On the West Coast, we’re captivated by our provincial health officer. Dr. Bonnie Henry showed up on our radar during an early press briefing for COVID-19 when she let her emotions show through. Since then, she’s become a rock star (look out Michael Jordan, she’s even had a shoe designed in her honour) for reasons that go far beyond her compassion.
We’ve come to know Dr. Henry as one of the world’s leading virus hunters. Along with her team, she’s developed a unique strategy for flattening the curve and is pursuing it methodically. She isn’t swayed by what other provinces or countries are doing to fight their pandemics, and most importantly, she’s always calm.
As I watch Dr. Henry’s daily briefings, I can’t help but think that her intelligence, fortitude, empathy and calmness are perfect attributes for a financial advisor. While finding all those traits in the same person is rare, they should be on everyone’s wish list when looking for someone to help them with their finances.
Knowledge where it counts
You can’t expect your advisor to know everything, but there are some areas where she has to be an expert. The first is the plumbing of the investment industry. You’re counting on her to navigate you through the different account types, various fees and charges, performance figures and the mechanics of trading. She needs to know this stuff cold.
Your advisor also needs to be a good interviewer. If she’s going to help build a portfolio that fits your situation, she needs to ask probing questions and be a good listener. In this vein, she must have a good working knowledge of asset allocation and portfolio construction. It’s the most important risk management tool you have and an area most investors need help with.
It’s also nice to have an advisor who is good at picking stocks, but it’s not necessary. Today, there are many ways to execute on a plan using mutual funds, ETFs and other managed products. Likewise, a deep understanding of economics and politics is not a requirement. A dazzling discourse on the macro picture, while impressive, will have limited impact on your returns.
You want your advisor to be attentive and do what you want, but only to a point. For sure that’s the case for service and trading matters, but when it comes to investment strategy, a compliant, agreeable advisor, or what I refer to as a wet noodle, is not what you’re looking for. You want someone who has a defined approach and pushes back when you try to steer off course.
This firmness should come with humility. If you’re interviewing an advisor who tells you she got the tech boom and bust right, avoided the 2008 crisis, rode the ten-year bull market and anticipated the coronavirus meltdown, you need to look elsewhere. A person who can’t face her mistakes and limitations is clearly not grounded in the realities of investing.
Other deal-breakers to watch for include recommending a product before fully understanding your situation, touting year-to-date performance, hesitating or squirming when asked about fees and betraying the confidentiality of other clients by name dropping.
The time you need an advisor the most is when you’re feeling either euphoric or despondent. The biggest investment mistakes occur when emotions are running high, usually near market tops (FOMO) and bottoms (fear). You need a counterbalance to prevent you from getting caught up in the moment. A rock to lean on when you’re shaking. Someone who sucks the emotion out of the situation and helps you make forward-looking decisions.
Dr. Henry finishes every briefing with the phrase, “Be kind, be calm, and be safe.” I’m trying to clone her because we all want a trusted advisor who cares more about her clients than the branch manager’s sales target. A confidant who protects us from a corporate agenda that rewards her for focusing exclusively on large clients, favouring the company’s own products and constantly selling. In other words, someone like Dr. Bonnie Henry, who champions your interests.
Tom Bradley is chair and chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at [email protected].