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Do you prefer a Boutique or a Department Store? (Why Smaller is Better)

July 4, 2012 - 0 comments

I happen to prefer shopping in a boutique than a department store. I like more personalized service from sales associates who get to know me, my likes and dislikes. The same can be said for working with an advisor who is associated with a smaller, boutique investment firm.

All PWL advisors share a common investment philosophy, although we don’t necessarily implement portfolios in exactly the same way. (I describe PWL’s philosophy as one of managing risk through investment in various asset classes, constructed using broadly based funds, always with the client’s ability and need to take risk in mind.) Each advisor at PWL sits in on our monthly Investment Committee meetings, chaired by our Director of Research, where new products are discussed and approved for use in our portfolios, or new asset classes are explored. In the department store equivalent of investment firms, it is often difficult to find advisors who can succinctly define their investment philosophy.

Our semi-annual Strategic Investment Days allow us to meet face-to-face to delve into economic trends and explore new strategies. Most recently, we discussed the pros and cons of emerging market bonds and had insights from Jared Kizer of Buckingham Asset Management. One of our newer advisors commented that he had never attended an internal meeting that presented such a wealth of information.

In these days of social media, compliance approval is required for all blogs and information posted on the web. We have direct contact with our Compliance Officer who is responsive to our requests for approval. We can often have a blog written, passed through compliance and posted on the same day. (Thanks to Mike and Maggie!) Larger firms are often forced into more rigid procedures.

PWL has spent time on its processes, particularly when a new client comes on board. We spend a great deal of time getting to know both the hard and soft facts. This is essential as we develop planning and portfolio recommendations. If we don’t know where the client wants to go, how can we get them on the right path? The regulators of our industry require us to both gather and disclose information. We recently reviewed IIROC’s (Investment Industry Regulatory Organization of Canada) new requirements for the Client Relationship Model, which states in part:

“The CRM amendments will clarify and strengthen the obligations of advisors to their clients in the following areas:

  • improved account relationship disclosure, including more information to investors on account types, the services they can expect to receive, as well as transaction and account fees and charges;
  • enhanced suitability assessment standards to ensure investments are appropriate to each investor’s objectives and time horizon, as well as to the composition and risk level of the investor’s overall portfolio. Additional “trigger” events will also require that suitability assessment reviews are conducted more frequently;
  • the introduction of enhanced standards for the disclosure and management of existing or potential conflicts of interest between investors and their advisor and/or firm; and
  • the introduction of requirements to provide clear information on statements about the cost of investments and the performance of investor accounts.

As we reviewed these requirements, we realized that little or no change is required to our processes – clients are entitled to receive this information.

So if you are considering a change of your financial advisor, think about whether your prefer to shop at a boutique or a department store.

 

By: Kathleen Clough with 0 comments.
Filed under: Financial Advisor, Strategy
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