Tag: Wealth Professional

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.

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.

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.”

Fees can be such a drag: Wealth president on needed reporting reform

Mutual funds, despite being the investment vehicle of choice for millions of Canadians, are regularly underperforming – and fees are the culprit, says a wealth management president.

Chris Ambridge of Provisus Wealth Management says that many low-fee options aren’t always what they seem, as reporting doesn’t take the drag from fees into account, and that greater clarity is needed for investors. “A lot of people look the simple costs that they have to report, like MER, but there are many costs that go beyond that and it’s difficult in the instances of mutual funds to see exactly what they are without a lot of research,” he says.  “The information is there, but you have to dig for it as an individual.”

In Provisus’ monthly insight report, he points to the new SPIVA Canada Scorecard approach developed by the S&P Dow Jones Indices, which reports on the performance of actively managed Canadian mutual funds, rather than that of their benchmarks. The takeaway, the report argues, is that “fees are often the difference between owning a yacht and dreaming about one.”

“The cost of owning investment vehicles, including many ‘low fee versions, needs to be understood in terms of investment returns because the underlying fees are also a drag on investment performance,” it states.

Ambridge adds that additional disclosure is important, especially as new CRM2 rules are to be implemented this week.

“Most clients are at a loss to say, ‘Well, how did I do over five years?’ or ‘How did I do compared to a benchmark?’- and that’s where clients are going to be seeing things in the six to nine months that will hopefully open their eyes and allow them to make a decision that it’s time, perhaps, to explore other options,” he says.

However, it’s up to advisors and portfolio managers to take a transparent approach, and educate investors on their options and the true impact fees are having on their returns.

“I would like to think so but Canadians are still reliant on their advisors, and that’s a good thing at this stage,” he says. “But it’s a matter of education, being aware of alternatives out there, the term we like to use is, you have to overcome inertia. Clients have to be convinced there’s a reason for change and then they go out and change it.”


by Penelope Graham 

13 Jul 2016


Link to article: http://www.wealthprofessional.ca/news/fees-can-be-such-a-drag-wealth-president-on-needed-reporting-reform-210331.aspx

New pay-for-performance funds to offer investors something different

A new pay-for-performance structure has been introduced for pooled funds in Canada – and it’s putting a wealth management firm’s money where its mouth is. Provisus Wealth Management, which has been in business in Canada for over a decade, has launched a sister company named Transcend, which will offer a first-of-its kind performance structure.

“The operative word is new, because what we’ve done doesn’t currently exist in Canada,” says Chris Ambridge, CEO of Provisus and Transcend. “We decided that with the advent of the ETFs and the robo structure, people are looking for real value for the money they pay, so we decided to give them something entirely different.”

Transcend has driven down the costs of their pool funds to their operating costs, charging only 25 basis points to clients in order to cover the administration, trading and legal requirements of the funds.

“For us to earn money, what we have to do is drive value-adding performance, or beat the benchmark that we’ve assigned,” says Ambridge. “Every fund has a pre-set industry standard benchmark and what we will do is – clients get the performance they get up to the benchmark, so no fees will be charged. But once we outperform the benchmark, we will take a 20% performance fee on the value add that we deliver.”

He adds that with pending CM2 regulation in store for mutual fund fee structures clients will start looking to more transparent options as they realize just what they’re paying for.

“Bringing these funds to these fee levels has clearly been at the back of our minds with CRM2, because as clients for the first time in a lot of instances truly start to see what they’re paying, and see what they’re actually getting in terms of performance, we suspect there’s going to be a lot of people questioning what they’re in, and trying to determine if change is necessary,” he says.

He adds that Transcend’s service model will provide lower net worth clients with the same level of service as higher net worth investors – an important feature as robo advisor models become more prevalent among investors.”There’s always in every instance, a portfolio manager who will discuss over the telephone with the client their goals and aspirations, risk tolerance, profile, and produce for them a customized investment policy statement for that client and their money types,” he says.

“It’s exactly the same functionality, service and support that we give to our much wealthier clients so they’re taking that high-net worth solution and giving it to everybody.”


by Penelope Graham

16 Jun 2016


Link: http://www.wealthprofessional.ca/news/etfs/new-payforperformance-funds-to-offer-investors-something-different-208942.aspx