Some clients no longer want or expect a gift from their advisor as they may have the impression the cost comes out of their fees.HAKINMHAN/iStockPhoto / Getty Images
When Sara Gilbert started working in the financial services industry in the late 1990s, she was part of a team tasked with buying high-end holiday gifts for clients at retailers like Tiffany’s. The luxury vases, picture frames and other decor items that she purchased were a way for financial advisors at her then-employer, Merrill Lynch Canada Inc., to show their appreciation to top clients.
“A lot has changed in the industry when it comes to gifting,” says Ms. Gilbert, now a business strategist and certified coach with Strategist Business Development in Montreal.
There are stricter rules around gift-giving to clients at some firms in the industry and some advisors are forgoing presents altogether. In some cases, there are fears of offending clients with the wrong item – or maybe the client doesn’t celebrate the holidays. Some advisors skip gifts to avoid speculation around whether the client is paying for it through their fees.
There’s also the challenge of finding a gift the client doesn’t already have, Ms. Gilbert says. “As the industry moves more towards high-net-worth and ultra-high-net-worth clients, they can buy themselves whatever you might get for them.”
Instead, Ms. Gilbert recommends advisors focus on more modest gifts that are relevant to the individual client. For example, if a client mentions they’re going to Italy in the spring, a book on the best sites to visit might make a nice gift. Or, maybe it's a donation to a charitable cause that's close to their heart.
It’s about making a personal connection, particularly at a time when advisors are looking to provide value for clients.
“Advisors are looking more to make an impact,” Ms. Gilbert says. “It really comes back to the human aspect of what we’re doing.”
Jason Heath, an advice- and fee-only certified financial planner at Objective Financial Partners Inc. in Markham, Ont., says his firm has stayed away from gift-giving in part because of his business model. “We aren’t making the same revenue per client as a portfolio manager,” he says.
What's more, he says many clients don’t want or expect a gift from their advisor. Some may have the impression the cost comes out of their fees.
“One risk of sending a gift that is too expensive to a client is the client wondering to themselves, ‘Who is paying for the gift?’” Mr. Heath says. “Advisors need to balance the cost of gifts and client appreciation events with the fees they’re charging. Some clients may prefer no gifts or events and lower fees.”
Mr. Heath’s company used to send holiday cards but now they send a year-end e-mail to clients and make donations to charities they want to support. “We’ve had a really good response” to this strategy, he says.
This month, the company will make a donation to the ALS Society of Canada. Mr. Heath’s mother passed away from the illness this year, which is also known as Lou Gehrig’s disease. The company also plans to donate to the Aphasia Institute of Toronto. Mr. Heath’s mother and two of his clients also suffered from aphasia, which is the loss of ability to understand or express speech caused by brain damage or cell degeneration.
Mr. Heath says some of the nicest gifts he’s received, from clients or other advisors have been handwritten letters. He received a few of these when his mother died.
“It sounds cliché, but it’s the thought that counts,” Mr. Heath says. “Sometimes simple is better.”
Dan Bortolotti, portfolio manager at PWL Capital Inc. in Toronto, says his firm doesn’t send holiday gifts, in part because of the optics.
“I appreciate that advisors want to thank their clients during the holidays, but I think many of those clients have figured out that they’re paying for those gifts indirectly,” Mr. Bortolotti says. “Our philosophy has always been to keep our fees as low as possible and let our clients spend those savings however they want to.”
Sending smaller gifts could also backfire, he says. “I have heard of advisors giving $5 Starbucks gift cards to their clients, which can seem insulting: ‘Thanks for being a valued client all these years: here’s a latte.’”
Instead, PWL makes a donation to a charity each year, often with a personal connection, and mentions it in the holiday cards that are sent out to clients. Last year, the company supported a cancer hospital that was treating one of its client’s children for leukemia. This year, it chose St. Michael’s Hospital in Toronto, where Mr. Bortolotti’s mother received life-saving treatment.
“We feel this has more impact, and our clients appreciate it more than a token gift with our logo on it,” he says.
Still, Mr. Bortolotti sometimes sends gifts – such as a bottle of champagne or a gift basket – to specific clients throughout the year when they reach an important milestone, like retirement or reaching a savings goal.
“I think people appreciate the personal connection to the gift [because] it’s related to a life goal and not just a holiday," he says.
Some advisors, however, still believe there’s something special about giving clients a gift for the holidays.
Terry Shaunessy, president and portfolio manager at Shaunessy Investment Counsel Inc. in Calgary, gives all of his 25 client families a Christmas basket with wine, cheese and chocolate from small local businesses as well as a Christmas wreath or floral arrangement.
“Our point of view is, ‘Who doesn’t like a present with stuff that you usually wouldn’t buy yourself?’” says Mr. Shaunessy, who started the business almost 20 years ago. “I think if someone was offended by [our gifts], we would know.”
Mr. Shaunessy sees it as a small gesture of appreciation for clients, especially given the increased competition for money managers.
“It’s our direct thank you to the families,” he says. “They have a lot of choices [of where to take their money]. Gratitude is something that can get missed in the financial services business.”