building your high net worth business a matter of life and death
Download
Skip this Video
Download Presentation
Building your High Net Worth Business: A Matter of Life and Death

Loading in 2 Seconds...

play fullscreen
1 / 37

Building your High Net Worth Business: A Matter of Life and Death - PowerPoint PPT Presentation


  • 112 Views
  • Uploaded on

Building your High Net Worth Business: A Matter of Life and Death. Tom Junkin Senior Vice President Personal Trust Services Fiduciary Trust Company of Canada. About Fiduciary Trust Company of Canada. 2004.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Building your High Net Worth Business: A Matter of Life and Death' - brody


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
building your high net worth business a matter of life and death

Building your High Net Worth Business:A Matter of Life and Death

Tom Junkin

Senior Vice President Personal Trust Services

Fiduciary Trust Company of Canada

about fiduciary trust company of canada
About Fiduciary Trust Company of Canada

2004

Bissett Private Client becomes Fiduciary Trust Company of Canada, a federally regulated trust company

2000

Bissett acquired by Franklin Templeton Investments

2006

2001

1982

Fiduciary Trust Company of Canada has $8.5 billion AUM

Franklin Templeton acquires Fiduciary Trust Company International (founded 1931)

Bissett & Associates founded

agenda
Agenda
  • Understanding Canada’s High Net Worth market
  • Lessons learned from High Net Worth clients and advisors
  • How can you build your High Net Worth practice?
  • Questions and answers
7 5 of the population controls 93 9 of investable assets in canada
7.5% of the Population controls 93.9% of investable assets in Canada

The top 1.5% control 65% of investable assets.

Source: Capgemini, The Canadian Wealth Management Market 2004/2005

50 of hnw canadians are over age 60 they control 50 of total investable assets
50% of HNW Canadians are over age 60. They control 50% of total investable assets.

People over age 70 represent almost 1/3 of the HNW market.

Source: Capgemini, The Canadian Wealth Management Market 2004/2005

higher wealth segments will grow at the highest rate
Higher wealth segments will grow at the highest rate.

It’s true: the rich DO get richer, faster.

Source: Capgemini, The Canadian Wealth Management Market 2004/2005

understanding canada s high net worth market
Understanding Canada’s High Net Worth Market
  • Between 1990 and 2004, household financial assets more than doubled.
    • 46% of Canadian wealth is in non-financial assets.
  • Between 1991 and 2001, Canadians over age 80 increased by 41% to 932,000.
    • 2001 to 2011: 80 year old Canadians will increase again by 43% to 1.3 million
  • 12.7% of high end assets under management are held in estates and trusts.
    • $18.6 billion is currently held in wealth transfer structures.

Source: Statistics Canada; Investor Economics Fee-Based Report Summer 2003

understanding canada s high net worth market8
Understanding Canada’s High Net Worth Market
  • From 2001 to 2004, the Cost of Living Extremely Well rose 27% versus 10% for the CPI.
    • The wealthy are feeling the crunch of rising costs.
  • From 1967 to 1989, marriages between previously-married people quadrupled.
  • In 1973, 5.4% of divorces were not a first divorce. In 2003, 16.2% of divorces are second or higher.
    • Family relationships have never been as complicated as they are today.

Source: Capgemini, The Canadian Wealth Management Market 2004/2005; Statistics Canada

democratization of wealth management

Institutions

Ultra HNW

HNW

Mass Affluent

Democratization of Wealth Management
  • Investor Expectations
  • more planning
  • access to experts
  • customized solutions
  • product choice
  • global choice
  • my own CFO
  • Supplier Product Push
  • value added services
  • sophisticated products
  • leverage technology
  • leverage distribution

Investors behave like the wealth segment above them.

HNW behaviours predict future Mass Affluent behaviours.

commoditization of investment management
Commoditization of Investment Management
  • Solutions that have already migrated from Institutions to the Mass Affluent:
    • efficient frontier analysis
    • index funds
    • product categorization (growth vs. value, small cap vs. large cap)
    • manager of managers
    • style diversification
    • hedge funds / alternative investments

Mass Affluent clients are already looking for “institutional”

services: Strategic Planning, Chief Financial Officers

lessons from the ultra high net worth segment
Lessons from the Ultra High Net Worth segment
  • 62% have fired an Investment Manager in the last 18 months
  • Client: “I wish more advisors would...”
      • #1 response: Listen (25%)
      • #2 response: Be more honest and open (19%)
  • Advisor: “I wish more clients would...”
      • #1 response: Educate themselves with our help (20%)
      • #2 response: Be more honest and open (18%)
      • #3 response: Communicate needs better (13%)

Lesson: HNW relationships are hard work. Superficial

relationships don’t last.

Source: Institute for Private Investors, IPI Report 2002

lessons from the ultra high net worth segment13
Lessons from the Ultra High Net Worth segment
  • What, if any, transition is your family engaged in today?

Lesson: Families spend almost as much time worrying about

succession planning as they do about firing Advisors.

Source: Institute for Private Investors, IPI Report 2003

lessons from the ultra high net worth segment14
Lessons from the Ultra High Net Worth segment
  • What Wealth Management services do you value the most?

Lesson: Investment management services are important, but they

are only part of the complete wealth management suite.

Source: Institute for Private Investors, IPI Report 2004

lessons from the mass millionaires
Lessons from the Mass Millionaires

Percentage of Mass Millionaires who:

  • Rely on an Investment Advisor 73%
  • Use two or more Investment Advisors 25%
  • Say a formal financial plan is important to them 75%
  • Do NOT have a formal financial plan 75%

??

