Portfolio Manager Referral Program

What is private client wealth management?

A Portfolio Manager or Private Client Money Manager makes discretionary investment decisions for your assets based upon established goals and constraints. Typically, it is more personalized, better quality advice than is available through a broker, bank, or investment fund, but at less cost. However, unlike stockbrokers and investment fund companies, Portfolio Managers usually have a minimum account size that they will accept. Today these minimums are as low as $250,000.

Watch The Portfolio Manager Solution video.

Why consider a Portfolio Manager instead of a Broker for investment decisions?

Portfolio Managers charge a fee and don’t charge a commission every time there is a transaction. Therefore, their interests are aligned with the client’s long-term goals instead of being motivated to create a lot of activity. In addition, hidden commission such as strip bond and ETF spreads can cost clients without them even being aware.

Independence is also an important consideration. Underwriting and Investment Banking bias has plagued the brokerage industry for years. Even supposed “independent” brokerages can’t offer many investments if not supported or approved by their head office.

In addition, these Portfolio Managers are typically smaller boutiques of larger pension style managers. As such, one receives conservative Portfolio Management similar to a pension fund but with personalized service.

Why consider a Portfolio Manager instead of an Investment Fund?

There are 10 major differences between Portfolio Managers and investment funds:

  1. TRANSPARENCY – All fees are fully disclosed and the mechanics and relationships between all parties are easy to see. It’s not a closed box, but rather an open book.
  2. DIRECT OWNERSHIP – You own the individual securities directly. Through a custodian such as National Bank the stocks, bonds and cash are held for you. The Portfolio Manager merely has your permission to buy and sell in the account. This leads to portability of the holdings. If we no longer want one Portfolio Manager to advise you, a simple form cancels their authority to trade in your account. Therefore, your portfolio can be managed by another Portfolio Manager, but the underlying investments don’t need to be sold. This avoids triggering capital gains taxes.
  3. LOWER FEES – Investment Funds average 2.5%. Portfolio Manager fees average about 1% lower. A $250,000 account over 20 years earning 8% will yield $1,165,000 whereas at 7% you are left with only $967,000.
  4. DEDUCTIBILITY OF FEES – In non-registered portfolios the fees you pay may be deductible on your tax return, further reducing the cost.
  5. ENHANCED TAX EFFICIENCY – Gains and Losses in the managed portfolios are individualized and offset against each other minimizing the reporting for tax in non-registered accounts. In addition, an Investment Fund’s investor could inherit some gains from the fund and pay the tax on it, but not even be an investor at the time of earning these gains to enjoy the increase in the investment.
  6. LIQUIDITY OF HOLDINGS – Some Investment Funds have reported taking 130 days to sell some holdings, whereas Portfolio Managers don’t have the same constraints. The reverse is also true. If one wants to enter the market slowly and buy securities selectively this can be done with a Portfolio Manager whereas the Investment Fund gets invested 100% the first day.
  7. ENHANCED REPORTING – More accountable and easier to understand statements means a better understanding of exactly what you own. It will be easy to recognize the large, Blue Chip companies you own (there is less of what doesn’t matter and more of what does).
  8. CUSTODIANS ARE COVERED BY CANADIAN INVESTOR PROTECTION FUND (CIPF) – CIPF covers customers of members for the failure to return securities and cash balances held in the account by a member for a customer. The coverage is $1 million for each account entity, in other words, each RRSP, RRIF, HoldCo. Account, cash account per individual is covered by a separate $1 million.
  9. EFFICIENT INCOME CREATION – When one is depending upon their portfolio for income it is better to depend upon dividend, trust and interest payments to be placed in your bank account. Investment Funds that use unit values to determine prices means you are selling some investments at a low to provide your income.
  10. HIGHER DEGREE OF PERSONALIZATION – If one has particular needs where certain investments are to be avoided because of “conflict of interest” or ethical investing preferences, these are easily accounted for in the Investment Policy Statement of the Portfolio Manager.

Why use Blackburn Davis Financial Inc. to make the introduction and be involved in the process?

Blackburn Davis Financial Inc. currently assists clients with the appropriate referral of approximately $500 million of investment assets. We are active throughout Alberta and British Columbia, but concentrated in Edmonton, Calgary, Vancouver, Victoria and Vancouver Island. We coordinate and weave together all aspects of your investment, health and estate planning needs to provide a comprehensive and cohesive approach to your finances. This is done through consultation with your legal and accounting advisors. It is this planning process that drives our desired level of risk, rate of return and asset allocation between stocks, bonds, cash and other asset classes.