Doug Norris, a retired VP at an engineering, architectural and survey materials firm who lives in Toronto’s Harbourfront neighbourhood, knows when he’s being sold and subscribes to the old adage that the easiest person to sell to is a salesman.
He started buying stocks in response to provincial tax incentives benefiting people investing in Quebec companies. Upon retirement, he placed those assets with a firm which, he says, aggressively churned his account.
“I lost a bunch of money,” he recollects. “I switched over to [another brokerage] and got started but was always being sold something. Plus, I was paying 3.5%.”
That advisor told Norris she was moving him to a managed account with a 1% fee. “I had a lot of bonds, so that didn’t make sense given the management fee took too much of a chunk out of the return.” At a seminar put on by that brokerage, Norris met Cynthia Kett, principal at Stewart & Kett Financial Advisors. She started doing his taxes, developed a cash flow projection, and performed a general analysis of his financial affairs.
“Then, every time my advisor approached me with a new gizmo, I asked her to look it over.”
A few years ago, when he was considering buying UL insurance, he had Kett run the numbers and made his decision based on her math. He notes it’s worth the hourly fees when her perspective can make a portfolio more tax-efficient or ensure unanticipated needs are properly covered.
Still, he stresses, that planning relationship is special and he has very different expectations for his brokerage relationships.
Norris says he pays money managers for research he can’t otherwise obtain. In exchange, he expects them to beat the index by a couple of points. “I ask a lot of questions and make them work for their money,” he says. “I want their eyes on managing money; nose to the paper. I don’t want them doing anything else. I’d rather these advisors not dilute their thoughts.”
Client Peter Mortifee, works with John Nicola at Nicola Wealth Management in Vancouver, also looks to his advisors to produce the requisite returns without requiring his input. In fact, that frees him to focus on the philosophy behind portfolio decisions.
“We don’t sit down every year and say, ‘What are our targets for this year?’ John [Nicola] has a particular style of investing that I’ve come to admire. We have cash flow targets: we want a 6%-plus return and good solid performance. That approach is one I’m very clear about. But I don’t worry about the valuation of the portfolio year-to-year.”