Senior VP, branch manager and portfolio manager, Raymond James Ltd.
In the business
We favour value over growth investing, although we invest in growth at a reasonable price. My client portfolios primarily include dividend-paying stocks trading at attractive valuations. I currently hold BMO on the financial services side and Genivar on the engineering and consulting side.
For low-risk income investing, I’m using laddered bond portfolios with average durations of 2.5 years. For higher yield and low-to-medium risk, I consider mortgage-backed securities, preferred shares and capital securities trusts.
The financial sector is a core position. Banks have a long-term track record of stability and currently pay attractive dividends. The rest of the portfolio is diversified between energy, utilities and consumer staples to reduce volatility.
For international stocks, I mainly use value-based, third-party portfolio managers who don’t mirror the index. I’m cautious of ETFs because, while their management fees appear cheap on the surface, there is often a 2%-to-3% bid-ask spread when you buy and sell. ETFs are becoming complex and require due diligence before investing.
I have a wealthy client who’s an artist and charitably inclined. We came up with a plan to start a non-profit art school for underprivileged kids. This also created significant tax opportunities. I also have clients who love travel but don’t want to spend a fortune, so I introduce them to home exchange programs. For disciplined clients, I’ve suggested using credit cards for all expenses to earn free flights.
I’ve also helped a couple in which the wife (with advanced dementia) was in a care facility while the husband was living in the family home. The couple had been income splitting to save tax, but the cost of the wife’s care went up in proportion to her income. By unwinding that arrangement, they paid a little more in taxes, but saved almost $12,000 annually in long-term-care costs. The husband was so thrilled he can’t stop talking about it.
Originally published in Advisor's Edge
Read this article and full issues on the iPad - click here.