When a new client transfers their exisitng portfolio into our care, it never ceases to amaze me what I will find.
We might live in Canada, but Canada represents only about 3-4% of world capital markets. Having a 5-10% weighting in Canadian equities might be acceptable. But a 50% plus weighting? That is not a properly diversified portfolio and "yikes!" to have to endure a year like 2015 where Canadian equity assets were one of the worst performers.
I will not even begin to list the junior oil and gas and mining stuff that the former advisor stuffed in there likely to capture some "new issue" commissions.
Only 15% fixed income assets and less than 5% in government bonds? That is not balance my friends. In times of high levels of volatility, this is a portfolio that is going on the wild ride.
DSC (deferred sales charge) mutual funds. Advisor gets 5% up front (no cost to the client, yet) and an MER (management expense ratio) of 2.5% (advisor gets a trailer of .5%). The conflict of interest here is extraordinary! I cannot believe that these still exist. Oh and if you want to get out of them before the 7 year penalty period...this is where it "costs" the client.
This was not a portfolio put together by someone who truly cared about the client.
Broad diversification, balance among asset classes in a fee based account with a full understanding of any third party management costs and respect for your long-term goals and objectives is the sign of an advisor who cares.
Ask yourself, does your advisor really care?
What has she / he done for you lately?
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Scott Tomenson,CIM Managing Partner, Chief Investment Strategist