Episode 7

On today’s episode, we’ll be interviewing John Amonson, R.F.P., and President of Unbiased Financial Services, on his history in the profession, his entrepreneurial spirit, and his client-first, relationship approach to financial planning.

 

Transcript

David Miller

And welcome to the advanced financial planner podcast. With me today I have John Amonson. John, thank you very much for joining us.

John Amonson

Well, thank you, David. Appreciate being on.

David Miller

John, you’ve been president of Unbiased Financial Services for the last 22 years and this is why I’m very excited to have you on. I want to hear your history, your successes, your failures, what you’ve learned over this period of time to continue the success of your business. So again, thank you very much for joining us. Just maybe start by telling me a little bit about your history, please.

John Amonson

Well David, I started back in the trust industry, which really is a great place to get a good foundation in this business. And the early years were with National Trust. And one of the things I learned back then is that the trust industry was a spot, historically, where the very wealthy clients would have their financial needs met in the early days. So the trustee industry very early on was a place that served the needs of those that had sophisticated requirements. And so that was interesting to me, I knew nothing about it. And my role in the trust industry was as a salesperson, so I sold their discretionary investment services, their trusteeship services, their executor ship services, their record keeping services. So that was very interesting. And I had a position with a couple of trust companies there was Canada trust, CIBC and latterly, Royal trust. So that spanned about 13 or 14 years.

David Miller

And John just stop there for a sec. Let’s go back even further. What was your motivation and becoming a financial planner in the first place?

John Amonson

Well, I really didn’t have that initial motivation, David. So I remember I got out of school and I did a business degree and thought I had forgotten most of it. So I went back and did a master’s degree. You know, those early university years. So anyways, I got out of that, and I was wondering what to do and my in laws actually suggested that I go see a fella by the name of Bob Hamilton, who was that National Trust at the time. And they knew Bob, he was a local Calgarian. And I had started a little business called Select Right. It was a business designed to help people make better hiring decisions basically using behavioral description interviewing processes. So I called on Bob to try to present my wares and he called me back about a week later and asked me to come in for a job interview and offered me a job to start in the trust industry. So basically, that’s how I got started, David.

David Miller

So you had an entrepreneurial mindset, because you want to start your own business there. And then you just happen to fall into the right place because of who you knew. Or who your family knew. So you spent 13 years or so with Royal Trust, got the financial background, you had the Business Management or Business Degree and entrepreneurial mindset. What was the key to saying, I’m out of Royal trust, or out of the trust business, I want to set up my own shop.

John Amonson

Yeah, that’s exactly right. And picking up on the entrepreneurial mindset I think is probably key in this instance because that ultimately led me to creating this business model and I think is pretty foundational to my career. Well I might just spend a little bit of time on the experience in the trust industry before going there because it kind of connects. The first thing about being in the trust industry is that the trust industry, by definition, is a fiduciary environment. And for those watching the podcast, if that language isn’t familiar, it’s basically an environment where you put the client’s interests ahead of your own. And by definition, that’s what a Trust Company is and and the trustee is. So it’s a great place to start because not many institutions in the financial services industry start from a fiduciary perspective. it’s difficult to actually to find a firm or an individual that will commit to acting as a fiduciary in writing. So that’s the first thing about a trust industry and the value of that experience. But where that leads you, David, is if you’re acting in the best interest of the client, what became apparent relatively quickly is that you have to do more than just sell the service being offered by the Trust Company. So you and I both know that these services are offered in a context. And really, you have to address the context to do what’s right for the client. And so over the years I began to learn that that may not have been delivered to the level that I hoped it would be delivered. And at the end of my time, in the trust industry, I basically made the decision that I wanted to create a firm that would treat clients the a way that I would like to be treated if I was a client. So that was the core driver. And that meant wrapping our delivery in the context of a fiduciary environment and a financial planning environment.

David Miller

Yeah, and on the podcast previous to this, I talked at a very in depth conversation with Doug McDonald, about about what a fiduciary is. And he had a slightly different definition, not something in writing, it’s something you believe in, is what I took from that. But what you’re saying is so true. I used to work at a big bank. And I could not, even though I thought I was a fiduciary, provide a fiduciary service. So I had to get out of there. And that sounds like the same kind of feeling you had.

