Category: Press

Prolong your practice

You’ve spent your entire career building your practice from the ground up and now you’re thinking of selling it. You have a book full of loyal clients who you enjoy servicing but the pressures placed on your time is starting to wear on you. While many advisors seem doomed to work long hours into their “would be” retirement years, perhaps you’re considering either selling your book or passing it on to a family member. There’s only one problem: You’re inextricably entwined in the business and you don’t really want to fully retire.

As a personal services business, your clients trust and have a rapport with you; they like the way you treat them and handle their business. While that can make for lifetime customers, it can also make it difficult to sell your business to someone else. There are no guarantees that your clients will stay with the new owner and therefore the value of your business to a potential buyer might be less than you expected. Most advisors who seek to sell their firms won’t get the price they’re after and deep down they don’t even really want to sell.

Another consideration when selling your business is finding an appropriate buyer. Many deals involve a price that’s payable over time, and is largely contingent on how many clients stick around, so you have to be sure that the buyer is someone you trust to do a great job. Do they share a similar investment philosophy? Do they value exceptional service and look after their clients properly? How comfortable are you passing on your life’s work to somebody else?

Another consideration is that once you sell your business, it’s no longer yours. There is no going back so unless you’re 100% certain you’re ready to move on, a better solution would be to look at alternatives. Rather than selling off your business consider an alternate strategy which will allow you to focus only on those parts of your business that you like the best.

For many advisors, the best strategy for their later years might be to slow down, rather than retire outright. Offloading responsibilities can help a planner enjoy staying in business longer than they imagined. Outsourcing the activities that you enjoy the least could save you from the burnout that many veteran advisors face.

Rather than making a decision to abandon your business, you can evolve your business. If advisors are doing everything themselves; conducting annual client meetings, managing money, performing mutual fund research, portfolio construction and monitoring, handling ongoing administration and back office functions, it’s no wonder that many feel burned out.

With that in mind, it’s worthwhile to consider outsourcing as a way to free up time and bring outside expertise into the practice. These considerations can range from the delegation of a portion of the investment management function for some clients, to delegating all facets of the investment and administrative roles for all clients.

Working with a third party provider to handle everything from portfolio construction and management to rebalancing, compliance, research and back office support has been a fast growing trend among advisors over the past decade. Before choosing an outsource supplier, consider the following:
Look for providers that share your investment philosophy
Determine all fees and costs
Confirm advisor and client account minimums
Find out who is the firm’s custodian
Ensure the technology is easy to use and integrates with your structure
Consider the ease of transitioning in and out of the plan
Evaluate the advisor and client logistics to change to the new business model

This is where Transcend can help out. We can free up your time so that you can focus on advancing your business to where you want it to be. We can be an extension of your office, handling your investment and administrative needs such as determining asset allocation, researching investments, selecting portfolio managers, and due diligence. On the administration side we take care of trading client accounts, managing client cash needs, managing fee based billing and reporting, as well as providing regular investment and performance updates to clients. Transcend will work with you to customize your service experience so you can work as efficiently as possible.

While the process of outsourcing can be a challenging one, the objective is to free up your time and energy so that you can focus on the activities you enjoy. By outsourcing these responsibilities, not only will you reduce your paperwork, but you’ll gain time for yourself, your family and the rest of your business.

How high investment fees can diminish Investment Returns

Special to the Financial Independence Hub

The objective for most investors is to earn value-added performance. Unfortunately there are fees and other costs that can diminish investment returns. The reality is that the costs associated with investing in these products can lead to underperformance when measured against industry standard benchmarks.

The above chart shows the average annual fees and their impact on investment performance for Equity Mutual Funds, Exchange Traded Funds (ETFs), robo-advisors and Transcend’s Pay-for-Performance™model. This is illustrated by comparing their returns against a benchmark. The benchmark is a universally accepted representation of a particular stock market that is used to measure the performance of a portfolio manager.  For example, a benchmark for Canadian equities is the S&P/TSX and a benchmark for U.S. equities is the S&P 500.

Ultimately, excessive fees reduce clients’ investment performance and hampers their ability to reach their financial goals.

While ETFs and robo-advisors are gaining in popularity, mutual funds are still the prevalent investment product for retail investors despite numerous studies that have confirmed the weak investment returns of equity mutual funds relative to their benchmarks. In Canada, a fairly new approach developed by S&P Dow Jones Indices called the SPIVA Canada Scorecard confirms performance failings. The latest result based upon five years of data ending December 2016 confirms that equity mutual funds have underperformed their benchmark, often because fees have such a negative impact on the overall portfolio results.

