Financial Planning for Investment Strategies

Low fee passive ETFs are simply a low-cost solution that allows you to purchase all of the stocks or bonds in an index for a very low price. The cost to buy a Canadian stock ETF is as low as .06% per year, compared to hiring a stock manager or mutual fund manager at the Canadian average of 1.14%.

We use this strategy for our clients because research shows that over 90% of active investment managers fail to outperform an ETF that’s managed to the same index or benchmark over 10 years. What this means is that over 90% of professional managers who try to manage U.S stocks for clients do worse than simply purchasing the low fee passive ETF of the S&P 500.

Why is this the case? Shouldn’t a financial advisor be able to outperform if that’s what they’re being paid to do?

The truth is, it’s mathematically impossible for more than 50% of investors to outperform an index over an extended period of time. If the index represents the average return of all investors in that stock market over a given period, then that means 50% of the investors do better and 50% do worse. The problem is that this assumes there are no management fees, no transaction fees, no commission fees, and no taxes. By the time you add all of the fees, over 90% of professional managers underperform.

Here at Tomkins Financial, since we don’t receive any commission for investments, we only want to invest in what we know is the best investment strategy for our clients. We don’t benefit from high-cost mutual funds or charging you extra to try to pick stocks for you. We get paid the same no matter what we use, so we only use what is best for our clients. We know that historically if you had followed our strategy, you would have outperformed 90% of other investors. We have no reason to believe that this won’t continue into the future as the math will continue to hold.

As far as the relative volatility rebalancing, well, that’s a bit more complicated. It’s effectively a mathematical formula that tells us when to increase or decrease the amount we hold in a particular asset class based on the volatility and correlation of that asset class as compared to the rest of the portfolio. Put simply, when an asset class grows more or falls more than another asset class, we want to decrease or increase our exposure. Relative volatility rebalancing is essentially a formula that forces us to buy when things are low and sell when things are high.

By combining the use of low-cost passive ETFs with our proprietary rebalancing strategy, we fundamentally believe we’re offering our clients the best solution available to them at this time. While we don’t know what the future will bring, we will always be working & researching ways to improve for our clients.

If you’re considering Assante Nanaimo for your investment management needs, here’s what you can expect:

> Over 40 years of combined investment management experience.
> Investment accounts managed by a CFA (Chartered Financial Analyst) charter holder.
> A completely unbiased approach since we offer no internal products.
> Fee-based investing. We get paid a fee on the value of your account with no commissions or kickbacks. As you grow, we grow. If your account goes down, so does our fee. It’s in our best interest to grow your account as much as possible, within your risk tolerance.
> Substantially lower total investment fees than the vast majority of our competitors.
> Goal based investing. We work with you to determine your goals and design your investment strategy needed to reach those goals.
> The strong financial support of a national dealer (Assante Wealth Management) managing over 40 billion dollars combined with a local family-based business (Tomkins Financial) that has been doing business in Nanaimo, BC for over 30 years.
> A firm that will truly put your interests first. We grow by client referrals and good reviews, not walk-ins or clients sent from a bank branch. The only way we get new clients is by going above and beyond and providing exceptional service.