HighView Financial Group https://www.highviewfin.com Tue, 10 Jul 2018 13:05:21 +0000 en-US hourly 1 https://wordpress.org/?v=4.9.7 HighView Family Story: Former Entrepreneur with Multiple Advisors in Need of Integrated Family Wealth and Succession Plan https://www.highviewfin.com/blog/former-entrepreneur-with-multiple-advisors-integrated-family-wealth-and-succession-plan/ Tue, 10 Jul 2018 12:57:52 +0000 https://www.highviewfin.com/?p=10077 Advisors work together to create sustainable wealth plan"This family story is the first of a series in which we discuss some of the common investment challenges families face and what ultimately led them to HighView. Here, we explore the topic of families who have built their wealth through entrepreneurship. Often, the biggest worries in these situations are ‘what ifs’—what if my money isn’t well managed, doesn’t last, or needs to be rebuilt—that can leave families feeling like they don’t have full control over the wealth they have worked so hard to create.

In this story, the family had built a successful business over three decades before selling it to net several million dollars. At the time, in working with the entrepreneur’s accountant, the family’s investable assets were allocated between three financial advisory firms. Three years of operating in this manner left the family feeling financially lost as their portfolios were simply riding the waves of the capital markets with no defined purpose or method of measuring success that was personally relevant for them.

Through their accountant, the family approached HighView to create an integrated wealth plan for the whole family—first generation of Mom and Dad, second generation of adult children, and future generations as well—that would build true multigenerational and sustainable family wealth.

  • Collaborating with the Family’s Advisors to Create a Wealth Plan: By collaborating with the family as well as their accountant and estate lawyer, HighView crafted a tailored wealth plan that illustrated how the family could create a sustainable balance sheet that could be passed down through the generations.
  • Increasing Wealth Security and Decreasing Fees: HighView consolidated the family’s assets with a single, large Canadian financial institution. We were also able to materially lower their investment fees relative to expensive retail-priced investment products in which the family had previously been invested.
  • Providing the Family with Peace of Mind: The family receives quarterly and annual reviews that measure their portfolio’s behaviour against their stated goals. This objective, transparent approach gives the entire family confidence in knowing that their portfolio is supporting their goal of creating multi-generational, sustainable family wealth.

Read the full family story here.


HighView is an experienced fiduciary portfolio management firm whose sole purpose is to provide our clients with peace of mind by making their wealth sustainable. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

You may also be interested in:

]]>
Mitigating Volatility to Create Sustainable Family Wealth https://www.highviewfin.com/blog/mitigating-volatility-to-create-sustainable-family-wealth/ Fri, 18 May 2018 15:21:27 +0000 https://www.highviewfin.com/?p=10024 Mitigating Volatility to Create Sustainable Family WealthFor families who have built their wealth over a lifetime or have experienced a liquidity event such as the sale of a business after decades of hard work, the prospect of being held hostage to the whims of the market can be frightening.

The reality is that markets are inherently volatile, and you need to be able to tolerate short-term volatility in your portfolio. If not, you may react to fluctuations in ways that are detrimental to your long-term returns like, for example, forcing liquidation at inopportune times.

But how much volatility are you willing to tolerate?

To mitigate volatility over the long term, you need a portfolio built and managed based on your goals and risk tolerances, not market performance. Having a portfolio grounded by your tolerance to risk and driven by goals-based benchmarks will help provide long-term wealth sustainability and keep you feeling at ease, even in turbulent times.

Assessing Tolerance for Risk

Gauging Your Own Risk Tolerance

When thinking about how the returns from your investments will support your family’s down-the-road needs, you also need to consider the other side of the coin—your risk tolerance.

Your tolerance to risk is highly personal, which is why there should always be harmony between how you feel comfortable investing and how you actually invest. If you’re a low-risk investor with high-risk investments, you might find yourself ringing alarm bells with every market shift.

Your risk tolerance should always be assessed and balanced with both market conditions and the pursuit of your specific short, medium, and long-term goals.

Measuring Success

Understanding the Importance of Relative vs. Goals-Based Benchmarking

At its core, benchmarking revolves around one question: has your portfolio been successful?

A common approach in our industry is to track success by measuring your portfolio’s behaviour against relative benchmarks like market performance. Since these metrics might not be relevant to your family’s overall needs, this practice often leads to problems like depleted capital, missed funding requirements, and exposure to unnecessary amounts of risk—all of which jeopardise the long-term sustainability of your family’s wealth.

Instead, your portfolio should be structured to determine performance based on your actual needs and goals. Tracking goals-based benchmarks that take into account your individual lifestyle and financial goals and risk tolerances will help you remain committed to your investment strategy even through market ups and downs.

Viewing Prudent Rebalancing as a Risk Management Tool

Rebalancing can be an important risk management tool, but it needs to be done using disciplined processes to be effective. If it’s performed too frequently, you run the risk of driving up costs and not capturing the momentum of well-performing assets. If it’s not done often enough, that could expose you and your portfolio to unsuitable levels of risk.

Also, any rebalancing within the portfolio should be discussed and reflected in the Investment Policy Statement.

Although market volatility isn’t something you can change, it is something you can prepare for with portfolios that are built to reflect your lifestyle ambitions, financial needs, and risk tolerances—helping you achieve your own goals and not arbitrary benchmarks.


HighView is an experienced fiduciary portfolio management firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

 

]]>
Due Diligence Can Distinguish Good from Bad Money Managers https://www.highviewfin.com/blog/due-diligence-can-distinguish-good-from-bad-money-managers/ Wed, 25 Apr 2018 20:32:08 +0000 https://www.highviewfin.com/?p=9996 Securities regulators have recently sanctioned a few mutual fund companies for spending excessively on promotional events and gifts to financial advisors who sell their funds. This is harmful to investors since it really treats the advisor – not the investor – as the most important client. While it’s impossible to know what happens behind closed doors, there are ways to sense whether a firm is more sales-oriented than it is investor-oriented.

The Rule

Securities regulators finalized National Instrument 81-105 in 1998, a result of the many recommendations made by securities lawyer Glorianne Stromberg. NI 81-105 allows mutual fund companies to, for instance, pay commissions to advisors selling their funds; but cannot make those commissions contingent on the level of sales or types of products. It also outlines limitations when fund companies hold marketing events or trips to promote their funds to advisors – the subject of the allegations against Sentry Investments last year and Mackenzie Financial and 1832 Asset Management (Dynamic Funds) this April.

