1. Tell us about your background and what made you gravitate towards the private markets?
My career started at a full-service brokerage in Toronto in the mid ‘90s. Clients were investing primarily in traditional public market investments. Later, working at a family office, I learned more about private market investments not typically available via traditional channels.
Today, both public and private market investments are found in my clients’ diversified investment portfolios.
2. What are some of the biggest changes you have seen since you started?
There have been significant client-centric advancements in the private marketplace in the last fifteen years since my introduction to this space. The regulatory landscape has shifted towards greater investor transparency and disclosure. KYC, KYP and suitability responsibilities have increased. Exempt market concentration guidelines have narrowed. In practice, this has led to improved practice management at the dealer, issuer and advisor levels and better-informed decision making by clients, increased portfolio diversification and, in my experience, superior long term client outcomes.
3. What is the one thing you want someone unfamiliar with this space to know?
Pretending we are not emotional, and expecting people to consistently make prudent long-term decisions, no matter their duress, is unrealistic.
If you are interested in why investors make the decisions they do, behavioural finance suggests it is easier for most to avoid risk in their finances than it is to grow their wealth. If one only invests when the news is good and prices are high, and then sells in a panic when the news is bad and prices are low, investors will not share in the long term returns of the marketplace, or any specific investment.
We are emotional. This aversion to loss is powerful and all too often reflects itself in significant negative long-term consequences. These mostly stem from short-term emotional decisions made from a lack of confidence.
A diversified portfolio structure across both public and private investments can help reduce those negative emotions that adversely influence our decision making. This can aid long-term portfolio returns. A more diverse set of price actions, targeting reduced overall variability, can lead to better decision making when times get tough, resulting in superior long-term outcomes.
4. What are your ‘go to’ features that you look for when completing KYP on a given product for suitability consideration?
a) Cost of Capital
b) Management
c) Business Plan (Item 2)
d) Other:
When completing KYP, the base assumption to be satisfied is the ability of the issuer to deliver consistent returns while prudently growing asset value over time – see above. In my experience consistency is key in the private market, and how I want to run my practice. This can represent significant quantitative and qualitative horsepower for the portfolio and, over time, a well-earned increase in investor confidence. It is wise to complete KYP on every product offered by your dealership to best understand the landscape. This is important to suitability decisions and prudent practice management. When doing so, there is no single go-to feature. Rather, it is all of them in aggregate. As the industry ages and progresses, there are now numerous issuer partners with prolonged track records of consistent returns. Fans of baseball will understand the importance of getting on base. If you can get on base consistently you will get more total bases than swinging for the fences and striking out.
5. Share something interesting about yourself that most people don’t know.
I am currently working through my ski instructor levels (not easy for me) on winter weekends and am an avid sailor in the warmer months. Our sailing teams have represented Canada internationally numerous times. We are currently climbing the World Sailing rankings in match racing trying to earn entry into World Match Racing Tour events. Much like our professional lives, this rewards consistency, sound planning and attention to detail.
