The fifth installment in the Advisor Spotlight Series
Published by Tanner Geary
September 3, 2020
Up until this point, all of our features in the advisor spotlight series have highlighted financial advisors. Yet, the wealth management industry has been rapidly innovating away from the standard AUM model. Our original vision for the advisor series was to showcase the unique approaches different wealth management firms were taking. Of course, you can still receive fantastic service from a traditional practice and we some saw reasons why in our previous posts with both Wes Ashton of Harbourfront Wealth as well as Evan Turner of Nicola Wealth. To date, our very first feature with Adam Bornn was most likely the farthest we had strayed from the traditional model. This week we go one step further and show why you don't even have to be a planner to affect the wealth management industry.
For our fifth spotlight, I am excited to be releasing an interview with Darryl Brown, CFA, of Spring Planning. Spring Planning is a female-led, advice-only planning firm. With a remote team and a flexible, upfront fee-structure, Spring draws clients from Vancouver Island to Halifax. The traditional advising model provides a fantastic service for high net worth individuals, yet often fails to adequately address the needs of the every-day Canadian. We became quickly drawn to Spring and their mission. At RiskMetrics we create sophisticated risk assessment tools for financial advisors with the mission that that it is ultimately the clients themselves who benefit, and that they can be confident in the service they are receiving. Spring provides personalized planning and portfolio reviews tailored to the complexity specific to the client.
Darryl is the Director of Portfolio Strategies at Spring Planning and has years of experience in capital markets as a credit analyst, and later as a Director on the Sun Life Financial Investment Management Team. I started off the conversation with Darryl by asking him to share how he found himself at Spring and away from the capital markets.
Tanner: What made you want to transition from a successful career in capital markets and away from Sun Life?
Darryl: I really enjoyed my time working on the investment team at Sun Life Financial, focusing on the energy sector, and I found myself very comfortable continuing my career in the capital markets. I had experience working for DBRS doing credit ratings and I really enjoyed the analytical side of things. However, I began to realize that what I really wanted to do was work more with clients. I found myself in my 30's and had friends coming to me asking how they should invest their money, or just coming to me for some reliable information. I felt like at that point in my life as a pre-mortgage, pre-child person, that it was a good time to make the jump. I originally established a practice based on researching different investments, dissecting strategies over the long-term, and providing some direction for clients. It's a practice I still run today.
Tanner: How did you go from performing investment research to joining Spring?
Darryl: I found myself connected to Spring's founders Sandi and Julia and I realized that I was in a similar position to them. Spring was already successfully providing comprehensive financial plans for their clients and they were looking for a way to provide more value for their clients in their investments.
Tanner: How would you describe your role with Spring and what exactly do you do as the Director of Portfolio Strategies?
Darryl: People come to us at Spring wanting a financial plan and a deeper planning process. A large part of the plans are focused on forecasting and budgeting, but there is also a component of it that relates to investments. I use my expertise to increase the skill level in investment conversations and portfolio reviews. I do not provide any portfolio recommendations, but I will conduct an analysis of the investments a client already has, whether it matches their risk tolerance and where they are in life. I provide some literacy and education to the client around the investments that they already have. These responsibilities can really be broken down into three categories:
- Conducting portfolio reviews
We will often have clients come to us with an existing portfolio or plan from another wealth management firm. I will review the plan they have received, provide a second opinion and evaluate any individual holdings they have.
- Providing an Investment Policy Statement
I will go through what can be described as a matchmaking process with our planning clients. At the end I will provide an investment policy statement that outlines what their investments ought to be. Clients are then able to take the detailed investment policy statement we have created for them, in most cases it is the first time they have received such a document, and then they can choose how they would like to move forward. Some clients choose to take care of their investments themselves, others may use an investment manager or roboadvisor. Ultimately, it helps clients re-frame the importance of their investments and how it fits into their overall financial plan. A lot of people are used to thinking about their investments as needing to beat the market. The IPS helps them to remember what their investment goals are.
- Assist in finding an Investment Manager
In many cases, we will have clients coming to us looking for an investment manager. Regardless of whether or not we have provided them with a financial plan, we will help them find an investment manager.
Tanner: You appear to offer a very customized and fee-based service, how does Spring charge its clients for plans?
Darryl: The core of our business is financial planning. Our base financial plan comes in a package that can be broken into two separate categories; simple clients without a corporation, and complex clients who have either multiple streams of income or one or more corporations. From this base package, we then have several à la carte add-ons such as the investment services I provide. We will also provide clients with estate plan diagrams or complex cash flow reviews if needed. It is crucial for us to conduct a rigorous client discovery process so that the final plan meets the scope of their needs.
Tanner: As someone who is a part of the fee-only world, or advice only, how do you feel it compares to the traditional AUM model?
Darryl: One of my favorite parts about the advice only model is that it eliminates conflict as it relates to people and their ability to interact with them and their investable assets. Some people who have no assets are perfectly willing to pay for a financial plan. In many cases, the AUM model will only help people who have $250k or more in assets.
However, the biggest drawback to our model is getting people to see the value in what we do over the traditional AUM style. The industry has been wired to pay for investment management and most of the time the financial plan is something which is just given away. Many people fail to understand what a real financial plan even is and have been existing under the assumption that the one-page investment memorandum they received is a ‘financial plan'. We find that our clients are often very well informed and have usually outgrown the AUM model.
The AUM model is not a bad model by any means, but it just probably isn't the best. A challenge I see with our advice-only approach is that not exactly everyone has a few thousand dollars to spend on a financial plan and I feel that it can be split up even more to attract an even larger audience.
At first glance, it may be a bit confusing as to what exactly Darryl does as Director of Portfolio Strategies, however his succinct interview responses do a great job of highlighting the unique value he brings to the table. We will be following up next week with a conversation with Spring's founders Sandi and Julia. If you have any questions for Darryl, or are interested in Spring Planning, please follow the contact button below.
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