These P’s will help organize your questions and ensure the important ones get asked
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.
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.
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.
Deal-breaker: The adviser is more interested in selling you the latest hot product than learning about your needs.
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.
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.
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?
If you’re not getting straight and complete answers, be assured you’ll be paying too much.
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.
That is, long-term performance. At least five years, and, hopefully, 10 or more. It’s about growing your assets over time
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 …
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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NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
Tesla began selling the software, which is called “Full Self-Driving,” nine years ago. But there are doubts about its reliability.
The stock is now showing a 16.1% gain for the year after rising the past two days.
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
Companies in this story: (TSX:GSPTSE, TSX:CADUSD)
The Canadian Press. All rights reserved.
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