Portfolios have to be maintained which gives you the perfect opportunity to touch base with your client. But wouldn’t it be better if you could spend most of your time talking about estate planning, insurance coverage, and tax planning rather than portfolio technicalities?

Exchange traded funds (ETFs) allow you to build a conceptually simple portfolio for your clients that is as easy to maintain as it is to explain. More importantly, this portfolio strategy will distinguish you in the crowded field of advisors.

Take the Canadian Couch Potato ETF RRSP Portfolio for example, our version of a portfolio first devised in 1991 by Scott Burns, a U.S. personal finance journalist. Burns put half his money in an S&P 500 index and the other half in a government bond fund. Besides being dog simple, drop dead easy and miserly in costs, it was also surprisingly effective.

Our version splits the portfolio evenly into five ETFs, two Canadian bonds ETFs of 5 and 10 year maturities, a large cap Canadian index fund, a broad U.S. stock index fund and a broad international index fund.

Click on the related link below (Table) to see how little this diversified portfolio will cost in management fees.

That wispy 0.24% gives you lots of room to add on a fee-for-service charge and still leave your clients far ahead of the costs of a conventional mutual fund. You won’t have to track and explain manager changes or fund mergers. Simply rebalance as necessary and use the time to explore value-added opportunities with your clients. If being a couch potato is a little too inactive for you, consider using an ETF portfolio as a core position and adding stocks or actively managed funds to complement the mix.

Your clients will be grateful for the simplification you bring to their investments, and you’ll have the time to hear them say so.

Sponsored by Barclays Global Investors Canada Limited
Contact Howard Atkinson at howard.atkinson@barclaysglobal.com

Commissions, management fees and expenses all may be associated with Exchange Traded Funds. Please read the relevant prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. BGI’s ETFs, other than iUnits, are not qualified for distribution to the public in Canada as no prospectus has been filed for such funds with Canadian securities regulators.