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Get There However You Choose

The increase in investment access options has grabbed headlines and conversations over the last 18 months for a number of reasons.  Extended positive returns from stock indexes and regulations related to fee disclosure are two of the big ones.  The third big one is a change in the questions clients are asking advisors.

Two of the 3 are great news. The third is exciting while it lasts, but it will reverse itself.

Of the great news, client access to information and investments directly has given new opportunities to both clients and advisors.  New opportunities come with new risks.  As a client, the cheapest option isn’t always the best option.  Investments need to be tailored to your goals, risk tolerance and tax situation.  Price isn’t the whole story. The last time you purchased a car, did you ask your neighbour what they paid for their car?  Did you purchase the least expensive car without asking about features and performance history?  Likely you reviewed your options, picked the features that were most important to you and stopped questioning the price once you found the car that you enjoy and meets your needs.

Fee disclosure took a long time to arrive on investors’ doorsteps and was unfortunately only a partial disclosure requirement.  Now that we have a start, I think clients have a new way to talk to their advisor about how they will manage compensation.  If you haven’t reviewed your fee report on your own and with your advisor, I recommend you do so.  Ask whether the numbers include all of your costs- see articles below to review the regulation and some firms’ choices on disclosure.  Remember that an ‘all-inclusive’ fee on an investment account doesn’t necessarily include all of the costs associated with managing your account, it may only include everything that the advisor listed for you.

If the goal of investing is to have the money that you have saved produce return on it’s own, it should be evaluated on that basis.  Which means being clear on how much expertise and time you personally have to manage investments, what amount of risk you are comfortable with and can handle, what rate of return do you need to meet your life goals and finally, what types of investments do you prefer.  Answering all of these questions, instead of making quick changes to your investment portfolio will provide a significant benefit to you in the long term.

If you have further questions or would like to review your portfolio in relation to you goals and risk tolerance, please contact [email protected]

New Fee Reporting Falls Slightly Short

Performance Reporting Rules

Investment Product Basics