The Role of Advisors and Analysts

Individual financial advisors and their firms have an obligation to understand the structure, features, costs, and risk-return potential (among other aspects) of every product recommended or sold to clients. But the practical reality is that most investment dealers don’t do extensive due diligence on mutual fund companies because they are well known, have long working histories with dealers, and offer highly-regulated products (i.e. mutual funds sold by prospectus).

The bar for deep due diligence that I and my partners at HighView set gets higher each year. As analysts, we are outsiders trying to peer inside of the organizations we cover to make a high conviction assessment – and ultimately decide whether the firm and any of its offerings deserve a spot in our clients’ portfolios. There are signals that we can use as indicators of whether the firm is a good steward of the assets entrusted to them:

1.      Investment Offerings

We tend to take a cynical view of investment management firms that launch gimmicky products that are designed more to sell than to perform. Examples abound from the late 1990s (technology), early 2000s (high-payout structured products), mid-2000s (BRIC, China, Emerging Markets), and 2010s (bank loans, high-payout income funds, Cannabis funds, bitcoin). Retail-oriented firms – like the aforementioned firms cited by regulators – tend to launch more trendy products. More institutional quality firms never launched these trendy products. An investment theme can easily be included in a firm’s existing products or strategies. Launching a bunch of new products can be a legitimate way of exploiting an investment opportunity, but often it’s just a way to attract more money from investors.

2.      Costs and Compensation

Investment AdvisorOver my career, a few standout mutual fund companies offered higher-than-normal compensation across all of their products. Offering more than 1% per year to advisors selling funds, for example, is unjustifiable. If an advisor is providing a higher level of service that can be justified by a higher fee; the advisor can charge it directly. Products offering higher commissions are simply trying to attract more sales. And that almost always leads to higher investor costs and lower returns – not very investor-friendly.

3.      Governance – Policy and Practice

During our due diligence on one of the above firms, we asked for a copy of the firm’s policies and procedures manual. They refused, which lead us to suspect that they had something to hide. We later found out that this firm failed on both its written policy and its implementation.

In 2009 we detected a conflicted trade by a fund manager at another of the above mutual fund companies. We had zero doubt that it was a trade that should have been reviewed (and ultimately rejected) by the funds’ Investment Review Committee (IRC). It wasn’t and the trade went ahead with very few aware of it. When we challenged this firm’s head of compliance at the time, he offered a weak argument. That put a black mark on that firm’s due diligence file.

4.      Communication

Investment management firms communicate through websites, advertisements, and direct communications. Those that are forthcoming and genuine are usually more client-centric. The same firm that refused to give us a copy of its policy manual also had a very sales-driven communications strategy.

Their ads were sometimes misleading – such as the ads I wrote about in 2016. They would reach out to us to brag about superficial things like a performance award/rating or their top ranking in sales (i.e. money flowing into their funds). But when we reached out to ask them questions of substance they were tight-lipped.

Another firm’s older ad promoted its two monthly income funds – one of which I first wrote about in 2001 – as a “Miracle Funds”. Its years of excessive distributions resulted in significant erosion of capital and a distribution that is a fraction of what it once paid.

Most investors and advisors won’t be able to replicate our type of due diligence, but the above factors will help in deciding whether a firm is deserving of your hard-earned investment dollars.


HighView is an experienced fiduciary portfolio management firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

]]>
The Client Dangers of Proprietary Investment Product Overload https://www.highviewfin.com/blog/client-dangers-of-proprietary-investment-overload/ Wed, 28 Mar 2018 17:16:40 +0000 https://www.highviewfin.com/?p=9978 Absolute Objectivity Is Key When Advising Clients

One of the Founding Principles of HighView Financial Group is ‘objectivity’, which from a portfolio construction perspective means that we don’t believe that advisors should be conflicted in the construction of their clients’ portfolios by using investment product from related product manufacturing companies.

For instance, this lack of objectivity has become increasingly common over the past two decades amongst Canadian financial institutions, through both organic and acquisition growth, that now have both extensive client advisory (‘distribution’) businesses as well as large investment management (‘manufacturing’) businesses. This use of advisors’ own corporate investment products in client portfolios is referred to as using ‘Proprietary Product’. The benefit to the overall wealth management business in these situations is obvious as they can make money from clients on both the Advisory Fee as well as the Investment Management/Manufacturing Fee.

We’ve held this view of objectivity for many years having personally experienced during our Bay Street careers the negative consequences for investor clients of having their portfolios dominated by proprietary investment management businesses. Instead, we believe in the independent division of distribution and manufacturing businesses, as it’s the only way to truly ensure that client portfolios are constructed in a conflict-free manner with the clients’ best interest in mind.

Research Results on Proprietary Product Use

Credo Consulting, a reputable research and consulting firm in the Canadian asset management segment, recently completed a two-year research survey (February 2018) on financial advisors loading their clients’ investment portfolios with their affiliated companies’ financial products (‘Proprietary Product Loading’ or PPL). In reading the results of this survey, I found the extent of use of PPL within client portfolios very interesting. Specifically, what Credo Consulting found is that investors who work with advisors associated with distribution business that also have a product manufacturing division are many times more likely than other advised investors (ie: up to 9-12 times more) to have that company’s products in their portfolios.

The Well-Being Effects of Proprietary Product Use

To test the effect of PPL on investor well-being, Credo asked investors with PPL about their feelings of financial well-being (ie: How they feel with respect to their financial expectations—behind, at par, ahead, etc.)  The results from this study show that the practice of PPL does not currently harm investors’ state of well-being. Although I’m not questioning the results of this well-being analysis, I do believe that financial well-being is ‘more than just a feeling’. In other words, it’s not just about a qualitative assessment. It also requires quantitative facts to support those feelings. Unfortunately, investor clients and most Canadian wealth management organizations do not have the applicable client portfolio data to actually answer this question properly.

Quantitative Assessment of Well-Being

From a portfolio management perspective, ‘Meeting My Expectations’ is defined as meeting my financial goals with my required rate of return (after all fees), over my investment time horizon, at my level of desired risk.

In other words, you need the following portfolio information to be calculated:

  1. Financial Goal: What size of portfolio do I need in retirement to fund my required retirement income in ten years’ time?
  2. Required Rate of Return: What rate of return, after all fees, do I need to fund my retirement lifestyle?
  3. Desired Level of Risk: What level of volatility am I prepared to accept on my capital?

