The Whole is Greater than the Sum of its Parts

Spring 2012

First coined by the philosopher Aristotle, this phrase aptly defines the modern concept of synergy. For anyone who has played team sports, it echoes the T.E.A.M. acronym—together, everyone achieves more. At T.E. Investment Counsel, it embodies how we take our investment process to the next level, bringing unparalleled value to our clients.

If imitation is the sincerest form of flattery, then T.E.I.C. has plenty of admirers. At the time of our founding in 1994, our investment process was fairly unique. We followed an objective, fee-only approach that is synonymous with T.E. Wealth. Unlike other investment managers of the day, we were, and still are, entirely client-driven. Without commissions, trailer fees or any other form of compensation from investment managers, our fee-based investment service meant we had nothing to gain by recommending one investment management solution over another, other than what was in the best interest of our clients.

Unencumbered by an in-house investment platform or proprietary portfolio managers, we pioneered the multi-manager approach, having the freedom to investigate any manager or investment management solution that we believed could benefit our clients. This has not changed either. However, more than 15 years later, many of the major players in wealth management now offer their own multi-manager platforms. They are often limited by corporate affiliations to a sub-set of the manager universe. And, although fee-based investment management services are increasingly prevalent today, few of them are truly fee-only, as trailer fees and related incentives continue to flow to advisors from investment solution providers.

So, while the rest of the investment management world has taken steps to replicate our approach, to paraphrase Aristotle, it is the sum of our parts that still sets us apart. The value we provide at T.E.I.C. is intrinsically linked to the value provided by our financial planning colleagues, and together we do achieve more. When we sit down with you and your financial planning consultant to develop your investment policy statement, we already know about your financial goals, including retirement, estate planning and tax considerations, from your consultant. Your investment policy statement contains recommendations that are designed to dovetail with these goals and your overall financial plan. In addition, it outlines your investment objectives and risk tolerance, the recommended asset mix and investment solutions as well as appropriate benchmarks. It is our agreement with you and clearly defines how your money will be managed.

When we research and review investment managers and solutions, we are guided by the twin goals of wealth creation and capital preservation. Within this context, our focus is on managing risk, seeking stable, consistent performers who will do well for our clients over the long term. We examine potential managers in terms of past performance, looking for consistency in style over different market cycles. When evaluating a manager’s investment process and style, we want to ensure that it is in line with how they actually manage the funds and that it adheres to stated objectives and constraints. In addition, by reviewing the personnel involved and the company’s ownership structure, we can be confident that the organization has staying power, is not overly reliant on any one person, exhibits low turnover of investment professionals and has an effective succession plan in place.

When it comes to monitoring managers on an ongoing basis, we are equally rigorous. In addition to routinely evaluating performance on an absolute basis as well as against peers and a benchmark index, we keep tabs on personnel, manager style consistency and other changes that could affect whether a manager is delivering on stated investment objectives. Manager research, selection and oversight is led by our Director of Research, supported by a dedicated Research Analyst and investment counsellors from across the country, who also contribute to the research function. In the more than 15 years that we have been selecting managers, we have only had to remove two from our platform, one as a result of ownership changes we believed could affect performance and the other due to a material change in the manager’s style.

As seasoned investment professionals we know that knowledge is power and our rigorous process reflects this line of thinking. We believe that the combination of our investment process and your T.E. Wealth consultant’s in-depth understanding of your financial situation and wealth management goals makes us uniquely positioned to deliver unparalleled value to our clients.

This article was submitted by T.E. Investment Counsel Inc.

 

 

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