Posted by Purpose Investments on Jun 23rd, 2020

CIBC’s Mark Slater On The Importance Of Goals-Based Planning

With over 25 years in the industry, Mark Slater, lead advisor of the Mark Slater Financial Group at CIBC, knows a thing or two about how to guide his clients through a financial crisis.

He chats with Purpose Financial founder and CEO, Som Seif, about:

  • The groundwork he laid years ago that helped him navigate through the initial shock of COVID-19
  • Why he returns to his foundational principles when things get tough
  • How goals-based financial planning keeps both his practice and his clients more safe and secure
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Read the transcript:

SOM
Hi everyone, this is Som, founder and CEO of Purpose Financial and Purpose Investments.

I’ve been reflecting a lot lately on everything we’ve dealt with over the last few months. Any time we go through a challenging experience, I always find it valuable, once we’ve got a bit of space and perspective, to look back on how I reacted and the impacts of my own decisions and the decisions of my teammates.

I do this both personally and for my business because it’s something as an individual I think you want to reflect on but also how am I guiding the decisions in my business?

In the investment industry, dealing with ups and downs are our day-to-day. In a normal environment, our jobs are to manage those regular bumps in the road — the good and the bad, not to get too worried and not to get too excited.

But, as we all know, the last little while we have been in an abnormal environment, and not even close to a normal one. We’ve been learning together how to manage our way through a global pandemic, both personally and with our businesses.

From the middle of February to the middle of March the markets swung 37% from peak to trough, and in such a short period of time. For a business, the impact on revenues and cash flow was severe on a run-rate basis. When you think of the swiftness and severity of the decline and the uncertainty of how much further it could have gone, as a leader I and many others were faced with having to make meaningful decisions with imperfect information. And we had to make them really quickly.

That’s easier said than done.

It’s always easy to look back and think of what you could have done differently. But I’m really proud of the way we made decisions, and that we made the right decisions in retrospect — based on the best interests of our clients, our team, and our partners — to try and ensure the safety and structure of our business were true.

And we did it in large part by going back to our core values as a company.

In those moments what helps you make those decisions, both personally and professionally, is always to return to your core values. What are your foundational principles? Always go back to the cause, I say, when you don’t know how to move forward.

When we think about this it’s something that I always want to ask others. I know why we have to make these tough decisions, but lately, I’ve been thinking more and more about how we make them.

If I flip that over to look at the advisor side, it’s a similar business model to the way we operate at Purpose Investments. It can be impacted by the movements of markets and, of course, by your clients’ decisions every single day.

As an advisor, you have a fixed cost structure and broad client base and for both, you have to make the right decisions that will have a huge impact on the security and prosperity of your customers. It’s a massive responsibility.

And in my opinion, nobody knows the importance of that responsibility more than my guest today, my good friend Mark Slater.

Mark has more than 25 years of experience in our industry as an advisor and leads the Slater Financial Group at CIBC. During COVID-19 I think he’s done some really interesting things around how he made decisions to not only run a great business for himself but how he communicated with his customers during such a difficult time.

Mark, thanks so much for chatting with me today.

MARK
Hi, thanks for having me Som.

SOM
Mark, I’d love to learn more about how you dealt with the pressure of the environment in the middle of March and the past three months and how you guided your business and your team through that.

Now that we’re through that initial shock, I want to get into what you’ve learned that helped you to support your clients better and ultimately run a stronger practice.

To start off, walk me through what March felt like for you. What unique pressures did you face for your business, your team and your clients?

MARK
After the initial shock and the speed of the market sell-offs, and I think we went from thinking it was a China problem, maybe a Europe problem, to quickly realizing it was a global problem, we do what we always do with we go through crises, and we’ve been through a number of them over the last 25 years.

You hunker down, calmly think through what the issues are and prioritize what you need to do. This was a year with a unique experience in the sense that I started to worry about my team’s safety. So that became a priority, just like I think for everyone.

All of my team members commute on the GO train and the TTC and everyone was getting very nervous about commuting. So we started to look at working from home, and CIBC was certainly telling us to start thinking about that. I was already set up for access from home and over the next two weeks CIBC was great, it was amazing how in about two weeks we were all seamlessly working remotely.

From a team perspective, that was totally unique where I’d never had to worry about the health and safety of my team. We needed to react and we got it all done on a safe, but quick basis, so that’s the team perspective.

From a business perspective, I’ve always been a very process-oriented person and we’ve tried to build a practice that’s very professional and equally process-oriented. I think even though we’d done that for different reasons a lot of the processes and technology that we’d already implemented really allowed us to pick up where we left off and continue to run the business seamlessly. I think our clients saw business as usual and we were there when they needed to get a hold of us.

I think you and I talked a month ago and I said some of my associates had gone to Jeff Gans’ presentation at the Purpose office in the last week that things were normal, and they came back from that meeting talking about everything Jeff said about maximizing value and being professional in your practice they felt we’d already done. And I said, “Look, I didn’t make this stuff up myself.” Over the years we’ve heard great coaches and always taken away and implemented some of their ideas.

