Why Private Wealth Management?

I am asked frequently the benefits of being in the Private Wealth Management (PWM) stream versus investing in mutual funds and/or bank funds. In order to answer this, we define PWM as the following:

• Minimum investment $500,000
• Custodial account (TD/National Bank/Laurentian Bank) managed by an Investment Counsellor (IC)
• IC buys and sells securities within your account based on a rigid Investment Management Agreement (IMA) signed by you
• A fixed fee of between 1-2% per annum is charged monthly based on the dollar amount of your account
• The portfolio is managed according to the “discretion” of the IC, and done without your signature or acknowledgement. You give the IC the authority to trade on your behalf

In Vancouver, some of our best know IC’s are Philips Hager North, Connor Clark and Lunn, Leith Wheeler, Dixon Mitchell. These firms manage billions of dollars of Canada’s wealthiest clients on a discretionary basis. We see three main advantages of firms like these in managing our assets:

• Qualitative/Quantitative analysis – Because an investor will typically only hold a basket of securities of between 50-100 stocks or bonds, these IC’s can drill down very deep on the companies to invest in and not have to analyse the broader market. This strategic review has produced excellent risk-adjusted returns over the long haul versus mutual funds that tend to be much larger and because of the assets they deploy, tend to look like the overall market
• Transparent/Lower Fees – IC’s bill monthly 1/12^th of the annual fee, and this fee is directly redeemed from your account. You get a bill for tax purposes at year end, and is deductible on non-registered accounts. Equity Mutual fund MER’s which average 2.5% and higher, in most instances are not deductible. At 2.5%, mutual funds are an expensive way to manage assets when you consider IC fees are between 1-2% and in many cases are tax deductible.
• Advice – Here’s the great part. When you retain Wiffen Financial Services in that fee of 1-2%, and we refer you to an IC for your money management, you receive a Financial Coach in the “middle” to advise you throughout the year. Whether it be planning for insurance, retirement, estate, tax, legal, debt, education or whatever the need, we are paid for in that fee that is charged on your assets. You never see a bill from our firm to advise you in your planning life cycle. Compare that to the banks or mutual fund industry, in most cases getting a qualified CFP professional to be on call for you 24/7 is very highly unlikely.

I could go on, but we believe at Wiffen that best practices would be for us to “hire” an IC on your behalf and work with them in managing your assets with proper asset allocation, defining risk tolerance, and on going direction on your accounts. As of 2014, we have 10 year returns on our quarterly reports with these firms. The results have been excellent, and we are committed to continue to use the PWM stream as the vehicle to help you grow and protect your hard earned nest egg.