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| Adrian Mastracci, president
of KCM Wealth Management says, "A category
of investment professional has emerged as
a primary source of investment advice." |
By Adrian Mastracci
Sounding Board
The Vancouver Board of Trade
February 2002 Issue
Several changes have taken place in the investment world in the
last two decades.
In particular, a category of investment professional has emerged
as a primary source of investment advice. That professional is known
as the "investment counsel" and investors have responded
well to their services.
My definition of investment counsel is a professional who designs,
invests and manages portfolios according to clear and well-defined
investment criteria for each client. An investment counsel has no
affiliation with products or financial institutions; thus, does
not sell products.
The services of an investment counsel are available to private
individuals, small businesses, family trusts, charitable foundations,
institutional portfolios, and pension funds.
The investment counsel does not receive any compensation or commissions
for the buying or selling of securities. Moreover, the investment
counsel does not have a bias in selecting the appropriate portfolio
securities.
This objectivity is often the most attractive feature for investors
in choosing an investment counsel.
Fees paid to an investment counsel are generally calculated as
a percentage of the market value of the portfolio. Most fee schedules
reduce as the value of the portfolio grows. These fees are deductible
for tax purposes, provided they meet certain criteria.
An investment counsel is registered with the provincial securities
commissions. The registration is based upon distinct qualifications
for both education and experience that the applicant must meet.
Becoming investment counsel requires at least five years of portfolio
management experience.
The investment counsel handles all facets of asset allocation decisions
- be it for equities, bonds and cash components of the portfolio.
This applies both to registered (i.e. RRSP, RRIF, DPSP, RESP) and
the non-registered (i.e. personal, corporate) client portfolios.
The primary role of the investment counsel is to meet the unique
investment needs of each client. Hence, the first step is to determine
the nature of the objectives, and create the investment policy statement
specific to each client.
The investment counsel may liaison with the client's accountant,
lawyer, banker and other professionals to design the investment
plan that addresses all aspects of the client's unique situation.
This is especially important where the client wishes to undertake
estate planning and estate freezing techniques.
After the portfolio is implemented, the investment counsel monitors
the portfolio and reports to the client on a quarterly basis. The
main purpose is that the client portfolio remain within the established
parameters and to rebalance, as deemed appropriate.
So where do you find them? They are listed in the yellow pages
under categories such as "investment advisory"
or "investment management". Of course,
you can also obtain a referral from a colleague.
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