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Are you your financial advisor’s 1st call…or last?

When does your Financial Advisor call you? What number on his call list are you? If you are an investor, this is something that you likely haven’t thought about, but should.

To understand why this really matters, let’s say you are a client of a Financial Advisor that is not licensed as Portfolio Manager (PM) and thus does not have the ability to service discretionary accounts. 

(A discretionary account is one that allows a broker to buy and sell securities without the client’s consent. … A nondiscretionary account is one where the client makes all the trading decisions).

This means that the Advisor has to obtain your consent to any changes in your portfolio. The price of stocks, ETFs and many investment products are constantly changing throughout the trading day. That means that if you aren’t the biggest and most important client, you probably will not get the first call. What if you are number 430? That means a lot of time has passed and the whole benefit of the change might be lost. Picture you are away on vacation, you get the idea.

Discretionary portfolio management ensures that you are number ONE. As a client of a PM in a discretionary plan, the price of the trade execution is the same for everyone involved in the trade. As an example, the PM manages 500 families. In those 500 families, the clients have 2500 accounts (RRSP, TFSA, LIRA, RESP, etc.). In those accounts, 690 plans hold ABC stock that the PM wants to sell. In a discretionary account, the PM could place one trade (block trade) where every investor gets the same price execution. The same trading applies to purchases. In other words, you would get the same price and timing of the trade as the PM, thus eliminating the cost of not being the first call.

So next time your Financial Advisor calls you to recommend a trade, ask him: What’s my number?

To learn more about how you can become a Number ONE Client, call us: 289-291-2121-877-486-4877

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