What If Your Advisor Can't Find You?

Feb 15, 2021 | Elaine Law


The PIM Discretionary Account

Our annual seminars were broadcasted live in a digital format, rather than over the usual in-person sit-down brunch. To our pleasure, the turnout was spectacular with over 500 attendees for our 3 webinars! Every year, it is common to have investors call us, asking us if they should buy the investments that were mentioned in the presentations. I tend to tell investors to not follow the recommendations if they were to implement them on their own. Why? Because most of the strategies and recommendations reflect what is being implemented within our PIM (Private Investment Management) portfolio, which is closely monitored by our PIM portfolio managers. Therefore, investors would not know when and if changes are made to our strategies.

PIM accounts are managed on a discretionary basis. Our ‘Portfolio Implementation and Risk Management Group’ oversees every PIM manager’s actions and every discretionary account we manage. PIM managers must meet strict standards for education, experience, and assets under administration. We are privileged and proud to be part of a group that can offer PIM to our clients, which make up less than one-quarter of all advisors at RBC Dominion Securities. PIM accounts are guided by an Investment Policy Statement (IPS), which documents your investment objectives, goals, and constraints. The IPS serves as a blueprint and guideline as to how a portfolio should be managed for a particular client. In particular, the IPS states a custom range of asset mixes that can be implemented for a client’s account. For example, the following table shows that for a target mix of 65% equity, 35% fixed income, the managers can adjust the equity weighting anywhere between 35% equity to 85% equity, depending on the investment environment and the levels of risks seen in the markets.

Last year, when we first learned about the pandemic, we quickly reduced our equity exposure in our PIM accounts and held cash. The cash was redeployed back into equities when prices were lower and indicators signaled that pockets of the market were oversold. By avoiding much of the downturn and investing in timely investment ideas like the “work-from-home” sectors, client portfolios were able to effectively participate in the market recovery. Of course, a PIM program or any other discretionary platform does not ensure investment success or outperformance. Non-discretionary platforms managed through effective and attentive client-advisor relationships can have great success as well. That said, in our opinion, this pandemic has showcased the importance of not just having competent investment managers but also a platform that has operational efficiency. Since clients had personally dictated and given consent to invest within the parameters of the IPS, we were able to make maneuvers without the requirement of contacting each client and manually implement the changes one-by-one. Rather, through the technology utilized by the PIM program, our managers are able to make adjustments to their model which efficiently and automatically adjusts client portfolios. In essence, PIM enables clients to benefit from tactical asset allocation and can be suitable for clients who may at times be difficult to reach or are simply not inclined to manage individual holdings themselves.

Innovations tend to survive and thrive during crises and the pandemic is transitioning us to a whole new world. Society first transitioned from a farming economy to a manufacturing economy, and from there to a servicing economy. Now we are transitioning to a digital economy where new leaders, new disruptions, and new opportunities are discovered each day. This puts stagnant portfolios at risk. This has become an investment environment where being in the right part of the market is equally as important as avoiding the wrong ones. This requires the ability to be nimble and provide tactical sector and geographic allocation, active rebalancing, and risk management oversight. For those clients who prefer an hands-off approach, we believe the PIM platform can help execute those needs. To find out more about our PIM account and PIM strategies, please contact me or one of our investment advisors.