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By Adrian Mastracci
North Shore News
Business Section, "Loose Change"
Sunday, October 28, 2001
Several changes have taken place in the investment world in the
last two decades.
In particular, a new category of investment professional has emerged
as a 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.
It is important to know that an investment counsel does not receive
any compensation or commissions for the buying or selling of securities.
An investment counsel does not have a bias in selecting the appropriate
securities.
This objectivity is often the most attractive feature for investors
in choosing an investment counsel as their investment professional.
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 to
become registered. 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, which leads to the creation of the
investment policy statement specific to each client. Building your
home and your investment portfolio have one common thread; things
go better when you start with a blueprint for each.
The investment counsel may liaise with the client's accountant,
lawyer, banker or other consultants 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 to ensure that the client portfolio remains 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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