.” That's not necessarily bad. I don't want to make it sound necessarily like a bad thing, but it's very, very difficult to navigate through these things when it's a promotional tool that people are using to get you to use their product. 

The other side of it, the things that are autonomous, they tend to be mass, right? In order to do something that's that systematic, you need to have something that can work at a very scalable level. So when you have things like that, you lose a lot of the customization. And when we're talking about financial products in particular, they're very specialized for each individual. They're going to have certain needs, certain goals, certain things that they want to have happen. And it's very difficult to do that within it, even though they're getting quite sophisticated, to capture those individual needs and wants and goals within an optimized or systematic type thing. It's more of a cookie cutter. It's a catch-all.

Catherine: [00:02:55] And we have different priorities, which is normal.

Andrew: [00:02:57] Yeah, absolutely. Everybody's got different wants, different needs, different fears. The thing that I kind of always come back to is, you don't know what you don't know. So you can go through that whole process and feel that you're in really, really good shape, but you didn't ask the right questions. You didn't know the questions to ask in the first place. So it’s almost impossible to navigate a situation, you know, in that scenario where you don't know what you don't know, you're dealing in a medium that is fairly complicated.

Catherine: [00:03:25] So I guess the relationship between the financial advisor and the client is very important so that you understand their needs.

Andrew: [00:03:32] Yeah. There has to be an open communication between the financial professional and the end client in order for this to work properly. In my opinion, it's better to have someone who has access to some of these same tools. Like, it's not like we don't use tools. We're not living in a cave here. Right? We use tools. So you try to always find the best of both sides. So we can use some of these tools. 

Now, when we're talking about independent financial advice or dealing with an advisor or a financial professional, the whole goal here is that that person, you've developed a deeper relationship with, and they kind of understand exactly where you want to get to, and how much risk or how much you want to spend, all that needs analysis that goes on when you're dealing with a financial professional. They can navigate these things and use those tools to help them and try to find the best solution that works the best for you individually, as opposed to something that works best at a scalable level and a cost-effective measure for the actual suppliers of those tools.

Catherine: [00:04:37] Is that something you have to remind your future clients? Like, do-it-yourself in the financial industry, that might not be the right way. How do you navigate around that?

Andrew: [00:04:48] Yeah, I don't do my own dentistry. So it's probably not a good idea. My view is that everybody has a chosen profession, something they do professionally. Right? It takes a ton of time to be able to go through and figure out all the different pitfalls. And even then, you're probably going to miss a few of them because, again, you don't know what you don't know. Research all the different products, options, how it all works. That takes a lot of time. So my view is, you're way better off to focus on what you do for a living. And if you can get a little better at that, if you could squeeze out a few extra dollars, a raise here or there and use that money to put towards your financial stability, the return on investment from that time spent versus time spent in front of the television watching a pundit is dramatically better.

Catherine: [00:05:40] And also, you could ask the right questions so that you're answering the needs of every person, and it's a personalized service. Because I guess sometimes people don't even know how they're actually covered. They don't have the right information since it's not personalized.

Andrew: [00:05:55] Yeah, that's a very big issue when it comes to the insurance side of things. There's a lot of very quick insurance-type products. In the insurance world, there's something called underwriting. So underwriting is the company like Beneva assesses the risk of this policy. Everything is contractually laid out when you sign to get in the policy. Now, the ones that are done through the more digital side or the more autonomous side, they tend to be underwritten at the time of claim. So you don't necessarily know what you're covered for or what the thing that you thought you were covered for, whether or not that was part of that policy. So you're lost. And that's why having an underwritten policy, when you sign it, everything's contractual legally within that contract. And we are bound by law to follow the terms and conditions of that contract. When you have other things where it's done after the fact, then it becomes much more problematic. And in certain cases, you may not even own the policy; the actual issuer owns the policy. And so you don't get paid; they do. So think of things like credit card insurance or disability insurance attached to credit cards, things like that. 

Catherine: [00:07:09] I'm already lost.

Andrew: [00:07:10] Yeah. Like I said, there's so many things, it's easy to get lost. Like, I think it's something that's pretty straightforward, but again, you don't know what you don't know.

Catherine: [00:07:19] And we have to gain trust in our financial advisor, too; I guess that is very important for you.

