Skip to main content

The Globe and Mail

My adviser made poor stock choices. What should I do?

Dear Nancy,

I've been thinking about managing my own money lately. I chose a financial adviser last year, after being involved with mutual funds for the previous 20 years. I thought I could make more money with someone keeping an eye on the markets everyday, but was not satisfied.

He didn't outperform my mutual funds that I own with RBC (O'Shaughnessy funds), and he made some poor choices for stocks.

Story continues below advertisement

I paid him a fee that worked out to approximately $200 per month, and I think I was paying a 1.75 per cent MER with the RBC funds.

I have a full time job with the Canadian Forces, so I can't be watching the markets everyday.

Are there some really good ETFs with low fees that you would suggest, and/or any other advice that you could offer for someone getting into this.

Thank you. Duane



Dear Duane,

I'm sorry that your result from using an adviser was not what you were expecting. Since you do not specifically state what the cause of your dissatisfaction was I will make some assumptions. If you were looking for advice that will ensure you will "make more money" I will assume you were expecting to outperform the market. No one can make the assurance that this will always happen. Choosing holdings for a portfolio are the result of a conversation with you, the client, to find out what your goals and expectations are, and more importantly, what your risk tolerance is.

If your goal is solely to "make money" risk free then the best choice are GICs, bonds and other fixed income investments. You will then make whatever the current interest environment is yielding. Presently, it is exceptionally low and is lower than the inflation rate. So, in real terms you are losing money because the buying power of your dollar is weaker.

Story continues below advertisement

If you are looking to have an income, I suggest you look at good blue-chip dividend paying stocks or dividend funds. If you want to avoid the ongoing MER costs, then look at the top holdings of various dividend funds. You will start to see common trends of holdings. That will give you some guidance on individual stocks to own. If you don't need the income to spend, then enroll in a dividend re-investment plan to cost-effectively acquire more shares with dollar cost averaging. A reminder: when purchasing individual stocks, there is commission to buy - and if you sell eventually.

You said that you don't have time to dedicate to looking after your own portfolio. I suggest that you don't give up. Start seeking another adviser that will be a better fit for you. The role of an adviser is to watch over your investments on a day to day basis so you don't have to. Your career is important and everyone should do what they do best and enjoy. You are paying to have someone who can dedicate the time and effort to keeping current with the changing events so you don't have to.

An adviser provides other services than just portfolio management. With a full-service adviser they can assist you with a financial plan, tax strategies, estate planning and see if you need insurance coverage.

There are many other facets of your financial well-being that an adviser is involved with. Be sure to ask how you can have these components of your life reviewed.

As for your request for suggestion for ETFs, any of the exchange traded funds typically have a lower MER than the actively managed mutual funds. There are a couple of low transactional portfolios that have been designed to hold various ETFs . The one that comes to mind is the "Easy Chair or Couch Potato Portfolio". This is simply a set it and forget it portfolio.

Whether you eventually choose to be a do-it-yourselfer, or use help from an adviser, it would be a good idea to have a financial plan to guide you along the way. There are fee-for-service consultants that are an alternative as well.

Story continues below advertisement

Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. To ask her a question, send an e-mail to asknancy@rbc.com or visit her web site at nancywoods.com

READ MORE FROM OUR ASK AN ADVISER SERIES HERE

Report an error
About the Author

Nancy Woods, CIM, FCSI, is an associate portfolio manager and investment adviser with RBC Dominion Securities Inc. More

Comments are closed

We have closed comments on this story for legal reasons. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.