Catherine Dorazio, B.Comm, MBA, CIM is a Vice President & Investment Counselor with Connor, Clark & Lunn – Private Capital in Vancouver, British Columbia, Canada. Catherine develops investment management strategies for affluent Canadians, foundations and institutions and can be reached at [[email protected]] or 604-643-5829.
Catherine Dorazio, B.Comm, MBA, CIM is a VP & Investment Counselor with Connor, Clark & Lunn – Private Capital in Vancouver, Canada
It is of great importance to trust your investment professional. Having utmost trust in this person allows you the freedom to focus your attention on other things, especially since we often forget to do a detailed analysis of our portfolio and the markets each day! And even though choosing an investment strategy isn’t rocket science there are too many investment products, firms and professionals with specific expertise to blindly select the first person you believe is trustworthy. Therefore, I am now going to elaborate on the points that I believe are important when qualifying the investment professional and strategy that is right for you.
Qualifications and Experience of the Investment Professional
A combination of credentials and experience is an important variable that many people overlook. This is often because the acronyms and titles can be very confusing. However, designations are important as they represent the level of training and the capabilities of each investment professional. I also don’t recommend putting all your faith in counting grey hairs since it is important for a professional to keep abreast of new tools, strategies and information that will help you meet your goals effectively. Therefore, I recommend asking the professional about their experience and qualifications in relation to other industry professionals.
Track Record and Merits of the Investment Team
Who is managing my money? This is one of the most important questions since rarely is it the person you sit in front of at each meeting. But this isn’t a bad thing since it takes countless hours to do the research and due diligence needed to identify investment opportunities and then set the appropriate asset allocation to meet your investment goals. I recommend finding a professional that is able to focus on giving you the service you need and is as close to the money managers as your wealth affords. In addition, inquire about the breadth of the service and investment team and the resources they have available to them, as well as their track record. There is something to be said for the expertise and resources of large money management teams versus the lone stock picker.
Strategies Available
Having access to various investment styles and strategies will help you capture returns during all market cycles. This leads you to ask what investment styles and strategies you will have access to and the cost of evolving the asset mix over time. Unique strategies such as Socially Responsible, Private Equity, or Emerging Market investments may also be of interest if they are available in a cost effective manner.
Cost & Transparency
The cost of investing directly affects your bottom-line return therefore it is important to understand what you are paying for. Ask for the fee breakdown, inclusive of commissions, trailer fees and management fees. And remember, the closer you are to the money manager the fewer middlemen have to get paid. If the size of your portfolio does not enable you to work directly with the money managers, be wary of products that have been nicely packaged and marketed all the way into your portfolio, especially when you can buy an Exchange Traded Fund (ETF) that represents almost any strategy for a fraction of the cost. And finally, fee transparency is important to ensure fees have not been layered on top of product or management fees. Simply ask, what is the total cost of holding this security or product in my portfolio?
The questions one could ask to ensure they are getting an appropriate investment strategy and the service they deserve are endless. Educating yourself about the options available to you will assist you in making good choices. Asking a few questions will show you are astute and hopefully will keep any professional on their toes.
What are some questions that you’ve found effective when interviewing potential investment advisors? [let us know in the comments]
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