Conservative investments guide this advisor’s choices

Laurie Rafter started her career when she was all of 19—an administrative assistant to the very first female licensed broker in Canada. By 24, she was a full-fledged broker, defying convention not only by being among the very few women who stepped onto the investment turf back in the early ’80s, but also one of the youngest.

She rose through initiative, and a keen observation of the industry. Even as an assistant, Rafter would offer to go to every client meeting, and learn everything she could. Soon, she started making investment suggestions to her boss and even volunteered to run seminars and bring in new names to prospect. Finally one day, her mentor said to her, “Laurie, you’re doing all this for me, why don’t you do it for yourself?”

Rafter took the advice seriously. And now, more than 25 years later, as senior vice-president and wealth advisor at Wellington West Capital Inc. in Winnipeg, her book is worth more than $100 million.

When she just started out, people eyed Rafter with surprise because finance was still a male bastion. “But when I opened my mouth and spoke about how I wanted to handle their finances and portfolios, they’d pay attention, and almost always respond to the empathy. And I actually found it an advantage to be female,” she says.

Despite being somewhat shy of prospecting, Rafter built a bulk of her book by organizing seminars for her clients and prospects when they were still quite a rarity in the early ’90s. She’d cold call, place ads in the local paper and send mass mailings. About 500 showed up to her first seminar. “Those kinds of things don’t work these days because the market is a little saturated,” she reminisces.

Now she’s taken to organizing appreciation events for her clients, which include renting out a movie theater on a Saturday morning and screening the latest release. And she never forgets to invite their kids and grand kids, making it a bonding time not just for her and her clients but for their families as well.

Investment policy

Aggressive when it comes to career, Rafter is conservative—very conservative—when it comes to core investment philosophy. A stickler for balanced portfolios, she plans for 4% to 5% returns, and constantly emphasizes the need for bonds—even though rates may be lousy—and enough cash to ride rough patches so her clients never have to sell stocks or assets in a bad market. “Investing 101—stay with tried and tested stuff, and shy away from investment derivatives,” is how she puts it.

For example, when a couple of Rafter’s clients insisted on buying Nortel—when it fell drastically when the tech bubble burst—she insisted they put it in writing because she says the volatile rise and fall of Nortel stock made her uncomfortable. “I didn’t mind playing the devil and making sure clients realized this was play money, and could go either way. I didn’t want to get caught in something like the Bre-X when some clients wanted to buy speculatively and I felt they were throwing their money away. And I wanted them to put it in writing not just to protect myself but sometimes it makes them re-think their decision.”

And when Rafter started sending out quarterly reviews in 2007, she once again erred on the conservative side, attaching newsletters warning client to become less bullish. “After four good years in the market there was bound to be a reversal. I didn’t know when it was coming, but coming it was.

“If stocks are growing at 10% and bonds at 3%, even a 50-50 portfolio will become 70-30 two years from now. You need to become more conservative and get back to 50-50. You can live your life at 50-50 or 40-60 because that’s where most pension plans live (as long as you don’t need that money in the next three years),” she explained. Most of her clients have been with her a long time—they survived the early 2000 crash together—so they’ve listened.

Know Your Client

To make sure she understands her clients’ psyches, Rafter’s KYC process focuses mainly on their emotions. “I don’t talk about investments till the last second. It’s more about feelings, experiences, and family backgrounds.” When it does come down to money talk, she tells them, “based on what you’ve told me, this is what I would suggest. And this is what it’s going to cost you.”

As a fee-based advisor, cost is something Rafter is extremely upfront about. “The way of the past—deferred charges and hidden fees—is an archaic way of doing business. The reality is you get what you pay for,” she says.

And to ensure her clients get the best value for their money, Rafter says she manages their financial affairs with diligent attention to detail. “When I look at clients’ portfolios, I don’t just look at their investments, I also look at how their portfolios are set up, which spouse has what investment, whether they have joint, individual or trust accounts, tax-loss planning, and most importantly, whether the right investments are in the right accounts.”

Rafter also makes sure outstanding credit card balances don’t sit around in client accounts—“small details [like] that can add up when markets are lousy,” she explains. “And when the rules change, I’m right on top of things. I’m undaunted by paperwork and have every document fully up to date.”

Rafter doesn’t believe in doing it all herself either. She focuses on building a relationship with her clients, decides what strategies they need, and then outsources the actual investing to topnotch managers.

As a policy, Rafter talks to her clients every quarter. For those who are really worried, she follows-up on a monthly basis. She had a client who’s retiring next year. It’s terribly bad timing, and the client was very upset. She sat her down and told her, “Your overall return in the last seven years is still positive. It’s just down from six months ago.” The client hadn’t realized that.

“People tend to look at the short-term. A portfolio that was worth $600 is now worth $400, but they don’t realize they started out at $200. They only remember the peak in the market,” Rafter says.

And if a client is still upset about something despite the advisor’s best intentions, the golden rule she says, is to deal with it immediately. “I don’t want them to go two days without hearing from me. Most of the time it’s misunderstanding. It’s a marriage; you got to treat it that way.”

And just like in a marriage, if her personality doesn’t gel with her client’s, she quickly opts out of the relationship. “Sometimes personalities don’t mix. If it isn’t a good fit at the get-go, I don’t take it any further.”