Given the market volatility reflected in those recently mailed out January account statements, many investors are now thinking about should they have the right person managing their portfolio.
Five questions you should ask your hard earned money manager during your annual review
Many investors don’t know how to start when the time comes to take a seat using their manager or adviser to examine their investment portfolio and determine if it is being properly managed.
It is an extremely challenging question to reply to especially taking into consideration the complexity of the Canadian investment industry, where a variety of market participants face differing regulatory and educational requirements.
The scope of the diversity is quite astounding: There are discretionary money managers, exchange traded fund providers, financial advisers, stock brokers, mutual funds sales professionals and financial planners, all billing themselves out as investment experts.
Most troubling would be that the most of these investment professionals don’t have a legitimate fiduciary duty to the client, like a lawyer or accountant does. In fact, it is quite easy to go into the industry without any business or financial background whatsoever apart from the completion of the relatively straightforward course and exam.
As a result, the industry in Canada is dominated by those licensed and compensated to sell you financial products. This arrangement isn’t necessarily a bad thing, as long as these products for sale match your risk tolerances and the compensation being paid is fully transparent and at a fair price.
The bigger issue, in my opinion, arises when sales professionals market on their own the same level to prospective clients despite having differing credentials and levels of expertise. As a result, many investors end up choosing an adviser based on gut feel instead of matching up to the actual kind of service they require.
To assist in avoiding this, here are three categories to consider and utilize when on the hunt for someone to help manage your hard earned money.