FREQUENTLY ASKED QUESTIONS
FAQs – We answer some the most frequently asked questions about working with Treegrove Investment Management Inc.
What is a Portfolio Manager?
Portfolio managers are firms and people who manage investment portfolios on behalf of private clients, foundations, endowments and pensions. Portfolio managers differ from mass-market or retail investment managers because they manage larger amounts of money for fewer clients. This often results in lower management fees.
Portfolio managers are also known as:
- Investment Counsel or Investment Counsellors
- Asset Managers
- Investment Managers
- Wealth Managers
- Advisers
What is Discretionary Management?
With discretionary account management, investment managers make buy-sell decisions without referring to the account owner for every transaction. The managers must operate within agreed-upon limits and objectives set out in each individual’s Investment Policy Statement. Discretionary management may be suitable for investors who do not have the time, skills or desire to be actively involved in the management of their assets.
What are the Benefits of Working with a Portfolio Manager?
- Fiduciary Responsibility
Portfolio managers have a fiduciary duty to act with care, honesty and good faith, always in the best interest of their clients. Investment decisions therefore must be independent and free of bias. This results in a higher level of trust placed on portfolio managers.
- Professional Qualifications
As fiduciaries, securities regulation requires the highest level of education and experience in the investment industry.
- Personalized Management of Your Portfolios – Portfolio managers provide ongoing management of your investments based on your objectives and risk tolerance outlined in your IPS. You typically give authority to the portfolio manager to make investment decisions without getting prior approval from you for each transaction (called ‘discretionary management’).
- Fees
Portfolio managers charge a percentage of the investments they manage. This fee is transparent and generally much less than retail management and distribution costs, which are often embedded as a cost of doing business. It’s important to note that your money must reside at a custodian financial institution for an extra layer of protection and safety and there is usually a small additional fee for this service. Fees are fully transparent on client statements and typically go down as a percentage of your portfolio as your assets grow. Fees are not paid by commission based on volume of buying or selling investments and are significantly lower than typical mutual fund fees.
- Investment Policy Statement (IPS) or Written Agreement
An individual written agreement will be established to set out how you will work with your portfolio manager, including ongoing communication, types of investments, reporting, fees, risks and other issues related to your own circumstances.
- Registration
Both the firm and the individual who is managing your investments are registered and monitored by provincial securities commissions.
- Legal Requirements of Firms
Firms registered as portfolio managers must meet strict financial reporting, capital and insurance requirements to further protect your investments.
Why should I become a Treegrove client?
Treegrove is a small, independent botique portfolio management firm. The firm and its advisors are registered with the Ontario Securities Commission in the category of Portfolio Manager. As such, services are as professional and trustworthy as those of much larger firms.
How Treegove Can Help You?
Treegrove develops a written agreement (usually known as an Investment Policy Statement or IPS) that takes into account your specific investment needs and goals. Your IPS is the basis upon which Treegrove selects an appropriate mix of investments and makes discretionary adjustments to your portfolio. We will meet with you at least annually to ensure your IPS is up to date and reflects your needs.
How do I know if Treegrove may be the right investment counsel for my needs?
We might be a suitable option for you if you answer “Yes” to many of the following questions:
a) I have outgrown mass market products or need to establish a family trust,
b) I prefer to speak directly to the decision-makers directly involved in the day-to-day management of my portfolio,
c) It gives me peace-of-mind to know that the talent managing my funds are principals in the firm, thus ensuring continuity over the long term,
d) My present investment outlook isbased on value retention and real rates of return versus chasing growth,
e) I would prefer a fee for service model instead of paying commissions, service charges and/or being tied to a company’s in-house financial products.
How is “Fee Only” Investment Management Different From Other Options Available to Me as an Investor?
Investment firms have four primary platforms for generating revenue. They can:
a) Earn a straight management fee,
b) Earn commissions on buying and selling,
c) Create and sell own-branded products,
d) Distribute the products of other providers for commissions and recurring “trailers.” Fee only firms like Treegrove only generate revenue from managing client portfolios. We do not earn commissions or represent the products of other firms. The benefit to our clients is that we do not have vested interests in particular investment vehicles and select our investment options from the open market.
Unlike large financial institutions, we are not driven to promote or sell corporate products/services which may not be appropriate to your situation. Should we think that you need advice from a lawyer, accountant or other professional, we can make those referrals. As an independent firm, we face no conflicts of interest with commission-based fees, unlike many brokers, financial planners, and mutual fund advisors who charge front- and back-end commissions. Over the years, most of Treegove’s clients have been referred to us by other clients or their professional advisors who have confidence in us.
What Does Your Typical Client Look Like?
Our typical client has minimum investable assets of $500,000 Our clients tend to be conservative investors who strive for real rates of return after fees and inflation.
Does Your Portfolio Manager Invest their own money in the same securities you recommend to your clients?
We may hold the same securities personally that our clients own; however, we do not operate any funds and we have a trade clearing system that ensures Partner trades are never in conflict with client trades.
What Securities are Held in Your Average Porfolio?
Our focus is primarily high-quality Canadian and US equities. We may utilize ETFs to replicate foreign exposure where appropriate. Each portfolio is customized to individual goals and needs. While we do have mandates that go from 100% equity to 100% fixed income, our client’s asset mix is typically between 30-70% equity, with the balance being in fixed income.
Where is my Portfolio Held?
Treegrove engages the custodial services of National Bank Independent Network (NBIN), a division of National Bank of Canada, to safeguard our clients’ assets. NBIN is Canada’s leading provider of custody, trade execution and brokerage solutions to independent Investment Dealers and Portfolio Managers, supporting more than 400 firms across Canada.
Independent of Treegrove, our clients receive monthly statements for each of their accounts by mail or online, directly from NBIN, ensuring an unbiased valuation of their holdings. Client accounts are protected by the Canadian Investor Protection Fund (CIPF), subject to CIPF conditions and limits.
Clients also have online access to their accounts on NBIN and also on our in house portfolio management system NDEX.
What is Treegrove’s Minimum Account Size?
Investable assets of $100,000 or more for ETF accounts and $400,000 or more for individual stock ownership accounts.
What Types of Accounts Does Treegrove Manage?
Mostly personal taxable and corporate accounts, Registered Retirement Savings Plans (RRSPs), Registered Retirement Income Funds (RRIFs), Registered Education Savings Plans (RESPs), Tax-Free Savings Accounts (TFSAs), Registered Disability Savings Plans (RDSPs), trusts and foundations.