Mutual funds can charge management fees as well as administrative costs and custodial fees. They can also charge clients for trading, legal, audit and other operational expenses. In the chart above, these fees plus investment related underperformance add up to the average true cost (-2.37%) of investing during the last five years for equity mutual funds.

Even low-cost ETFs, which are designed to mirror a benchmark, tend to disappoint. The performance lag can be tied to the level of fees of 0.32%, plus trading and rebalancing costs as well as a potential cash balancing drag of up to 0.42%, based on 2015 data from the Management Reports of Fund Performance (MRFP) found on the SEDAR.ca website. This analysis does not include the negative impact of brokerage costs to buy and sell, and potential custodian or registration fees. With that in mind, the chart reveals that ETF investors underperform the market appropriate benchmark by -0.74%.

Robo-advisors to the rescue?

Another relatively new entrant to the low cost investment marketplace is the robo-advisor. Employing several common assumptions such as an average portfolio size of $50,000 and trading costs of 0.2% per year, it can be determined that the average robo-advisor fee in Canada is 0.63%.

This cost shows that it is more efficient than traditional wealth management fees, but still lags behind the Pay-for-Performance™ model. While everyone is talking about robo-advisors, the true question should be about getting value for your money and how much fees can impact actual outcomes.

For example, using the average fee on a $50,000 portfolio, the cost of an equity ETF is $367 per year, a robo-advisor would set you back at $682 and an equity mutual fund has a total average annual cost of $1,185.

These high costs are exactly why some investors are reconsidering and questioning traditional methods of investing. Lise Allin of Lise Allin Insurance and Estate Planning Services is an advisor we work with in Ontario and she recalled one case involving a senior, now her client, who in a 10 year time span with an investment bank saw his wealth at retirement go from $1,200,000 to $750,000. This person had worked for 40 years to accumulate his wealth and the decline of his capital was very worrisome, given that he is now a widower with children living far away.

“Many still want to be able to leave their kids an inheritance, but they have to be on the right investment path,” Allin says. Since that time, Allin has been working with us to stabilize her client’s investments around the $750,000 mark, while he is still able to withdraw the $40,000 he needs on a yearly basis. This is a clear illustration of how fees and poor investment choices can quickly erode capital and create a risky situation, especially for senior investors.

What’s new?

Find a firm that puts clients first and adheres to a set of prudent wealth management principles. The goal with your investments should be to build a portfolio that combines effective risk management techniques with superior investment returns.

Recognizing the impact of fees on performance, Transcend.ca offers a revolutionary platform. A client-friendly fee structure that charges much less in fixed costs while manager compensation is based on merit, not asset size, when delivering returns that outperform the market.

Written by: Chris AmbridgeSource: http://findependencehub.com/high-investment-fees-can-diminish-investment-returns/

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Financial firm rolls out new fund under performance-based fee model

Businessman and businesswoman discussing at office with laptop on desk.

Businessman and businesswoman discussing at office with laptop on desk.

Financial firm rolls out new fund under performance-based fee model Investors seeking for yield away from a bond or guaranteed investment contract (GIC) now have another option, thanks to Transcend Private Client’s new offering, the Multi-Strategy High Yield Fixed Income Fund.

The group’s new fixed-income fund will follow its recently launched Pay-for-Performance fee model, where clients pay a nominal amount unless performance results are above the industry benchmark.

Transcend CEO Chris Ambridge said the fund affords investors with a more secure avenue for alternative investments. Additionally, the new fixed-income fund is expected to spur better yields than what bonds and GICs can potentially make.

“We are offering Canadians a reliable fund with low risk, based on our company philosophy that you only pay if the results are better than the benchmark,” he stressed.

Aside from being Canadian-centric, the fund will also be diversified in terms of assets through active management. It will invest in corporate bonds, convertible bonds, preferred shares, income trusts, REITs, mortgages, secured real estate and infrastructure projects, as well as alternative investment strategies and hedge funds.

Ambridge said investors who subscribe to the fund will not incur additional costs above basic management expenses. This will be the case until the fund outperforms the benchmark, which is 50% of both the FTSE Short Bond Index and the FTSE Mid Bond Index.

“We have very open conversations with advisors and investors on our track-record, why our company fee model defies the norm and why our service beats the competition,” he said.