Andrew: [00:07:24] Yeah. It's the key thing because you're not going to get very far if you don't have that trust level, because you'll always be susceptible to outside influences.

Catherine: [00:07:36] The uncle that says, “No, no, you should do like I do. Go on that website.”

Andrew: [00:07:40] Everybody has a neighbour that, during the dot-com bubble or whatever bubble is floating around right now that made 80% in this or whatever the case is. Right? So yeah, there's lots of different risks that are out there. There's dozens. 

Typically, in my universe, anyway, I work with financial advisors. They have a choice or they're working with Beneva directly in certain cases. But we then take and mitigate risk by handing the keys to professionals who do these different things, who build portfolios, and they're all structured a little differently, so we can mitigate risk as much as possible. Unfortunately, you will have to take some risk in order to generate a return. The risk-free rate of return in Canada has gotten better for sure over the past two years. That's the rising of interest rates. While that doesn't work out well for lots of people – if you own debt or mortgages, that's certainly not good – but if you're a saver and you want a risk-free rate of return, those things have gotten a bit better, right? For sure. Now, inflation's also gone up. So that kind of mitigates that, too. So first step is to make sure that your personal risk, you're not taking on anything more than you're willing to accept. You know, and everybody's brains are different. They're emotional. I tell a story all the time about my father-in-law, he's a GIC person. He doesn't want any risk. If he ever had a statement that came back that was less than the statement he had the previous quarter.

Catherine: [00:09:18] Which could happen.

Andrew: [00:09:19] Well, if you're invested in the markets, yeah, they go up and they go down. They go both ways. He'd literally jump out of a window. Like, he would lose his mind. So the stock market isn't for him. Anything that invests in taking on market risk isn't for him. But he may not know that. Right? So these are the kind of questions that a good financial advisor can ask. And we have to figure out what their risk is, because ultimately, if we don't do that, then they'll be on the ledge. And if they're on the ledge, they're quick to hit the sell button. And if you're selling at the wrong time, then it can cause problems.

Catherine: [00:09:52] You're losing money.

Andrew: [00:09:54] That's right.

Catherine: [00:09:54] And what are the most critical questions you ask when you meet a client that could really help you quickly know where they want to go?

Andrew: [00:10:02] Yeah. So it would be bifurcated into two sides. So on the insurance side, every professional – in fact, it's a regulatory requirement. There's something called a needs analysis where they actually go through many different questions and they talk about your dependents, what kind of protection do you have maybe through a group life insurance plan, or history, medical history of your family and things like that, what your debts and obligations are, and all of those sorts of things. If you wanted to make sure, for example, that if something bad were to happen to me, would I have enough money to cover my mortgage? So in my case, my wife wouldn't be left holding the bag on a debt. Like, at least that way it would be cleared. Right? So there's a whole system that's in place. And we do like systems. So again, autonomous tools use systems. We do, too. It's just it's more of a hands-on approach. So that's the insurance side. 

On the investment side, the biggest question is, when do you need this money?

Catherine: [00:11:04] Two days or two years.

Andrew: [00:11:05] Yeah. And I'll tell you personally – and not everybody may share this – but I wouldn't put anything at market risk if I didn't have at least three years’ worth of timeline.

Catherine: [00:11:12] Really? Three years? Is that your lucky number?

Andrew: [00:11:14] Yeah, well, it's a minimum number. So you kind of have to look at these things very long-term. So if you're dealing with a financial advisor and that's the question, they would say, “Okay, what are the plans? What's the goal?” I'm 52 years old. So let's say I'm going to be working for another ten years. I'm not looking to retire anytime soon. I don't need this money right away. I can take on more risk. But if I was saying, “You know what? I'm taking my ball and I'm going home in six months and I'm going to start redeeming,” liquidity is the big, big, big factor. Because like I said, I don't know what markets are going to do, but I know probabilities. And the longer time we have, the chances of success are greatly appreciated. But I can't take that risk if I don't have that time.

Catherine: [00:12:01] Absolutely. That's interesting. Three years, I'll remember that. I'll remember that. Is there kind of a good match we have to have with the client and the financial advisor? Like, should we kind of meet a couple of them to take the right decision, because we have a financial advisor that understood my needs better than another one?

