22 min read

Grow Together - March 2024

Personalized service sits at the core of our client relationships. So, this issue of Grow Together explores different angles of how, and why, we strive to show up for our valued clients in meaningful ways. Our contributors share their insights on what personalized client care means to them in working with clients to create exceptional experiences.

In this issue: Message from the CEO | Customer experience as a sustainable competitive advantage | The call to serve | With you at every step

Click here to read the issue digitally as a newsletter.

Message from the CEO

Matt Evans, CFA
SVP Enterprise Strategy, CWB Financial Group & CEO, CWB Wealth

“Fads fade and cycle, but the human desire to be taken care of never goes away.” Will Guidara, Unreasonable Hospitality: The Remarkable Power of Giving People More Than They Expect

I was lucky to discover renowned restauranteur Will Guidara’s book, Unreasonable Hospitality, when it was featured in a recent episode of the restaurant-based TV comedy The Bear. The episode follows Richie Jerimovich as he spends a week working in fine dining – reluctantly, at first. Richie is the rough-around-the-edges manager of a fictional run-down but much-loved family restaurant, The Original Beef of Chicagoland. Richie struggles to find his place as his new boss and the show’s namesake, Carmy Berzatto, prepares to relaunch with a renewed, up-market concept.

Through a series of events, Richie has a personal awakening and realizes that he has both a special talent and latent passion for authentically connecting with people. He begins to see his life and all its possibilities differently as he discovers that hospitality is a noble calling.

It’s a provocative reminder for those of us in service businesses to sustain the unique personal touch. Guidara’s New York restaurants, including Eleven Madison Park and NoMad, became known for extreme customer service, “hospitality so bespoke, so over the top,” that “it can be described only as unreasonable.” Guidara draws a clear distinction between service and hospitality, recalling that someone once described it to him this way: service is black and white; hospitality is colour.

I’m not the only Will Guidara fan at CWB Wealth. Many of us have enjoyed Unreasonable Hospitality and, across the firm, we strive to reach the higher standard it describes in the experiences we deliver to our client families.

One of the ways we test our progress is to ask for genuine feedback. Through the Voice of Client survey*, we invite our clients to share their candid assessment of not only the services we provide, but also the way we make them feel. We’re eager to learn how we can continue to show up for them not just financially, but emotionally as well. If you’ve responded to our recent survey request, I want to thank you for your generosity. We take nothing for granted. I can assure you that your continuous feedback inspires us to achieve our highest standards – so that you experience hospitality in your wealth management support from us.

Service is our theme for this issue of Grow Together, and we cover it from a number of angles. From the advisory standpoint, Anna Premyslova shares the impact of going the extra mile for our client families. Ralph Muth reflects on the unique ways his advisory emphasis evolves to meet changing needs over a lifetime in service to a family.

On the investment side, Scott Blair explores customer service as a source of differentiation for companies across several industries. As an investor, Scott comes at it through competitive advantage and how that translates to earnings power. Of course, he explores strategy, market position and competitive factors. But he also underlines an important point: the most successful service-driven companies are full of people with uncommon passion for service that is unreasonably good. Those who don’t have that passion won’t fit for long.

This brings us back to Will Guidara. Unreasonable Hospitality reminds us that standing apart as a service business comes down to the people doing the work. We wholeheartedly agree, which is why choosing the tagline Obsessed with Your Success was a no-brainer for us.

Giving our clients more than they ask for is a selfish pleasure we all share, because we view it as our calling to continuously make their lives better.

*As promised in our Voice of Client survey, the charitable organizations we’ll be providing donations to are:

  1. Canadian Cancer Society
  2. Salvation Army
  3. Heart & Stroke Foundation
  4. Doctors Without Borders
  5. Humane Canada

We sincerely thank all our clients who took the time and effort to give us candid feedback, so that we can better support you.

Customer experience as a sustainable competitive advantage

Scott Blair, CFA

Chief Investment Officer

One of the best parts of analyzing stocks for a living is meeting with senior executives from different businesses and industries. When we meet with the executives, we have the opportunity to ask them about their corporate strategy and analyze their responses. One of the key questions we dig into is what competitive advantages their companies have. In other words, what is their value proposition and is it sustainable?

