"October.  This is one of the peculiarly dangerous months to speculate in stocks.  The others are July, January, September, April, November, May, March, June, December, August, and February."

Mark Twain (1835 - 1910)

Asset Management

At Smarter Financial Planning we will not invest your money.

We only practice financial planning. Portfolio Management is at a minimum a full time job, as is financial planning. We do not believe that an individual can be an expert at both.

However, we understand how the financial system works, and can discuss investment with you in the sense of a strategy that would be most suitable. We can make sure you don’t make a significant mistake. We can also refer you to a short list of recommended firms, at your request.

Also, at your request, we will work with your chosen Portfolio Manager, as a team, to make sure your investments are aligned with your financial plans. You focus on what's important in your life; we'll take care of the details.

We have four principles that we look for in an investment manager. The first two are our responsibility, the third is yours.

  1. Competence: the individual or group making investment decisions must be equal to the most competent available. Competence is difficult to define, but we like to see a C.F.A., (Chartered Financial Analyst designation – more at www.cfa-institute.com ) or what we deem a solid level of industry experience.
  2. We also like to see a Registered Portfolio Manager License.
    1. This is the highest licensing available and is only awarded to those the Securities Commission deems highly competent.
    2. Holders are regularly audited by the Securities Commission
    3. All other licenses are self-regulated, which to me is a joke.
    4. Registered Portfolio Managers have few, if any, conflicts of interest.
    5. A flat fee is charged instead of commission and thus they are paid to manage risk not make transactions. There is a big difference.
    6. They are required to hold funds with an arm’s length trustee as opposed to within their own firm. (unlike Bernie Madoff)
    7. They are the only level of advisor that is a Fiduciary.  They must at all times do what is in the customer's best interest.
  3. Cost: Lowest is not necessarily best, but fees need to be reasonable. Your money won't grow if you are paying too much. With Portfolio Managers, percentages decrease with larger portfolios.
    1. Fees must be fully disclosed in a straightforward manner. No hiding them in reams of small print. There are many smoky mirrors in this industry.
    2. There are many ways to literally steal money from your account without breaking laws. I know, it sounds crazy, but is completely true.
  4. Chemistry: You have to like them. Your gut has to tell you that hiring them is a good decision.
  5. Non Correlated Holdings:Your portfolio should have parts that do not move in the same direction as the stock and bond markets. Doing so will add stability and often extra income.
  6. Other issues: When you choose an investment firm, there are many things to consider. There is a spectrum of firms available, allowing you to choose one that matches your personal choice.
    1. Would you prefer working with a man or woman? One is not superior to the other, but they communicate quite differently.
    2. Would you like a larger older firm with history, or a smaller newer one? Size can matter.
    3. Would you like a socially responsible (SRI) option? (no tobacco, polluters or defence stocks)
    4. Would you like them to have an office in your city for meetings, or in a different city to ensure your privacy?
    5. Do you prefer individual stocks and bonds, ETFs/indexes or managed pools? Do you care? (... most don’t, which is fine)
Are you interested in other investments, which will allow you to further diversify as well as bump up your investment yield?

We believe that the stock market is not the place it once used to be. Executive compensation is excessive, which hurts stock performance. While not leaving the market completely, we suggest clients learn about MICs, or Mortgage Investment Corporations.
  • Essentially your money is used to fund mortgages, secured by real estate.
  • The MIC is a pool of mortgages so your money and risk are mixed with other shareholders.
  • We look for MICs with reasonable loan to value ratios, meaning there is roughly 60 cents of debt for each dollar of property securing the loan.
  • We feel that the lowest risk real estate is completed (as opposed to under construction) owner occupied residential. Some commercial and construction can be fine, but the less the better.
  • This type of investment is not without risk, but we believe that risk is worthwhile.
  • The MIC charges a management fee of 1.5% to 2% annually. Yes, steep by some measures, but if you are receiving strong annual returns, it may be worth it.
  • MICs are less liquid than traditional types of investments, meaning the speed at which you can redeem your capital is slower, so please read the small print before investing.
Are you a completely passive investor or would you like to become actively engaged?

Is your current advisor a salesperson or a risk manager? How are they compensated? Are your interests aligned with theirs or is it the opposite?

At Smarter Financial Planning we will take you through a process to match you with a short list of highly competent asset managers with few or no conflicts of interest, a fully disclosed fee structure which is reasonable and a style most amenable to your own.

Contact us now to get started!