Would you like a car with that mutual fund?
Published on Advisor.ca, April 3, 2006, Written by Mark Brown
Advisors don't generally recommend things they know will decrease in value. Then again, there are not many financial planners like Peter Ameli who help clients decide their next car purchase.
Ameli is a planner with Berkshire in Toronto who sees giving advice on things outside of finance, including where to buy a car, as just good business sense. He considers saving his clients from being fleeced by an unscrupulous car dealer as part of his job.
At first, it seems like a strange fit. But Ameli is not just a guy who has hung out a shingle as a financial planner and sells cars on the side; he simply suggests to his clients where they can go to get a good deal. The catch is he doesn't make any money off this advice. So what's in it for him? The payoff (he hopes) is that the favour will help build relationships and be repaid somewhere down the road.
When Ameli was on the market for a new car two years ago he came across the Automall Network, a Toronto-based car broker and wholesaler that serves corporations, insurance companies and individual consumers. For a small fee of $300, regardless of the price of the car, Automall will find a car of your choice. The company claims it typically saves people $1,000 to $3,000 off the cost of their vehicle. Best of all, for those who lack the bartering gene of a Moroccan street vendor, it takes care of the haggling.
After his own purchase through Automall, Ameli started thinking he could help his clients save money by applying the research he collected for himself. If there is clearly something that can be used to help a person get through a particular stage in life then advisors should share their knowledge, he says. "Those are value added things that people remember and it also creates a stronger endearment in client relationship."
He's not the only one who feels this way. "My focus is to give the best value to clients so that they are able to plan properly," says Snigdha Malik, an advisor with Advent Financial Group in Brampton, Ont. Malik has built up a personal referral network. "If [my network] can get the right things for them at the right time and at the right price then the certainly my value to my clients increases a whole lot."
She stresses it's about helping her clients. "I'm not looking for any kickbacks."
Ameli and Malik are two of a small but growing number of advisors who routinely refer clients to Automall. Viraf Baliwalla, Automall's founder, says advisors are a good target audience for his company. "Our philosophy is the same — trying to keep more money in people's pockets."
For a number of people, car purchases rank as the second largest purchase they will make in their lifetime. But this approach works for other things as well, be it finding a good in-house caterer, picking a decent travel agent or locating a lawyer who can handle offshore issues.
It's not the sort of thing that comes up in every client meeting, but these topics do come up from time to time. The only time these two advisors offer their guidance on such topics is if a client raises the issue first.
But this sort of friendly advice is not without its risks. Both Ameli and Malik warn that a bad referral could irreparably damage a client-advisor relationship. "You have to do some vetting out and you've also go to position it correctly when you are dealing with a client," stresses Ameli. Both Ameli and Malik say they make a point of following-up on a referral to make sure nothing went wrong.
While Automall won't pay a commission to an advisor who has steers business its way, it will try to return the favour by providing "reciprocal promotion" to those planners on its website, says Baliwalla, provided they hear good things about that advisor.
Since opening in a basement in 1999, Automall sells about 150 to 200 cars a month. Although the company's base of operation is in Ontario, Baliwalla says his company can serve clients anywhere across Canada.