Transcend launches new fund under pay-for-performance fee model (P&T)

Clients who invest in Multi-Strategy High Yield Fixed Income pay a nominal amount unless the fund outperforms its benchmark

Toronto-based Transcend Private Client Corp., a subsidiary of Provisus Wealth Management Ltd., has launched a new fixed-income fund, Multi-Strategy High Yield Fixed
Income, which will follow the pay-for-performance fee model introduced to the Transcend platform in September 2016.

Under the pay-for-performance fee model, clients only pay a nominal amount unless performance results are above the industry benchmark.

“This fund offers investors a secure alternative investment that yields better results than a bond or GIC,” says Chris Ambridge, CEO of Transcend, in a statement. “We are offering Canadians a reliable fund with low risk, based on our company philosophy that you only pay if the results are better than the benchmark.”

The fund will be “Canadian-centric,” the firm says, and diversified in terms of assets through active management. The fund will be comprised of corporate bonds, convertible bonds, preferred shares, income trusts, real estate investment trusts, secured real estate and infrastructure projects, as well as alternative investment strategies and hedge funds.

The investment strategy will be focused on a short to mid-term structure, similar to a five-year GIC, the firm adds.

Investors using the fund will not be required to pay anything above basic management costs unless the fund outperforms the benchmark, which is 50% of the FTSE short bond index and 50% of the FTSE mid bond index.

Transcend launches fixed income fund

Transcend has launched the Multi-Strategy High Yield Fixed Income Fund, which allows clients to pay a nominal fee unless performance results are above the industry benchmark.

Investors using the fund won’t pay anything above basic management costs until the fund outperforms the benchmark. In this case, the benchmark is 50% of the FTSE Short Bond Index and 50% of the FTSE Mid Bond Index.

The fund will be Canadian-centric and actively managed. It will consist of corporate bonds, convertible bonds, preferred shares, income trusts, REITs, mortgages, secured real estate and infrastructure projects, as well as alternative investment strategies and hedge funds. The investment strategy will be focused on a short- to mid-term structure, similar to a five-year GIC.

Transcending Wealth Management

provisus

Investment platform is now bringing pay-for- performance to fixed-income space

Last September, Provisus Wealth Management shook up the wealth management space with the
launch of its Transcend platform. Responding to consumers’ frustrations that asset management in
Canada was overpriced for everyday investors, the firm offered a pay-for- performance model within its
equity pooled fund suite.

Under this structure, clients pay a base fee of 0.25%, which covers administrative costs for the
various funds used in a Provisus portfolio. If a fund performs better than the benchmark, a performance
fee equal to 20% of the fund’s return above its benchmark is then charged. It’s a novel approach and one
sure to have many imitators in the future.

So far the response has been great, and Transcend is expanding into the
fixed -income space with the Provisus Multi-Strategy High Yield Fixed Income Fund. Subscribing to the
belief that investors should only pay a nominal amount unless performance results dictate otherwise,
the new fund will charge the same fee as Transcend’s other offerings.

President and CIO of Provisus Chris Ambridge explains why he felt the need to launch a new product with
the same management and pricing structure.

The returns on bonds over the past few years have been poor and GIC rates are
negligible for clients,” he says. “There are not a lot of options out there in fixed income
for people looking for a defensive structure. We have created a fund with lower fees lower than a
bond ETF at 25 basis points. The average MER for an ETF bond is around 28 basis points.”

The fund, set to launch on September 30, will be Canadian-centric, but diversified in terms of assets
through active management. It will hold corporate bonds, convertible bonds,
preferred shares, income trusts, REIT’s, mortgages, secured real-estate backed lending and
infrastructure products, as well as alternative investment strategies and hedge funds.

The investment strategy will generally have a short to mid-term orientation, or as Ambridge puts it: “Essentially the same term structure as a five-year GIC.”

Key to Transcend and the reason it made headlines in investment circles last year is its Pay-for-Performance™ model. The firm takes a great deal of pride in being a trailblazer when it comes to fee structure and offering clients greater transparency. As the Transcend president has pointed out, investors using the Multi-Strategy High Yield Fixed Income Fund won’t pay anything above basic management costs until the fund outperforms the benchmark. The benchmark in this case is 50% of the FTSE Short Bond Index and 50% of the FTSE Mid Bond Index. Ambridge is confident the fund managers at Transcend will achieve its investment goals, regardless of what the Bank of Canada does with interest rates moving forward.

“The historic performance for the benchmark over the last ten years or so has been about 4.5%,” he says. “Based on our back-tested numbers, we are seeing double that. When advisors sell GICs, they get 25 basis points. Here they can take a large advisory fee, up to 1%, and clients will benefit from still having better performance than with GICs or bonds in isolation. GICs from the major banks are yielding about 1%.”