Lesson: Investors are looking for increased effort from Advisors

in establishing and periodically reviewing their Wealth Plans.

Lesson: Unmet needs are going to be met by someone.

Source: Taddingstone 2003 Mass Millionaires Report

lessons from the courts
Lessons from the Courts
  • People in many circumstances die without a Will.

Lesson: People procrastinate about making a Will.

Source: Alberta Law Reform Institute, Report for Discussion No. 16 (1996)

lessons from professionals
Lessons from Professionals
  • Professionals, who should know better, often fail to plan ahead.

Lesson: Intestacy is a great equalizer.

Source: Environics Research Wealth Poll II (1995)

lessons from advisors to the wealthy
Lessons from Advisors to the Wealthy
  • How have HNW expectations changed in the last 12 months?

Lesson: Canadian HNW investors are challenging their

Advisors to deliver more than investment advice.

Source: Capgemini, The Canadian Wealth Management Market 2004/2005

lessons from the advisors to the wealthy
Lessons from the Advisors to the Wealthy
  • What reasons are cited most often for terminating your services?

Lesson: Advisors should monitor family situations as

closely as they do investment performance.

Source: Institute for Private Investors, IPI Report 2003

emerging hnw client behaviours
Emerging HNW Client Behaviours
  • Behave more like a corporation:
    • Long range strategic financial planning
    • Planning earlier for succession and wealth transfer
    • Review and update financial plans more frequently
    • Hire a Chief Financial Officer to handle the burden
challenges advisors face in the hnw market
Challenges Advisors face in the HNW market
  • Deliver more service to HNW clients without significantly increasing costs
  • Best practices:
    • Standardize your workflow
    • Take a holistic view of client relationships
    • Rigorously segment your client base
    • Practice continuous professional development
    • Perform your core competency and outsource the rest
challenges advisors face in the hnw market23
Challenges Advisors face in the HNW market
  • Meeting Multi-Generation Families expectations for longevity
  • Best practices:
    • Reach out to all generations of client families
    • Create robust succession plans for your practice
    • Create multi-generation service teams
    • Offer solutions tailored to each generation’s needs
an incomplete wealth plan risks from your clients perspective
Loss of life

Loss of legal capacity

Lost opportunities to reduce taxes

Possibility their wishes are not carried out

Potential family conflict

Potential long and costly estate administration

An Incomplete Wealth Plan – Risks From Your Clients’ Perspective
are you ready to add wealth transfer services to your practice
Are you ready to add Wealth Transfer services to your practice?
  • To expand your practice to include Wealth Transfer Services, you can:
    • Build your own core competency
    • Build a broad network of experts and service suppliers
    • Outsource to a strategic partner
option 1 buildyour own core competency
Option 1: Buildyour own core competency
  • Learn to provide estate planning, executor, and trustee services directly
  • Advantages:
    • Independence
  • Disadvantages:
    • Training is expensive and time-consuming
    • Margins on estate and trust services are lower than investment services
    • Lack of permanence
    • Significant personal liability
option 2 build a broad network
Option 2: Build a broad network
  • Network aggressively with estate lawyers, accountants, and trust officers
  • Advantages:
    • Increased referral opportunities
    • Many experts available to suit individual needs
  • Disadvantages:
    • Time and effort to build reciprocal relationships
    • No economies of scale or negotiating power
    • Some experts could compete with your value proposition
option 3 outsource to a strategic partner
Option 3: Outsource to a Strategic Partner
  • Partner with a firm that integrates investment management with estate planning, executor, and trustee services
  • Advantages:
    • Immediate access to trust and legal expertise
    • Seamless integration with your existing business
    • Economies of scale
    • Continuity and resources
  • Disadvantages:
    • Few suppliers of integrated wealth transfer services exist
    • Must meet program requirements
professional executors and trustees in canada
Professional Executors and Trustees in Canada

Source: OSFI website “Who we Regulate”

qualifying clients for this program
Qualifying Clients for this Program
  • Minimum Investment of $500,000 in any product or solution within the Franklin Templeton Investments platform

AND

  • Client agrees to appoint Fiduciary Trust as:
    • Executor, or
    • Trustee, or
    • Agent for Executor or Trustee
what to look for in a wealth transfer partner
Global, multi-manager, multi-style investment management

PLUS

Professional executor and trustee services

PLUS

Specialized, independent legal advice by Canada’s leading experts

Added Value:

Expert consultation on will and estate planning

Transparent and competitive fees

Legal costs reimbursed to the client

Backed by Franklin Templeton reputation and resources

What to look for in a Wealth Transfer partner
benefits of incorporating wealth transfer services into your business
Benefits of Incorporating Wealth Transfer services into your business?

1) For you

  • Close out competitors
  • Increase client loyalty and retention
  • Increase AUM (use to consolidate and attract new assets)
  • Retain assets through generational transfers
  • Build HNW book of business
  • A solution to help you meet HNW clients leading expectation

2) For your clients

  • Majority of HNW clients have an incomplete wealth plan
  • 93% of Advisors report Estate Planning as leading client expectation in last 12 months
slide37

Franklin Templeton Investments Private Client Group part of Fiduciary Trust Company of Canada, a wholly-owned subsidiary of Franklin Templeton Investments Corp.

ad