The unfortunate reality is that most Canadian Wealth Management firms are not able to calculate all of these above values for clients as they haven’t collected the required portfolio data and/or they don’t have the applicable portfolio/wealth systems to actually calculate this financial information. Although most wealth management firms recently started reporting the ‘actual’ rates of return on their clients’ portfolios due to regulatory requirements, there is no regulatory requirement to calculate the above financial information for clients. Some advisors and firms do calculate this information, but most don’t.

In my personal experience, most investors simply don’t know their number. They don’t know what their quantified financial targets are, they don’t know what their required rates of return are, and they don’t know what level of risk they’re actually prepared to tolerate.

Given this, when an investor is asked ‘Is your advisor meeting your financial expectations?’, the investor is answering on a complete ‘gut feeling’ as they don’t typically have the required financial/portfolio information to actually provide an objective assessment and answer. As business consultant Peter Drucker once said, ‘You can’t manage what you can’t measure’, and this is the exact position in which most Canadian investors unfortunately find themselves today. They just don’t know their actual state of financial well-being.

Why Diversified Wealth Management Firms Don’t Really Want True Objectivity

As an investor, to meet your financial well-being requirements, you need to optimize your risk-adjusted rates of return in meeting your financial goals. In the current low interest rate environment, this is no easy task for investors. As a result, to increase your odds of doing so, I believe it is key for investors to have unbiased, open access to the top investment solutions, globally, which means not being limited by an over-allocated collection of proprietary investment products in their portfolios.

Just like no single sports team can have all of a league’s best athletes, no proprietary wealth management firm can have all of the industry’s best money managers. It’s just impossible. This isn’t to say that there aren’t some good money managers amongst proprietary wealth management firms, but the notion that ‘all’ or even the ‘majority’ of their investment products are top tier is completely flawed. In fact, in our experiences researching and due diligencing money managers for almost three decades, we have found that most proprietary asset management firms excel in one, and at best, maybe two areas. As a result, the only way for clients to truly access top tier money managers across all of the components of their portfolios is to have unbiased, open access to the full range of investment opportunities in the global marketplace.

Despite this reality, in my experience, together with the above Credo research survey results, diversified Canadian financial institutions who have both advisory and manufacturing businesses continue to push their proprietary investment products through their advisory/distribution businesses to distorted levels. Having worked on Bay Street for 16 years (prior to co-founding HighView over 12 years ago) and been involved extensively with two proprietary money management firms, I unfortunately don’t see this changing any time soon.

There are typically five arguments that I’ve been personally presented with over the years by senior executives of diversified Canadian wealth management firms as to why they don’t really want to make their businesses completely objective through an independent and rigorous due diligence process with respect to the distribution of investment product through their advisory channels.

1.      Our Company’s Profitability Will Suffer

If less proprietary investment product is sold through a financial institution’s advisory channels that will mean lower revenue for the overall organization, as it won’t collect the investment management fees on that lost product sale.

2.      We Don’t Need To Be That Good

The brand of the wealth management firm is solid with its client base. It therefore doesn’t warrant the extra cost and effort in seeking external money managers in areas in which the company doesn’t excel to deliver the ‘best solutions’ available to clients. This is because ‘good is good enough’, and there’s no need to be that good.

3.      We Can’t Fire the Whole Team

When financial institutions encounter portfolio performance issues within their investment management teams, the default response is to always try to fix the internal investment management team, even if the institution doesn’t have a competitive advantage in that particular area of portfolio management. Firing the investment team that created the poor investment results and outsourcing to a competent investment management firm is rarely contemplated.

4.      Let’s Be Rational About This

Most financial institutions do not employ the use of open access to investment solutions across ‘all’ of their advisory channels (ie: not just brokerage divisions but also retail and high net worth investment advisory divisions). But when open access does actually occur, it’s not typically ‘fully’ open but more ‘rationally’ open. In other words, financial institutions will ‘rationally’ allocate a portion of their investment products to external managers to give the appearance of being objective without truly living a fully-open approach to money management.

5.      We Need to Promote and Grow Our Corporate Partners

Many employees within large Canadian financial institutions have long-term incentive programs tied to the overall financial growth of their organizations. As a result, this has the potential to create a bias in the use of proprietary investment product and supporting affiliated companies and the continued growth of the overall organization.

As you can see, all of these above reasons are all about “Putting The Company First!” not “Putting The Client First!”.

Conclusion

I applaud Credo Consulting for conducting the survey that they did as it does affirm the extent of PPL occurring within the Canadian Wealth Management industry today. As I’ve outlined above, though, I believe quantitative, not just qualitative, research is required to properly assess investor well-being as I don’t believe that investor well-being is actually best served through the extensive use of proprietary investment product.


HighView is an experienced fiduciary portfolio management firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

]]>
7 Common Hurdles in Creating Sustainable Wealth https://www.highviewfin.com/blog/7-common-hurdles-in-creating-sustainable-wealth/ Wed, 28 Feb 2018 18:56:54 +0000 https://www.highviewfin.com/?p=9912 Your wealth gives you and your family the freedom to pursue your goals; however, accumulating it requires diligence, focus, and patience. For this reason, it isn’t something investors want to do twice!

The global marketplace is currently treading in the precarious waters of a secular bull market. In these changeable conditions, investors are looking for sustainable approaches that will keep their wealth afloat for many years to come.

In our experience managing family wealth over the past few decades, we have noticed seven roadblocks that can get in the way of investors making their wealth sustainable. We review each one below and provide insights about how you can overcome them:

Return on investment1. Relative Return Investing

Often, portfolios are constructed to chase relative index-based benchmarks that measure success according to things like market or peer performance. These approaches can be inherently flawed since the metrics might not have any bearings on your unique goals. This makes it easier to veer off course and can expose you to higher levels of risk.

To navigate around this impediment, focus on goals-based benchmarks centered around what really matters: creating sustainable wealth that empowers you to achieve your goals and fund future commitments.

You need to start from day one with a clear understanding of your objectives (things like financial, lifestyle, and philanthropic aspirations) and the purpose your wealth plays in helping you achieve them—only then can you construct a portfolio that will get you there.

2. Policy Vacuum

An Investment Policy Statement (IPS) plays an incredibly important role in effectively capturing your portfolio’s purpose and how you want it to be managed. Though the content may vary, these core elements should be present in an IPS:

  • Investment objectives specifying the purpose of your portfolio in order to meet your unique financial goals.
  • Risk tolerances, which outline your ability to tolerate risk in terms of capital and income loss.
  • Constraints including liquidity (defining any short-term needs for liquid funds), taxation considerations, and specific legal and regulatory issues to be addressed.

