Your advisor or planner is honest and 100% honest? Insist that he garnishes your mutual fund or securities portfolio with NO link to his firm. Neither directly nor indirectly. In case you do not know, when you first issue a security, a policyholder must promise a minimum sale in their network. The order ends up going to the customer, in the form of a “wonderful opportunity not to be missed”!
To prevent you from passing p’tites speed, here in my opinion, the guarantees of greater objectivity in financial advice. By closely monitoring these 5 categories of risk, you ensure maximum control over your business.
Distributing financial products
It starts with a sorting among the companies distributing financial products. Distributors and trustees must have a superior credit rating synonymous with financial strength. Few institutions receive AM Best, Standard and Poors and Moody’s ratings. When they have them, we must remember the best evaluated. It’s exactly like us when applying for a loan. They demand our credit rating, do the same!
The distribution between the companies of distributions, management styles and asset class (Shares, Bonds, liquidity …). RBC, Sunlife, Fidelity, CIBC, TD, Industrial-Alliance, Manulife, AIM, BMO … Retain the big brands in your portfolios by focusing on their specialty. Watch out for the scatter!
Taxation being a risk
Taxation being a risk in itself, you should not pay more tax than you should. Meticulous attention must be paid to the income category that your investments will generate. Even if you are very cautious, you have to look for ways to reduce your tax burden on investment income. In this regard, many institutions and large managers are lagging behind. They show nice gross yields, but in our pockets, there are less! We live in a NET world, NET after all. Net of fees and NET tax must be a major criterion to remember.
Specialists in their categories
It’s nice the stock broker of the bank. He sells, buys and puts options for sales and purchases and tries full of beautiful combinations. But what is its average score of the last decade? Is he practicing with your assets? Why TRY stuff when others have already proven themselves! Institutional managers, pension funds, wealth, foundations and mutual funds abound in the industry. They are specialists in their categories, whose returns have a proven history of more than 10 years. Some have the distinction of doing on average better than their peers with less volatility. Independent statistical data and verified evidence must be provided. The past is not guarantor of the future, but with the horrible past we have just lived … we can see more clearly and observe the know-how!
Supervision, rebalancing, updates and transactions must be initiated by an independent advisor. It is neither employed by the great institutions mentioned above, nor encouraged to favor one over another. The independent advisor is a professional registered with the Good Finance, in the file without task. His privilege to advise you in your investment choices is conditional on the maintenance of professional liability insurance in case of errors or omissions. He is NEVER made a check directly, but only to the distribution firms he has chosen to build your wallet