In one such meeting many years ago, with the CEO of a clothing company that manufactures basic apparel, such as t-shirts, the topic of online shopping came up. Management’s eyes lit up as they talked about how online shopping had created an “endless shelf” (ability to offer a wider range of products since stores are no longer limited to physical warehouse inventory). This company has a good product, but had been built on being a price leader, and online shopping presented a venue where price comparison was right in the customer’s face.

Leveraging your competitive advantage

This clothing company knew what their value proposition was (price) and didn’t try to be all things to all people. They focused on how they could win and worked aggressively to maintain their competitive advantage.

Every industry has a price leader. Although as the word ‘leader’ implies, it’s difficult to have more than one. If you’re not the price leader, your business better have other appealing attributes to survive – let alone thrive. Depending on the business, this can include things like convenience, location, or quality of product or service. In fact, most businesses have a combination of these drivers. For instance, Tim Hortons and Starbucks are both coffee shops at their core. Tim’s competes on price and convenience, with a focus on drive-throughs. Starbucks has more of a premium product at higher price points, and better quality (although that’s in the eye of the beholder!). At the heart of this combination is Starbucks’ strategy of creating an elevated customer experience.

Forbes produces an annual list called “Customer Experience All-Stars”, which rates brands on “products, services and treatment of customers”. Trust, perceived value, and quality were also key drivers of the survey. When people think about top-tier customer experiences, we think of companies that are in the hospitality business, such as Disney World or Four Seasons, or luxury companies, such as Mercedes or Louis Vuitton. Not often does a chain of convenience stores come to mind. Yet, coming in at #1 on the list is Buc-ee’s, a convenience store based in the U.S.! To better understand how customer experience can help a company stand out, no matter which industry, and become a sustainable competitive advantage, let’s look at three large competing retail brands.

Price, affordability, and experience

Walmart is almost synonymous with low price. Although, the firm is often criticized for hurting small business, helping to hollow out U.S. manufacturing through imports of foreign goods and for not paying a living wage, their pricing strategies keep customers coming back. Ironically, it’s not always cheap to compete on price. Walmart spends $20B a year in capital expenditures with a significant portion of this spend going to innovation, automation, supply chain and generating efficiencies across its discount stores, online business, and club stores. They’re also known for being tough negotiators with suppliers and passing on some of these savings to the end customer.

On the other hand, Walmart’s largest direct competitor, Target, thrives by focusing on affordability through unique brands (often private label). The company is perceived as having a higher level of service, more attractive stores, and a better quality of product. This combination has earned them the nickname pronunciation of “Tar-jay”, making it sound more like a couture, upscale brand. It also has a very loyal customer base that’s vocal in reviews and social media. The power of a higher standard Target experience can also be a risk when it’s not executed in a consistent manner. This can be seen in its failure in Canada about ten years ago. Expectations were high, pricing was off, selection was weak, and inventory was low. Canadians wanted the U.S. value proposition and the firm fell short.

Costco is a fierce competitor, with a chosen value proposition combination of price and a unique customer experience. This might not seem obvious to anyone who visits during weekend peak times, but going to Costco is truly an experience. Free samples, low priced comfort food with large portions, friendly staff, new products every time you visit that provide a “treasure hunt” experience, and a focus on cleanliness are all elements that offer differentiation. Although pricing at Costco is sharp, the trade off is that the selection is limited, and large pack sizes make price comparison difficult.

Investment implications

From an investment perspective, we look for companies with not only competitive advantages, but sustainable competitive advantages.

New competitors pop up all the time without the legacy systems and infrastructure that were once an advantage for a company. These systems may actually become a disadvantage in current times, as it makes it difficult to pivot. For instance, many retailers have failed since the advent of online shopping. Their value propositions, whether price, location or experience were just not sufficient to compete with the advent of the Amazons of the world.

All three retailers in this article have sustainable competitive advantages, and all three have been rewarded by the market with solid returns over the past decade. However, Costco stands out as having been the best investment over the time period and is the only one of the three that’s owned in our U.S. portfolios (see figure 1).

