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Adrian Mastracci, portfolio manager at KCM Wealth Management, says “Portfolio managers have become a major source of unbiased advice. Investors have welcomed their services." |
Vancouver, BC (February 5, 2007): The world of investment advice has witnessed many changes over the last quarter century.
During our lifetime, we engage a wide variety of people to provide services. There are accountants, lawyers, investment bankers, insurance agents, doctors, dentists, real estate agents and many more. Some provide broad services, while others provide specialized services.
Most investors wrestle with what kind of advisor to choose in the quest of setting investment goals that are appropriate and achievable. Further, to manage the portfolio to achieve those personal goals.
Bernard Baruch, American financier (1870-1965), said: "My advice to investors who cannot give full time to a study of investments is to seek out some trusted investment counsellor. The emergence of this new profession of disinterested investment analysts, who have no allegiances and whose job is to judge a security on its merits, is one of the most constructive and healthy developments of the last century."
Adrian Mastracci, fee-only portfolio manager at KCM Wealth Management in Vancouver, comments:
"Investors seek three things:
- Professionals who understand them.
- Professionals they can work with.
- Professional advice they value.
Portfolio managers deliver value on all three."
Investor needs range from simple to complex solutions. Often, such needs are coupled with other issues such as retirement, risk tolerance, estate planning, income tax and business planning.
Portfolio managers have become a major source of unbiased advice. Investors have welcomed their services. Here is an overview:
1. What they do
Portfolio managers are trained to design, invest and manage client portfolios. All within clear and well-defined criteria for each client. They are independent. They are not affiliated with products.
They establish long-term client relationships. They spend time listening to clients. They understand client objectives, concerns, priorities and expectations. They draw on experience and perspective.
The client game plan is prepared after considering needs, investor profiles, diversification, time horizons and risk tolerances. It becomes the foundation for the ongoing management of the portfolio.
Portfolio managers handle all aspects of asset mix decisions, selecting appropriate securities and plan implementation. Asset allocation becomes a focus of the portfolio. Another is tax-friendliness.
The plan is monitored and the portfolio manager regularly reports to the client. Portfolios are tweaked in response to changing client wishes and market conditions. Trading activity is kept to a minimum.
Portfolio managers work with the client's other advisors as required. They draw on the resources of the whole team. Often they become the client's "financial quarterback".
Their services are highly personalized and confidential. They have broad expertise in domestic and foreign markets. In equities and fixed income instruments. They strive for consistency.
2. Portfolio manager features
Portfolio managers are regulated and registered by provincial securities commissions. They adhere to a code of ethics, like the CFA Institute. Continuing education is a requirement.
Becoming a portfolio manager typically requires five years experience in managing portfolios. The most rigorous requirements in the financial services industry. The investment process is disciplined.
These professionals publish their investment philosophy. A unique feature is that they provide advice, not products. Their advice is independent and objective, with no conflicts of interest.
They have no bias in selecting the appropriate mix of assets and portfolio securities. For many clients, this objectivity alone is a very attractive aspect for choosing the portfolio manager.
Clients can authorize portfolio managers to manage portfolios on a discretionary basis. Reasonable decisions are made in keeping with stated investment goals. High investment quality is preferred.
Safety of client assets is uppermost. Third party custodians hold client assets. The client receives periodic statements, trade confirmations and often web access to view the account holdings.
3. Portfolio management fees
Clients pay portfolio managers a fee, not commissions nor trailers. Management fees are fully disclosed to clients in a signed agreement.
Fees are usually calculated as a percentage of the portfolio. Most fees begin around 1.25% and reduce as portfolios increase.
Fees are typically less than the cost of traditional mutual funds. They are deductible for tax purposes for non-registered accounts.
Minimizing total portfolio costs receives special attention. Portfolios have no deferred sales charges or front-end loads.
4. Who seeks their services
Portfolio management services are available to a variety of clients. Such as individuals, businesses, family trusts, charitable foundations, institutional portfolios and pension funds.
Advice rendered by the portfolio manager is governed by what is important to each client. The aim is to direct the client portfolio with a thoughtful plan that stands the tests of time.
Portfolio management services are appropriate for investors who want their financial assets managed by a professional. The client's best interests come first.
This personalized advisory model provides comprehensive, cost-effective portfolio services to each client. It delivers clear value.
I welcome your questions, comments and opinions.
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