Q&A: Comparing advisors

Question: For the past six years we have had a good relationship with our investment advisor who has selected a mutual fund portfolio. One year ago Royal Bank approached us saying they could significantly improve our rate of return. Unwilling to jump ship, we asked them to recommend a similar portfolio which we would track for one year using an arbitrary Sept. 25 date for start and finish. Royal Bank shows a 1.4% higher rate of return over that period. However, selecting a different start month gives us better returns with our current plan. Now, we are unsure how to make a reasonable comparison between the two plans. How can we do that? – Vivien M.

Gordon Pape answers: Let’s start with some words from your first sentence: “we have had a good relationship with our investment advisor”. That counts for a lot. Obviously you were comfortable with him or her until what seems to have been an unsolicited approach came from Royal Bank. Personal relationships count for a lot when it comes to investing and should not be severed without good reason. To my mind, a one-year improvement in performance of 1.4 percentage points isn’t reason enough, especially when applying different time frames produces the opposite result. Why not show the Royal Bank results to your current advisor, point out the difference, and ask for comments? You can decide on the basis of what he/she says.

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