John Amonson

Yeah, and maybe I’ll just clarify, David, I hope I didn’t define a fiduciary as something that was provided in writing. What I meant to say is that it’s difficult to find someone that would commit to being a fiduciary.

David Miller

 Correct, yeah.

John Amonson

so people talk about it all the time, but when it comes to actually defining themselves as a fiduciary in a manner where they stick their neck out, it’s hard to find someone that will actually do that. And so I agree completely with Doug that it is a mindset and it’s intuitive in many respects. And you’ll quickly know that if you want to function in that environment and you’re not in that environment that you want to.

David Miller

That’s right, that makes perfect sense to me. And again, the back to the entrepreneurial mindset, was there some help? Somebody to help you get pushed out of the Royal Trust? Or you just quit one day and said, No, I’m going to start this thing from scratch?

John Amonson

Well, that’s pretty big question. I guess there are a couple of points there. One very important part of those early experiences is the mentorship. And I had a couple of mentors in the trust industry and they really took me by the hand. You know, a young guy that had some vim and vigor but really had no knowledge of how the industry functioned. And good mentors were instrumental in that in that role.

David Miller

Do you want to name any names there or give any shout outs?

John Amonson

Mike Fiedler. Mike was my core mentor. I mean, he really taught me a lot. He was the wills and estate and trust officer at Canada trust. I mean he’d forgotten more than almost any anyone in this business knows by the time that I joined him so it was great. And the other part of that, David, is as most people know, that are in in an environment that they don’t really want to be in, it’s tough to just walk. Usually you have to get booted or fired or something. 

David Miller

Something.

John Amonson

Yeah, something, because it’s hard to walk. And I do remember at the time as a salesperson, I had performed reasonably well over the years in that function. And this particular year, my wife Nancy and I had just gotten back off an awards trip down to Cancun from the previous year. I knew the organization was restructuring their sales force so they were starting to document performance and I had had a poor quarter that that quarter and I came back off the reward trip to a letter saying that I hadn’t met my target for the first quarter and improved performance was expected. And I remember going for a steam that noon hour and I thought, you know, I know how to do this. And basically I was just bored and thinking, do I want to do this? 

David Miller

Right.

John Amonson

And it was a resounding no.

David Miller

 Right. 

John Amonson

And, you know, what I want to do is create something that delivers the type of service that I’d like, as a client. And so I gave my notice, and I indicated that I wouldn’t be taking any clients. And I ended up with one client and started. I do recall my first year’s annual revenue was $18,000, which coming off a good salary the previous year and good earnings, it was an interesting few years. I do recall selling my beloved Volkswagen Westphalia to fund my first computer system.

David Miller

Right! The sacrifices you have to make.

John Amonson

 Exactly. 

David Miller

And was Nancy working at the time? Was she supporting the family? 

John Amonson

Nancy is a registered nurse. So she had worked part time up until that point, but she did work full time and then a bit for the first couple of years until we got things rolling.

David Miller

So you start this business with one client, and how many years or how many clients until you felt more comfortable or to further that, when you consider yourself to be successful?

John Amonson

Well, that’s an ever evolving thing, David. There are levels to that. I would say we’ve been modestly successful at best, really, because the model really, that I think we paid some attention to trying to get to work was really a network based model. And a network based model linked to compensation. And we had to build our own systems to do that. And I think it’s probably the compensation most aligned with fiduciary duty, and technically probably near the top of the of the models in terms of compensation, how a planner or an advisor probably wants to get. It’s well aligned with fiduciary duty, but it’s difficult to administer, it’s a margin killer from a business perspective, in this day and age of fee transparency, it’s it’s completely opaque. I mean, if you try to explain to a client how the network fee model works, and in particular their situation, it’s not transparent at all. It takes it takes a fair degree of sophistication to administer and explain how how it works.

David Miller

Yeah, so you’ve gone from the sales aspect of Royal Trust, completely to the opposite end, from a belief of a fiduciary, but actually implementing a business model that acts like a fiduciary?

John Amonson

Yeah, we are a fiduciary. And so coming back to your question, in terms of degree of success, I have not been particularly successful beyond this small business in rolling that model out, but I haven’t given up hope on that. Because technology now, one of the challenges is actually implementing that structure. And technology is getting to the point where it might solve quite a few of those issues. I had a conversation just last week was one of the Robo advisors in town and I could just see his eyes light up in terms of that business model, and how it aligned perfectly with what he had hoped to be able to deliver. So there’s still some interesting paths ahead I hope.

