Is co-investing with clients an important bond or a marketing ploy?

Jason Pereira

Partner and senior financial consultant at Woodgate Financial, Toronto

Clients often ask me if I have the same investments they have, and the answer is yes, assuming we have similar risk profiles and timelines. In fact, company policy dictates that advisors invest the same way as they invest for clients.

Walking the talk often comes up with critical illness insurance. Clients want to know if I have it, and I tell them I do. I also let clients know I don’t have long-term care insurance, but I’ll certainly consider it once I reach 50.

Co-investing is a matter of ethics and trust. When investing, I look out for my client’s best interest and my own best interest, so our investments naturally match. Who wants to trust a chef who doesn’t eat his own cooking?

Jennifer Black

Portfolio manager, DFS Private Wealth and Mandeville Private Client, Toronto

Whatever I recommend to clients, I also hold. Co-investing demonstrates my commitment to clients and ensures I have a thorough understanding of their investments.

Most clients don’t ask if I’m co-invested unless they’re interested in a specific or new product, so if we talk about co-investing, I’m the one to bring it up.

For example, we recently invested in the Bay & Scollard Development Trust, a condo development. We shared with clients that we were co-investing in the project, and we explained how the investment works. The time to close was short, but our confidence in the project likewise gave clients confidence to seize the opportunity.

As long-term investors, daily trades aren’t a top concern. But, when we do sell an investment, we sell it for clients’ accounts first, not our own.

Robert Pollard

Senior vice-president and portfolio manager at the Wyndham Group, Raymond James, Toronto

In their own accounts, inexperienced advisors often try to beat the market, but most eventually realize it’s smarter to invest with clients and get solid returns.

When clients occasionally ask me what I’m invested in, I tell them I’m in the same investments they’re in. Asset allocation might differ depending on profiles, but actual securities are identical. Clients are relieved to know my family and I are invested alongside them. Discretionary management avoids potential conflicts.

I also charge myself the same fees as clients are charged, because I want to feel what clients feel when I see the statement. And if my wife has a problem with the fees, she’ll tell me.