Special to the Globe and Mail
by Tom Bradley
It feels like we’ve arrived at a point in time when investors are going to stand up and be heard. I say that for two reasons. First, baby boomers are moving into retirement and have more time to pay attention to their portfolios. And second, we have new client-reporting standards that are bringing fees and returns into the spotlight. The time when advisers can slough off awkward questions such as, “What am I paying you?” or “How am I doing?” is coming to an end.
For all investors (not just my generation), it’s a great time to start getting a better handle on all aspects of your investment portfolio. It starts by asking more and harder questions of your investment professionals. If you need something to motivate you, I’d encourage you to go on YouTube and watch last year’s advertisements from Charles Schwab. They make fun of how few questions clients ask their advisers. The current Questrade campaign takes the point a step further. Their ads are getting lots of attention right now.
If you’re ready to step up your game, I’ve composed a letter to help you get started. Feel free to cut and paste from it liberally.
Dear adviser/money manager,
I’ve been a client for a long time. As I get closer to retirement, I realize I need to pay more attention to my money and get a better sense of how and what I’m doing. I’ve delegated most things to you, but ultimately, I’m the CEO of my portfolio. I read an article recently that used that expression and it stuck with me.
With the new fee and performance report you sent me last week, it seems like now is a good time to get started on upping my game. I’d like to schedule a meeting for later this month. Here’s some of what I’d like to cover.
1. On the annual performance report, you’ve shown me one-year returns. I’d like to see numbers that extend back to when we started working together.
I remember you telling me that one- and three-year returns aren’t meaningful. If I remember correctly, you’ve even said I need to be careful reading too much into five-year numbers – for example, the past five years have mostly been up and don’t capture all types of markets. If I can, I’d like to include 2008 in my review.
Although the longer-term numbers aren’t on the new report, I’m told you can print them out for me. My friends who use discount brokers have all the numbers at their fingertips, so I assume you can do this, too.
2. What should I compare these returns to?
Is there an index or fund or something that would give me a sense of what an average performance was over the various time periods? I’d like to have some context when looking at my returns.
3. Beyond what I’m paying you, I’d like to get a full account of my total costs.
It’s been enlightening to finally get some information on what it’s costing me to invest with you, but I’ve read a number of articles that say the total you provided doesn’t cover everything. The fees related to my ETFs, mutual funds and that one closed-end fund aren’t included in the $5,880 I’m paying, are they? And what about the index-linked thing we bought? I’d really like to know my total costs.
4. What kind of service and advice should I expect for the fees I’m paying?
You and I haven’t met very often over the last few years, although you always call me during RRSP season. I think I get some free trades for my $5,880, but are there other services I’m eligible for? Do you do any financial planning? As I take more command of my portfolio, I want to do a thorough review of my situation.
I realize I’m asking you a lot of questions here but, as I said, I want to get a better handle on my investments and the information you provided doesn’t give me the whole picture. On this note, is there anything you would ask of me to help me achieve my goals?
I’ll see you in a few weeks. Thanks,
Your long-standing client