David Miller

yeah, and I should explain my definition of success is you’ve been in the business 20 some years by yourself, building it from the ground up. To me, I think you are successful in doing what you want to do every single day.

John Amonson

Well, thank you for that David. I have not been alone I can share that with you. This has been a team effort all the way. One of the things I learned early on, as I think anyone in business will know is that if they’re not aware of their own weaknesses, they’re in trouble. And I spend a lot of time understanding my own weaknesses, and then trying to build a team around those weaknesses and fill in the holes where support was required. So it’s been a team effort all the way.

David Miller

Yeah, so what do you like to focus on the most in the business? Ie: do you like to focus on your weaknesses? Or do you just go towards your strength and that’s what you do on a day to day basis and then you farm out the rest?

John Amonson

Oh, I definitely prefer to focus on my strength and prefer to let others focus on their strengths.

David Miller

So what is your strength? What what do you focus on?

John Amonson

Well, David, I’m a quick start. If you know the Colby Index at all, I don’t need a lot of information to make decisions. I’m an intuitive decision maker. And I connect a broad array of dots rather quickly in most cases. So I can connect and see paths forward, given a complex network situation. I can prioritize what needs to be done and I can think through parallel processes that need to take place in sequence to to identify what needs to occur over the next year or two.

David Miller

Yeah, so you’re a problem solver. Is that the your favorite part about running your own business, is just looking at different problems and figuring it out? Or is there something more specific?

John Amonson

Well, that in a team environment. I mean, there’s nothing better than having bright people at the table where the egos aren’t at the table.

David Miller

Well, you got your son there working with you. So that helps as well.

John Amonson

Right, Taylor and I have been working together now for over five years. And it’s been fantastic. Taylor is a lot better than I am in a lot of different areas. And we have Yan Lee, our Chief Investment Officer. And together, it’s really fun to come up with solutions to complex problems.

David Miller

And are you still in touch with a lot of your mentorship as you’ve kind of come along?

John Amonson

Yeah. Last night, I saw a few folks that I’ve known for quite a few years. So having said that, it gets a little tougher as people retire as folks who terror to stay in touch.

David Miller

I think you’re the best person to ask this. What is your best advice for new planners coming up? What advice have you given to Taylor for example, and he’s obviously seen you, through the years, building your own business?

John Amonson

Well, I think really the best advices that I would give is find a mentor, find a good mentor. And, find an environment that’s conducive. If you want to be a fiduciary, if you really want to act in the best interest of your client and do good work, find a firm that that has that culture, because there aren’t many of them. And once you find that firm, find somebody in the firm that’s willing to take you under their wing and mentor you along. And then spend time growing your professional development. All of those and develop some professional skills as well, I think probably helps.

David Miller

And that segues perfectly to why the IAFP is set up, why you were a member, you’re an R.F.P. When did you first become a Registered Financial planner?

John Amonson

That’s a good question David. One of my weaknesses is actually dates so I don’t really know when I first became a Registered Financial Planner. I know it’s quite a few years ago. And that’s been a great organization over the years. Basically, it’s where the best planners in Canada congregate. You know, I’m sure there are a few very good planners that aren’t members but by in large, most of the really good financial planners in the country, I would suggest, have some connection to the IAFP. The annual conferences. were amazing just to have a drink and rub shoulders with the folks and get a pulse of what’s happening in the industry.

David Miller

Yeah, and from a mentorship perspective, that’s what the IAFP is obviously built on, is the idea that you need to have a mentor that guides you along to create a plan. I obviously had a mentor in Russel Todd, that helped me along. Are you currently mentoring anybody? Taylor maybe?

John Amonson

No, well, I am mentoring Taylor. And I remember initiating that mentorship program when I was on the board a number of years ago. And I think it’s really been great in terms of formalizing the transition of knowledge and experience and offering our new members someone to connect with, that can help them along. So I’m glad to see it continuing to be an important part of the organization.

David Miller

And that’s great. And obviously, you were part of the board. I see the little award behind you, nobody can see that on the podcast but I know Spencer in our office just got the same one for time served. And that’s just an incredible way to kind of get back to the financial planning industry. What else are you up to in regards to your business? And maybe just tell me a little bit more about your ideal client, who you’re looking for, who you’re looking to help?

