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How is your investment return?

                                                                                                  By

                                                                                 Dane King,CMA,FMA,ACMA,CGMA

                                                                         President – Stratking Advisory Services

                                                                Financial Advisor -  Peak Investment Services Inc.

Sometimes when I ask potential clients the question, “how is your investment return?”, I would get this blank stare, pause and then a delayed and thoughtful response, “OK, I guess!”. The story gets even more interesting, when I ask, “what has been your annual return since inception?” or better yet, “is the investment return meeting your expectations?”. Answers like, “I am not sure” or “I haven’t given much thought to that” or “not much”, are typical.

I have found that many people do not know the “return since inception” of each portfolio they have and whether it met the target return they agreed with their Financial Advisor or were expecting. They would often get the investment statement showing movements up and down every quarter, but never told that the return was x% per year since they invested with the institution. This is usually because:

1. The investment statement does not show this

2. The Financial Advisor does not report this to the client when they meet for portfolio reviews

3. The investment system that generates the client statement is not capable of generating such performance information

I think that if you do not know your return since inception, then why bother invest in the first place? Investing is not speculating, but generally we put out a certain outlay expecting a return or profit on our money within a certain period of time. If it is not attaining this target return, then we should evaluate whether it is worth continuing that investment.

The other thing that investors should be concerned about is their “after tax return”. For instance at 46% Marginal tax rate, 2% interest in a savings account, is worth net of taxes, 1.08% after tax and assuming inflation rate is 3%, then the real adjusted rate of return is (1.92%). 100% of interest income (on bonds, cash, savings accounts) is taxed, whereas equity investments which generate dividend income or capital gains are taxed at a lower rate.  So investors should focus on tax efficient investments and choose Advisors who are savvy with tax and tax efficient investments. They should also be concerned that the after tax return exceeds the rate of inflation so the purchasing power of the money is not eroded over time. Additionally, investments should not only be evaluated on an “after tax return basis”, but on the merits of the underlying investment in relation to an individuals goals and risk profile. Since, it does not make sense trying to get a tax credit or tax deduction from the investment when you are exposed to losing more than the value of the tax deduction or tax credit. It is all about making prudent decisions to optimize returns while at the same time, minimizing risk. This is why it is important to work with a qualified and experienced Financial Advisor.

Lastly, investors should be cognisant of the variability of returns. If there are wide swings in return every year, then it is less likely that you would achieve your targeted return in the short and medium term planning horizon. Proper portfolio construction and diversification reduces portfolio variability.

Investment return can mean different things to different people, but to win in the investment game, make sure you have clarity in your mind, as to what that means to you, before investing for yourself or hiring a qualified Financial Advisor. Remember, what gets measured, gets done! Good luck with achieving your target investment return!

About Dane King and Stratking Advisory Services

Dane King, CMA,FMA,ACMA,CGMA is  President -  Stratking Advisory Services and Financial Advisor – Peak Investment Services Inc., in Toronto, Ontario.

Stratking Advisory Services is the full service firm for professionals and professionally owned small businesses. It provides wealth management services to active and retired professionals in Ontario and professional services to small businesses in Canada. Dane can be reached at 647-340-3801 or dane.king@stratking.org.

Further details on Stratking Advisory Services and Dane King can be viewed at www.stratking.org

Disclosure

Investment Services are provided by Peak Investment Services our Mutual Fund Dealer, all other Services by Stratking Advisory Services. Before you invest in any fund, you should consider how it would work with your other investments and your tolerance for risk. In general, you’ll have to pay income tax on any money you make on a fund. How much you pay depends on the tax laws where you live and whether or not you hold the fund in a registered plan, such as a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA). Keep in mind that if you hold your fund in a non-registered account, fund distributions are included in your taxable income, whether you get them in cash or have them reinvested. Please consult your Advisor and read the prospectus before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The information contained on this article does not constitute an offer or solicitation to buy or sell any investment fund, security or other product, service or information to any resident of Canada outside Ontario, the U.S. or the U.K. or to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot legally be made or to any person to whom it is unlawful to make an offer or solicitation. The information is not intended to provide specific financial, investment, tax, legal or accounting advice for you, and should not be relied upon in that regard. You should not act or rely on the information without seeking the advice of a professional.

What does Financial Freedom mean to me?

Written by:
Dane King,CMA,FMA,ACMA,CGMA
President – Stratking Advisory Services
Financial Advisor -  Peak Investment Services Inc.

Many people are trying to achieve financial freedom and may have not been able to achieve it because they have not yet put down on paper, the answer to, “what does financial freedom mean to me”?