Regardless of where you keep your investments, you should always have an IPS that’s properly tailored to reflect your needs and objectives. Your IPS gives investment professionals specific instructions to follow when managing your money and it gives you an opportunity to reflect on and articulate your own financial and lifestyle goals.

3. Erratic Investing

Erratic FinancingUnfortunately, the minds of many investors are dominated by two emotions—greed and fear. When the market is up, they find themselves obsessed with beating it, and when it is down they become hyper-focused on fleeing to “safer ground”. These attitudes dominated during the technology bubble of the late 1990s and early 2000s, and we’re seeing them again to some extent now with the rise of things like crypto-currencies, tech disruptors, and marijuana stocks.

Although many people assume this is how investments work, the reality is that this type of behaviour is never the best recipe for creating sustainable wealth. Instead look for disciplined processes underpinned by fundamentals and work with investment advisors who will structure a portfolio aligned with both your return goals and risk tolerances. This balanced and stable approach keeps you comfortable and committed to your long-term investment plans regardless of market conditions.

4. Island Investing

Money management is a crucial part of managing wealth, but it does not always stand alone. Families and foundations often have complex wealth management needs and benefit from working with professionals like lawyers, actuaries, and accountants who provide important structural advice to help better manage their assets. In the case of an affluent family, these recommendations could be related to the design and implementation of investment holding companies and trusts.

The key is to coordinate and integrate the structural and investment advice you receive so your investment advisor can architect a tailored plan and create well-informed, holistic solutions that generate sustainable wealth.  You want your network of trusted advisors working collaboratively and in well-defined roles together instead of in silos to manage your wealth and guide you towards your goals.

Conflicted investment solutions5. Conflicted Investment Solutions

One of the most frustrating questions you might grapple with is figuring out if your investment solutions are right for you or for the investment firm.

To assess this, it helps to understand the five main components that make up asset management offerings:

  1. Individual Securities: The specific stocks and bonds themselves.
  2. Investment Management: The people who “pick” stocks and bonds.
  3. Brokerage: The people who trade stocks and bonds on behalf of investment managers.
  4. Custody: The people who hold clients’ securities.
  5. Portfolio Advice: The people who structure a portfolio to match your investment objectives and risk tolerances.

Be wary if a single firm performs more than one of these five functions, and ask the firm questions like “why have you chosen that service provider?” and “how are their services priced compared to other similar competitors?”. The answers you come to will help you discern if the service providers have been chosen for your benefit or the firm’s convenience.

6. Portfolio Monitoring Gaps

Once implemented, investment professionals have an obligation to make sure they’re pursuing your investment intentions by strictly adhering to the objectives, risk tolerances, and constraints outlined in your IPS.

Your portfolio should be reviewed against metrics like:

  • Asset allocation
  • Security quality
  • Diversification of holdings by individual and/or industry allocation
  • Overall assessment of historical returns against portfolio objectives

Keep in mind that it’s natural for discrepancies in things like asset mixes, security quality, and diversification to occur from time to time. By consistently monitoring your portfolio, investment professionals can identify and rectify inconsistencies as soon as possible. If your advisor believes discrepancies with things like risk tolerances are in your best interest, they must obtain an updated and signed IPS from you, the client.

Infrequent Reviews7. Infrequent Reviews

Regular reviews give you valuable opportunities to find out how your investments are doing and discuss changes, ensuring your portfolio continues to meet your ongoing objectives and risk tolerances.

There are three broad types of reviews that should be conducted on a regular basis:

  1. Goals reviews, which allow you and your investment managers to ascertain whether or not your goals have shifted and, if necessary, make adjustments to your portfolio.
  2. Portfolio reviews to make sure your portfolio is behaving as it needs to and is meeting your short, medium, and long-term goals.
  3. Policy reviews to go over any changing circumstances that might require reforms to the portfolio structure or IPS.

Communication between you and your investment advisors needs to be open, objective, and consistent. This transparency will give you confidence that your family’s wealth is being sustainably managed in a way that reflects your unique needs.

How You Can Avoid These Impediments

Creating sustainable wealth takes commitment and perseverance. Working with an investment advisor dedicated to designing a goals-based portfolio, working with a range of professionals to provide comprehensive solutions, and being transparent with you about your portfolio’s performance will help guide you and your family towards the financial freedom and stability you seek.


HighView is an experienced fiduciary portfolio management firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

]]>
Understanding Your Family Office Options https://www.highviewfin.com/blog/your-family-office-options/ Tue, 23 Jan 2018 19:42:14 +0000 https://www.highviewfin.com/?p=9887 Affluent families often face a myriad of challenges that come with wealth, including:

  • Wealth management
  • Tax and estate planning
  • Business succession issues
  • Setting and funding philanthropic goals
  • Finding the time to manage these activities themselves or identifying trusted advisors who can

Rather than managing their affairs on their own, some families hire a group of practicing professionals including lawyers, accountants, investment advisors, family coaches, and other consultants to do it for them.

Other families consolidate their wealth management needs with one organization or person, hiring them to manage everything. Closing the gaps that can be the result of hiring many professionals working in isolation can make life easier. However, the search for consolidation can be fraught with complexity, as many variations on the theme exist.

As you will see below, each of these ‘themes’ present its own challenges.

Your Family Office Options

. Hiring a Person or Team to Fulfill a Financial Control Role1. Hiring a Person or Team to Fulfill a Financial Control Role

This helps to address the need for the consolidation of wealth management-related activities – rather like one-stop shopping.

This approach puts the responsibility for staffing and supervision squarely on the family’s shoulders.

Job performance and the opportunities for a successful outcome are based solely on the individual or organization’s competency and the framework within which they work.

Some families find that the individuals in this role become self-protecting gatekeepers, restricting other professional advisors’ access to their closely held clients.

Creating Your Own Single Family Office (SFO)2. Creating Your Own Single Family Office (SFO)

Many families with significant wealth form their own Single Family Offices to fulfill the majority of their wealth management needs.

These are usually managed and staffed by accountants and/or legal professionals. On rare occasions, they will also include an investment professional.

The success of the Single Family Office is based on the staff’s ability to meet unexpected or complex challenges, which requires experience and technical skills associated with best-in-class advisors.

The overall cost of operating a private family office can be prohibitive, and limits this option to families with a net worth of at least $100 million.