Figure 1: Costco’s customer experience for the win
Costco's customer experience for the win

Source: FactSet

From a financial perspective, Costco has been able to grow sales at a higher rate than its competitors. They also consistently outperform market expectations. As described earlier, it’s about the trust consumers have in the brand, the unique offering and the overall in-store experience that keeps people coming back. Consumers go to Walmart and Target primarily for the pricing, they go on a “Costco run” because they want to, despite knowing they’ll likely spend more than they intended. In our view the customer experience is indeed a sustainable competitive advantage for Costco.

The research bears this out. Costco ranks #5 in Forbes’ Customer Experience All-Stars list, while Target ranks #277. Walmart doesn’t rank at all (although, wholly owned Sam’s Club does come in at #65). Who would have thought a top-tier customer experience could be walking around in a crowded warehouse?

The call to serve – when they know how much you care

Anna Premyslova, CFA®

Private Wealth Advisor, Portfolio Manager, CWB Wealth Partners

If you’d told me ten years ago how often we’d be loudly over-enunciating into the phone, “SPEAK TO REAL HUMAN” to cheeky, vaguely-people-named robots in 2024, I’d think you were watching too many episodes of The Twilight Zone. But today, this is increasingly our everyday reality. 

Need help with your account? Tell it to our chat-bot. Want to learn about our products? Take our sleep-quiz/hair-questionnaire to see which mattress or shampoo bottle our AI sorting hat has assigned you to. In decades past, department store personal shoppers and other individually-tailored service providers were the norm. But today, technology has allowed many businesses to serve a wider clientele than they ever thought imaginable. And in that process, the act of individualized client service has become increasingly rare.

For our part, we’ve also watched AI and technology revolutionize the world of investing with excitement. And harnessing AI-powered financial planning software has been a tremendous value-add to our clients. But we’re also fiercely protective over what got us here in the first place: the human touch. 

When going the extra mile becomes an addiction

In Unreasonable Hospitality, restaurateur Will Guidara recalls overhearing a family dining at his brasserie lament the only regret of their New York visit – not having tried a true “street dog”. As he sprinted to the nearest hot dog vendor and delivered it to their table, Will says that the thrill of creating that moment of “one size fits one” individualized service became his addiction. 

Feeding that addiction, Will then did something counterintuitive. He standardized the exceptional. Will encouraged his team to go the extra mile to deliver that special human touch at every opportunity, not just on occasion. And when they did, to share it loudly with each other. This addiction spread and moments of exceptional human touch became more than one-off acts of solo heroism. They simply became How We Do Business

Obsessed with client care

This same obsession is also what drives us. In the spirit akin to Will and his team, every Friday our own team comes together nationally to share stories of gratitude, big wins, and moments of human connection. 

Recently, a senior leader recalled his experience working at a fee-for-service financial institution in the early 2000s amidst its acquisition by another firm. Very quickly, he knew that his internal compass did not align with his new leadership. He was being pressured to rotate his clients’ portfolios from low-cost, high-quality investments into inferior but higher-fee-generating ones. 

Around this same time, a recently-widowed client met with him to discuss concerns about her situation. How would she manage her cashflows now that the primary income earner, her husband, was gone? How would she deal with the insurance company? How would she update her own estate plan, or steward their portfolio alone for the first time? 

As she asked him these questions, the advisor knew who his primary duty of care lay with. So, he gathered his courage and told her that he could no longer promise to protect her best interests at this firm. Soon after, he would leave that organization and join the team that would one day become a part of CWB Wealth. He knew immediately that he was amidst people who cared about how much they could do for a client, not how much they could make off a client

Today, the widow who sat across from him after her husband’s passing continues to rely on his sound advice some 20 years later. 

Moments that matter

Over the years of maintaining this Friday tradition, stories like this one have become the norm rather than the exception. Stories of advisors becoming the “life hubs” for the families they serve, of being there for the most elating and devastatingly human moments in their client’s lives. Some have shared their grief over receiving final emails from a client on their deathbed. Others retell warm invitations to weddings and baby showers. 

