Lori Livingstone, private client portfolio manager with Toronto-based ScotiaMcLeod Inc., says there is one question a client seeking a financial advisor should ask before anything else: “How many clients do you have?”

Many advisors, according to Livingstone, have so many clients they are simply unable to devote the necessary time and attention to manage each client’s affairs properly. Such advisors are focused on the quantity of clients rather than the quality, Livingstone says, and frequently end up with hundreds of accounts.

Livingstone currently has a wealth-management business consisting of $50 million in private client assets. But those assets are spread across only 30 individuals or client families. That puts her average account size at about $1.7 million. The maximum number of clients she feels she can serve properly is 50.

“Rather than being sales-driven, I am relationship-driven,” says Livingstone, 48. “My vision is to have only a small number of clients so I can walk the talk of providing exceptional and comprehensive service, and truly know the client.

“In building my business, I’ve moved slowly, holding out for the right kind of clients,” she adds. “I’m looking to build long-term relationships. And that requires a good fit and good chemistry.”

Livingstone’s business is fee-based and, as a portfolio manager with the chartered financial analyst designation, she also has complete discretionary control over all investments and trading decisions. Asset mix is determined on an individual basis, based on goals and risk tolerance; although some clients are more conservative than others, most of the portfolios she manages are a mix of fixed-income and equities.

Holdings include blue-chip stocks, preferred shares and corporate bonds. Livingstone will use exchange-traded funds for diversified exposure to categories such as corporate bonds or gold. Although she likes to pick her own Canadian stocks for clients, she occasionally uses mutual funds, such as Dynamic American Value Fund, for U.S. exposure.

“I am each client’s personal portfolio manager,” Livingstone says. “My clients have access to me, and I have a fiduciary responsibility to them. They realize the benefit of delegating, and they are not trying to micromanage. I don’t take clients who want to trade or speculate.”

Livingstone made the career shift from the institutional side to managing wealth for private clients six years ago. She developed her business philosophy and desire to work directly with individual clients after 20 years of working her way through various jobs in the investment industry, including a stint as portfolio manager for large pools of funds.

After graduating from the University of Western Ontario with an economics degree, Livingstone completed the Canadian securities course. She found a job in the back office of what is now Toronto-based BMO Nesbitt Burns Inc. and quickly graduated to the trading desk, where she was the only woman.

Livingstone soon saw that the CFA designation was the “gold standard” that could propel her career forward. By the age of 26, she had completed her CFA and experienced the harrowing stock market crash of 1987.

Her next move was to Toronto-based Prudential Financial Inc., for which she worked first as an analyst and later as a portfolio manager. Her responsibilities included Canadian and U.S. equities for both the insurance company’s internal portfolios and for its investment funds.

After about five years at Prudential, Livingstone moved to Toronto-based Sprott Securities Inc., for which she worked in institutional sales, with a mandate to develop U.S.-based clients. When a headhunter called almost two years later to offer her a job in institutional sales with a mid-sized brokerage firm in New York, she couldn’t resist the opportunity to work in the big leagues.

Livingstone worked 12-hour days at that job and also enjoyed the social life of the big city, but eventually reached a crossroads: she was torn between moving to a big-name U.S. firm and exploring her urge to travel the world. She ended up taking 18 months off, spending time in South Africa, Namibia, Indonesia, Thailand and Australia.@page_break@Ready to resume work, Livingstone returned to portfolio management in Toronto, working for KBSH Capital Management Inc. She watched the technology boom and subsequent bust, and continued to question the ethics she had seen demonstrated in various facets of the wealth-management sector over the years.

“I realized there is a great disparity between the way people claim to manage money and how they actually manage it,” she says. “I saw so-called ‘value’ managers chasing hot stocks and trading like the devil. Too many industry people make decisions based on their own job security rather than the interests of the client.”

When Livingstone hit her 40th birthday, she celebrated by climbing Mount Kilimanjaro. She also did some soul-searching about how she wanted to spend the rest of her working life.

“After having a lot of different conversations, I realized I could take my many years of investment experience and help private clients manage their own money,” she says. “I knew it would be much more rewarding to have direct contact with the clients and make a difference in their lives. I also knew I was an independent thinker, and entrepreneurial and confident enough to build a business as well as manage the assets.”

Livingstone started on that path at Toronto-based RBC Dominion Securities Inc. but later moved to ScotiaMcLeod, where she is now. Originally, she built her business by cultivating relationships with accountants who could give her referrals.

Later, referrals starting coming in from existing clients. Livingstone’s minimum account size is $1 million. Although these wealthy clients are harder to find than smaller clients, she says, their needs are more complex and interesting.

When required, Livingstone can draw upon Scotiabank’s team of legal and tax experts to provide clients with specialized expertise.

A major catalyst in a potential client’s life is often what brings in that client to consult with Livingstone. Frequently, that catalyst is the sale of the client’s business, which generates cash to invest. Inheritances are another catalyst, as are divorce settlements.

Most of Livingstone’s clients are in their 50s and 60s and on the cusp of retirement, although her oldest client is a 93-year-old widow and the youngest is a 30-year-old lottery winner.

Half of Livingstone’s clients are women, and she has observed a growing number of women handling their own finances due to the death of their husbands, divorce or simply choosing to be single.

“It’s important that people have a financial plan in place to fund what could potentially be a long retirement with increasing longevity,” Livingstone says. “I am, first and foremost, a risk manager.”

In terms of relationship-building, Livingstone bases the amount of client contact on each individual’s desires, saying there is no “cookie-cutter” approach. Each client gets a customized statement on a quarterly or monthly basis that shows performance, transactions and fees.

“Transparency,” says Livingstone, “is one of my strong beliefs.”

Because Livingstone’s client portfolios are diversified across asset classes, her clients did relatively well when the stock market crashed in 2008. The discretionary authority Livingstone exercises over her clients’ accounts can save those clients from doing the wrong thing at the wrong time. Livingstone can be strategic and flexible, and take advantage of extreme market conditions.

“Since the crash, the stock market has done well despite dire economic circumstances,” Livingstone says. “But it’s difficult for an individual to buy when things look bad. Experience counts, and I’ve been through a number of market cycles. I made mistakes in my 20s and watched other people make mistakes. And have learned from reading, watching and experiencing.”

Livingstone keeps fit by running regularly and working out with a personal trainer. She likes hiking and tennis, and still has the hunger to travel — although she now limits that to shorter trips. She is a voracious reader of everything from business analysis to fiction, and she is writing a book on investing for women.

IE