- JANICE TUFF
MARTIN CLOUTIER, Senior Investment Advisor, B.Com (Hons.), CFP, RRC, Harbourfront Wealth Management
“The power of community”
Martin Cloutier has been married to his wife Carole for 23 years. He’s a dad to four kids, a proud hockey and ringette parent who’s hosted many gatherings for fellow hockey parents, and the instigator behind the community pond rink and countless neighbourhood fire pit parties in his south Winnipeg community.
It’s fair to say that community and family are themes that run through Martin’s life – both personal and professional.
In the beginning
Family is the reason Martin started a career in personal finance. His dad was a Financial Planner for 24 years. “I was working at Manitoba Hydro,” says Martin. “My dad would email me or call me saying, ‘how come you haven't joined me yet?’ I said, ‘things are pretty good here. I have every second Monday off and a good pension plan.’ I was comfortable with what I was doing.” Eventually, Martin agreed to take a mutual funds course and an insurance course. And he liked it.
“I didn't want the silver spoon, so I said I’m going to run my own practice for the next while and see how I do. In the industry, if you make it past five years, you'll be OK. But that first five years was super hard.”
In the end, Martin joined his father in his practice. They complemented each other and significantly increased the value of their book. But after 14 years at a large corporate financial planning firm, Martin needed a change. “I came to realize that I could do better for my clients, for my family and myself, so I transitioned to Harbourfront Wealth Management where I'm a Senior Investment Advisor. I’m also an equity partner because we are a private firm. I’m happy here. We don’t have to make decisions to enrich shareholders, so we can focus on decisions that better serve our clients.”
Martin specializes in pensions, helping clients including physicians, pre-retirees and retirees. This includes advising retiring clients on whether or not they should keep their defined benefit pension plan with their employer or transfer out. He also focuses on Canadians who have been working in the U.S. and may have accumulated an IRA or a 401K – pension plan-type investments – helping them repatriate those assets back to Canada. To offer an even more complete service for clients with US accounts, Martin is looking into getting licensed with Harbourfront America, so that he could manage US-based accounts. Another niche is people who have estate tax issues. Many of the physicians he works with have private corporations, so they’re in need of tax and estate planning surrounding professional corporations.
The big difference: Investing like a pension plan
Martin works with clients who have all types of risk tolerances from – low to high – when it comes to investing. But, he says, where he stands out – and where he provides exceptional value – is with conservative to balanced clients; those with low to medium risk tolerances.
“The average person would be a balanced investor,” says Martin. “That’s usually a 50/50 portfolio, split between stocks and fixed income or equity and fixed income. Part of the problem we see right now is that inflation has been high, and that eats away at a lot of the profits in the fixed income part of your portfolio. If that fixed income portion is only earning two per cent and inflation is four per cent, you're actually losing ground. A lot of clients ask me, ‘is there a solution to this?’
There is: investing like a pension plan.
“If you think of the Canada Pension Plan, the Ontario Municipal Employee Pension Plan, these are big money managers. Look at Harvard and Yale endowment funds. They manage a lot of money. So if they’re very successful – and they are, they're returning about 10 per cent per year – let's emulate what they're doing in the best interests of our clients.”
That means understanding the options available and creating the best mix to fit each particular situation, even when – or especially when – that situation is always evolving. “Instead of telling our clients we’re going to buy this portfolio and stay the course, we're going to make changes along the way,” says Martin. “We'll help them reduce risk, maybe become more aggressive when the markets are low and more conservative when markets are high – of course, all within the client’s tolerance for risk.”
The challenge for most Financial Advisors is staying on top of those ever-changing markets. Watching markets is a full-time job in itself, so it’s extremely difficult to provide timely investment recommendations along with good advice on retirement planning, tax planning and investment planning. There aren’t enough hours in a day to provide great advice and react quickly to changes on the horizon, like an upturn or a market crash. “You can't wear all of these hats,” says Martin. “So I have an investment management team that is laser-focused on investment planning alone.”
This unified management account, called Watermark Private Portfolios, is dedicated to watching markets for opportunities and threats and making changes to the client portfolio. That means clients benefit from more timely attention to their portfolios. Instead of contacting each client for every change – which can take a couple of months with a full roster of clients – changes are made in the clients’ best interest and within their tolerance of risk.