And let’s be honest. This isn’t nearly as selfless an exercise as it may sound, because Will is right: making people feel good is addictive because it also feels good back.

For me, moments of human touch fill my battery. They are the bank that I draw from when a tougher day comes along. 

Recently, a client confided in me that a “perfect storm” of life challenges had forced them to postpone a long-planned Thelma & Louise-style road-trip. Immediately, our team (lead by our resident office administrator and Magic Maker) sprung into action to help make the trip extra special whenever the time for it finally came. 

It was nothing expensive or extravagant – just some basic road trip essentials – but watching through photos as the tiny blue Thunderbird that we included travelled across the miles and borders with them is something I’ll cherish for years to come. 

Whether it’s asking the difficult questions, getting “beneath the mask” to understand the oft complex emotions behind investors’ financial decision-making, or just listening more than we talk, we’ve come to know that our clients don’t care how much we know until they know how much we care. And isn’t that what the human touch really is?

With you at every step – the value of going beyond wealth management

Ralph Muth, CFP®, CIM®, CPA, CMA
Private Wealth Advisor, Financial Planner & Associate Portfolio Manager

Lawyers, real estate agents, and wealth management advisors. We all charge fees, the value of which is often questioned. What’s in it for clients? Perhaps Warren Buffett said it best, “Price is what you pay, value is what you get.” 

There’s a cost associated with everything. What are you willing to pay for something that adds value to your life? If you want better health, you could find endless free, online health and fitness advice. But if health has a high value for you, you might want to hire a personal trainer to design, and help you stick to, a fitness and nutrition program that’s tailored specifically to you. 

Likewise with your finances, you could use a non-fee-based or digital option, but would your financial outcomes be the same as someone who has the support of an advisor who understands their needs, worries, and aspirations through every stage of life?

Buying and selling financial products is a fraction of what a wealth advisor does. A significant portion of our role is dedicated to listening to what keeps our clients up at night, and offering counsel to allay those worries. Our clients share much more than monetary concerns with us throughout their lives, and we evolve our financial advice to support them every step of the way.

Reflecting on my own clients, there are roughly four generational life stages. Each require a different approach and sensibility.

Starting the life journey (ages 18 – 30)

Most people in this age group are moving onto post secondary education, learning a trade, or starting careers and a family. They have little life experience and, often, many of their wants and needs have been paid for by the bank of mom and dad. Now, they’re investing in their careers, saving for a property purchase, exploring the world, and learning about finances.  

Many have entered the work force during the pandemic, having never met their manager or colleagues face-to-face until months later. While working from home has given them immense flexibility, it’s also caused them to experience isolation, job-related anxiety, financial worries, and health concerns. 

My role with this cohort is to focus on education, and do so in a way that’s mindful of the psychological stressors they face. As an example, one of my newest and youngest clients – who has almost no experience with investing – wanted to know if he could “buy” an RRSP or TFSA. Once I explained that these were types of investment accounts, each with different advantages and disadvantages, he had a better understanding of how these could play a role in his savings goals. This gave him confidence to engage in a more in-depth conversation with me on the various products and solutions available. 

The nesting years (ages 30 – 50) 

This is probably the most stressful period in our clients’ lives – especially from a financial perspective. People typically want to advance their education or career, purchase or upgrade property, grow their family and save for their children’s education, prepare for retirement, and enjoy a better quality of lifestyle options. 

Their ability to do any of these comes down to affordability. As these are prime earning years, it becomes a balancing act of managing the day-to-day while preparing for retirement. The financial burden of all this can feel overwhelming and have negative impacts on mental health, relationships, and overall well-being. As wealth advisors, we do more than find products and solutions that help them fulfill their needs in this life stage. Our counsel involves quarterbacking the various moving parts of their complex lives, so they’re free to focus on their career, family and lifestyle goals knowing we’re here to support them. 
It begins with creating a financial plan which includes cash flow projection. Once we have a sense of where clients are financially, we can create multiple scenarios to help them achieve their objectives in this phase. Their financial plan acts as a roadmap to help them make decisions that align with their future goals. 

