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The seven P's you need to follow when hiring an adviser or investment manager – Financial Post

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These P’s will help organize your questions and ensure the important ones get asked

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If you’re like me, you’d rather mow the lawn than have to find a new adviser or investment manager. It’s a daunting task and you never know if you’ve made the right decision. But as the chief executive of your portfolio, you need to hire and then manage someone, unless you’re willing to go it alone.

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Maybe it’s your first time hiring a manager, or perhaps you need one because you recently fired one. Either way, my partner, Salman Ahmed, and I use a framework called the seven P’s when selecting managers for our funds.

These P’s will help organize your questions and ensure the important ones get asked. Ideally, you should interview at least three candidates, even if you have one who is highly recommended.

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People

Friendly and firm is what you’re looking for. Someone who is personable and approachable, yet strong enough to help you stare down the hard decisions. Experience and credentials will vary, but an understanding of asset allocation and portfolio construction is a must-have. These skills will help match your portfolio to your situation and personality.

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Deal-breaker: The adviser is more interested in selling you the latest hot product than learning about your needs.

Philosophy

You buy into a distinct investment philosophy if you hire a manager at an investment counsellor, such as Mawer Investment Management Ltd., Pembroke Private Wealth Management Ltd. or our firm. The adviser’s approach is the firm’s approach.

If you hire an adviser at an investment dealer, it will be their personal philosophy. Brokerage firms cater to all types of approaches.

Either way, you need to understand how the adviser plans to build your wealth. Are there some industry biases or a focus on dividends? Will the portfolio be mostly in Canada or more broadly diversified?

Note: Exchange-traded funds (ETFs) are not an investment philosophy. They’re a useful tool for implementing one, but reveal nothing about how returns will be generated.

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Parent

Where your adviser works could be important. At brokerage firms, it’s all about the person, since the tools and support behind the adviser are pretty standard. If, however, you’re considering a counsellor, then the firm is key (including its philosophy and track record). Always make sure there’s a history of stability and treating clients like you well.

On the latter point, if you have $250,000 to invest and the firm’s commission structure favours million-dollar clients, there’s little chance you’ll get the service you’ve been promised. Compensation drives behaviour.

Price

What you’ll pay is a touchy subject that shouldn’t make advisers squirm, but often does. Nonetheless, like any product or service you buy, you need to ask what it will cost. Will it depend on the size of assets in your accounts, or be based on transactions? Will there be other charges such as a registered retirement savings plan (RRSP) or transfer fees? And how will it be reported to you on an on-going basis?

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If you’re not getting straight and complete answers, be assured you’ll be paying too much.

Process

This P refers to the decision-making process: how managers come up with ideas and make buy or sell decisions. This is especially relevant if you want to invest in individual stocks.

Equally important is how you will be served and advised. Who will you deal with? How will you be communicated to? Is financial planning included? And how often will you meet?

It’s a deal-breaker if there’s no mention of how the adviser helped clients in past bear markets. After all, turbulent times are when you most need sound counsel.

Performance

That is, long-term performance. At least five years, and, hopefully, 10 or more. It’s about growing your assets over time

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Returns are easier to assess for investment managers who have a published track record. With advisers at brokerage firms, you’ll want to see a sampling of long-standing clients. Don’t settle for returns from a “proposed” portfolio. Anyone can use hindsight to put together a top-performing portfolio.

Warning: If the adviser doesn’t admit to any weak periods or mistakes, you’ve either found the best money manager in the world or …

Passion

This is probably more important in our process than yours. We’re looking for investment geeks to manage our clients’ money. You want investment chops, too, but also need someone who is grounded and has more enthusiasm for helping navigate your financial journey than driving the latest BMW.

Tom Bradley is chair and co-chief investment officer at Steadyhand Investment Funds, a company that offers individual investors low-fee investment funds and clear-cut advice. He can be reached at tbradley@steadyhand.com.

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Ontario supports investment of $31.5M in Wellington, Perth county businesses – CTV News London

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London, Ont. –

Ontario supports $31.5 million surge within the Southwestern Ontario economy with $2.6 million being invested in Wellington County through the Regional Development Program.

The investment by Wellington County manufacturers, which will build on domestic manufacturing is being supported by the Ontario government, will help to create 71 jobs and retain 150 jobs.

“Through the Regional Development Program, our government is making targeted investments in local manufacturers to help them create good, local jobs,” said Vic Fedeli, Minister of Economic Development, Job Creation and Trade in a statement.

“These projects are making a significant impact in communities and economies across the Wellington County region and Southwestern Ontario by helping to secure the private-sector investment that will support strong regional growth.”

