Three tips to better manage your portfolio - MoneySense

Three tips to better manage your portfolio

Bruce Sellery offers his top tips on how to take more control over your money.




I strongly believe that the average retail investor is being under-serviced by the financial industry. There are many people that offer tools and advice for free or fee, but ask 10 people if there are happy with their investment portfolio performance over the years, and I think we can agree on the answer. So here’s my question: What is the number one tool the average investor needs that is not readily available today?


I live in Calgary and the weather here can be nuts. Hail in July, snow in September and sun so smoking hot you can sometimes sit on your deck drinking eggnog in December. The weather is the way the weather is in Calgary, and I don’t think there is much point in complaining about it.

The same goes for the financial services industry. While some of the things that these firms do are nuts—and yes, I have been on the receiving end—the industry is the way that it is. Journalists, regulators and politicians will do what they do to report on it, monitor it, and legislate it, but the fact is that our banking system is better than most others around the world.

But don’t read this as a defense of the industry. It isn’t. Instead, read this as a rally cry for retail investors to take control of their own financial future, instead of hoping that a bank will discover its inner benevolence and do something other than try to boost its bottom line. Which leads me to my answer to your question about the number one tool for investors.

1. Take accountability for your money

The number one tool for investors is to take accountability for their money. The great thing is that this tool is already available—we don’t have to invent it, or wait for an app to be built. We just need to take advantage of our own ability to be accountable.

I speak to large groups of people across the country on a regular basis. My mission is to inspire them to get a handle on their money so they can live the life they want. Most of the actions that you need to take to do that are unfettered by the profit motive of the industry. Here are some examples:

2. Determine where you are on the Priority Pyramid

Everyone’s priorities are different based on their circumstances in life. Find out what you should be focused on and work furiously on that task so you can move up to the next level of the pyramid. It begins with cash flow, and moves up to debt, saving, tax vehicles, then investment performance. And an individual investor’s ability to achieve the performance of the benchmark index is as simple as setting up a discount brokerage account and buying exchange traded funds. There is no new tool that needs to be invented to do that.

3. Be vigilant about investing fees and commissions

While you didn’t say it explicitly, I would bet your beef about investment performance has something to do with fees Individual investors don’t need the industry to lower fees, they just need to buy the products that are already out there that charge low fees. Over time, the industry will do a better job servicing investors who seek out low fees options. For example, BMO now offers ETFs, TD has its e-series and ING Direct (soon to be owned by Scotia) offers low fee index funds.

One of the biggest examples of the industry reacting to changing investor tastes was the move by Investors Group to lower some of its mutual fund fees. They didn’t do this because people complained about fees. They did it because they were losing business to lower priced options.

Drive industry change as an individual

The executives in the financial services industry are like any other—they go where the money is made. And right now the buzz on Bay Street is all about the “mass affluent.” How do they make money from people who have less than the $500,000 it takes to qualify as a high net worth client? It will be a big challenge because that demographic is starting to wake up to the power they have when take accountability for their money. And that is going to lead to significant industry change over time.

My challenge to you is park your angst about the industry aside for the moment. Go out there and get a handle on your money first then help the people in your life do the same. That path has a much better chance of leading to the industry change you’re looking for.

P.S. Don’t forget that individual investors can buy shares in the banks. If you really believe that the big profits will continue, consider buying the sector. After all, in the last 10 years Canadian bank stocks are up over 75%.

P.P.S. There is one thing that non-Albertans don’t fully appreciate about the weather in Calgary. The city has more than 300 days of sunshine every year and that is something to celebrate.