For over 10 years, I have advised thousands of professionals, executives and business owners. When I meet them the first time, I would usually ask this question, “What does financial freedom mean to you?”

In couple situations, both spouses would usually give a different answer to this question. This would be very enlightening to them both and I would then have each of them write down the answer to this question on a sheet of paper, separately. They would then come back to me with their completed sheets to the answer, “what does financial freedom mean to me?” Based on the information on the two sheets, we would then brainstorm, how to combine the answers into one document, comprising agreed goals and strategies, so that both spouses are considered in the planning process.

I am often amazed of how many couples have not done this before. It is important to be working on the same page and to understand the drivers behind each person’s view of money. This is one source of harmony in a marriage, when both spouses are working together towards financial freedom, assuming this is a common goal. It also reduces the chance of the financial plan failing.

So financial freedom means different things to different people and most importantly, it is difficult to achieve financial freedom without clarifying what that really means to you. Also it is difficult for a Financial Advisor to be successful with a client who is not sure what financial freedom means to him/her.

You are unique and unless you can put your finger on what financial freedom means to you, it would be difficult to achieve it. Is it?
1. Not having to balance your cheque book?
2. Having enough money to travel each year?
3. Being able to leave behind a legacy for a loved one?
4. Being able to donate to a charity or your choosing or bless your church or Pastor/Priest with a special gift?
5. Paying off all your debt?, etc.

As a couple, after you have agreed that this is a common goal, or as an individual that this is a worthwhile goal, then the next hurdle is agreeing on the strategies to achieve it!

After you and/or your spouse have the answers to “what does financial freedom mean to me?”, it is time to get some qualified professional help!

Stratking Advisory Services is equipped to provide you with support in attaining financial freedom. Call us today at 647-340-3801 for a confidential financial planning session.

About Dane King and Stratking Advisory Services

Dane King, CMA,FMA,ACMA,CGMA is  President -  Stratking Advisory Services and Financial Advisor – Peak Investment Services Inc., in Toronto,Ontario.

Stratking Advisory Services provides wealth management services to active and retired professionals in Ontario and professional services to small businesses in Canada. Dane can be reached at 1-888-865-3870 or dane.king@stratking.org.

Further details on Stratking Advisory Services can be viewed at www.stratking.org

Disclosure
Investment Services are provided by Peak Investment Services our Mutual Fund Dealer, all other Services by Stratking Advisory Services. Before you invest in any fund, you should consider how it would work with your other investments and your tolerance for risk. In general, you’ll have to pay income tax on any money you make on a fund. How much you pay depends on the tax laws where you live and whether or not you hold the fund in a registered plan, such as a Registered Retirement Savings Plan (RRSP) or a Tax-Free Savings Account (TFSA). Keep in mind that if you hold your fund in a non-registered account, fund distributions are included in your taxable income, whether you get them in cash or have them reinvested. Please consult your Advisor and read the prospectus before investing. There may be commissions, trailing commissions, management fees and expenses associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. The information contained on this article does not constitute an offer or solicitation to buy or sell any investment fund, security or other product, service or information to any resident of Canada outside Ontario, the U.S. or the U.K. or to anyone in any jurisdiction in which an offer or solicitation is not authorized or cannot legally be made or to any person to whom it is unlawful to make an offer or solicitation. The information is not intended to provide specific financial, investment, tax, legal or accounting advice for you, and should not be relied upon in that regard. You should not act or rely on the information without seeking the advice of a professional.

Written by Dane King,CMA,FMA,Chartered Marketer

President of Stratking Advisory Services

MARKETING TO SUCCESS

Marketing: The management process that identifies, anticipates and supplies customer requirements efficiently and profitably.

GOOD corporate governance and effective strategic planning, technology, management and leadership are vital because they revolve around the most important stakeholder – the customer.

But the most important strategy for creating the foundation of a successful, world-class company is to create a marketing-oriented company. The marketing concept involves being more effective than competitors in integrating marketing activities towards determining and satisfying customers’ needs and wants.

There are said to be four pillars of the marketing concept:
1. Target markets
2. Customer needs
3. Profitability; and
4. Integrated marketing

Integrated marketing exists when all the company’s departments work together to serve the customer’s needs.

The objective of the company is to identify the needs of the customer, i.e. determine the target market, and satisfy them profitably. This requires knowledge of your competitors as well as your ability to satisfy your customer’s needs.

