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A handful of spring cleaning tips for your investment portfolio

Martin Pelletier: Here are five key factors to look for when it comes to determining what’s right for you

Springtime usually brings about change as we come out of winter hibernation, and the same goes for managing your portfolio, since this time of year tends to be when investors begin reviewing their financial situation and start cleaning things up ahead of the upcoming tax season.

Not surprisingly, this often leads to discussions about how your wealth is being managed and if it is on track to meeting certain financial goals and objectives.

If this happens to be your situation, here are five key factors to look for when it comes to determining what’s right for you and whether you have the proper team and resources supporting your needs.

Discretionary portfolio manager vs. investment adviser

Even if you have the time and the level of sophistication to assume responsibility for your portfolio, you may still want to deploy an investment adviser, because the more information you have, the more prepared you can be. A good adviser will provide you with the relevant information and research required to make sound investment decisions as well as challenge you on your ideas.

That said, many people just don’t have the time or knowledge to do it themselves and this is where a good fee-based, discretionary portfolio manager can help. This means handing over control of the investment decisions, since they will assume responsibility for the overall management of your portfolio. However, it will be guided by the rules set out in the investment policy statement, so make sure it properly matches your objectives and risk tolerance.

Size matters

If you’re wondering why you don’t hear from your adviser, it’s probably because they have too many clients to service. Sticking to a hard investment minimum and turning clients away is a difficult thing for any adviser to do, but a necessity when it comes to maintaining a high level of service.

To avoid this, conduct a mutual interview to see if there is the right fit on both sides, and ask if there is capacity for taking on your business. A good adviser can also refer you to a colleague if there isn’t.

Agnostic, flexible approach

Having someone who is conflict free, meaning your adviser isn’t simply selling you internal proprietary investments, can really help improve performance. Be sure not to confuse this with in-house pooled funds, which can improve efficiency in managing portfolios, because the holdings within those funds may not necessarily be proprietary in nature and might make use of other managers and/or exchange-traded funds.

Some may also prefer a portfolio manager that has the flexibility to allow for some customization or outside-the-box holdings, such as a tactical sleeve, or even utilize very effective investment vehicles such as structured notes.

Managing risk alongside returns

It isn’t uncommon to look at things in absolute terms against a particular benchmark(s) when evaluating performance. This creates two problems: benchmark selection and the risk taken to generate the return.

We really like the goals-based benchmarking approach, complemented by an active risk-management process. This means a target return is set to meet a set of goals or objectives and the risk is minimized as much as possible in trying to achieve it.

Taxation and wealth planning

Finally, a planning-led approach is essential in managing any portfolio. This will become a driving factor in the years to come, especially in an environment of persistent deficit spending and governmRetail investors are ignoring something bond investors are telling marketsents looking for ways to support it through increased taxation.


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Undertaking an advanced wealth plan should include much more than a forward cash flow projection, and get into tax strategy discussions, will and estate planning.

Like any good old-fashioned spring cleaning, having a to-do list and sticking to it can really help get things done, so that you can relax and start enjoying the sunshine and warmth of knowing that everything is being looked after.

Martin Pelletier, CFA, is a senior portfolio manager at Wellington-Altus Private Counsel Inc, operating as TriVest Wealth Counsel, a private client and institutional investment firm specializing in discretionary risk-managed portfolios, investment audit/oversight and advanced tax, estate and wealth planning.

Source: Financial Post