Choosing an investment professional

Last week, John Heinzl of the Globe and Mail wrote a good piece on The Difference Between Advisors and Counsellors. He did a nice job of spelling out the key aspects of what it means to work with a professional investment counsellor versus a commissioned salesperson.

Heinzl also provided a few questions every investor should ask if they are in search of an investment counselling firm. You can click on the link above to read the article. I’ve reproduced the questions below, along with our answers at Newport.

• Is the firm registered with the provincial securities commission?  Yes.
• What is the minimum account size?  $1 million.
• Are client assets held with a third-party custodian? Yes, NBCN, a wholly owned-subsidiary of the National Bank of Canada.
• How long has the firm been in business? 10 years.
• How does the firm define its style?  Keeping clients wealthy is our style.  We do this through wealth management, giving attention to tax planning, estate and succession planning, cash flow management, etc. — factors that impact one’s net worth. From a pure investment perspective, our approach is to earn an attractive rate of return at a lower level of risk than is typical.  We do this by investing in a very broad range of asset classes (both public and private; fixed income, equities, real estate, mortgages, etc.) and by hiring independent asset class specialists in each of these areas.
• Do the investment professionals carry the Chartered Financial Analyst designation?  Yes, we have professionals who carry the CFA, in additional to others who are CAs or LLB.
• Will the firm develop with you an investment policy statement that reflects your objectives?  Absolutely.
• How often are representatives of the firm available to meet?  “How often would you like to meet?” is a question we will ask at our first meeting. Your preferences will dictate how often we meet, be it annually, quarterly or more often. This is of course flexible and may change over time depending on what is going on in your life and the work we’re doing for you.
• On what basis are the investment management fees calculated? How frequently are they charged?  Fees are based on a percentage of assets invested and vary by asset class (fixed income having a lower fee structure than equities). Fees are calculated monthly and charged quarterly.
• Will the firm provide you with names of clients for reference purposes? Happily, upon request.