Mailbag: Trump, Cybersecurity, Asset Allocation, and Digital Signatures

Each month, we select a handful of questions that were asked by clients or soon-to-be clients. We like to post our answers online because others may have that same question as well. Here are a few of the things we were asked about most recently.

QUESTION FROM TORONTO: With Donald Trump in office, I was thinking he’s more for fracking and oil drilling as opposed to green energy solutions. Would it not be wise to buy these stocks?

You read our mind. More drilling will benefit the pipeline producers, for example. We purchased an oil pipeline for suitable clients on Wednesday.

Our policy is to include all clients in our block trade purchases unless there’s a good reason to exclude someone. For example, if an account doesn’t have enough cash for a reasonable allocation, we won’t buy a very small amount of the stock. Also, some clients have restrictions against buying energy stocks, so we excluded those accounts from our purchase yesterday.

QUESTION FROM EUROPE: Are you expecting bad consequences after Trump’s election?

No. We wrote a blog about this topic in September called “What if Trump Wins”. If you’re interested in reading it, visit https://www.schneiderpollock.com/post/what-if-trump-wins. The summary is that the market has almost always gone up under any president.

QUESTION FROM SOUTHERN ONTARIO: My computer was hacked. They got into my bank accounts and moved money from savings to checking.  Fortunately, they didn’t get any farther, but I had to have my computer cleaned and it has been a nightmare!

For clarification, this bank account was not the investment account that we manage at the National Bank Independent Network.

Here are a few practical tips to employ in order to protect yourself against a cybersecurity crime.

Make sure to enable multi factor verification so that a second layer of protection is enabled whenever someone tries to access a password-protected program. By doing so, a text will be sent to your phone with a unique code that must be entered.

Turn on automatic software updates, including virus definitions. Also set up your virus scan to regularly scan your system.

Be very careful with emails. Always check the email address to verify it matches the person you believe to have received a message from. Never click on unusual links or open suspicious files

Check the activity in your bank account regularly, as this client does. If anything looks suspicious, call the bank right away to report the activity. Each bank has an entire fraud department that deals with these situations.

QUESTION FROM PETERBOROUGH: Should I have all my money in stocks or spread it out?

It depends on who you are.

We make a suitability assessment of each client based on their risk capacity (i.e. their ability to take on risk) and risk tolerance (i.e. their willingness to take on risk). Someone can have a higher risk tolerance than risk capacity, and vice versa. Regardless, we construct each person’s portfolio using the more conservative assessment of their risk capacity and risk tolerance. So, if someone has a high risk capacity but low risk tolerance, we’ll construct a portfolio as though the client has both a low risk tolerance and low risk capacity.

Sometimes this assessment changes over time. It’s easy to say you’re comfortable with 10% swings up and down when you only own cash, but during a market correction when prices actually fall that full 10%, some people realize their risk tolerance is more conservative than they previously thought. In these cases, we will adjust the asset allocation so that the client is comfortable with their portfolio mix.

QUESTION FROM TORONTO: Do I have to drive down to Bay and Adelaide and find a parking spot to sign the account opening forms?

No. We send each client a Docusign email to open a new account. This requires only an electronic signature and has been very popular with our clients for its speed and efficiency.

QUESTION FROM WESTERN CANADA: Who should I send emails to: Jeff or Sunni?

You can email either of us and we will direct your message to the appropriate person.

Several years ago, regulatory updates (called “Client Focused Reforms”) were introduced that formally require us to take notes every time we speak to a client. Whomever you speak to, the other individual will know the details of the conversation within a few hours after the notes are reviewed.

Broadly speaking, talk to Jeff about anything related to “investment advice” and talk to Sunni about anything to do with the operation of your account.

QUESTION FROM BURLINGTON: Are you completely independent?

Yes. Our firm is 100% owned by Jeff and Sunni and we have no formal or informal arrangements with other investment firms (aside from the National Bank Independent Network, which acts as our custodian). The custodian is the safekeeper of your assets, but all investment decisions are made without their input, so we are free from any conflicts of interest.

Please reach out to us at info@SchneiderPollock.com.

-written by Jeff Pollock