Joining a Multi-Family Office (MFO)3. Joining a Multi-Family Office (MFO)

A Multi-Family Office (MFO) is formed when two or more families share the costs of operating a Family Office, thus reducing the cost borne by each family individually.

This alternative poses the same staffing and remuneration issues associated with maintaining a successful SFO.

Furthermore, getting participating families to agree on costs and staff selection as well as structuring the MFO to reflect the unique needs of each family can be problematic.

 

Employing a Commercial Family Office (CFO)4. Employing a Commercial Family Office (CFO)

The most common option is the Commercial Family Office (CFO). Several professional practitioners join together in one enterprise to serve all the financial needs of several high net worth families.

A CFO maintains the families’ required objectivity. They are competent, capable, and experienced in meeting their clients’ needs.

Employing a CFO reduces costs while providing families with an integrated solution to address their array of complex needs.

The CFO professionals work together in an environment that supports their work on the families’ behalf maintaining their required objectivity.

Families need to ensure in advance that the CFO is not promoting proprietary products with little regard for the family’s specific goals.

Financial groupwork5. Creating a Virtual Family Office (VFO)

The Virtual Family Office (VFO) harnesses the experience, dedication, and loyalty of a family’s established group of independent advisors.

The VFO professionals become the family’s trusted wealth stewards and look after their wealth management needs in a cohesive and consistent manner.

This is the option we recommend for most families due to its key benefits, including:

  • Experience and competency: Families continue to harness the experience and competencies of the proven professionals who serve them.
  • Variable cost structure: Families avoid the costs of setting up their own Family Office or sharing in the funding of an MFO. Instead, they pay each professional participating in the Family Stewardship Council based on their respective fee schedules.
  • Objective advice: Families avoid any conflicts that might arise from using the services of a CFO and obtain a purely objective set of solutions to address their needs.
  • Integrated advice: Families eliminate planning gaps or oversights through the collaborative efforts of their advisors.
  • Confidence and comfort: Families achieve the peace of mind that only comes from knowing that there is a formal governance structure and set of processes in place to ensure that all the family’s stewardship needs are being met in the appropriate manner.

At HighView, we create a Family Stewardship Council for our clients, which is an entity that constitutes a VFO in its established structure and disciplined processes.


HighView is an experienced fiduciary investment counselling firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

]]>
Happy Holidays to Our Valued Clients and Their Families https://www.highviewfin.com/blog/happy-holidays-to-our-valued-clients-and-their-families/ Sun, 17 Dec 2017 08:00:24 +0000 https://www.highviewfin.com/?p=9839 As the holiday season approaches, we want to thank our clients and their other professionals for their continued support of HighView Financial Group over the past year.

2017 was not only the 12th anniversary of HighView, but also a year of ongoing positive change and growth in our firm.

Some of our key business accomplishments that will continue to increase our investment fiduciary and service commitments to our clients are highlighted below:

• After 11 years, we recently moved our Oakville office to a new location, which will allow us to continue to provide our clients with the level of service you are accustomed to, while accommodating our growing firm.

• We continued to invest in new technologies that enable us to increase the effectiveness our services to our clients. For instance, in 2018, we’ll be launching a HighView Client Portal which will provide a secure method for clients to receive and store their HighView quarterly portfolio statements as well as other client materials over time.

• To ensure high quality support and service to our clients, we made additional investments in the HighView Team with the addition of both Priya Tak as our Client Service Coordinator and Compliance Officer, and Phil Marynowicz as our Investment Administrator.

We’re grateful for the team of quality professionals who we’ve attracted to our firm, as they all share our common passion for building an investment firm where clients’ interests are placed first, and where words like objectivity, transparency, and accountability of advice mean something.

Holiday Giving

At HighView, we believe in the importance of family and of philanthropic giving.

In the spirit of the season, we are donating to an organization in the community that supports grieving children, youth, and families: Lighthouse for Grieving Children.

Lighthouse provides bereavement support groups, training for caregivers, and other resources for children, teens, and families following a death in the immediate family. They are based in Oakville and rely on volunteers and donations to continue their day-to-day efforts in supporting grieving families.

As you are considering your own holiday giving this year, we encourage you to visit Lighthouse’s website and learn about the good work they are doing.

Our 2017 Holiday Hours

  • December 22nd: Closed at noon.
  • December 25th: Closed.
  • December 26th: Closed.
  • December 29th: Closed at noon.
  • January 1st: Closed.

Highview Holiday

We wish the best of the holiday season to you and your family, and we look forward to an exciting 2018.


HighView is an experienced fiduciary investment counselling firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

You may also be interested in:

]]>
Artificial Intelligence: Embracing Disruptive Change for Business and Beyond https://www.highviewfin.com/blog/artificial-intelligence-embracing-change-for-business Fri, 24 Nov 2017 18:11:07 +0000 https://www.highviewfin.com/?p=9783 HighView recently had two educational seminars, one in Oakville and one in Toronto, on the fascinating subject of Artificial Intelligence (AI).

A Primer on Artificial Intelligence

Human progress moves ever more quickly as time marches on. More advanced societies have the ability to progress at a faster rate, so it’s no surprise that 19th century humanity made far more advances than 15th century humanity. This is referred to as the “Law of Accelerating Returns”.

And now, we are entering a new age of rapid AI advancement.

AI investment is growing fast. Tech giants such as Google are spending billions of dollars on R&D. Adoption patterns illustrate growing gaps between digitized early AI adopters and others. AI can deliver real value to serious adopters and can be a powerful force for disruption; it has the potential to improve forecasting and sourcing, optimize and automate operations, develop targeted marketing and pricing, and enhance the user experience. There are no shortcuts for business today. Companies cannot delay their digital journey if they wish to remain competitive. Adaptation will be crucial to survival.

Despite it’s upsides, artificial intelligence is scary for many. The idea of AI as a threat stems from the academic theory known as “the singularity” which argues that researchers will eventually develop a machine smarter than its creators. In doing so, this machine would be able to program itself in more advanced ways than humans can understand.

Welcome to the World of AI: Embracing Disruptive Change

Our first speaker, Gayemarie Brown, embraces AI and sees abundant opportunity.

Gayemarie has more than 25 years of digital transformation experience. A seasoned, bold leader and entrepreneur, Gayemarie, through her work as National Innovation Leader for Deloitte Canada, and now as founder and CEO of her own consulting firm, Wintam Place Consulting, is a strategic visionary, helping companies translate their ambitions into practical plans. She is a sought-after speaker, world renowned female futurist, and a self-described lover of humanoids and artificial intelligence.