“Markets are very fluid and opportunities come and go quickly. So just like a pension plan buys and sells investments on a discretionary basis, investments are bought and sold for clients on a discretionary basis. We then notify clients what we have bought or sold after the fact, and explain why we did so. We also report the transactions and the logic behind them on the client’s enhanced quarterly statements, which also provides them with clear information surrounding their rate of return. Overall it's been really well received by clients.”
This unified management account allows Martin’s clients to invest like a pension plan, so he has access to investments the average Financial Advisor doesn’t – most notably, private investments. “Professionally managed pension plans have so much money in their institutional investments that they have more investment opportunities than the typical investor. One of the areas they focus on are private placements: private debt, private real estate, private equity,” says Martin.
“Some of the biggest pension plans and endowment funds have anywhere from 50 to 70 per cent invested in private investments. The average investor has maybe only five per cent invested in investments like this. If you want more consistent, predictable and probable results, adding private investments into a portfolio works. We’re able to get most clients into private investments. It's a huge differentiator and allows us to provide exceptional value for those clients.”
The above chart shows some of the most popular fixed income investments,
compared to Rockridge Private Debt Pool.
That value includes sheltering clients from stormier economic times. “I've gone through many downturns, in 2008-2009. It was hard because you're there to hold your client's hand and guide them through so they won't make a mistake and emotionally sell their good value investments”. Because Watermark Private Portfolios invests like a pension plan, Martin had a different experience during the last market downturn, in 2020.
“When I was calling clients, they were expecting the worst. Markets were down 30 to 50 per cent, depending on what asset class you're looking at. But generally, clients were down only at three to five per cent. It was the best market downturn experience I've ever had with clients. I felt they were reaching out through the phone and hugging me.”
Offering unique services
Investing like a pension sets Martin and his team apart, but it’s not the only service that makes him stand out. He offers Prestige Concierge Service, a more personalized approach to planning. It looks at a client’s family dynamic, their beneficiaries, family health history, everything. It also includes a retirement income audit and an estate analysis – all to better understand the client and determine the contingencies he should make based on their plan.
Martin also employs Monte Carlo analysis, which uses simulations to model the probability of different outcomes in a process that cannot easily be predicted. “Investments don't go up in a straight line,” Martin explains. “If you’re estimating a return of eight per cent, some years you might see minus 10 per cent, some years plus 20 and so on. We’ll run about 500 iterations of return and see the probability of success in your plan given those 500 scenarios. That gives clients reassurance knowing that regardless of the order of returns they achieve, they're going to be OK. Or maybe they're not and we have to make changes to the plan.”
Continuing to grow a community
Martin’s experience as a hockey/ringette dad and an active community leader colours his approach to his practice. He knows that by being part of a community, everyone does better. “Working at Harbourfront is great because we only hire seasoned advisory teams. The brain trust of us combined is significantly more than just my single brain trust. In this business, you’re going to be continuously learning and growing, and it takes other people around you to help you with that growth.”
To that end, Martin is working to grow his small team of four people and expand the brain trust that has done so well for Harbourfront and its clients. “I'm in talks with many Advisors in Winnipeg. I want to grow my team and I want an equal partner, a senior partner to work with. I'd like to bring on a junior partner as well. I want to be able to provide more continuity of service to clients because – believe it or not – I like to take a week off once in a while, recharge my batteries and be better with my clients when I come back.
It’s clear that, for Martin, community and family are priorities. And bringing both into his approach to financial planning brings rewards for his clients and gratification to his practice. “Even though I love the numbers and I love the analysis, it's all about the personal relationships with clients and the friendships you develop and being able to add value to them. You don't make lifelong clients and multi-generational clients by trying to offer them the flavor of the day. You bring value by providing them with advice that will help them for their whole life.”
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Janice Tuff is a professional writer and communicator who got her start in radio copywriting.
Three decades later, she continues to draw upon the valuable lessons learned in her radio days: grab your audience’s attention quickly and always tell an engaging tale.
Martin Cloutier B. Comm (Hons), CFP, RRC
Investment Advisor Exec.
Assistant: Ahren Richmond (ARichmond@harbourfrontwealth.com)
177-B St. Mary’s Road Winnipeg, Manitoba, R2H 1J1
204-256-231-6350 cell: 204-996-9269