Transcript

If you have tens of millions or $100 million to invest, do you stick with one advisor? Do you diversify? Why or why not? And those are some of the questions we're answering today with our guest, Dan Goodwill. He's the vice president of Managed Portfolio Consulting Solutions with RBC. I'm Stephanie Mattice with Michael Yhip. Welcome to MarketCast, presented by Michael Yhip Wealth Partners. Dan goodwill, welcome and hello.

Hello. Thanks for having me.

Thank you for being here. So it seems logical and maybe somewhat survivalist, I think, to take a large savings and parse it into different places. This goes back to the stashing under mattresses in some ways, right?

Yeah. I think when somebody amasses a great amount of wealth in their lifetime that they've got a lot of things to think about. As we're thinking and planning for that wealth over the course of time, we're thinking not just for our own lifetime, but we're thinking beyond that.

Is this a gift that I want to give to my kids, a gift that I want to give back to the community in some way? And how do I properly-- store this for that next generation? I can't consume this all in my lifetime. Should I be putting everything in one place? If I do, how do that's the right place?

We're seeing a lot of those clients with a contemplation of, now what? The fulfilling part of the business owner was not making the money. The fulfilling part for the business owner was creating a successful business. And so what can I do with this wealth to create that fulfillment, either for myself or for my kids, or for my grandkids, or for my great grandkids, starts to be the contemplation that we're seeing with those clients.

How do you fit into that, Mike, and then how does Dan supplement that?

I wear a couple hats. I think the first one is I am a portfolio manager with experience, understand the markets. I think that's why clients are drawn to the practice. The role also extends to, of course, being the quarterback with some of our other partners, let's say in private banking who would co-manage relationships with some of the most affluent families in the country, and together our job is to bring the resources of RBC.

So when we look at the investment function in particular, a lot of what I do is try to understand the desires, the tolerances, the areas of risk and opportunity that the client is focused on. And some of those clients actually have different desires. Some of them might be attracted to investing in some more alternative types of investments.

They might have heard about investments in private equity, as an example. They may be drawn to that. They may have themselves had private equity invested in them. Others may say, no. You know what, I've been comfortable with blue chip stocks, and I want to have a portfolio ultimately that leans towards that. And there's many different ways to fulfill a financial plan from an investment perspective.

So you have to have the knowledge of first of all, what the client wants, what they need. But once do, we have to go to a toolkit, an expanded toolkit, which really Dan has built on behalf of the firm. Do all of those ideas need to come from RBC specifically? No. We have other managers that we've looked at that can provide diversification and thought, but still be held and managed within the security of the RBC platform. So that's the relationship that Dan and I have.

The role that he plays for all clients is an access point into Canada's largest financial institution and a major global player. And where I think Michael's clients really appreciate what he brings, is that experience that he's got in being on the other side of the table as an asset manager, understanding that world, understanding what it takes.

And his acumen on the investment side is frankly greater than the majority of those in the business. So he's providing this unique access point into RBC with his views and his experience layered on top of that. Once he comes in and once the clients come in, how I view our job is to make sure that we're building that platform that can support the wealthiest clients in the country.

But I still have in the back of my mind, am I putting everything in one place? And so what I've done for really the past two decades here is try and build out this platform of options not named RBC, and with companies outside of our walls as an organization. But then expanding also outside of our borders as a country, and how do we bring the best of all those worlds back to our clients?

I think of this analogy of the decathlon at the Olympics. They're good at one thing, but they weren't quite good enough to compete at the highest level at that one thing. So they went into the decathlon became a generalist at 10 different events.

We're definitely going to get mail from decathletes. [LAUGHS] We can only hope.

When you compare the performance of the generalist in each one of those events at each of the Olympics, and compare it back to the specialist in each one of those, it ranges between 5 and 40% worse than the specialist. So the specialist at the hundred meters runs faster than the decathlete at the hundred meters. The specialist that the high jump jumps higher than the generalist in the decathlon.

So when I think of that and put it in terms of the investment world, my risk as an investor of going to a single manager is saying, well, I'm hiring you to be my generalist. And you might be better than 99.9% of the world at this stuff, and you're going to do no harm to my portfolio. But could I have something better if I could hire a specialist in each one of those 10 events and enter the decathlon with 10 specialists versus one generalist?

And so that's what we've tried to do with our platform. What I've tried to build here is if I can add more specialists, I'm going to increase my chances of success over the long-term.

This is a great analogy. Yeah. So I want to go full circle to the introduction. When I said, do you stick with one advisor, do you diversify?

Well, I think the risk from my standpoint, I mean, Michael's going to say, obviously you should stick with one advisor and it's under Michael Yip Wealth Partners. But the reality is, yes, you should stick with one advisor if they're giving that access to the specialists.

But I think the benefit that you get from having a single source of mind and management looking from a top-down perspective is that now you've got someone watching the whole portfolio, rather than thinking about my one component. If I'm hiring out all those different components, the only person watching all of those components is the client.

And what expertise does the client have looking over those components? They've likely created their money-making eavestroughs or HVAC systems, whatever it is and the investing world, is a new world for them. And while they're often highly intelligent and can learn it, do they want to at that stage in their life?

This is part of that, this family office series is what I think clients appreciate is can you build provide due diligence and oversight, reporting, and color on our assets over time, who's responsible for that I could pick up the phone and call or text? And that would be fundamentally my function and my team's function. And I call that the outsourced CIO model-- Chief Investment Officer.

Normally what would happen is we would have a client that-- this is a perfect example-- we have a client that had $500,000 with us, business owner, 10 years ago, and we don't have minimums. We actually look for clients that have great growth potential, and we knew this client was going to do a great job-- 10 years later, $100 million plus.

And during all those years that we were side by side, we were managing the money. There was no third parties, in a sense, because the amount of capital didn't justify that amount of diversification. Now, it's a different story.

Now, my role has shifted to be able to say, look, we've got this bucket of alternative investments we can and should allocate to how do we go about due diligence in these opportunities, supporting them. Why do we think they're great ideas? Let's fill this bucket in, and again, we provide oversight and guidance on that.

We would turn to Dan and say Dan we have a need to invest in US equity, should we be doing some passively? Should we be going and using our active managers, which his group has done due diligence on. Inevitably the answer is a bit of colum, A, and a bit of column, B. And again, our role becomes the outsourced CIO as the family office.

And these family offices that we build around, clients are led by the clients. They're directing their desires. And our job is to say, yep, that makes sense. Or no, we really don't think that makes sense. And hey, that's outright dangerous. We probably shouldn't do that. And I think clients appreciate that.

Dan Goodwill you are like RBC's 007. You're the best kept secret, but you've done that deliberately.

I think the platform and the capability that we can deliver to clients is one that, on the one hand, I would love for more people to. But on the other hand, the more people about it, the less exclusive, I think, what we've created becomes.

For us, privacy is a big part. Clients can come, use us as a conduit to gain access to different things and maintain their own privacy. Perhaps, unintentionally, we've kept our little group in the stuff that we work with on with our advisors, we've kept in that realm of let's not talk about Fight Club. Let's keep this as something that's unique to US. The best way for US to market this and to talk about it with clients is one on one. Is sitting down face-to-face, looking into people's eyes and having that conversation, rather than a marketing document or a PowerPoint deck.

That's it for today on market cast presented by Michael Yip Wealth partners with our guest Dan goodwill and me, Stephanie Mattice. Thanks for listening.

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