John Amonson

Well, David, ideally, I prefer situations that are more complex than simple, because I get a great deal of satisfaction out of simplifying things. And I know what a hardship it can be on families when there’s a bunch of complexity. So I like dealing with complexity and I like helping families simplify that complexity. Often, there’s a disconnect between spouses. For example, when you when you hit my age, perhaps late 50s, early 60s, it’s not unusual where you have one party in the couple that has had extensive business experience and the other not so much. And then you contemplate, what happens if they lose one of them, and one of them dies, really. And then you have a survivor, trying to make sense of a complex array of financial instruments and relationships and all built with this language that often they have very little understanding of.

David Miller

 Yeah, it’s a giant mess. 

John Amonson

It’s a giant mess. And the hardship on the family, especially in these second relationship scenarios where you have may have children from a first marriage and you have a second relationship. It’s extremely complex. And if good planning isn’t in place in those scenarios, it can be very hurtful in many ways. So I love that sort of environment where a bunch of complexity stuff all over the place and objectives to simplify, and a two or three year process where it takes a while to pull it all together. And at the end of the day, everybody’s looked after within and everybody understands what’s going on. So that’s what I like.

David Miller

And so the focus on your business then, you’re not just doing the super complicated, you’re also taking on simpler clients. It’s not what you enjoy. But maybe tell me more about this net worth model and why that’s a little bit different. And is it a family office that you’ve set up? Or?

John Amonson

Well, historically, a family office is, there are many that would argue that it’s a sort of an ill defined term and marketing term and really doesn’t mean anything. And at the end of the day, I would agree with most of that, and I would suggest that the one core idea is that if you’re not a fiduciary, you probably shouldn’t be calling yourself a family office.

David Miller

 Right. 

John Amonson

Yeah, and that’s that’s really how it all started. The wealthy families would hire their own staff to look after their financial affairs. You just have to think about a master servant relationship. And in a an employer employee relationship, if you found out that your employee was taking commission’s from a supplier and you were their employer, they’d be fired. So the employee has a duty to the employer, which basically, in our role as planners, when you have a fiduciary duty to our clients, we have a duty to our client. So basically, the idea of a family office is that you have a fiduciary relationship and you probably have some expertise and experience in relatively complex situations, and you take on fewer clients. So, having said all that, one of the reasons to focus on that market segment, historically is it has been difficult to achieve any margin from a business perspective on clients that didn’t support a certain level of revenue per annum. But that’s changing now. So for example, Robo Advisors are, I think, providing a platform that enable you to deliver good service in a fiduciary environment at a lower price point. And so there is an opportunity to broaden that spectrum. From my perspective.

David Miller

Yeah, when you say broaden the spectrum, you’re just talking about the number of clients because obviously when you’re satisfied with a situation, it’s very complicated. There aren’t that many enormously complicated situations out there, it’s rare. There’s a lot more people out there that are just looking for help. And that model from a Robo Advisor perspective, they still need someone to support them through the biases they have through, maybe my bias against Robo advisors comes out here but, there still has to be somebody that coaches them along. But maybe talk on that.

John Amonson

Well, I couldn’t agree with you more on that, David. In fact, you may be familiar with the language around credence good or service. And for those that aren’t familiar with that language, a credence good or services is a service where it’s difficult to know the value of the service before you buy it, and often after you buy it. So financial planning is really a credence good in that it’s very difficult for our customers to know the value of it. Having said that, they have been conditioned over the years to understand the value of good investment advice. In fact, probably mistakenly so, to the point now where good investment advice can be obtained at a very low cost.

David Miller

 Yeah, it’s turns into a commodity. 

John Amonson

It’s a commodity. And what is really quite valuable is the relationship that you referred to earlier. 

David Miller

Correct. 

John Amonson

In terms of planner to help folks with their overall implementation of their investment, plan amongst other things. Just coming back to your question around the net worth model, David, I think a good example might be something like this. If somebody had free cash flow of, just for easy numbers let’s just say 100 grand a year, where they could allocate that post that money somewhere. And let’s also assume that they were mid career, so they still had remaining debt, for example. And they’d already used up their RSP contribution room. If one was to measure volatility, not on a portfolio basis, but rather on a net worth basis, you can argue that a balanced portfolio would be taking 50 grand of that 100 free cash flow and paying down debt and taking the other 50 grand and putting it in a pure equity portfolio. And from a traditional perspective, that’s rather ludicrous to have a 100% equity portfolio. But on the other hand, from a net worth perspective, it’s a balanced perspective.

