Portfolio Review and Investment Manager search: A Case Study

Welcome back to another exciting installment in our 2020 series of case studies. This month, we’re introducing you to Olivia, who came to us looking for a portfolio review. Our case studies use real stories about real clients (mashed up with many other client stories and altered to protect the innocent) who spent time with us, developing the next steps in their lives. We chose this theme as a way of demonstrating the value of our 2019 theme, Design Thinking – something we practice each day at Spring. 

It can be hard to say, before we dig right into your details, exactly what your outcomes will be… we just know we can help you get on the road to your vision of a successful life. That might be a bit too vague and nebulous for some people (and understandably), so we thought… why don’t we share with you the real results of what has worked in the past? 

To date, we’ve shared the stories of: 

• Troy and Annie who had dreams of renovating, setting up RESPs for their kids and figuring out the best way to use their cash flow
• Zoe, a retired widow who received a lump sum after her husband’s passing. She wanted guidance around her monthly spending and the bank’s investment fees
• Baby and Johnny who struggled with paying down their line of credit debt
• Terri, a single woman with variable income
• Isaiayah who sought a portfolio second opinion, and
• Jesse and Tulip who have two children, one with a disability requiring long term care

Each individual, couple, and family faces unique challenges that require unique solutions. Everyone has their own fires to face and the right answer for them might not be the right answer for you – but there will be a right answer for you, somewhere along the line. 

This month, we want to introduce you to Olivia, who had some big decisions to make after her detailed portfolio review. 

Olivia…

Olivia is a single professional in her mid-forties. She’s always worked extremely hard, not only building her own public relations company, Washington & Associates, but also investing her income towards her visions of financial freedom (she doesn’t much like the word “retirement,” but she definitely wants to be free!). 

Olivia has managed her own investments as long as she has had them. To get investment ideas, she follows a popular stock trading website, and pays $2,000 a year for that subscription. She has an RRSP, a TFSA, maximizing her contributions to both in the last two years, when her income grew significantly. On top of that, she has taxable, non-registered investment accounts and her own home, with a mortgage. 

Last year, Olivia received a buyout offer that was just too good to pass up. Washington & Associates was acquired by Rimes Inc., a much larger marketing and communications company that saw Olivia’s firm as a natural extension of their work. Olivia really respects the CEO and is excited about the direction that Rimes will take all the work that Olivia has put in over the past decade.

Her Challenge…

Olivia now has a larger salary and scope of work inside Rimes Inc., as well as shares in Rimes – not to mention a big chunk of money to invest from selling Washington & Associates. She definitely doesn’t have the time to keep up with the recommendations from her stock trading website. She found herself unsure whether to maintain her current portfolio, or find an investment manager to take care of her portfolio while she focuses on accelerating the PR division at Rimes Inc. 

Olivia reached out to Spring Plans and met up with Darryl, our Director of Portfolio Strategies. After their discussion, Darryl proposed a portfolio review, followed by an investment manager search if she felt that she wanted to find a partner to manage her portfolio. Olivia loved the proposal, told Darryl to get started, and started sharing her information. 

The Results of her Portfolio Review

When Darryl performed Olivia’s portfolio review, he found that she held almost 200 different individual stocks. This of course made for a very well-diversified portfolio! Despite this, Darryl found a significant concentration of investments in small, US-based firms, primarily operating in the technology sector. This revealed a bias held by the stock trading website Olivia subscribed to, as Olivia indicated that this wasn’t something that mattered to her one way or another. 

At the same time, there was a complete lack of any investments in companies outside of North America, or in sectors like health care, utilities, or telecommunication. When Olivia walked through this review with Darryl, she really was surprised. She always felt strongly about diversifying in her portfolio, knowing that – as Darryl says – “it’s the market’s only free lunch,” and was disappointed that this strategy was not reflected in the investments she held. 

Understanding how far she was from the investing strategy she really wanted felt pretty daunting to Olivia. With everything she has signed up for at work, she knew that she couldn’t really handle making the significant shifts she wanted by herself. At the same time, she was a bit reluctant to consider hiring an investment manager. 

“I read so much about high fees and low quality advice,” Olivia said. “I don’t feel confident that people in that field are really going to be looking out for my best interests.”

Darryl then reviewed a number of alternatives with Olivia, from maintaining her current approach, to considering a number of investment managers that we have had the pleasure of working with at Spring Plans. These are professionals we all felt would be great fits for her investment objectives – and whose fees were all around 1% per year or less. Olivia was really surprised at the fee schedules she reviewed, as she had understood that she would be paying much more. Suddenly, hiring an investment manager didn’t seem like as bad an idea as it was at first. 

What really drove Olivia’s final decision to move away from self-management was the realization that maintaining a properly balanced and diversified portfolio would take a great deal more time and monitoring than what she was willing and able to give. We introduced her to, and helped her interview three prospective investment managers. After a thorough search process, with lots of discussion, she successfully partnered with a manager she felt confident – and we felt confident – would be the right fit for her over the long term. 

In the Years Ahead…

Olivia plans to have an annual portfolio review with her new manager and Darryl every year, and will be adding a full financial plan with the rest of our planning team after she gets her feet under her at Rimes Inc. We are thrilled to have helped Olivia with the next steps in her life, knowing that she’s got a team around her who will be able to keep her investments and finances on track while she focuses on her career. 

Looking for your own portfolio review? Learn more on our Portfolio Strategies page here.