Paul Wheaton of Mawer Investment Management is part of Wealth Professional Canada' Outstanding Portfolio Managers 2018
Firm: Mawer Investment Management
Position: Investment counsellor
Years in wealth management: 14
Years as a portfolio manager: 3
Certifications: CFA
Now in his third year as a discretionary manager, Paul Wheaton moved into that side of the business after first distinguishing himself as an analyst with Hamilton Capital Partners, Kootenay Capital Management and Gluskin Sheff & Associates. He joined Toronto-based Mawer Investment Management in 2014 and started managing assets for clients the following year.
The role of a financial analyst shares some common ground with portfolio management, but there are just as many differences. In particular, the client interaction that comes with portfolio management is a skill one has to master pretty early.
“There is definitely a lack of understanding on what discretionary management entails, particularly from people coming from the brokerage communities,” Wheaton says. “Usually I give an overview of the differences between how I operate versus what they may have experienced at another firm.”
There are many reasons why people choose to use a discretionary manager, and time is a major factor. “The clients who come to us want to delegate that responsibility and not be involved in the day-to-day operation,” Wheaton says. “So we spend a lot of time at the beginning of the relationship to understand their goals and objectives, and then set the investment policy statement to the guidelines that their account will be operated under. From that point, they will be more hands-off than they were used to in the past.”
The level of interaction varies between PM and client – some prefer quarterly meetings, while others feel an annual catch-up is sufficient. What might change those arrangements is market sentiment – the current climate is a case in point.
“I’m part of a team of portfolio managers, and we operate very much as a unit. We don’t typically make big changes because our view is that our expertise is understanding companies”
“It is certainly a talking point I have had in client meetings – a reminder to check in about what your client objectives are, to see if there is too much complacency with the risk level in the portfolio,” Wheaton says. “Now that we have actually gone through a period of volatility, it’s a reminder that markets can go down, so it’s a good time to check in.”
Despite that volatility, the way Wheaton approaches his job hasn’t changed much over the past three years. The fundamentals of discretionary management remain, in good markets and bad, which is one of Mawer’s cornerstones.
“The philosophy of the firm is that we don’t typically make big changes,” he says. “I’m part of a team of portfolio managers, and we operate very much as a unit. We don’t typically make big changes because our view is that our expertise is understanding companies.”
A lot of time and effort goes into picking the kinds of stocks and bonds that make up Wheaton’s portfolios, and a correction in the market isn’t likely to suddenly make those companies unattractive as investments. It’s investing for the long term, which is exactly what his clients want when they walk in the door at Mawer.
“We are very much a bottom-up stockpicking company,” Wheaton says. “We have a 30-person research team that picks the securities and creates the portfolios that I then use for my clients. They are good businesses with a resilient business model, well managed and where we think we can pay a fair price It can be months to years from initial idea into actual investment. They may come across an idea through a screen and spend a couple of months doing due diligence, but if the valuation isn’t attractive, it will go on the watch list for as long as needed.”