Highlights from Gayemarie’s presentation “Welcome to the World of AI: Embracing Disruptive Change”:

  • We are living in an exponential world. Humans understand linear progress, but exponential progress requires new models and new ways of thinking.
  • The rate of change continues to accelerate:
    • Digitalization of everything
    • Disruption of the old guard
    • Costs of technology continue to decline (3D printing, industrial robots, drones, solar energy are just a few examples of how costs have decreased in a short period of time)
    • Accessibility to knowledge and the internet on a global basis
  • Computational power, discoveries, and breakthroughs in AI advancement, the Cloud, the internet, the proliferation of data, and the rise of Quant computing is changing the landscape.
  • Changing business models – many businesses are being disrupted. It’s important for management to stay abreast of change, apply AI, and adapt.
  • AI today is excellent at understanding patterns, learning tasks, and is ok with logical reasoning but still weak at abstract learning.
  • AI is here to make lives better. Advanced machine learning will augment human capability or replace mundane tasks.
  • AI is learning fast. Amazon’s virtual assistant Alexa now has over 15,000 third party skills in just over one year of learning.
  • The 2015 DARPA Robotics Challenge required robots to climb a set of stairs, turn valves on and off, open a door, get in and out of a car, and master an obstacle course.
  • Today robots are being used for many things – check out Pepper.

A Machine Learning Revolution

Sri Iyer, Managing Director and Head of Systematic Strategies at Guardian Capital, and portfolio manager for the Guardian Global Dividend Strategy is one of HighView’s investment managers. Sri began his career in the financial services industry in 1995, firstly with Global Value Investors based in Princeton, New Jersey, and since 2001, with Guardian Capital.

Sri spoke about how AI, machine learning, and Big Data are changing the investment industry and how Guardian has applied AI and Big Data into their research and forecasting abilities.

Highlights from Sri’s presentation “A Machine Learning Revolution”:

  • Exponential increase in amount of data available – 90% of world data has been created in past two years alone.
  • Data flood expected to increase digital universe of data from 4.4 zettabytes (or trillion Giga Bytes) in 2015 to 44 zettabytes by 2020.
  • Open source frameworks for splitting complex tasks across multiple machines and aggregating results has dramatically diminished barriers to entry allowing for large scale data processing and opening up big/alternative data based strategies to a wide group of quantitative investors.
  • Significant developments in machine learning methods – big strides in pattern recognition, increased focus on investment applications of Deep Learning.
  • Adoption of Amazon Echo, Google Home, and Apple Siri rely heavily on Deep Learning Algorithms.
  • Goal of machine learning is to enable computers to learn from their experience in certain tasks. Machine learning methods attempt to uncover relationships between variables: when given historical patterns, the machine forecasts outcomes out of the sample.
  • Guardian applies machine learning to help predict outcomes for dividend securities.
  • Collective intelligence of a diverse and independent group typically yields better estimates than any one superior individual.

Artificial Intelligence: Impact and Benefits to Competitive Strength

Another of HighView’s investment managers, Chris Page is President, CIO, and founder of Laurus Capital. Laurus relies on deep fundamental research and maintains concentrated portfolios of financially strong and well-managed companies with long term growth potential. For more than 30 years, Chris has held a number of senior positions within the investment and insurance business and founded Laurus with a vision of a firm focussed on client wealth creation through prudent risk averse investing and a culture that fosters independent thought.

Chris spoke about some of the Laurus Small Cap investments in companies with regards to how AI impacts and benefits competitive strength.

Highlights form Chris’s presentation “Artificial Intelligence: Impact and Benefits to Competitive Strength”:

  • Businesses can use AI to their competitive advantage.
  • AI can add value to knowledge and data, enriching the client experience and enhancing human judgement.
  • Advantages of AI include:
    • Limiting competition (first to market, specialist knowledge, quality differential)
    • Increasing margins
    • Greenfield capability
    • Having a continuous client (locking in client with technology platform)
  • We all know big names like Google and Amazon, but there are numerous investment opportunities in the small cap market where companies are utilizing AI to their advantage.
  • Examples Chris spoke about include Kinaxis, Wabco, and Intuit among others.

For Chris’s presentation, please click here.

In Closing

The capabilities of artificial intelligence are rapidly increasing, which will have a significant impact on business and the economy, as well as the investment industry in particular.

It’s important for savvy investors and forward-thinking investment firms to stay engaged in the ongoing discussion and developments as this exciting technology progresses.


HighView is an experienced fiduciary investment counselling firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

You may also be interested in:

]]>
Designing Investment Policy for ESG and Impact Investing https://www.highviewfin.com/blog/designing-investment-policy-for-esg-and-impact-investing/ Tue, 24 Oct 2017 17:48:11 +0000 https://www.highviewfin.com/?p=9746

 “We believe that considering material ESG factors as part of our investment decision-making process, with respect to both direct and indirect investments, along with other material investment factors is consistent with our fiduciary duty”.

UTAM

There is a mind shift underway in the evolution of fiduciary duty in the world of investing: a move away from the old school thinking of “maximizing returns” without regard to impact and exercising due care, to one of skill and diligence by way of Environmental, Social and Governance (ESG) factor analysis that our fiduciary obligations requires us to consider. Ultimately, using our capital to shape a better society.

At the same time and on the other side of the table, companies are facing an increased pressure for better disclosure of what they are actually doing to address ESG factors in their business to enhance sustainability. As Elisse Walter of the Sustainability Accounting Standards Board (SASB) so eloquently states in her speech at a March 2017 CPA Canada Event, markets are being reshaped by resource constraints, climate change, population growth, technological innovation, and globalization. Sustainability is poised to be the next competitive frontier. In fact, research has already shown that companies can achieve superior results—including return on sales, sales growth, return on assets, and return on equity, in addition to improved risk-adjusted shareholder returns—by focusing on the limited number of materiality-based, industry-specific sustainability topics as identified by SASB. The question is no longer whether companies should disclose information on material sustainability risks and opportunities; it is how they can improve the effectiveness of the disclosures they are already making.

In short, it is not about more disclosure; it is about better disclosure. Many are promoting and supporting corporate environmental disclosures with a focus on climate. Most recently, over management’s objections, shareholder resolutions to disclose climate risks passed at the annual meetings of ExxonMobil and Occidental Petroleum this past May.

