Rating your Advisor, Diversification and More
Your Investment Advisor
Recently Rob Carrick, the Globe and Mail’s resident investment expert wrote a piece about how to rate your Investment Advisor. It is titled “Am I Getting Value from my Advisor?”
From my experience (32 years in May) it is very difficult to find any advisor who doesn’t think they are worth every cent that they charge. Of course, this is ludicrous, like every field of work, there are the good and the bad. Trust me, I have seen really bad – naturally, all of these were outside of RBC!
It is tough for an advisor to know just what their clients truly feel about them. We tend to get a little cocky and perhaps feel because we have strong ethics and we truly care about the people we deal with and that is enough. Let’s face it: that is not the only criteria - clients tend to care about this thing called performance. However, not performance at any cost! I am not
just talking about cost as a fee, but also cost as a function of risk.
This is where I think a ‘good’ investment advisor can truly stand out. Sure, you want to make hay while you can, but it is the hard falls that really stand out in an investor’s mind. The years 1987 and 2008 are likely meaningful (market crashes) but 2005 (up 22.9%) and 2009 (up 30.7%) likely don’t mean much.
Help us be better, take a look at that scorecard – just Google the title “Am I getting value from my Investment Advisor” and let us know the good and the bad (Hopefully there is no ugly!)
The term “my portfolio is diversified” is overused. What does that really mean? In my humble opinion, this is where a lot of do-it- yourself investors fall short in their money management skills. There was a 20 year study from 1995-2015 showing the S&P average returns at 8.2% but the average investor’s returns at 2.1%.
How is that possible? The funny thing is, I remember a survey from 20 years ago that showed pretty much the same thing!
Building a truly diversified portfolio is an art. A portfolio that is designed properly from the start should not require knee jerk reactions to any market movement.
The reason is that your portfolio is built to match your personal objectives over the long term regardless of any noise in the current environment. Sure, there are adjustments that have to be made and rebalancing that has to be done to make sure asset mix target are adhered to. However, any real changes should only be considered if your objectives change – not due to external factors. It is these big moves due to market fluctuations that lead to those low “average” investor returns.
Make sure your fees are competitive and your portfolio is truly diversified and enjoy your life and retirement in peace.
Don’t let your friends be average either – have them give us a call!
The beginning of the year is always a great time to look at the months ahead and set some goals or things we want to accomplish. The oft forgotten area, when it comes to setting yearly goals, are financial goals. Not just how much money you want to have in your accounts but clear ideas on how you want to use the money, where you will take it from as well as any outside advice you may require when it comes to financial matters.
That’s where Paul, Kristin, myself and RBC Dominion Securities come in. You may be familiar with all the services Paul has offered over the years but here is a refresher:
- Will and Estate Planning
- Financial Planning
- Charitable Giving
- Business Ownership Planning
Not only do we offer these services to our clients, we offer these services to your children (and even grandchildren) to help them prepare for their financial future and help them feel secure.
- My wife Rosanna, the teacher, turned 51 the other day. No real reason to put this in here, but she will slap me when she reads this! J 2.5 years to retirement, Rosy!
- Bradley (now 22) and his girlfriend are off for a three week trip to Europe. One week in London and two weeks touring Italy. They are very excited – Brad’s first trip without Mommy and Daddy!
- Figure skating continues to be good to Leah – she won gold in Toronto last month and a silver in Niagara this past week. Apparently the judges missed a slew of their points and Leah was NOT impressed.