Andrew: [00:12:22] Yeah, for sure. I do recommend that. This is very, very important stuff. So this is the long-term future when it comes to savings and investments and insurance. So this is where I want people to spend the time. So if you have to meet one or two people… The way it works is a lot of these are referrals. So if you have friends or family that are happy with their current person, that's probably where I would start, at least to get the ball rolling. And that's how the advisor community kind of works too. It's important because they're in the business. They need those referrals to grow, right? That's where most of the growth of their practices comes from referrals. So we like to make sure that clients are happy, because I have a line that I say all the time: “Happy clients means a happy practice.” And that's what every financial professional wants. They want a happy practice with happy clients.

Catherine: [00:13:19] Absolutely. And tell us what type of consequences can people actually experience if they don't have a financial advisor?

Andrew: [00:13:26] Well, in terms of the insurance side, we talked a little bit about that, where if you're not covered for what you thought you were covered and that certain thing did happen to happen, that is obviously catastrophic. Right? On the investment side, it does come back to what I was alluding to earlier about, if you don't have a financial advisor, you need to be very sanguine to do this correctly because you, me, everybody, we're all susceptible to the same emotional pressures. These are age-old pressures; they're fear and greed. That's what moves markets. That's what makes them go up or down.

Catherine: [00:14:04] So they want people to be emotional.

Andrew: [00:14:06] Well it helps, certainly in terms of… there's always two sides. So for every time someone selling something, someone's buying something. This is more to do with trading, but it's funny. Anyway, the old trader saying is that bulls – people who think the stock markets are going to go up – bulls get fed; bears, who think the stock market's going to go down, also get fed, but hogs get slaughtered, right? So it's the greedy ones, the ones that are… again, that's why we have professionals.

Catherine: [00:14:43] I like the animal image of this.

Andrew: [00:14:44] Well, yeah. It's been around a long time. Bulls and bears. I don't know where it comes from originally, but yeah, the idea is, we need to take out as much emotional out of it.

Catherine: [00:14:51] With the financial advisor, you don't have that emotion.

Andrew: [00:14:55] That's right. That is the big consequence. But there are others. More practical things, like estate planning. Am I paying too much in taxes? Does the plan make sense from a whole bunch of other different factors? Right? It's not just all about risk and return and profits on your investments. There are other factors that need to be taken into account. And again, it can be fairly complex. So you can spend the time required to learn all this stuff, or you can hand the keys to a professional and don't do your own dentistry and get you where you want to end up going eventually.

Catherine: [00:15:34] And Andrew, it must be a little bit delicate sometimes to ask your financial advisor, “Hey, how do you make your money out of helping me out?” Tell us, how does that work?

Andrew: [00:15:44] Well, there's there's there's many different models that exist. But the ones generally, especially at Beneva and the ones of the financial advisors that I work with, kind of work mainly in that fees are bundled. So let's start on the insurance side. So when you pay a premium, premiums are what you pay to be insured. That's the cost that you're paying for the insurance. They include the commissions that would be paid to a financial advisor. And so it's all bundled in that price. So off the top of my head, this insurance is going to cost you $40 a month. Well, the advice part of it was covered. 

Now, in the investment world, there are fees. We have professional money managers. We have Beneva. I work here. There's lots of different things that are happening. The fees are part of what's known as the management fees. The costs of the advice are embedded into the management fees, and those management fees are bundled into the investment. So without getting too complicated in it, what clients really need to know is that anytime we post any rates of return on investments, they are net of fees. So whatever we're showing as the performance, that would be after the advice person has been taken care of in terms of their commissions or their costs.

Catherine: [00:17:10] Is it more interesting if you have an investment of two, three, ten years?

Andrew: [00:17:15] Well, as I mentioned, the longer you work with somebody, the longer you're invested, more often than not, the better your results are going to be. And that kind of loops back to the referral process, right? So the better you do as an end client, the way those fees work, it's a percentage of the market value. So as market values get higher, the amount that you're remunerated as a broker for the consulting and advice is also higher. The better you do as a client, the better they do. So we like to think of it as…

Catherine: [00:17:51] You make more money, everyone makes more money.

Andrew: [00:17:53] Yeah, we want the client to win. We want the broker to win. And if Beneva is the right product or solution for that particular situation, then obviously we win too, right? And if people do well, then we also do well.


