Portfolio Audit Service
The Index House offers a complimentary independent portfolio audit service1 of investment choices and tactics to help frustrated investors understand where problems exist. Provide us with information about how you are invested and we will diagnose your broken portfolio. The following list guides each portfolio audit to help uncover problems.
Strategies and investments: How do you make investments? What type? Is your strategy even achievable?
Asset mix: Is it appropriate? Often overlooked, the asset mix determines your expected return and the risk you take.
Risk: Are you taking too much risk? Are you taking any uncompensated risks? What about inflation and underperformance risk?
Performance: What is your return? Are you outperforming or underperforming? Do you need to make changes?
Tax efficiency: Disorganized portfolios and active trading create unnecessary tax. Lesser-known tax issues include: high coupon bonds in taxable accounts, tax harvesting to minimize taxable gains, and foreign withholding tax.
Expenses and inefficiencies: How much are you paying for portfolio management? Are you even aware of all the commissions, sales charges, fees, redemption charges, management expense ratios and trading costs? Lesser-known frictional costs occur when you buy U.S.-dollar-denominated investments in your registered accounts.
Statements: Good portfolio results don’t come through neglect. Wise financial stewards maintain command and control over their portfolio through better reporting which should disclose fees, provide after fee rates of return over various time periods, and benchmark returns for performance comparison. Better reporting should be simple to understand and accessible.
Advisor’s qualifications and applicable legislation: Most advisors today are subject to one of two ethical standards in the service of clients. The "fiduciary standard" is a requirement to act in the best interests of the client. It is a legal standard on par with other professionals such as doctors, lawyers and chartered accountants.
The "suitability standard" merely requires the advisor to make appropriate recommendations. In the latter case, the client is responsible for the final decision and therefore retains the legal responsibility. Portfolio management firms generally fall into the following types: bank, mutual fund firms, brokerage firms and private counsel. Only a private counsel firm owes you a fiduciary duty.
Fixing Broken Portfolios:
Christopher M. Turnbull, BA (Econ), CFA, CFP, TEP
The Index House*
Suite 2020, 10060 Jasper Avenue
Scotia Place, Tower 1
Edmonton, Alberta, T5J 3R8
*The Index House is a division of Polaris Financial Inc.