President and CEO, Bellwether Investment Management
In the business
over $100 million across 92 households
We routinely screen about 3,500 NYSE and TSX companies and ADRs, and narrow it to 35. We recently sold Aimia, a loyalty management company, amid concerns about earnings growth. We’re at the low end of our income investing range (35% for a balanced mandate). We’ve invested only in corporate bonds for the last three years. In taxable accounts, we also hold rate reset preferreds to avail ourselves of dividend tax credits.
For equities, we look for strong dividend, cash flow and earnings growth. Good examples are Starbucks (three-year dividend net growth of 35%), and McDonald’s (net growth of just under 14%). We also compare historic multiples of a company (e.g., Amgen) and its competitors (e.g., Celgene). Starbucks trades at a fairly healthy multiple (current PE is 16; forward PE is higher), but we’ll pay more for a stock growing at such a good pace.
We ask new clients what they liked and disliked about their last advisory relationships. Clients decide how many times they’d like to meet us in a year. Most ask for two in-person meetings.
We’re fully fee-based. We charge 1.25% (including custody costs) on the first million. Fees progressively taper as assets increase.
With couples or family members, we have each one fill out our risk profiling questionnaire and, when necessary, we separate accounts to allow individual asset mixes. We treat all accounts related to a family as a single household, but customize our reporting—consolidated at family level or separated by corporate and personal accounts.
Growth While we rely on traditional referrals, over the last few years we’ve also advertised through Google AdWords. The campaigns have focused on transitional phases, such as divorce, and have attracted about six clients over two years. We’re also regularly quoted in the media, such as BNN, Canadian Business and CNBC, and that has gained us three to five clients per year.
Originally published in Advisor's Edge
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