Offering Clients Alternative Investment Opportunities as a Financial Planner

The vast majority of consumers, other than those in the high net worth segment, will only ever know about investing in the public market. However, alternative investments can diversify a portfolio and help it withstand typical volatilities. Today’s guest explains how and why she decided to make private investments available to all of her clients.

Janea graduated from the University of Saskatchewan with a degree in Marketing, then decided to start her own financial advisory firm in 2008. She started as a personal financial advisor offering independent insurance and investment product, but after obtaining her CFP in 2012, she decided to drop her mutual funds license and become a private wealth advisor with Raintree Financial Solutions.

Janea is listed as a top advisor within her investment dealer and her managing general agency, she has been nominated for the Women in Wealth Management Young Gun of the Year Award, and received the Saskatchewan Award of Merit for Business Leadership in 2016.

What You’ll Learn in This Episode:

  • Why Janea decided to drop her mutual funds license (3:40)
  • The reason Janea always focuses on cash-flow first (12:10)
  • The tools Janea uses to serve her clients (18:40)
  • How the former marketing student markets her business today (21:05)
  • Janea’s unique approach to compensation (23:50)
  • The most difficult aspect of offering alternative investments (25:10)
  • Why Janea recommends new advisors grow their book of business organically (32:00)
  • The place Janea sees for alternative investments within the evolution of the financial services industry (33:45)

Links and Resources:

Janae Dieno

Brightrock Financial

Finding the Money to Fund Financial Planning Webinar Registration

Quotes by Janea:

“All my friends are, you know, buying gas and cigarettes and trying to get booze and I’m opening an RRSP. Ok, sounds good.”

“You really have to go through… educating them on the fact that investments don’t just end with stocks, mutual funds, bonds, and GICs. There’s a whole other world out there of investments.”

“If you’re willing to kind of pull up your socks and do a little bit of hard work in the beginning, growing your book organically I think has so much more meaning because then you really get to work with the clients you want to work with.”

Janea Dieno always had an interest in finance — first from listening to her father and uncle talk about it at the kitchen table, and then at the age of 16 when her uncle helped her open her first RRSP account. She’s now owned her own practice for 11 years, and considering that she’s “never done anything easy in [her] life,” she has a lot of lessons to share from her experience.

Below, we’re sharing three key ideas from this episode:

  • Why Janea decided to drop her mutual funds license
  • Janea’s unique approach to compensation
  • The most difficult aspect of offering alternative investments

For the rest of the episode, find the podcast on iTunes or Stitcher, or hit the link above.

Why Janea decided to drop her mutual funds license

Soon after earning her CFP, when Janea was a few years into running her practice (not to mention expecting her first child with her new husband), she made the unusual decision to drop her mutual funds license.

At the time, she owned a home and a rental property that she and her husband were managing themselves.

Janea recognized the importance of having investments outside of the public market, but being on call 24 hours a day for her tenants was getting exhausting. She was looking for a better way to diversify her portfolio and invest in real estate and different asset classes without actually having to own a property.

She realized that mutual funds couldn’t offer everything she wanted in her own portfolio. That’s what led her to explore alternative investments in the first place. And once she saw how useful they were to her, she wanted people like her clients — most of whom are in the $100,000 to $3 million range — to have access to these investment opportunities, too.

How she makes it work

Janea found Raintree Financial Solutions — a private capital market dealer — to be her back end office, dropped her mutual fund license, and became a Private Wealth Advisor associated with Raintree.

She’s found that she trusts the diligence Raintree puts into selecting quality private investments. And importantly, they have referral arrangements with portfolio managers, so she can still offer great managed portfolios to her clients.

“It was kind of the best of both worlds,” she says.

Janea’s unique approach to compensation

The debate over fees and compensation can be a heated one, with one common argument for fee-for-service arrangements being that clients don’t like it when their advisor works on commission. There’s this idea that you’ll always work in the best interest of whoever is paying you. If the client’s not paying you, it’s hard to ensure you’re always in it for them.

That’s why Janea decided to offer her clients a choice: they could either pay her an hourly rate for financial planning, or she could earn a commission from any insurance or investment products she helped them implement as part of the plan.

So far, not a single client has ever chosen to pay the hourly rate.

The reason is that they trust the plan she has created — which she completes before officially engaging the client. They see value in what she has done for them and how her suggestions will benefit them, so they don’t have any issues with her earning her living through commissions.

The key here is that Janea is transparent about the possible methods of compensation and what they mean, and she gives her clients the option of choosing what they’re most comfortable with.

The most difficult aspect of offering alternative investments

One challenging piece of Janea’s business has been educating her clients about alternative assets and “the fact that investments don’t just end with stocks, mutual funds, bonds, and GICs. There’s a whole other world out there of investments.”

She’s certainly careful about informing clients of the risks associated with private investments, but she also wants them to know the potential benefits.

For instance, she shares that she works with private investment companies that have good track records, large employee bases, and good board management.

Managing investor behaviour around alternative investments

Janea’s been working with one couple for the last three years and spent a lot of time telling them about what private investments can bring to their portfolio and how she ensures those investments are diverse.

For a long time, they were very wary of the risks. However, they did eventually implement some private equity.

Then 2018 came along. It, of course, wasn’t a great year for the public market. In the meantime, the couple’s private equity investments went up, and their portfolio as a whole remained stable.

Now, Janea has to reign them in the other way — now that they’ve seen the benefits of alternative investments, she’s advising them to maintain a balanced portfolio and not err in the other direction.

Hint: Even if you don’t offer private investments to your clients, you’ve probably had to help mitigate the effects of both fear and excitement on investor behaviour and portfolio stability. For more advice on managing investor behaviour, listen back to our episode with Steadyhand’s Tom Bradley.

To learn more from Janea, make sure you catch the full episode where she discusses the importance of cash flow management, her tips for marketing yourself in a smaller city, and why she recommends that new advisors build their book of business organically.

In the episode, Janea also mentions a cash-flow specialist course that helped her completely change the way she addresses cash-flow with her clients.  We’ve partnered with CacheFlo, the company that created this course, to run a free webinar: Finding the Money to Fund Financial Planning. To learn about why traditional budgeting doesn’t work, why cash-flow is about so much more than just math, and how to unlock its value for clients, register for the webinar — we’ll see you on the inside!