The makeup of the fund will be strictly Canadian, explains Ambridge, a strategy designed to remove any currency risk that could hinder performance.

“We are hoping to replace Canadian bond portfolios and mutual funds,” he says. “We don’t see the need right now to go outside of Canada – the yields are high enough here to generate sufficient returns for Canadians. We prefer to have our foreign currency exposure on the equity side.”

Catering to retail investors, Provisus now has $440 million in assets under management and has been selected as one of Profit 500’s Fastest Growing Companies in each of the last three years. Canadian investors expect greater choice and better value from investment products nowadays and Transcend is clearly a response to that need. For those who plan to purchase the fund, it will be available through the same platform that has proven such a success with its equity pooled funds.

“The fund will be available exclusively through our managed account structure,” says Ambridge. “Having a managed account structure allows Provisus to keep the costs down. Advisors can offer the fund through a referral.”

Are Investment Fees for suckers?

Special to the Financial Independence Hub

Providing a service costs money, but paying a fee deemed as an unnecessary amount has come under attack from consumers at all levels. Think banking fees, or the perception of “hidden fees” on phone bills to brokerage and investment fees. Consumers are demanding more value and in some cases winning the battle.

There is more scrutiny on fees than ever before. Studies have shown many investors either believe they do not pay anything or have no idea what they do pay (Hearts & Wallets: Wants & Pricing — What Investors Buy & Competitive Ratings — 2016).

But everyone understands nothing in life is free and clients have a right to know what they pay.

The long-view of investment fees

For centuries, if an ordinary person had any liquid wealth the best they could hope for was meagre interest on their cash. Then, as the concept of companies developed, the notion of profiting from an equity investment emerged and stock exchanges were established in seventeenth century Europe to trade equities.In Canada, much of the early development was raised in the London market, with public shares of large companies such as the Hudson’s Bay Company. The Toronto Stock Exchange (TSX) was created in 1861, and 17 years later the TSX was the second official stock exchange in Canada.

Asset managers on the rise

For less well-heeled investors, the first modern mutual fund was created in Canada in 1932. They were slow to catch on and grew very little between 1930 and 1970. However this was reversed in the 1970s when investors wanted greater stability following the oil crisis.

The cost of owning mutual funds is made up of three parts: acquisition costs such as front-end load commissions; ongoing costs both embedded and negotiated; and disposition costs such as redemption fees. The cost of ownership, rather than the Management Expense Ratio (or MER, which often contains trailer fees representing the commission paid to brokers and mutual fund dealers for advising clients to purchase the funds) is the most effective way to measure total investment expenses.

Recent developments have provided retail investors with the opportunity to lower investment costs of mutual funds due to the proliferation of no load funds, online/discount brokerage firms, fee based accounts and Exchange Traded Funds (ETFs) which have dramatically altered the investment landscape.

Traditional asset managers charged investors significant fees, ranging from 1.0% to 1.5% of assets under management for high net worth clients, a practice that is still common today.

Success-based Investing

Now a new fee concept is on the market. Last year, Canada’s first Pay-for-Performance™ investment service launched. It shifts power to investors by aligning fees to investment results relative to benchmarks. While a basic admin fee of 0.25% is charged, investors do not pay any more unless the performance of the funds exceeds specific industry benchmarks. Meanwhile, the investment manager earns income only when they deliver superior returns.

The idea here is that clients need to feel their money has value. And when results achieved are better than industry standards, the fee paid seems worthwhile: like it was a good investment.

How to find value

Knowing if you are getting value for your investment portfolio can be tricky for some. Blind loyalty can tie up investments for years with a particular institution. Gains are made, but how do we know we’ve reached our maximum goals with the money available?

Ask yourself three questions:

  1. Are my fees clear and understandable?
  2. Do the fees put my interest first?
  3. Are the fees reasonable for the service provided?

It may not yield all the answers you want, but it’s a start.

September 14, 2017

Written by: Chris Ambridge

Source: http://findependencehub.com/investment-fees-suckers/

5 common mistakes when working with an advisor

Special to the Financial Independence Hub

Canadians are often faced with complex and nondescript investment products that can be overwhelming.  As such, most people need professional advice. With personal recommendations as one of the most common forms of referrals, selecting the right advisor should also be based on qualifications, fees that won’t gouge, and the advisors autonomy to act in the best interest of the customer.