As a living document, their plan gets revised every couple of years to ensure their more immediate financial decisions are still in service of their overarching long-term goals. A key aspect is managing risk to their livelihood, such as job loss or unforeseen health issues. We can refer them to in-house insurance experts who ensure they’re covered for life’s curve balls through any stage.

Getting ready to retire (ages 50 – 60)

Having spent the past 25+ years making mortgage payments, putting kids through post secondary education, travelling, and saving for retirement, this cohort faces a pending transition to retirement. Today, their stressors outweigh previous sandwich generations. For example, many have had adult children (the “boomerang kids”) move back home to save money for a property or to pay off debt. This has significantly added to their expenses. With aging parents living longer, they may also need to provide financial support for at-home care or have had them move in. These added costs reduce their ability to save for their own retirement.

The need to support both older and younger generations financially and/or emotionally takes a huge emotional toll on this demographic. They not only worry about how to manage the day-to-day while securing their financial futures, but also worry about these things for their loved ones. Added to this, there are many moving parts to managing their financial affairs due to the complexity of savings and investment options today. 

To help alleviate stress, I revise my clients’ financial plan and cash flow projections as things change. (Or implement a plan if they don’t yet have one.) Further, I review their investments to ensure they’re still suitable and continue to align with their goals and objectives. This includes discussing the macroeconomic environment and how that’s impacted their returns over the years. My goal is to understand what my clients are thinking and feeling, so I can provide alternative perspectives and present solutions that will help get them to their desired financial state. 

Successful retirement (age 60 and beyond)

Those who have made the transition to retirement can finally breathe a sigh of relief. Right? They’ve been planning and saving for the past 40+ years. For most, it’s the first time they won’t have a regular paycheque. Money inflows have been replaced by outflows. This can be stressful if they still have mortgages or other loans to pay off, or if they’re helping family members with day-to-day or larger expenses.

Beyond these financial concerns are a myriad of deeper emotional needs, like declining health and dealing with the passing of friends and loved ones. Loss of identity can also be experienced as many people gain their sense of self and purpose through their careers. 

On the other end of the spectrum, people are living longer and have more active retirement lives. They may wish to start a new career or parlay a passion into a business to fill their day with meaning. Philanthropy and giving back to the community are other common ways people do this. 

To help my clients manage this new deaccumulation phase, we determine the most tax efficient way to withdraw from their investments to receive a steady income. In navigating their new financial picture – and all the paperwork that comes with it – we look at the rollover of RRSPs to RRIFs, LIRAs to LIFs, and transfers of TFSAs and various other banking accounts. We also determine whether to keep their defined benefit pension plan with their former employer or invest it, and how soon to take CPP and OAS.

Just as importantly, we assess their need for emotional support. Reaching out by phone or in-person to make sure they’re okay, and reminding them that we’ve planned for this – they’re going to be okay. Helping them find resources for whatever needs they have can also bring reassurance. 

We come to know and build trust with our clients and their families through each progressive stage. Truth be told, it’s a bond that’s more familial than anything else.
With each passing milestone, they know our counsel will always be in support of both their financial and emotional best interest. And, for some people, you just can’t put a price on value like that. 
Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. Views expressed are as of the date indicated, based on the information available at that time, and may change based on market and other conditions. Unless otherwise noted, the opinions provided are those of the authors and not necessarily those of CWB Wealth or its affiliates. CWB Wealth does not assume any duty to update any of the information. Investment decisions should be based on an individual’s own goals, time horizon, and tolerance for risk. Nothing in this content should be considered to be legal or tax advice and you are encouraged to consult your own lawyer, accountant or other advisor before making any financial decision. Quoted yields should not be construed as an amount an investor would receive from the Fund and are subject to change. Investors should consult their financial advisor before making a decision as to whether mutual funds are a suitable investment for them. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments.

Please read the prospectus, which contains detailed investment information, before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. CWB Wealth uses third parties to provide certain data used to produce this report. We believe the data to be accurate, however, cannot guarantee its accuracy. Visit cwbwealth.com/disclosures for our full disclaimer.