So how should we as investors, think about making our world a better place and align ourselves with the United Nations sustainable goals to end poverty, protect the planet and ensure prosperity for all? How can we design our Investment Policy to align with what we believe in?

Responsible Investing

Responsible Investing is an approach that integrates consideration of ESG matters into investment activities with the objective of enhancing long term investment performance.

The integration of ESG considerations within investment processes and across asset classes continues to gain interest among investors and concerned citizens. Evaluation of ESG factors can provide insights into investment risk and management of ESG risks can add to long term sustainable returns. Studies have shown that companies with robust sustainability practices demonstrate better operational performance. Strong corporate environmental performance also links to financial outperformance. Strong ESG standards correlate with good stock price performance, and of course, brand awareness. We all know that poor governance, or poor health and safety measures, or exploitive labour practices directly impacts shareholder value (think emissions scandals, or non-compliance with building codes resulting in collapse).

Investment policies surrounding Responsible Investing are being considered and developed by investors, families and foundation investment committees. There is no “right” way, but the best way is to incorporate policies into an Investment Policy Statement (IPS) that communicates the investor’s wishes and beliefs. Some choose to develop a Responsible Investment Policy to be housed within a section of the IPS or as an addendum to an IPS. Either way, a policy formalizes the practice of integrating ESG issues into investment decision making. An addendum to the IPS may be a simple way to start as to how to include ESG factors. As we move forward, Responsible Investing may become incorporated throughout the IPS.

ESG Issues to Consider:

Examples of Responsible Investment Policies

As per the PRI guide on writing a Responsible Investment Policy, policies can take many different shapes. You might start by identifying high level core beliefs that are central to you, and you might read other IPS’s that have been designed for ESG and Social Impact Investing.

For example, the Western University IPS states a belief that ESG factors may have an impact on corporate performance over the long term. Section 4 of its IPS, titled Responsible Investing, outlines how the university will engage external investment managers and that this engagement will involve increasing the level of scrutiny on ESG factors. The university will keep a registry, updated annually as to ESG related information on its external managers. This may include incorporation of ESG factors into the firm’s investment process, the firm’s target allocation for climate change related investments, the presence of a committee on sustainable investment, the portfolio’s exposure to fossil fuels, sustainable industries, and high impact sectors, and details about the firm’s proxy voting policy.

Another great example is the University of Toronto’s (U of T) annual report on Responsible Investing. U of T has a major commitment to Responsible Investing and in particular, points to a comprehensive approach to the challenges posed by climate change. The University president, Meric Gertler, called on the University Pension committee to incorporate ESG factors into its Statement of Policies and Procedures, a change that was implemented in June 2016. He also called on UTAM (the University of Toronto Asset Management Group) to build a rigorous and systematic approach to integrating ESG factors into investment decisions. UTAM, along with many other universities and investment managers, is now a signatory to the United Nations supported 6 Principles for Responsible Investment (PRI):

  1. We will incorporate ESG issues into investment analysis and decision-making processes.
  2. We will be active owners and incorporate ESG issues into our ownership policies and practices.
  3. We will seek appropriate disclosure on ESG issues by the entities in which we invest.
  4. We will promote acceptance and implementation of the Principles within the investment industry.
  5. We will work together to enhance our effectiveness in implementing the Principles.
  6. We will each report on our activities and progress towards implementing the Principles.

Putting It in Perspective: Sustainable Investment Taxonomy

An excellent model on describing the matrix of Responsible Investing can be found in the TASK FORCE Report on Sustainable Investment Taxonomy: September 2016. This report describes Responsible Investing or Socially Responsible Investing as being synonymous with sustainability and it provides for a simple model on the taxonomy of sustainable investing, dividing it into three distinct orders:

  • Screening Strategies:

Screening Strategies can be negative or positive. Negative screening would simply exclude companies based on what they sell such as tobacco, alcohol, weapons, gambling, pornography, or fossil fuel. Positive screening involves identifying companies that have a positive impact, and often use ESG measurement systems and scores to guide decisions. MSCI and Morningstar/Sustainalytics are providers of measurement and scoring systems used by many investment managers today.

  • Thematic Strategies:

Thematic Strategies are built on focussed and constrained investment universes. Thematic strategies will have very specific allocations and can typically be overexposed to some sectors such as clean technology, renewable energy, industrial and technology, and underexposed to sectors such as energy, financials, or consumer.

  • ESG Practices:

ESG Practices are not an investment strategy per se, but a group of investment practices. They are not the primary driver of an investment thesis but rather practices of making investment decisions. ESG integration is currently being employed by many traditional investment managers as a way to identify new business risks, and improve corporate behaviour through direct engagement and shareholder activism. According to the Responsible Investment Association (RIA), 80% of investment managers now pay attention to ESG issues.

ESG factors include climate change, biodiversity, air and water pollution, corruption, executive remuneration, and board diversity among others. These are all material issues that should be integrated into the investment making decision processes. Voting can affect governance, and provide a management team with valuable feedback. Important voting issues should be reviewed and voting rights used in a responsible way so as to add value to change.

ESG Practices and Designing Your Own Investment Policy Statement

There are three primary ESG Practices:

  1. Identifying emerging ESG risks.
  2. Actively influencing the operating behaviour of management teams through engagement strategies, proxy voting, corporate engagement and shareholder activism.
  3. The measurement and monitoring of environmental and social impact.

In designing your own Investment Policy Statement, and incorporating Responsible Investment guidelines you may want to think about:

  • Incorporating ESG standards for investments. These could be high level, or specific based on certain issues and minimum standards.
  • Your core beliefs such as companies need quality management, strong, diverse and effective boards, transparent shareholder reporting, recognition of environmental and social risks, and executive compensation that aligns well.
  • Setting guidelines for ESG practices across all asset classes. Research has shown that governance scores are most important when determining bond credit worthiness. Bonds with high governance scores suffer credit downgrades less often.
  • Setting guidelines for working with external investment managers; what issues are important, what requirements and measurements are expected.
  • Social or environmental themes that may be important to you such as community housing, clean technology, climate, food, agriculture and forestry, green investing, renewable resources, social impact bonds, waste management and/or water infrastructure and technology. You may wish to review the UN Sustainable Development Goals for further background and understanding.

As described in the Taxonomy model, potential approaches for responsible investing can include negative and/or positive screening, theme investing or ESG integration. You may wish to invest through the traditional public markets or through private markets. You might combine some of the approaches or all of the approaches.

As mentioned earlier, there is no “right” way but rather the way that suits your individual, family or foundation goals and objectives.

