You Deserve Greatness: Getting the Best Out of Your Investment Options

August 24, 2018 Marc Lepage

Originally published by Canadian Healthcare Network on August 14, 2018.



When it comes to investing, physicians have more choice than ever before. This is a good thing. However, this presents a challenge: how do you assess the choices and select the option that makes the most sense for you? Recent conversations that compare management expense ratios (MERs) and the cost-for-value of advisor advice in the context of emerging robo-advisor service models highlight this struggle.

Having spent the better half of my career supporting physicians to achieve their financial goals, I am skeptical of any argument that there is one best way to invest for everyone. There isn’t. People are different and they want and need different things. However, what all investors need, and deserve, is clear and transparent information about the broad range of options available to them. 

I believe most investors are serious about comparing investment choices apples-to-apples. Below I offer four recommendations for cutting through the confusion in order to get the very best out of the growing number of investment options on the market.



1. Compare Options Based on Your Own Priorities

When it comes to distinguishing between options, where do you start? It really comes down to your priorities. Some investors only care about the lowest possible cost. Others want expert guidance and advice to grow their portfolio. Some want to reduce the amount of time and effort they spend making investment decisions. Others want to be fully hands-on and do it all themselves. And then there are those who have extremely complex financial situations and need a team of coordinated experts to support them. 

Once you know what your priorities are, it’s a lot easier to compare competitive options.

Beyond that, you’ll likely want to consider more qualitative factors. How do different solutions compare in terms of experience working with physicians, responsiveness and accessibility, and focus on putting your priorities first? Establishing your own filter for what matters is the best tool in evaluating a proliferation of choices.



2. Get Familiar With the Range of Products Out There

Speaking of a proliferation of choices, getting educated on what’s out there—and how options compare in terms of costs as well as value—is critical. Every institution is different, but MD’s four different service offerings run the gamut and offer a useful illustration of the range of products available on the market. Let’s break it down, sorted from lowest fees to highest:

Intuitive, low-cost online brokerage services

This is a low-cost and easy to use online investment platform for do-it-yourself clients who want to execute their own investments, without the benefit of advice. The MD example is MD Direct Trade.

Simplified online investing with access to advice

Some clients prefer automated and cost-efficient digital advice with access to a team of advisors via phone, email or live chat. Fill out a questionnaire about your goals and risk tolerance, and you’ll get a portfolio recommendation tailored to you. MD ExO Direct® is a good example of this.

Comprehensive financial planning

For those who prefer their advisor to take a more active role in managing their assets and want a face-to-face relationship, and a full financial planning service that includes advice on investments, insurance, tax savings, retirement and estate planning.  MD’s offering in this case is MD PlusTM.

Discretionary wealth management

As the size and complexity of a portfolio increases, so do the amounts of time and expertise required to manage it. This is where private investment counsel comes in. To serve clients with complex financial needs, we offer MD Private Investment Counsel (MDPIC), which includes personalized expertise through a dedicated MDPIC Portfolio Manager and MD Advisor. These types of offerings often provide clients with exclusive access to specialized solutions and asset classes.



3. Don’t Underestimate the Value of Good Advice

A common question that surfaces with clients when faced with the option to pay more in fees for advisory services is–does it really matter? Will working with an advisor translate into better investment outcomes? In my experience, the answer is yes, it matters. There’s quantifiable evidence to support how working with an advisor can improve savings, confidence and retirement readiness.

Two reports,1 by the Center for Interuniversity Research and Analysis of Organizations (CIRANO), shed light on the financial and emotional benefits that investors receive when they work with an advisor. Key findings suggest it has a profound impact on financial assets and savings discipline and boosts your prospects for a better retirement.

 

4.      Demand Transparency Around Fees and Advisor Compensation

With so many investment options available today for physicians, it’s important to understand exactly what you’re signing up for.  It’s reasonable to expect management fees in some form from every institution, but it’s important to recognize that all financial institutions do it differently.

At MD, we are fully committed to fee transparency.[2] We go beyond the minimum disclosure  requirements to provide our clients with information about all fees and compensation associated with their investments. We believe it’s the right thing to do and we’re proud of the fact that MD’s fees are among the lowest in Canada, nearly  30% lower than other financial services firms.[3]

The other key area where transparency really matters is around advisor incentives and compensation. MD Advisors and Portfolio Managers are subject to extensive regulation by Canada’s securities commissions and by the self-regulatory organizations (SROs), whose fundamental goal is to protect investors. Additionally, our Advisors and Portfolio Managers are not compensated based on volume of trades nor on the types of products sold. They are paid a yearly salary. This is a cornerstone of who MD is and how we have worked to put our clients’ interests first for close to 50 years. We know this is not only something our clients value, but also expect.

There has never been a better opportunity to customize your investment experience to your needs and your priorities. My best advice: when it comes to making decisions, start your evaluation by understanding what matters to you most. Don’t get distracted by the noise. Choose the financial products, and partners, that fit who you are and what you value. You deserve greatness—so don’t hesitate to demand it.





 

1 Montmarquette, C. and Viennot-Briot, N., The Gamma Factor and the Value of Financial AdviceCenter for Interuniversity Research and Analysis of Organizations (CIRANO)2016. Montmarquette, C. and Viennot-Briot, N., Econometric Models on the Value of Advice of a Financial Advisor, Center for Interuniversity Research and Analysis of Organizations (CIRANO), 2012.

2 The MD Direct Trade fee disclosure meets all the regulatory requirements; it does not provide a management expense ratio (MER) breakdown.

3 MD compared the management expense ratio (MER) for MD mutual funds and MD Precision Portfolios™ (applies to Series A fees only) with the average mutual fund MERs for comparable funds, using data from Investor Economics as of December 31, 2016.

About the Author

Marc Lepage

Marc Lepage, CFP, CIM, FMA, FCSI, Regional Vice President, MD Management Limited, London, Ontario.

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