Here are some of the most frequently asked questions about Investment Management Services.
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Private clients are individuals and families who have a significant financial portfolio and require expertise and access to investments beyond those available to the mass market.
A portfolio manager manages investments on behalf of private clients, foundations, endowments and pension plans. Portfolio managers typically manager larger amounts of money for fewer clients which often results in lower management fees and an enhanced level of attention to each client and their portfolio. Portfolio managers are regulated by provincial government Securities Legislation.
Please view this Investment Service Provider Comparison table.
Discretionary money managers manage client portfolios without requiring approval for each transaction. The day-to-day investment decisions are made by the portfolio manager. The portfolio manager independently selects securities for portfolios based on an investment policy statement that has been reviewed and approved by the client.
Discretionary managers have a fiduciary duty to act with care, honesty and good faith and to always act in the best interest of their clients. Investment decisions must be made independently, without conflict of interest or bias.
A discretionary money manager is the preferred choice of money manager for many high net-worth private clients for many reasons:
- Private clients who recognize that they don’t have the interest or expertise required to manage their portfolio are attracted to the service provided by discretionary money managers.
- Many private clients choose a discretionary manager so they no longer have the stress and burden of having to make continuous, individual investment decisions. Discussions with the manager are focused on strategic issues rather than individual transactions.
- Private clients also benefit from working with discretionary managers as these individuals, as fiduciaries, are required by securities regulations to have a high level of education and experience in the investment industry.
- The after-tax cost of investment management is typically significantly lower than other providers who are charging high premiums for biased, non-personalized investment advice that is provided without the guidance of a long-term investment plan.
An investment policy statement is a document that serves as a strategic guide to the planning and implementation of an investment strategy. It is customized to each client based on their preferences, attitudes and situation. It is developed in consultation with each client who must also approve the original version as well as any subsequent revisions.
Elements common to most investment policy statements include return objectives, risk tolerance, liquidity requirements, time horizon, taxation, asset allocation and performance expectations. The investment policy statement is reviewed regularly and updated as necessary when a client’s situation changes.
The asset allocation of a portfolio describes how much value (usually expressed as a percentage) of a portfolio will be invested across a variety of asset classes such as equities, fixed income and cash. The asset allocation of a portfolio is a critical strategic decision as it is the main driver of the return and risk characteristics of a portfolio. Read the article, “Asset Allocation” for more information.
The custodian is responsible for the following:
- opening, maintaining and closing accounts;
- maintaining current, accurate records of client holdings;
- settling trades;
- preparing account statements and tax documents; and
- calculating and reporting tax information to federal and provincial governments.
The term “segregated investment account” means an investment account that is held in a client’s name at the custodian and is separate from all other client accounts. A segregated investment account provides the greatest investment flexibility as each account can be tailored to the specific needs of each client. A segregated account has many benefits including ease of transfer of individual securities or an entire account, ability to trigger capital gains or losses on individual positions, and a high level of transparency of account activity and costs.
Not to be confused with a Segregated Fund (Seg Fund) which is an investment fund only available through insurance companies. Bluenose does not invest client assets in seg funds.