Frequently Asked Questions

There are two main sources of comprehensive investment return data that influence our decision-making:

• • CRSP – The Center for Research in Security Prices
  • Kenneth R. French – Biography (dartmouth.edu)

An example of a recent research paper:

• • How Targeting the Size, Value, and Profitability Premiums Can Improve Retirement Outcomes by Mathieu Pellerin :: SSRN

We believe the evolution of the investment landscape has rendered binary active/passive labels outdated for comprehensively describing an investment strategy’s approach. A more nuanced framework is to assess the active/passive distinction separately for a strategy’s philosophy and its implementation. Our systematic investment approach combines a passive philosophy with active implementation.

Firstly, a decision needs to be made on how many mandates should exist in each model, to ensure they capture an appropriate variation for the different risk exposure our clients will require.

From there, we build out a strategic asset allocation that would be appropriate for each risk suitability.

Once an asset allocation is established, then decisions must be made on what securities will be held to make up this allocation.

When choosing these securities, we first start with the security type.

We believe that securities such as ETFs and low-cost mutual funds provide clients with the greatest opportunity for diversification and more predictable long-term returns.

Once the security type has been chosen, we will then analyze the merits of the many options available. A typical analysis will consider things such as:

• • Asset Allocation
    • • Region
      • Market Cap
      • Style Exposure
      • Sector Exposure
      • Bond Credit Quality
      • Bond Sector
      • Bond Maturity Exposure
  • Performance vs. peers
  • Cost
  • Turnover ratio
  • Dividend yield
  • Bond yield
  • Effective Duration
  • Manage Tenure

Asset management fees are charged on an account basis.

As per the CRA, individuals can claim fees to manage investments in their non-registered accounts.

Fees paid in registered accounts such as RRSPs and TFSAs are not tax deductible.

Check out the link to our video below for additional information.

• • Can You Deduct You Financial Advisory Fees? – Trans Canada Wealth Management

National Bank Independent Network is Harbourfront’s custodian for client assets. Client accounts are held with NBIN, a division of National Bank Financial. National Bank is a chartered bank, as well as one of Canada’s oldest financial institutions and the largest provider of back office support for IIIROC firms. Currently NBIN manages 160 billion in custodial assets.

Harbourfront is a member of the Canadian Investor Protection Fund. By having an account with Harbourfront you have automatic CIPF

coverage. CIPF is sponsored by the Investment Regulatory Organization of Canada (IIROC) and is the only compensation fund approved by the Canadian Securities Administrators for IIROC Dealer Members.

The Investment Industry Regulatory Organization of Canada (IIROC) is the national self-regulatory organization which oversees all investment dealers and trading activity on debt and equity marketplaces in Canada. IIROC sets high-quality regulatory and investment industry standards, protects investors and strengthens market integrity while maintaining efficient and competitive capital markets.

To determine the proper model to use for each client, a full suitability assessment must be had. Before having this discussion, however, it is important first to review the client’s full financial situation and to create a financial plan that addresses their financial goals. This is an important piece of the process as it lays the groundwork for what rate of return a client may require (or not require) to meet these goals. This part of the process usually takes 1-2 meetings.

After a plan has been created and reviewed, we then shift to a discussion around investments. First, we ascertain what experiences a client has with investing, and gauge what their investment knowledge is by asking probing questions. Once we have a good idea of the client’s knowledge base, we discuss the investments with the client from a high level. Differences between a bond and a stock. What a “market” is, and what the indices measure. What asset allocation is, and how it can be used to manage volatility. And more explanations of this sort.

Once we feel the client is comfortable with the topics we have discussed, and have addressed any questions they have, we will move into a discussion surrounding their individual risk profile. We use a KYC worksheet with the client that has eight questions on it. The purpose of this sheet is not just to answer the questions but to encourage a robust discussion about how they really feel about risk and volatility. This discussion, even though just eight questions, will typically take 30-60 minutes.

Once completed, we will then have a discussion about the time horizon for each portion of their assets, and then how we should situate each account. Each model has a “Conservative”, “Moderate”, “Moderate Aggressive”, and “Aggressive” mandate that can be used according to the client’s suitability.

The client asset allocation may vary depending on the intended use of those funds. For example, a 40-year-old client may be suitable to maintain an aggressive strategy in their RRSPs since they are to be used in 20+ years for retirement, but want to take a Moderate approach with their RESP since their kids will be using those assets in  5-10 years.

We hesitate to customize models for clients as a regular practice, as this would make maintaining the models more difficult. Further to this, we have account options that that client may be better suited for, such as a discount brokerage account, or a regular non-discretionary brokerage account. This allows us as a company to maintain the majority of the client’s funds in an efficient manner, with the ability to make changes to the models all at once with the confidence that their accounts will still be within their stated risk profile.

That being said, there, of course, will and can be some one-offs, where a client whose accounts are all in the discretionary program would like a specific position. Prior to adding this position, we would ensure a full suitability determination is performed and noted in the file. This research would be performed with programs such as yCharts, Morningstar, and any other information I can find, such as articles and opinions from reliable sources, etc.  If this position altered the overall risk profile of the account, we would ensure the client signs an account updated to reflect the risk profile they would now wish to maintain. I would then also flag this account as requiring more frequent reviews to ensure that the risk profile is maintained.