David Miller

 Right.

John Amonson

 And you can argue that the after tax yield on debt repayment exceeds virtually anything you can get in triple A debt these days. So that’s an example of a net worth model versus a traditional financial investment model. 

David Miller

it makes perfect sense. Look at the entire situation, not just the account. Which is what a lot of investment advisors do at this point. They just manage that one specific account and the risk tolerance, put them into A, B, C, D, or E. And then you’re they’re done. And they don’t consider everything else that’s going around with the client situation.

John Amonson

Yeah. And really, the question is, how does the planner get paid for that level of sophistication? So the status quo is to take all of it and put it into a product that pays you 1% versus taking half of it and instructing the client to pay down debt, which reduces your revenue in half. So that’s an example of the challenges of implementing a network based model.

David Miller

Yeah, it’s always how to commoditize the financial planning of it. Because we don’t want to be a commodity, we want to be an adviser that has a long term relationship, that’s valued much more than just a single transaction. So I completely understand the net worth model and this, the struggles in that. So if you could look at yourself in your own business, any advice that you’d give somebody else coming up? Would you suggest somebody follows in your footsteps in your specific business model or would you suggest just focus on the fiduciary aspect and build what you want to build?

John Amonson

Yeah, you know, it’s been, it’s been a great career for me, David. I’ve loved it. I’ve feel very satisfied. I was talking with Taylor the other day about this. I don’t think I’ve worked maybe a couple of weekends in 30 or 40 years.

David Miller

 Right.

John Amonson

 And not many days after five or six. So it’s been a very nice environment in which to serve clients. I would encourage people coming into the industry to have their entrepreneurial hat on and their fiduciary hat on and look for opportunities, because I think some of the new technology and software coming out is going to make it much easier to deliver this type of offering at a lower price price point. And I think the opportunity to be there to help a lot of folks.

David Miller

Yeah, and certainly, this is not a technology type of conversation, I think we could spend an hour just talking about technology, and the types of things that you’re seeing and implementing. We could have another hour conversation about Robo advice, and what that might mean. There’s so many ways we could inform the public. But what’s the biggest thing that you would say to just anybody walking on the street? How do we get them out of the sales mindset and into the arms of financial planners? And I said, Yeah, bank employees, people walking on the street, but it could be a bank employee wanting to get out, it could be just prospective clients. How do you promote that? 

John Amonson

I think they want to want to get out first of all. I think internally, it probably has to feel wrong for them, where they realize they’re paying more attention to their targets than they are to the needs of the client. And if that feels wrong for somebody, then they should start looking for a different environment.

David Miller

That sounds altruistic in a way.

John Amonson

It is. That’s the driver. I don’t think you are in the business we’re in, David, without being somewhat altruistic.

David Miller

 Right.

John Amonson

Yeah. 

David Miller

Well, anything else you want to bring up in regards to advice? Anything you want to tell? This is your soapbox, this your opportunity?

John Amonson

I don’t know. For most folks generally, spend less than you earn and pay attention to your estate planning. And for those of us in the planning industry, start early on your succession. You mentioned Doug McDonald earlier. I remember listening to him speak. And he said, start by the time you’re 50, because it takes 10 or 15 years to get it in place. I know we’ve been working on it here for at least 10 years. And it’s nicely underway now, but it takes a long time.

David Miller

Yeah, and there’s a succession but then there’s actual retirement. I still don’t think Doug’s retired, Russell Todd is still not retired. They’re still looking after some clients. I think Doug said one or two.

John Amonson

Oh yeah, you get to do what you really like doing. And there’s a bunch of stuff that people that are more talented than we are get to look after you. So it’s can be a very nice transition without a hard retirement.

David Miller

Well, obviously, your passion for advice only is evident there John. Thank you very much for joining me today. It’s been a really good conversation. I’ve learned a lot. Thank you very much.

John Amonson

Well, David, I appreciate your reaching out and thank you for doing this. 

David Miller

Thank you.