Moving Towards a 100% Impact Portfolio

Certain organizations are moving proactively and intentionally toward a 100% impact portfolio where all of their assets are used to generate positive impact. Inspirit Foundation is one such organization. The mission of the Inspirit Foundation is to promote inclusion and pluralism through media and arts, provide support for young change leaders and impact investing—specifically addressing discrimination based on ethnicity, race and religion. The Inspirit Foundation believes it can create positive change through their capital allocation and is on the road towards a 100% Impact Portfolio. They are not the first foundation to think this way and they acknowledge the work that has been done before them by foundations such as the F.B. Heron Foundation, The Hamilton Community Foundation and the Edmonton Community Foundation.

The Inspirit Foundation believes in using financial capital to support companies that behave responsibly and they will engage and respectfully challenge companies that have room for improvement. For Inspirit, the definition of 100% Impact includes:

  • Applying impact investing tools to the public portfolio (90% of the portfolio) by incorporating positive screening and ESG factors into mainstream traditional investments, ensuring shareholder engagement, having some specific product choices (i.e. shift capital to renewable energy sources through a fossil fuel free equity fund), and by not knowingly investing in alcohol, gambling, pornography and adult entertainment, tobacco and related products and weapons.
  • An allocation of 10% to private investments that contribute to inclusive society through mission and program related investment. This is invested by way of private real estate, private debt and private equity.

While Impact investing is not new, it continues to grow in interest and capture attention across the investment community. At HighView, we began our journey through research and meeting with many people and firms that focus their time and energy on sustainable investing. HighView joined the Responsible Investment Association (RIA) this past spring, and more recently, our Portfolio Strategy Committee has enhanced our investment manager selection and ongoing monitoring processes by implementing an ESG due diligence component to understand how our managers integrate ESG factors into their investment research. While only a start, we will continue to look for ways to bolster our expertise and capabilities in this burgeoning sector.

To that end, HighView works strategically and collaboratively with firms that have specific expertise beyond our own. In this regard, we are pleased to align with Purpose Capital. Formed in 2010, Purpose Capital is an impact advisory firm that designs and deploys customized impact investment strategies by mobilizing all forms of capital to accelerate social progress. Purpose Capital has worked extensively with Inspirit Foundation on their impact investment journey. We are excited to continue our focus in exploring new ideas for sustainable investing, and stepping beyond ESG integration to meet our clients’ evolving requirements.

Sources

Special thanks to Hyewon Kong and Nadi Naderi of AGF Investments, to Julie Desjardins of RIA, and to Upkar Arora, CEO of Purpose Capital for their knowledge and guidance on Sustainable Investing.


HighView is an experienced portfolio management firm for affluent Canadian families and foundations. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

You may also be interested in:

]]>
Why Do I Need an Investment “Fiduciary”? https://www.highviewfin.com/blog/why-do-i-need-an-investment-fiduciary/ Tue, 17 Oct 2017 14:55:41 +0000 https://www.highviewfin.com/?p=9739 A true investment fiduciary is all about putting the client’s interests first.

Too many investment advisors only pay lip service to the idea of “putting the investor first”; a true fiduciary has a legal and ethical responsibility to live up to that promise.

At HighView, we define a fiduciary as someone acting in a position of trust on behalf of, or for the benefit of, a third party; and as such, they are required to act in their best interests. A fiduciary is held to a higher standard of care than an advisor who is not a fiduciary.

Which Professionals Are Fiduciaries?

In Canada, specific wealth management roles are always fiduciaries; for example, trustees and discretionary investment money managers.

However, broker-dealers and other advisors (such as financial planners, investment advisors, etc.) exist in a grey area depending on their legal status.

It’s important to know that financial advisors who are not considered fiduciaries are only held to a Suitability Requirement, which means that as long as an investment product is suitable but not necessarily the best solution for the client, then the job of the financial advisor is complete.

With the rising standards of care from both clients and regulators, the fiduciary definition is receiving growing discussion and debate in our industry.

Canadian courts have identified five interrelated factors that determine whether a financial advisor has a fiduciary relationship with their clients:

  1. Vulnerability: the degree of vulnerability of the client due to factors such as age or lack of language skills, investment knowledge, education, or experience in the stock market.
  2. Trust: the degree of trust and confidence that a client places in the advisor and the extent to which the advisor accepts that trust.
  3. Reliance: whether the client has a history of relying on the advisor’s judgment and advice, and whether the advisor claims to have special skills and knowledge upon which the client can rely.
  4. Discretion: the extent to which the advisor has power or discretion over the client’s account or investments.
  5. Professional Rules or Codes of Conduct: rules and codes that help establish the duties of the advisor and the standards to which the advisor will be held.

5 Reasons Investors Should Choose an Investment Advisor Who Is a True Fiduciary

As an investor, it is in your best interest to seek out an investment advisor who also has your best interests at heart.

A Consultation Paper published by the Canadian Securities Administrators (CSA Consultation Paper 33-403), states that acting in the best interest of the client, as a fiduciary, means that:

  1. Client interests are paramount
  2. Conflicts of interest are avoided
  3. Clients are not exploited
  4. Clients are provided with full disclosure
  5. Services are performed reasonably prudently

These five elements mean that fiduciaries are independent and completely objective – they do not have obligations to anyone except their clients and they do not receive fees from any of the investment products or managers they recommend.

For investors, the benefit of having a fiduciary financial advisor comes down to this: peace of mind.

Turning a Critical Eye on the Investment Industry

We believe that it’s time for regulators to re-examine the application of fiduciary standards to various wealth management roles, due to the growing affluence of our society, the rising complexity of wealth management issues, and the trusted role that financial advisors perform in clients’ financial lives.

For a recent example, consider the Ontario Securities Commission (OSC) roundtable on discontinuing embedded commissions, which Dan Hallett of HighView participated in. Too many of the panellists were focused more on the investment industry and why a commission ban would be bad for the industry, rather than the real concern – the clients. Click here to find out more in Dan’s post-roundtable recap blog.

The notion of what it means to be an investment fiduciary — an investment professional who acts in the sole interest of their clients – will continue to gain traction in the wealth management industry and the media.

Investors are increasingly saying, “I want someone who I can trust and who puts my interests ahead of their own!” And they’re right.


HighView is an experienced fiduciary investment counselling firm committed to investor transparency. We would be happy to discuss our goals-based investment approach with you and your professional advisors.

Watch our videos about a variety of asset management topics.

 You may also be interested in:

]]>