When 27-year-old advisor Connor Hewson joined his family’s practice three years ago, he knew he’d have to contribute something unique.
His 56-year-old father, John, has a degree in social work and a knack for talking to clients in complex situations. His 29-year-old brother, Taylor, has his CLU and CFP, and specializes in insurance and estate planning. Together, they run TCM Financial Studio in Regina, Sask.
Connor says he’s analytical by nature—each family member has taken personality tests—so being a Chartered Investment Manager (CIM) suited him. Advisors with CIMs can be discretionary portfolio managers and specialize in affluent or institutional clients. Students of the designation learn about building portfolios, alternative investments and evaluating investment performance.
Connor had considered getting the CFA designation, but after talking to friends and mentors with CFAs, he decided it would take him down a more corporate career path, which he wasn’t interested in. He also liked that, by studying for the CIM, he would be on the fast track to an IIROC license.
Why he got it
By focusing on the technical aspects of investing, Connor was rounding out the firms’ services.
“If we were all doing the same things, there would be no point to us working together,” he says.
The firm was founded by Connor’s grandfather, Philip Hewson, in 1977. John joined in 1992, and now he and his sons are developing it into a collaborative firm. They attend to clients together, each addressing a different aspect of someone’s needs.
“Individually, there’s only so much you can bring to the table,” says John. “If you’re going to be a specialist, you’re going to be giving up some areas of general practice. What we’re trying to do is have a general practice made of specialties.”
Connor and Taylor recently helped a client who wanted to expand his portfolio beyond the mutual funds he bought from another advisor. Taylor worked on the client’s financial plan; Connor analyzed the portfolio.
Connor’s CIM training helped him review the client’s investments and devise alternative strategies. He says the designation taught him to assess mutual fund and ETF managers by looking at their work styles and how long they’ve managed their funds. He also has the skills to analyze historical performance, including whether a manager has consistently beaten a fund’s benchmark.
In this client’s case, his analysis showed the portfolio was overweight Canadian securities, especially in the financial and energy sectors. Further, though the client had about $2.3 million invested with his other advisor, the fees on his mutual funds hadn’t fallen commensurately. So Connor developed a low-cost diversification strategy.
He put the client in emerging market, global healthcare and global consumer discretionary ETFs. He also added emerging- and developed-market bond funds to the client’s fixed-income mix, which had been mostly Canadian government bonds. These investments have kept costs down while providing exposure to new sectors and markets, Connor says.
The Hewsons have known this client for 23 years. Over that time, the client and his wife had invested $380,000 with the firm. They weren’t a big part of the Hewsons’ business until Taylor and Connor brought their tag-team skills to the portfolio in January. Since then, the couple has invested a total of $900,000 with the firm. “That shows the education we’ve received is seen as worthwhile by the client,” says Connor.
The approach is attracting professional clients who want to learn about finance and are looking for credible guidance, says Connor. In the past three years, about 20 young doctors have come to the firm. So far, they’ve mostly required mortgages, insurance, and cash flow planning, but the firm is also helping them connect with specialists to structure their practices, minimize taxes and fit investments into their plans.
How he got it
CIM hopefuls must pass the CSC. Applicants must also have two years of relevant work experience in the last five years. CSI, which administers the CIM, says work experience should include conducting or supervising investment management.
Having met these prerequisites, Connor says his CIM experience went smoothly. John pushed his sons to take the CSC while in university, before they would have to juggle working and raising a family alongside their studies.
“My own experience with a wife and children was that it [is] almost impossible to put the effort into it, and enjoy the courses, once you’ve got all those extra demands,” he says.
Connor’s work experience included school co-op placements and, after graduating, a stint as an analyst at Farm Credit Canada. “We had an investment book there, and I was responsible for cash management and compliance,” he says.
Prerequisites taken care of, students can choose two paths to the CIM. The first path is to complete CSI’s wealth management, portfolio management and advanced investment courses (cost: $2,490). The other path is taking CSI’s investment management techniques course and portfolio management course (cost: $1,480). Connor chose the second option. (See “Designation at a glance,” above.)
