John Soutsos - Stop Accepting Mediocrity

Cookie-Cutter Portfolio Solutions

Over the last 25 years or so, the financial industry in Canada has commoditized their investment solutions into ‘all-in-one’ portfolios. Most people’s risk tolerance lands them in a typical ‘balanced fund’ allocated 60% to stocks and 40% to bonds;
Future return expectations – the balanced portfolio solution does not consider that bonds no longer offer attributes and benefits that they historically provided.
Near-Zero interest rates and the potential for rising interest rates and inflation in the future make bonds a poor investment diversifier, relative to historical experience.
Lower expected returns means – the inability for investors to achieve their retirement objectives;
When solutions are all constructed using the same strategies, the only differentiation becomes ‘price’ – i.e. the management fee.
The only advantage in such an environment that can be sought is from ‘lower fees’. Thus the increased competitive alternatives that focus on fee-reduction.
- This is a fallacy. Lower fees don’t necessarily result in higher returns. It depends on portfolio construction and investor’s behavioral responses to market events and risks;

info@med-wealth.ca or call 905-568-2000.

Med-Wealth