When you dine out, there are questions your server asks every time, like: “Can I start you off with something?” and “What’ll you have?” This is why most of us start by taking a look at the menu of what’s available.
Similarly, to make good choices from the big, wide market “menu” available to you, there are a couple of questions you’re best off knowing in advance. These include: “What’ve I got?” and “How’s it been performing so far?”
These are both great “No Dumb Questions.” After all, if you don’t know where you stand, how do you know where to go next? And yet, I’ve found many investors often aren’t sure about either.
At PWL, we help by providing our clients with ongoing reports on these subjects. In today’s “No Dumb Questions,” I’m going to introduce one of those reports to you – our Client Review – and explain how and why it works. If you want to know when I also cover our sample Performance Report, and are watching this from YouTube, be sure to Subscribe to my channel by clicking on the bell!
You know how it goes when you go out to eat with friends or family. The conversations flow right away, with the usual, “How’re the kids?” and “How was that last vacation to Borneo?” sort of stuff. You’ll also glance down at the menu, because you and I both know: If you’re not ready when your server comes around, you’ll either rush- order something you didn’t mean to, or worse, ask for more time and get stuck in “restaurant limbo.” You’re ready to order … but now there’s no help in sight.
Well, just as you want to be ready to order your best choice in an action-packed restaurant, there are times when you’ll want to make good new choices for your investments in a market that never stops moving.
Whether it’s deciding how to invest new assets, determine how best to withdraw existing funds, or just wanting a reality check on how your portfolio is faring – these sorts of decisions are best made if you’ve prepared for them by viewing a “menu” of where you’re at. If you’re in a relationship with a wealth advisor who’s got your back, you should already be receiving regular reports to help you remain current on at least two key questions:
At PWL, we produce two basic reports to help our clients answer these essential questions about the money we manage for them. The first report addresses that first question: Where do you stand today? We thought long and hard about what to call it, and came up with something pretty darn clever. We call it our Client Review.
Okay, so the name may not be all that exciting, but our Client Review is more of a work horse than a racer anyway. It packs a load of sturdy information into a handy, one-page summary.
As you can see, there are four main sections to it.
Portfolio Activity shows how much your total PWL portfolio was worth at the beginning and end of the current month and year. It also lets you see how much of the change was due to depositing or withdrawing funds, versus how much of it was because of market performance.
For example, in the “Year to Date” column, you can see that, from the beginning of the year through September 20th, John’s portfolio not only benefitted from about $5,000 in market investment returns, he also added about $32,000 in cash. John would want to remember that before he gets too excited about how dramatically his portfolio has leaped upward … or conversely, how much it goes down after he’s taken money out. This may seem kind of obvious, but I’ve seen investors forget these details if all they’re seeing is a bottom line. That is why we break it out.
Next, let’s take a look at the Portfolio Details. How is that total current portfolio value divided among accounts? Have you got it mostly in taxable accounts? Mostly in RRSPs?Is it mostly yours or mostly your spouse’s accounts? Here’s where you’ll find that info at a glance.
The Portfolio Information section offers an even wider lens, reminding you how long you’ve been at it to begin with and, in case you forgot, that you’re looking at Canadian dollars. As an added touch, we include the Canadian/U.S. exchange rate, [any videos we could point to on this subject?] as a “good to know” reference.
Finally, there’s your Portfolio Asset Mix. This section pulls double-duty. First, in table and pie chart format, it shows you how your dollars are invested. Are you loaded up on bonds—fixed income? Or do you have more stocks—equities? What sort of mix, or allocation, [link to past asset allocation video?] do you have within these two types of investments?
Why would you care if it’s all your money? I’ve covered this earlier. Basically, if the stock market is on a tear while you’re mostly invested in bonds, that will explain why your returns may not match up with your high-flying neighbor’s. This may be just fine because, basically, this section is about helping you see whether your investments are performing according to your plans … not your neighbor’s. That’s why its second duty is to show you how your current investment mix compares to what you’ve got planned – or targeted – for it.
If you find your investment goals and your investment reality pies are out of whack, it may be a good time to revisit your investment menu. For this and other purposes, we also produce a Portfolio Performance Report, which takes you a little deeper into addressing your “How am I doing so far?” question.
