Andrew Kost of Assante Private Client (CI Private Counsel) is part of Wealth Professional Canada's Portfolio Management Powerhouses 2017
Investment counsellor
ASSANTE PRIVATE CLIENT(CI PRIVATE COUNSEL)
Years in the industry: 25
Years as a PM: 15
Industry accreditations: CFA
Typical clients: High-net-worth clients with assets from $2 million to $6 million
A lot can change in 25 years, and that certainly rings true for Andrew Kost when he looks back on his career. “Originally the investment role was about getting the proper information in order to make an informed decision,” he says. “Now it’s more about filtering out the noise and finding what information is material.”
Aside from the misinformation and mixed signals that are a by-product of the digital age, clients have also changed, which means their PMs need to evolve, too. “Most Canadians have some exposure to the investment world,” Kost says. “With the complexity around taxes and constant changes, tax planning has become a more integral part of our conversation. “
That’s especially true when it comes to the high-net-worth segment – when the assets being managed are in the millions, a great deal of care is paramount. “We look at two elements of risk when determining an appropriate risk profile – capacity and willingness,” Kost says. “The investment horizon tends to influence the client’s capacity to take on risk and ride out any volatility. In the high-net-worth space, building a tax-efficient portfolio is an important objective as well.”
When it comes portfolio construction, Kost uses equities, bonds and alternatives, depending on the circumstances. The Fed’s commitment to raising interest rates is one such factor that will influence his strategy going forward. “From a fixed-income perspective,” he says, “our positioning has been defensive since we feel that, in general, monetary easing is coming to an end, and interest rates will likely begin to normalize.”
For stocks, the strong markets have made finding undervalued companies pretty difficult, so Kost plans on building cash levels until those opportunities present themselves again. In terms of alternatives, he doesn’t chase higher yields; rather, the priority is on providing clients the protection that comes through diversification. “In the current market environment, with geopolitical and socioeconomic risks running high, we strongly believe that a broad array of anti-correlated asset classes is necessary to provide real downside protection to client portfolios,” he says.
When it comes to the wealth management space in general, Kost believes the regulators have the right idea, but the wrong methods. In his view, more paperwork isn’t something clients will respond positively to. “Account documentation, compliance reporting and client information are getting more and more onerous, having the exact opposite effect of what is aimed for by the regulators,” he says. “Clients are no longer reviewing documents and disclosures due to a lack of time and/or complexity.”
He believes a better solution would be to take a page from the CFA Institute’s book, which compels those who obtain the designation to have a fiduciary duty to act in best interests of the client. This should be the common goal of anyone involved in managing money, Kost says, citing recent scandals that have damaged the reputation of the industry. “If the same principle was applied in the whole financial industry,” he says, “we wouldn’t be running into the aggressive selling problems that some banks are experiencing now.
“In the current market environment, with geopolitical and socioeconomic risks running high, we strongly believe that a broad array of anti-correlated asset classes is necessary to provide real downside protection to client portfolios”
ASSANTE PRIVATE CLIENT(CI PRIVATE COUNSEL)
Years in the industry: 25
Years as a PM: 15
Industry accreditations: CFA
Typical clients: High-net-worth clients with assets from $2 million to $6 million
A lot can change in 25 years, and that certainly rings true for Andrew Kost when he looks back on his career. “Originally the investment role was about getting the proper information in order to make an informed decision,” he says. “Now it’s more about filtering out the noise and finding what information is material.”
Aside from the misinformation and mixed signals that are a by-product of the digital age, clients have also changed, which means their PMs need to evolve, too. “Most Canadians have some exposure to the investment world,” Kost says. “With the complexity around taxes and constant changes, tax planning has become a more integral part of our conversation. “
That’s especially true when it comes to the high-net-worth segment – when the assets being managed are in the millions, a great deal of care is paramount. “We look at two elements of risk when determining an appropriate risk profile – capacity and willingness,” Kost says. “The investment horizon tends to influence the client’s capacity to take on risk and ride out any volatility. In the high-net-worth space, building a tax-efficient portfolio is an important objective as well.”
When it comes portfolio construction, Kost uses equities, bonds and alternatives, depending on the circumstances. The Fed’s commitment to raising interest rates is one such factor that will influence his strategy going forward. “From a fixed-income perspective,” he says, “our positioning has been defensive since we feel that, in general, monetary easing is coming to an end, and interest rates will likely begin to normalize.”
For stocks, the strong markets have made finding undervalued companies pretty difficult, so Kost plans on building cash levels until those opportunities present themselves again. In terms of alternatives, he doesn’t chase higher yields; rather, the priority is on providing clients the protection that comes through diversification. “In the current market environment, with geopolitical and socioeconomic risks running high, we strongly believe that a broad array of anti-correlated asset classes is necessary to provide real downside protection to client portfolios,” he says.
When it comes to the wealth management space in general, Kost believes the regulators have the right idea, but the wrong methods. In his view, more paperwork isn’t something clients will respond positively to. “Account documentation, compliance reporting and client information are getting more and more onerous, having the exact opposite effect of what is aimed for by the regulators,” he says. “Clients are no longer reviewing documents and disclosures due to a lack of time and/or complexity.”
He believes a better solution would be to take a page from the CFA Institute’s book, which compels those who obtain the designation to have a fiduciary duty to act in best interests of the client. This should be the common goal of anyone involved in managing money, Kost says, citing recent scandals that have damaged the reputation of the industry. “If the same principle was applied in the whole financial industry,” he says, “we wouldn’t be running into the aggressive selling problems that some banks are experiencing now.
“In the current market environment, with geopolitical and socioeconomic risks running high, we strongly believe that a broad array of anti-correlated asset classes is necessary to provide real downside protection to client portfolios”