The investments are as follows:

  • Weberlane Manufacturing is investing $4.8 million to build a new 115,000 square foot manufacturing facility in Listowel.
  • Nieuwland Feed & Supply is investing $16.2 million to consolidate its production facilities as well as build a second feed mill on the property.
  • Bold Canine is investing $6.5 million to expand and renovate its facility, purchase equipment, and invest in research and development.
  • Wellington Perforated Sheet and Plate is investing $3.9 million to develop new products, and produce more steel parts in-house.

The Regional Development Program for Eastern and Southwestern Ontario was launched by the government in November of 2019.

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U.S. equity portfolio manager explains seven-step investment process – Wealth Professional

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The third step is identifying growth drivers. Sanders carries with him words from an old mentor – ‘always understand what drives top-line revenue’. For example, when Sanders first invested in Amazon back in 2003, when it was $17 a share, online penetration of retail sales in the U.S. was only 3%, but he believed that number was going to grow substantially over time. He met with Jeff Bezos who explained his competitive advantages – widest selection, lowest prices and convenience – completed his analysis and bought the stock. Sanders said: “That’s an example of a company that had a clear growth driver – penetration of its end market with offline retail going online.”

The fourth step is a financial statement analysis, getting into the nitty gritty of the balance sheets from a cash-flow perspective, while the fifth step is a management team assessment. Sanders is not interested in a company’s latest shiny product but instead wants to understand the key assumptions that go into his team’s investment process. ESG factors are also analysed at this stage, including how the board is made up and the compensation model.

Step six is critical and involves Sanders laying out four scenarios – best case, base case, bear, and worst, which are all five-year minimum discounted cash-flow models. The base case is what he thinks the stock is worth today, an estimate of cents on the dollar or intrinsic value. If Sanders believes a stock is worth $100 and it’s trading at $70, it’s 70 cents. He said: “We have this list of companies we’re following, and it’s ranked by cents on the dollar every morning. When stocks get to 70 cents, we recheck the analysis and we buy, and when stocks get up to 100 cents, we sell. That, in a nutshell, is our process.”

Every quarter these values are updated, in step seven, so it’s a moving target, underpinned by deep fundamental research that involves a 10-person team looking at one stock at a time before presenting it the team for debate.

While many investors focus on what is happening that quarter, Sanders told WP he thinks longer term, an approach illustrated by the crash of March 2020. He saw a health crisis, not an issue with the consumer, who ultimately drives the economy. Now in his third market cycle of managing money, the portfolio manager recognized that many elements were actually in good health, from millennials with no mortgages, a housing market at steady levels in the U.S. as it continued its recovery from the 2008 Global Financial Crisis, and a banking system that was doing well after 10 years of Federal Reserve stress tests.

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Surge Closes Investment into Contractor Connect – Business Wire

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DALLAS–(BUSINESS WIRE)–Surge Private Equity LLC (“Surge”) announces investment into its 10th platform, Contractor Connect LLC (“CC” or “Company”), a B2B networking lead-generation platform within the home improvement and remodeling space. The transaction closed with debt financing provided by Modern Bank and Assurance Mezzanine Fund with BakerHostetler acting as lead counsel.

Since its founding in 2014, CC has connected hundreds of thousands of homeowners to local contractors through its proprietary lead aggregator, screening, and live-transfer platform. The Company primarily specializes in various home remodeling verticals including bathrooms, windows, roofs, gutters, and sidings. Its recognized brand is highly regarded across the 25+ states it currently serves. Founder Joseph Powless will remain on as both an owner and partner of the Company.

“COVID has accelerated work from home hybrid and full-time trends. People are now spending more time at home, increasing the demand for home improvement,” said Surge Founding Partner Thomas Beauchamp. “This sustained macro demand for the industry paired with our plan to launch into new verticals such as HVAC and solar give us a clear pathway to sustaining the historical 25% annual growth rate.”

About Surge Private Equity

Surge Private Equity is a Dallas-based private equity firm that seeks majority investments in growing businesses with $2-7.5MM of EBITDA. Together with its lending partners, Surge provides entrepreneurs with liquidity and investors with higher yields and greater accessibility through lower investment minimums. Surge primarily invests in companies where the seller will remain in an ongoing capacity.

About Modern Bank

Modern Bank, N.A. is a privately owned, entrepreneurial bank that provides flexible, competitive, and reliable senior debt financing solutions to commercial companies. Its experienced bankers specialize in working with lower middle-market companies and owners to provide low-cost cash flow-based financing solutions.

About Assurance Mezzanine Fund

Assurance Mezzanine Fund is a private investment firm providing $3 to $20 million customized growth capital solutions to profitable, lower-middle-market companies nationwide. We look to invest our funds in established companies operated by experienced and proven management teams with a history of building enterprise value.

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