Businesses must be careful not to re-engineer processes merely to control costs or reduce risks, because to do so may indirectly stifle business flexibility and responsiveness to customer trends and competitive strategies.

The job of the successful entrepreneur is to determine the optimal marketing mix that would satisfy and exceed customer expectations. This marketing mix would include price, place of availability, promotions, products, processes, ambience, and people (customer service).

These marketing mix elements are strong methods of differentiating the product, service or company in the market place. Many firms focus on customer service, but one must be careful not to over-deliver customer service to unprofitable segments, and under-deliver service to the more profitable segments. This is likely to incur losses. One must provide the right service to the right segment at the right cost.

Additionally, “one size does not fit all”. You cannot expect to provide standard products and services across different customer segments. Products and services must be customerised to specific segments, and marketing strategies and promotional campaigns must be specific to local trade areas.

To facilitate this, therefore, it is important to have ongoing surveys to gauge changing customer value expectations. Remember: Value is in the eyes of the customer.

As can be seen, developing a marketing orientation is a tough job because it requires focus on the intangible area of cultural change – an area in which many managers are not trained. It usually involves changing values, beliefs, attitudes and work methods and processes.

A marketing orientation challenges every member of a company to relate his or her work to the needs of the marketplace, and to balance it against the company’s own profit needs.

Nowhere is it more important than in the area of product design where the customers’ views are of tantamount importance.

Establishing a marketing orientation is a mammoth exercise that requires commitment from the bottom up. Everyone must be on board, and must understand the reasons for the change and where the business wants to go.

Strategic direction, therefore, is important. If you develop and implement a successful marketing strategy, your customers definitely will feel the difference.

GENERIC STRATEGIES

• Transformation – by changing job and department definitions, responsibilities, incentives and relationships.

• Convincing the management team of the need to become customer focussed. Without executive support, this project is bound to fail.

• Appointing a top marketing officer and a marketing task force, and getting outside help and guidance, where necessary.

• Changing the reward structure in the company to change departmental behaviour.

• Hiring strong marketing talent and leading marketing companies.

• Developing strong in-house marketing training programmes for corporate management, as well as marketing and sales personnel.

• Placing emphasis on marketing knowledge, skills and attitudes.

• Establishing an annual “Marketing Excellence Recognition Programme” for the development of exemplary marketing plans.

• Re-organising from a product-centred company to a market-centred company.

• Establishing a marketing organisational structure, in which people are organised by the markets they serve (geographic, type of business, etc).

• Empowering business managers to initiate and tailor customer-value strategies.

• Developing a customer-driven culture incrementally.

Summary Traits of a MARKETING ORIENTED FIRM

A marketing oriented firm is focused on identifying the customer needs and satisfying those needs profitably. Here are a few defining traits:
1. Long-term orientation – the business operates at a future/strategic level in devising strategies;
2. Pre-occupation with planning – the right products, channels, levels of service, marketing strategy, to meet the customer’s long-term needs;
3. Obsession with marketing;
4. Marketing department prominent within the organisation – primarily to integrate the marketing activities; and
5. Emphasis on marketing research – which involves market, price, product, competitor and economic research.
6. A marketing oriented firm is focused on identifying the customer needs and satisfying those needs profitably
7. Practices integrated marketing communications
8. A marketing expert is part of senior management team
9. Focuses on the service mix(12P's) versus product mix(4P's)
10. All hands are on board during sales campaigns - cross functional teams
11. The marketing department is given the resources needed
12. Focus is on customer profitability instead of corporate profitablity - since profitable customers = profitable business
13. Bases strategy on marketing plan - blue print for success
14. People are passionate about marketing in the organization in all functions
15. There is a marketing function in the organization structure
16. Product development is driven by marketing research
17. Takes time to know the client well and re-engineers the organization to create excellent client experiences
18. Has a service champion in each department
19. Has a reward and incentive system to motivate greater sales and client engagement,etc.

Creating a marketing oriented firm does not happen overnight. It is important however to set clear annual objectives and deliverables and “work the plan”. A useful start would be to conduct a marketing audit. If you need help in creating a marketing oriented firm, you may reach me at 1-888-865-3870 or at www.stratking.org

Dane King is the President of Stratking Advisory Services, a Chartered Marketer, Certified Management Accountant and Chartered Global Management Accountant. For over 20 years Dane has been helping organizations devise and execute sales, marketing, branding and management accounting strategies to make more money.

He can be reached at 1-888-865-3870 or at service@stratking.org.

Stratking Advisory Services www.stratking.org provides professional services to small businesses across Canada and wealth management services to professionals in Ontario.