Staying in Control of Your Investments
When Working with a Portfolio Manager
By Kevin Greenard CPA, CA, FMA, CFP, CIM
Kevin Greenard is an associate
director and portfolio manager
with The Greenard Group at
ScotiaMcLeod in Victoria, and a
regular columnist with the
Times Colonist newspaper.
T
here has been a dramatic increase in the number of professionals working in the financial services field over the past
decade, and these individuals have a variety of titles, ranging from financial adviser to mutual fund representative,
financial planner to insurance broker, and investment adviser to portfolio manager—to name a few.
There are two main regulatory bodies in Canada: the Mutual Fund Dealers Association of Canada (MFDA) and the
Investment Industry Regulatory Organization of Canada (IIROC). From a regulatory standpoint, professionals in financial
services are differentiated by approval categories. Two common registration types are “investment representative” (IR) and
“registered representative” (RR). An IR equates to what some firms call “administrative associates.” IIROC rules state
that an IR can trade, but not advise on, securities with the public in Canada. By contrast, an RR can trade and advise on
securities. Often, an RR will speak directly to a client about trade recommendations, and give the trade sheet to an IR for
processing after all trade details have been confirmed.
There is another approval category: “portfolio manager” (PM). A PM is an RR who has been designated and approved
for the purpose of managing the investment portfolio of an investment dealer’s clients through discretionary authority
granted by said clients. Discretionary accounts are often referred to as “managed accounts.” It’s important to note that
managed accounts must be fee-based, as PMs cannot use discretion to charge commissions.
To obtain approval to act as PMs, individuals must first complete educational requirements, gain a specific amount of time
in the industry, and have a minimum level of assets under management; they must also have a clean compliance record.1
Additionally, financial firms often have internal requirements as well, because their PMs have considerable oversight of all
trades. Once approved, PMs are held to a high
duty of care, often referred to as a fiduciary
responsibility.
While the regulations are stringent, PMs do
have significant advantages over traditional
advisers when it comes to the speed of trade
execution. Consider that the markets in British
Columbia open at 6:30 a.m. and close at 1:00