However, many people are now spending a significant amount of time surfing the web and seeking advice online, where it can be difficult to distinguish expert advice from the inept.

In Canada, 96% of registered advisors are “dealing representatives,” which means they are salespersons not legally required to look after your best interests. On the other hand, just over 4,000 advisors are registered in categories where they must act as true fiduciaries and are legally required to deliver clients advice that must be in their best interest. While there are many financial advisors who look after their clients in the same way as true fiduciaries and deliver exceptional support and guidance, there are a whopping 118,000-plus advisors who do not have to adhere to such standards.

As an investor in search of an advisor, your goal should be to find the right person to help you reach your future financial goals. While you can correct a poor choice down the road, you would have wasted valuable time and may have actually suffered financial setbacks. It is therefore paramount you avoid the following mistakes:

Mistake #1

Don’t fall for the opening pitch. No matter how enticing the discussion and no matter how obvious the initial set of benefits are, chances are you are only seeing one side of the equation. No one wants to reveal their warts, especial right off the bat. So take your time to establish a rapport with the advisor. Trust comes with knowledge and clarity so make your first appointment about gathering information and creating a connection.

Mistake #2

If investments and products are the first subject of conversation before attempting to build a profile of you and your family, take a pass. Remember you are looking for someone that can give you personalized advice and not a canned spiel or off-the-shelf solution. If the advisor starts talking about investments before understanding your fears then you should think twice.

Mistake #3

If the advisor starts spouting off jargon or buzz words, look to the nearest exit. Like most clients it is not your life long ambition to be fully versed in all things financial. You have a real life, with other priorities that require your focus and energy. After all isn’t that why you are seeking out an advisor in the first place? So demand straight talk without the mumbo-jumbo.

Mistake #4

Seek out a written and understandable set of recommendations. An unintelligible proposal is bad, but no proposal is even worse. Remember you want to avoid the sales pitch pressure. What better way to do that than having something tailor-made for your circumstances and then have the time to mull over the material before making a decision. It should be comprehensible, straightforward and written in plain English.

Mistake #5

You should be the one talking, not the advisor. Too often sales-first advisors talk too much and cannot be interrupted because they are pushing their agenda. Instead, they should be asking you questions; listening to your responses and providing concise answers given your requirements and needs. Verbal diarrhea should make you sick.

Your task is simple. Avoid falling for these mistakes. Ask yourself: “Have I experienced any of these mistakes?” If your answer is either “yes” or “I’m not sure” then perhaps change is necessary. Just remember you should never assume everything will be okay. Don’t assume it will be better down the road. Don’t assume your advisor understands your goals because you may find that only one of you is actually in it for the long haul.

 

June 29, 2017

Written by: Chris Ambridge

Source: http://findependencehub.com/5-common-mistakes-working-advisor/

Advisors need to counter growing threat of robo-advisors

As new research shows robo-advisors are gaining traction among clients, advisors should find ways to use these tools as well as provide the unique services that set them apart.

 

As robo-advisors present a growing threat to traditional financial services firms, financial advisors should find ways of using these tools in their practices and focus their efforts on services that cannot be replaced by technology, according to several investment industry insiders who spoke at the Independent Financial Brokers of Canada’s (IFB) Spring Summit in Torontoon Thursday.

“[Robo-advice] is going to become more and more prevalent,” said Chris Ambridge, president and chief investment officer at Provisus Wealth Management Ltd. and president of Transcend Private Client Corp., an online platform and a subsidiary of Provisus, both based in Toronto.

Ambridge pointed to recent statistics from Strategic Insight showing that assets under management at Canadian robo-advisors jumped by 44.6% to $1.07 billion at the end of the first quarter (Q1) of 2017 from $743 million in the fourth quarter (Q4) of 2016. During that same period, the number of accounts surged by 56.1% to 46,149 from 29,572, while the number of clients rose by 55.2% to 33,757 from 21,752.

The size of those accounts, however, is shrinking. At the end of Q1, the average account size was $23,274, down from $25,126 in Q4 2016.

Nevertheless, research suggests that a growing number of clients are choosing robo-advisors over traditional advisors. Ambridge presented the results of a recent survey showing that 30% of investors believe robo-advisors do a better job than human advisors, and 72% of clients under the age of 40 said they are comfortable working with virtual advisor.

But it’s not only millennials who are making the switch. The average age of a robo-advisor client is 44, Ambridge said: “You would think it’s all millennial people who are just starting off, but it’s not.”

In addition, the survey shows that of the affluent clients who had switched firms in past two years, 45% went to a robo-advisor.

