Take the emotion out of investing

  • Enhance asset management using high-touch relationships and communications.
  • Minimize risks through discretionary money management and index-based asset allocation.
  • Improve effectiveness by helping clients understand risk and managing expectations.

After a quarter-century of success in the financial sector, what inspires you most about your practice today?

This is a knowledge-based relationship business.

"...if we’re not in close contact with the client, chances are high that they will deviate from the plan. Effective advice is rooted in regular communication."

When it comes to financial success, there are no shortcuts. It is rooted in ongoing hard work and diligent practice. There’s a lot of envy in the world of money, but people who have money often work very hard to get it and keep it. The good news in all of this is that some of the hard work necessary for financial success can be subcontracted to professionals like myself.

What are some of the strategies you’ve found most effective in guiding your clients during times of market volatility?

To help clients in the most effective way, we must first listen and get to know them. We have very high-touch, informative relationships with our clients at Desjardins – we want them to know what we’re doing, obviously, but we want to know how and what they’re doing as well.

Life events such as births, deaths, separations and job changes can affect the road map for financial success that’s been put in place. If we are at all distant from these events when they occur, if we’re not in close contact with the client, chances are high that they will deviate from the plan. Effective advice is rooted in regular communication.

What are some of the most important strategies and vehicles you use to help manage volatility within client portfolios?

We have a very rigorous investment process. I’m a discretionary money manager with Desjardins Securities, and we have strict guidelines for the investments that go into our portfolios and for the rebalancing of our models. We use a broad-based index strategy that reflects our macroeconomic view. Since asset allocation represents 90 per cent of the variation of portfolio returns, we devote a lot of time to the methodology behind asset allocation decisions.

"The more we can do to eliminate or diminish emotion in the investment process, the greater our risk control."

In our view, index products are great vehicles for maximizing risk control. For diversification purposes and to help provide alpha over time, we also use some smart beta indices.

We want to have the least amount of emotion possible in the management of our portfolios. It’s a big part of the reason we’ve gravitated towards an index-based portfolio model. And we don’t want the client’s emotion affecting his or her portfolio, which is why we’ve adopted a discretionary approach.

The more we can do to eliminate or diminish emotion in the investment process, the greater our risk control.

What is your best advice to less senior advisors?

Since transitioning to discretionary portfolio management a few years ago, I’ve certainly wished I’d done so sooner. It makes us so much more effective. Discretionary management takes the emotion out of investing; having that filter between the client and his or her money is very powerful.

In addition, the index-based methodology we’ve adopted allows us to meet return expectations, control cost and manage risk in an optimal fashion.

“Increased client demand and the transparency and accountability demanded by the various governing bodies in the industry will amplify the trend towards discretionary management.”

Canadian investors are really just starting to realize the attributes of these types of investments. Increased client demand and the transparency and accountability demanded by the various governing bodies in the industry will amplify the trend towards discretionary management.

Looking forward, the consensus is that equity portfolio returns will normalize toward a 50-year historic average. With single-digit rather than double-digit returns, along with the volatility that is permanently embedded in the markets since the financial crisis, managing return expectations and helping clients understand risk will be critical in attracting and retaining clients.

Mary Hagerman

Mary Hagerman

Portfolio Manager and
Investment Advisor
Desjardins Securities

Mary Hagerman is a portfolio manager and investment advisor at Desjardin Securities in Montreal. She and her team specialize in financial planning for professionals, as well as tax-advantageous investment strategies and intergenerational wealth transfers.

One More Thing

In recent years, we’ve done a lot of work with professionals who are appropriate candidates for incorporation. As we guide them through the process, we see an incredible change in their financial situation. We restructure their finances, increase their savings capacity, and provide them with income-splitting strategies they didn’t have access to before. They are amazed by the outcome.