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Discretion Is The Better Part Of Value

Consumers can be forgiven for being confused about the roles of various service providers within the financial services industry. Indeed, the Canadian financial services industry has done a poor job of communicating with investors regarding the differences between Portfolio Managers, Financial Planners, Mutual Fund Dealers, Stock Brokers and Insurance Brokers/Agents.

A Portfolio Manager provides discretionary portfolio management services in order to meet the unique needs of individual and institutional investors. A Portfolio Manager's only business is to manage portfolios and advise clients on a fee-for-service basis. While the investor's assets are managed by the Portfolio Manager , the securities are actually held under a separate trust agreement, usually with an independent trust company licensed to conduct business in Canada.

Discretionary management is a distinguishing feature of a Portfolio Manager because only registered Portfolio Managers have the education and experience required to obtain this level of licensing under the various provincial Securities Acts across Canada. Other types of service providers within the Canadian financial services industry are licensed and governed by self-regulating bodies (SROs), such as the Investment Industry Regulatory Organization of Canada (Stock Broker/Dealers) and Mutual Fund Dealers Association (Mutual Fund Dealers, Financial Planners) and Investment Funds Institute of Canada (Mutual Fund Companies).

Another attribute that differentiates Portfolio Managers from other providers is membership of the majority, if not all, of their portfolio managers in the CFA Institute, a highly respected international organization that supervises the strict ethical conduct and professional standards of its members. This organization also bestows the Chartered Financial Analyst (CFA) designation.

As mentioned above, Portfolio Managers charge for their services on a fee-for-service basis. Compensation is never contingent upon the number or value of transactions within the portfolio or account. This approach often leads investors to believe that Portfolio Managers are more expensive to retain than other types of investment service providers. Usually, the opposite is true. In fact, sales commissions (front-end, deferred sales charges), high mutual fund MERs (management expense ratios), hidden or explicit trading commissions, and other "administration" charges usually result in investment management costs that are higher than the fees charged by Portfolio Managers.

Need proof? Contact a Portfolio Manager at Mawer to learn why Discretion is the Better Part of Value.

If you would like to learn more about how we manage money, please contact our office toll-free at (888) 549-6248, and ask to speak to a Portfolio Manager, or email us for an information package.