Bellwether Investment Management Inc.

Personalized Investment Solutions for Affluent Families

Bellwether provides a boutique investment management service with tailored investment solutions for high net worth investors, foundations, estates and trusts, utilizing its yield-oriented investment process.

Bob Sewell, the President and CEO, and Steve Meehan, Vice Chairman, spoke with The Canadian Business Journal about the challenges facing the investment industry today, and the upside for high net worth individuals investing with Bellwether.

Bellwether management assembled a team that brings together unique skills and experience providing a strong foundation for the company’s disciplined portfolio process and personal client service. Each Bellwether team member has over 20 years of experience in the investment industry, and the team’s independence, agility and devotion to the distinct needs of affluent families provides a unique blend of skills and can-do attitude that work to their client’s benefit.

While many would find it strange to launch an investment firm in 2009, amid one of the greatest financial crises in history, Sewell offers a very pragmatic explanation — “It’s easier to start at the bottom of the market. The fact remains that through mid-2009, we saw the bottom of the equity market and things started to look more positive; and while the normal business cycle has not fully developed yet, the markets continue to improve.”

The strategy worked and today Bellwether serves a sizable base of affluent Canadian families, and it is mostly the work of these satisfied clients and their referrals that continue to bring new clients onboard.

Tailored Investment Solutions

Bellwether strives to overcome the notion that the investment firm only serves their clients as “portfolio manager”, by delivering on the promise of broader “wealth management”, offering its clients a service based on the philosophy of tailored solutions. With a plethora of wealth management strategies, from tax, to estate and retirement planning, the firm meets even the most complex investor needs.

The company works with the client to create a tailored solution according to the client’s financial state and goals, and treating clients more as “partners” rather than “clients”, working together for everyone’s benefit. Meehan said, “What makes Bellwether different is that we are not trying to make a sale to these individuals. We work to create solutions that create long-term partnership, not short-term transactions. We are managing our own money for profit and one could say that we merely invite our clients to join us.”

Today’s affluent investors often prefer to see the individual securities held within their portfolio. To provide for this need, Bellwether typically creates a segregated portfolio — a tailored investment solution built on Bellwether’s core strategies. There are three main focuses of the Bellwether strategies: North American Dividend Growth equities (medium and large “best in class” companies based in Canada and the U.S.); Global Tactical Exchange Traded funds (ETFs); and Canadian and U.S. fixed income (government bonds, corporate bonds, and preferred shares).

All Bellwether strategies share a common focus — yield-oriented investing which balances above average dividend income with reasonable capital growth.

Bellwether’s Disciplined Dividend Growth Process invests in companies with two critical characteristics: a history of dividend increase, and current earnings and cash flow growth to ensure the dividend increase trend continues. Bellwether has found that the share price of companies with these characteristics tend to rise over time. Also, when the stock market becomes more turbulent, the dividends pay the investor while they wait for the rough patch to pass.

Alternatively, their Global Tactical ETF strategy provides nimble, cost effective access to global equity markets allowing Bellwether’s archerETF division to take advantage of opportunities in foreign markets with less risk (offering ETFs such as those of Ishares and Bank of Montreal). Both equity strategies are combined with Bellwether’s fixed income management in the right asset mix to preserve and grow their clients’ wealth. The firm’s North American Dividend Growth and Global ETF solutions serve as a base to create the right portfolio that meets the clients’ needs, working to deliver higher yield potential, stability, diversification, and inflation protection.

According to Sewell, with the aging North American demographic that’s approaching or in retirement [the baby boomers], a big portion of retirement income has historically come from fixed income markets. However, with yields on government bonds, whether it’s the 10 year Canada Bond or the U.S. Treasury Bond, lingering below two per cent, these investors can no longer rely on bonds to fund their retirement. “The need for steady growth and reasonable [tax efficient] income through dividends is critical to these individuals,” says Sewell.

The Importance of Transparency

According to Bellwether, historically many investors paid little attention to the fees they were paying or the quality of service they were receiving. Often when they ask prospective clients how much they are paying for investment management the answer is, “I don’t know.” When equity markets rallied, investors were not as concerned with the fees they paid; however, with markets offering more modest growth, more and more investors are questioning the value they are receiving.

“We find that the investment industry today lacks transparency, whether its transparency in the clients’ fees or the way their money is being invested. In our view, affluent investors need tailored solutions rather than an investment product, and this resonates with the investors we talk to, investors who are tired of paying high fees [two-plus per cent plus] while not getting the tailored, profitable solutions, and the service they want,” says Meehan.

While protecting clients’ capital has become the best practice to make them money in the post-2008 economy, investors also want to remain well informed about their investments. “Investors often turn to large institutions believing that because of their size their interests will be protected, however, for high net worth individuals this may not be optimal, as these organizations struggle to provide the level of service and tailored solutions that their monies require and deserve,” says Sewell. “It’s like the difference between tailored clothing and something off the rack – tailored just fits better.

“As the investors gain a better appreciation for the current slow growth investment environment, and as they decide they need a partner on their journey, we believe that more affluent families will consider us for their wealth management solutions,” concluded Sewell.