The shift to robo-advisors is being driven in part by consumers’ growing preference to transact digitally, but also by a lack of trust in the financial services sector, Ambridge said. In fact, 70% of the clients surveyed said they question the trustworthiness of financial services professionals.

“Trust in financial services is not at an all-time high,” he said. “In fact, it’s pretty low, quite frankly.”

For advisors, this means that taking the time to build solid relationships and earn clients’ trust is more important than ever, Ambridge said.

Instead of viewing robo-advisors as a threat, advisors should focus on the factors that differentiate them from those online services, countered Ron Fox, chairman and CEO of Toronto-based Glidepath Portfolio Services Inc.

“The human financial advisor is not going anywhere,” he said. “Technology cannot replace you, because the reasons why people value your service have nothing to do with technology.”

Specifically, technology could never replace the empathy and reassurance that clients get from their advisors Fox said. However, he noted that advisors can use technology to improve the services they provide.

“Technology is facilitating customized and enhanced levels of service that weren’t accessible to most in the past,” said Fox.

Specifically, advisors should utilize technological tools to help with tasks that can be done more quickly and more affordably by computers, such as asset allocation and systematic portfolio rebalancing, Ambridge said.

“Don’t spend a lot of time on things that computers can do better,” he said. “All you’re doing is wasting your time.”

That allows advisors to focus on the value-added personalized advice that computers cannot offer, such as comprehensive financial planning, tax planning and helping clients build a legacy, he said. Advisors should also strive to offer a variety of different asset classes and products to differentiate their offerings from those available online.

Embracing technology to automate some of the administrative tasks that previously consumed advisors’ time and resources can also help advisors be more profitable, added Robert Frances, chairman and CEO of Montreal-based Peak Financial Group.

 

By Megan Harman | June 01, 2017 15:20

http://www.investmentexecutive.com/-/advisors-need-to-counter-growing-threat-of-robo-advisors?

 

Delegating for Success

Transcend President Chris Ambridge, CFA explains how advisors can lessen their workload but boost profits at the same time

If an advisor were to rank their key responsibilities, keeping clients satisfied surely figures at the top of that list. It’s a priority that does not receive enough attention according to many in the profession, as regulatory pressure has meant their focus is often diverted elsewhere. Provisus Wealth Management’s new investment platform Transcend, seeks to ease that burden, allowing advisors to concentrate on adding value for clients through financial planning and tax assistance.

“We can help advisors transition from their existing business structure and focus on financial planning as opposed to compliance, administration or trading,” explains Chris Ambridge, President of Transcend. “It is outsourcing the portfolio management to focus on additional planning services and client retention.”

Transcend’s research shows that a financial advisor’s workload usually breaks down to a 60-40 split between servicing clients and portfolio management/compliance. Using this program means that 60% can increase to 100%.

“If an advisor wants to slow down, but still wants to keep all their clients, we are offering an alternative to the current structure,” says Ambridge. “Essentially it is 40% less work, 40% more pay and they can focus on what makes them better advisors.”

In these fee-conscious times, clients are asking a lot more of advisors and those unable to meet increased demands will be left behind, Ambridge points out.

“Advisors need to adapt or become irrelevant,” he says. “Advisors that fail to react will face severe challenges to their future profitability and growth. Competition will force their hands. To compete successfully advisors must differentiate themselves, otherwise they will have to compete on price to win or retain clients.”

Catering to a wide range of retail investors, it now has $440 million in assets under management and has been selected as one of Profit 500’s Fastest Growing Companies in each of the last three years. Transcend is an offshoot of the Transcend Separately Managed Accounts Program that has proven to be a real success for Provisus. The new entity is especially noteworthy as it offers a pay-for-performance model within its equity pooled fund suite. It’s a novel approach, and one the company’s president believes really sets it apart from its competitors.

“With the advent of CRM2 and more of an onus on cost and performance, we need to put our money where our mouth is,” he says. “If we don’t beat the benchmark, then we won’t get paid. Ask any other money manager out there if they are willing to issue the same edict – I don’t think you’ll find many.”

Under this structure, clients pay a base fee of 0.25%, which covers administrative costs for the equity funds used in a client’s portfolio. If a fund performs better than the benchmark, a performance fee equal to 20% of the fund’s performance above the benchmark. Of course, it will be tougher than others to achieve that target, 2016 being a case in point.

“We were essentially around the benchmark for most of the year, and a little under at the end,” Ambridge says. “We can take hiccups like this though because over a long-term basis we add value.”