About six years ago we said that we were going to standardize how we host meetings, and have regularly scheduled meetings with our clients and there would be three options on how to have them: 1. In person, 2. Quarterly at our satellite offices, or 3. We’d use a video conferencing solution.

So we were comfortable with technology, and within a few years, about half of our client meetings were already being done digitally. We essentially, with a turn of a key, converted all of our on-going scheduled meetings to digital and it’s been pretty seamless and clients have embraced it.

SOM
Did you feel a rise in anxiety directly from customers, did you notice them calling look for reassurance? What was your perspective there or had you done a lot of things in advance to manage some of that type of risk in the way they were thinking?

MARK
I think in general our clients handled in pretty well and we took it in stride relative to the situation we’re in. There were a few clients, typically newer clients that haven’t been through a crisis yet, who worry more and need a little more hand-holding, and then you have some clients who you know tend to worry more and you’ll always need to reach out to them.

We didn’t prepare for any particular type of crisis, but in February we sent out some commentary about how past pandemics have unfolded and where the markets were 12 months later. In March, when we realized panic was starting to set in, that’s when we as a team kicked into gear and started doing our calls to give the situation a broader context.

We basically made a commitment to get a hold of every one of our clients by the end of March to see how they were. We let them know everything is going to be ok, and we lead as always with financial goals-based planning. We understand that when we have a plan we’re going to hit road bumps along the way, and some will be more significant than others. We already have that built into the plan. We can show them how every 5 years we assume we’ll have a hiccup and we can reflect on how those are temporary blips on the 20- or 30-year plan that we’re on.

We get through them, and we have the conviction of 100 years of combined experience and data to know that this time was not different in the sense that it will eventually end and things will get back. Later on we also sent out a personal letter with a book that summarizes my personal philosophy on investing.

SOM
Yeah, I’d love to spend some time on that. We connected in the beginning of April and you talked about the ability to go back to basics and one of your core principles that you specifically learned as an advisor early on from reading Nick Murray. Then a few weeks later I received your letter in the mail with Nick’s book.

Tell me more about what it meant for you to go back to those foundational principles and how did it help guide you in your practice and your business?

MARK
Nick Murray has been around for a long time, I think advising from 50 years and coaching for 20 or 30. I got into the business in 1995 and about a year later he published The Excellent Investment Advisor  and I read it and thought it made complete sense. It was simple, straightforward and I thought I should re-read it every year.

When it was written, it was during a time when our business was very commission-based, transaction-based, our value proposition was knowledge of the markets and knowledge of investments. It was about velocity of assets and most communication was done by the phone. And in that book, in 1996, he said that the future investment advisor should be running a goals-based financial planning business, it should be a relationship business that’s trust-based and fee-based.

Fast forward to now and you see he had a lot of foresight, and we did implement a lot of what he suggested in the early 2000s. I lost touch with some of the daily stuff he was doing until about six year ago, and I had a colleague who mentioned he got Nick’s monthly newsletter. I signed up and started to read it religiously, as well as another book of his, Around the Year with Nick, where he takes his last 20 years of newsletters and every day he’s got affirmations that you can read and redevelop your conviction.

I read his stuff constantly and so now, especially in times of crisis, for me he kicks in and I sort of just think like Nick. I read his work every month and every day.

SOM
You talked about how to reach out to proactively reach out to clients. What have you implemented in that last couple of weeks and months that you think is something you’ll keep doing on a go-forward basis, maybe forever, that works in both good times and bad times?

MARK
I don’t think we’re really changing our practice. I think what this whole experience has taught us is that everything we’ve been building over the years actually works. Goals-based financial planning lets you go back and look and refresh clients’ minds on the two risks we’re trying to manage.

There are temporary market risks that come along on average every five years where you can get a 30% correction or more in the markets, but those are temporary. As long as you’ve got the patience and know those risks have been priced into the plan you know you’ll be ok.

Then there’s definitely the psychological pain, which is very real, and it’s been scientifically proven that losing money, even if it’s just on paper, is twice as painful as the pleasure you get for making the same amount of money, so you’re not going to just get over that. But it’s a temporary risk that isn’t going to affect their long term plans.

The bigger risk is inflation and taxes, and the only asset class that always delivers a return above inflation and taxes is investing in a diversified basket of companies that pay dividends and whose dividends are historically about twice the inflation rate.

So I don’t know if there’s anything new that I’d do differently. I think we’ll continue to lead by providing goals-based financial planning, we’ll continue to run stress tests regularly for clients to show them how different economic environments could affect the outcome of their plans and that’s they’ll be fine.

I think it would be nice to eventually go back to face-to-face meetings, but I think that regardless we’re set up to run video meetings for as long as we need to until we feel safe to meet again.

SOM
Mark, this has been excellent. Congrats on continuing to run a wonderful practice and I’m sure your clients feel incredibly fortunate to have had you as an advisor during these difficult times. And good luck as we continue to navigate what are sure to be volatile times.

MARK
Thanks a lot, Som.