Catherine: [00:18:19] Do you have a story that reminds us that maybe we really do need a financial adviser?

Andrew: [00:18:24] Well, the one that always comes back, and I guess I've mentioned it a bunch of times now, is time in the market versus the timing, the market. And the idea is that if you had made that investment into the TSX, the dates work, that if you put it in December 31st, 2002, and you bought the TSX index and you just held the index. This is the one that you hear on the radio when they tell you the number. That's a total return index. So that's a very, very common one. And you put your $10,000 in 20 years earlier. So that would be December 31st, 2002. $10,000 goes in. At the end of 20 years, it's a fairly long time, but that's hopefully what the time horizons we’re dealing with, your $10,000 grew to 50,000 and change. If you stripped out the ten best trading days of those 20 years, so just 10 days out of 20 years – not a lot, right? 

You can miss ten trading days. No one's going to ring a bell and tell you today's going to be the best trading day. So if you miss them and you're trying to time the market, you got scared and you pulled your money out, well, if you miss those 10 best trading days, your $10,000 grew. It still did pretty good. It went up to just under just over 27,000, which works out to about 5%. The 10,000 that grew to 50,000 works out to about 8.5. Now, if you miss another ten trading days, so now you've missed 20, your $27,000 drops to just under 18. And if you miss the 30 best trading days out of 20 years – it's not a long time – you're down again to just over 13,000. And if you miss the best 40 trading days, you actually lose money.

Catherine: [00:20:10] Oh, that's interesting.

Andrew: [00:20:12] Yeah. And it's not something widely advertised. But most Canadians do not make money in the stock market. And the main reason why is that they are constantly going in at the wrong time and out at the wrong time because they got scared and they got greedy and they bought when because everything was going up. I got to get in, I got to get in. To me, that was always very jarring. You'd think if you were there for most of the time, you know, 90% of the time, you should be fine. But it turns out not so much.

Catherine: [00:20:47] Leave it to the professionals.

Andrew: [00:20:49] That's right.

Catherine: [00:20:51] Thank you so much, Andrew. Thank you so much. Now I will call a financial advisor right now.

Andrew: [00:20:56] You should, you really should, and everybody else out there. And once you get started, it'll be okay. And if I've got a second, I'll tell people, this is an old thing, but 10% of your gross income should go into long-term savings buckets.

Catherine: [00:21:10] 10% seems a lot.

Andrew: [00:21:12] No, you will be more than happy. If you do that, and you come back 20 years later, there'll be a very large pile of money there at the end.

Catherine: [00:21:21] So every pay, you put 10%.

Andrew: [00:21:22] That's the key. You got to do it so that it happens automatically and it just kind of happens in the background. You check in on it every once every few months or six months or what have you, and you'd be surprised; it just kind of moves up.

Catherine: [00:21:35] I'll call you in 20 years, Andrew. I love that tip.

Andrew: [00:21:38] Absolutely, absolutely.

Catherine: [00:21:40] Thank you so much.


Catherine: [00:21:51] So, Andrew, can you wrap up our discussion and give us the main reasons why we all need probably a financial advisor?

Andrew: [00:21:58] Yeah, I think everybody should, unless you're doing this professionally, it's a really good idea to reach out to people, find the right one for you, and make sure that you're not exposed to things that you may not even know that you're exposed to. And develop a relationship with that person so that you're going to get to where you want to go. And you can't get to where you want to go if you don't even know how to drive the car to get there. So that's really what a professional financial is there. They're there to kind of hold your hand and walk you along this life process, this journey to get you to the end result that you're looking for. And that could be anything. It's different for everybody.


Catherine: [00:22:42] Thank you so much, Andrew, for sharing your experience with us and giving us so much great advice about how it's more than important to have a financial advisor. Thank you to all our listeners. We really hope these insights will help you to showcase your value. If you have any questions, don't hesitate and contact us at [email protected]. If you would like to have more information about this topic and discover other episodes, go on Beneva’s website in the podcast section. Stay tuned for another conversation that will guide you for future insurance and business needs. Until next time.


Today, Andrew Gardiner, Regional Sales Director, Investments, at Beneva, sits down with our host, Catherine Duranceau, to talk about the importance of being a trustworthy advisor when it comes to investments and insurance needs.

Animation : Catherine Duranceau

Guest: Andrew Gardiner

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