He was especially motivated to get his CIM because it made him eligible to take Wealth Management Essentials for Investment Managers, which meant he could become IIROC-licensed. That course costs $725, making the two-course CIM path less expensive.
Connor joined his father’s firm in August 2012 and started studying for the CIM in spring 2013. His finance and business administration degree made learning easier, he says, though school was more about concepts than execution. This time around, he found it difficult to focus when learning about areas that wouldn’t apply to his work, such as institutional investing.
IIROC estimates it takes 450 hours to complete the course materials, including the CSC. Each CIM course has a closed-book, multiple-choice exam. The firm is quieter in the summer, so Connor used the extra time to study three or four hours a day, and then took the tests in October.
What it’s done for him
Before Connor and Taylor joined the firm, clients were mostly invested in mutual funds, and John used outside investment experts to execute more complicated strategies. With his sons’ new designations, the firm not only keeps investments in-house, but MFDA advisors also ask them to place their clients’ securities.
He’s now confident about choosing the most suitable investment for a client. He also knows how to measure how a given stock or an asset class would impact a portfolio’s performance, as well as how to combine assets with low or negative correlation. “The analytical side of building a portfolio was something I really learned in depth, and I’d say that would be the main benefit of doing that course,” he says.
In the last six months, his firm has brought in three new clients with assets of more than $1 million each. The clients had more than one advisor and were looking to consolidate at a single firm. With the CIM complete, Connor wants to keep learning. He’ll complete the CFP and is thinking about getting a master’s degree in behavioural finance.
John adds that Connor and his brother have loved learning since they were young. He says it’ll serve them well because stricter rules and clients with higher expectations are permeating the industry.
“There are certainly people out there who don’t have designations who are doing a good job, but I see the game changing,” he says. “If you want to command the commissions or the fees, you’ve got to have a baseline of professional, organized education.”
THE BENEFITS OF THE CIM
Becoming a CIM isn’t enough for Katherine Gordon. She wants to be a portfolio manager, too.
Gordon, a Sprott Private Wealth vice-president and investment advisor, became a CIM in 2013. After 12 years in the industry, she pursued the designation because “there was higher demand for discretionary portfolio management,” she says. “Hearing that was the new trend in the industry, I wanted to make sure I was prepared.”
She studied while working full time and raising two children. She learned on weekends, and took textbooks on family vacations. “All of my textbooks smell like sunscreen now, and probably have sand in them.”
Gordon says the biggest benefit of the CIM is learning about investments and portfolio strategies in granular detail. “It has improved my confidence with alternative investment strategies,” she says. She uses hedge funds with her institutional and wealthy individual clients, and she now feels more confident when explaining why they’re different from mutual funds. She tells clients hedge funds have the flexibility to use the strategies they think will make the most money for their clients, while mutual fund managers are constrained by a mandate.
Wealthy clients are, increasingly, expecting discretionary management, but so far Gordon hasn’t been able to offer the service. Completing the CIM makes her an associate advising representative, but, to become a portfolio manager under OSC rules, an established portfolio manager must supervise her for two years. Currently, there isn’t anyone suitable at Sprott, but she hopes there will be soon.
Gordon wants to become a portfolio manager so she can attract clients who want to hand over the responsibility for their money. “Right now, the client has final say and has to authorize everything.” While her existing clients are happy with the format, the firm has gotten enquiries from people looking for discretionary advisors, and she’d like to take them on.
While she waits, Gordon finds her new designation is attracting attention. She’s been contacted about a dozen times since she listed the designation on her LinkedIn profile. “It’s unbelievable how regularly I’m getting emails and phone calls with either questions about the course and my job, or offers for jobs.”
But she and her colleagues are preparing their firm for the future. “We’re prospecting new business and recommending fee-based. The industry seems to be going that way, so we’re making sure we’re prepared.”
Originally published in Advisor's Edge
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