Reviewing Your Advisor

By Kim Inglis

We’ve had more than a year of negative news stories – some related to the markets and others involving political issues such as Brexit. If there’s an upside, it is that investors are examining their holdings and how they are managed. It should be done periodically anyway, but some investors are unsure where to start. You can accomplish a lot by asking yourself and your advisor a few pertinent questions.

Do you understand your statement? A Strategic Counsel survey states that over 60% of investors spend little or no time reading information from their advisors. Some account statements may be difficult to read but that should not be a hindrance to ascertaining portfolio performance. Your advisor should explain the statements clearly and/or offer alternative reports to display what you need.

How does your advisor address your problems? You should not be ignored once you have signed on. Part of your advisor’s value proposition must be that they will pay attention to you, which includes responding to your issues in a timely and meaningful fashion.

How are market conditions presented? Be wary if your advisor puts an optimistic spin on everything, and even warier of anyone claiming they always generate positive results. The markets are not static and unless you’re invested entirely in principal protected products such as GICs, it’s illogical to think that your portfolio would be immune to at least some volatility.

Are all the costs to manage the portfolio transparent and understandable?  A JD Power and Associates survey says nearly half (48%) of investors are unaware of the fees they pay. That is an astounding figure that should not be. Your advisor should be happy to clarify the fee structure and provide a written statement of fees.

Do you understand all of your investments?  Until you understand a product fully and know exactly how much it is going to cost, say no. If you don’t understand it, don’t own it.

Never write a cheque directly to your advisor. If the advisor asks you to write a cheque to them personally or to a private holding company, there is only one thing you should do – find the door and use it. Cheques should only be written to a third party custodian such as a bank or registered investment company.

Finally, if you’re unsure about either your advisor or the state of your portfolio, get a second opinion and be sure that it is comprehensive. The analysis should cover a range of aspects such as fees, asset allocation, liquidity, and portfolio performance.

Kim Inglis, CIM, PFP, FCSI, AIFP is an Investment Advisor & Portfolio Manager with Canaccord Genuity Wealth Management, a division of Canaccord Genuity Corp., Member – Canadian Investor Protection Fund.  The views in this column are solely those of the author.