Episode 26: Exploring Investing and Risk Management Profile

Jerome James is joined by Amy Dietz-Graham, Senior Wealth Advisor & Portfolio Manager at National Bank Financial to explore investing and risk management profiles, encouraging investors to ask the right questions of their advisors.

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Female Voice  00:04

This podcast is brought to you by OSPE, the Ontario Society of Professional Engineers. The advocacy body for professional engineers and the engineering community in Ontario.

Jerome James  00:19

Welcome to Engineering The Future, a podcast presented by the Ontario Society of Professional Engineers. I'm your host, Jerome James. Today I'm joined by Amy Dietz-Graham, Senior Wealth Advisor and Portfolio Manager with National Bank Financial. Amy has worked in wealth management since 2007. And excels at helping clients navigate tricky market conditions. Amy has been quoted in The Globe and Mail, CBC News, the Canadian Press, Advisors Edge Magazine and BNN. She is also a sought after speaker at events right across Toronto. Amy, thank you for joining me today.

Amy Dietz-Graham  01:00

Thanks for having me, Jerome.

Jerome James  01:01

Absolutely. So let's dive right into it. When people think about investing, they often think about economic factors that tend to be outside of their control. Can you explain more about those human factors that go into great investing?

Amy Dietz-Graham  01:16

It's a really good question. It's a thing, one of the most important pieces when it comes to investing is the behavioral aspect because it's all well and good to have a financial plan, to have great investments. But if you don't know how to interact with those things, when times get tough, that's where people will make the ultimate mistake. And you can see it, especially in markets that we're going through today. Things are very volatile, people are feeling uneasy. So it's a real test to see if you can stick with the proper investment portfolio of put together and hopefully the financial plan you've put all in place, making sure you can stick with it. So making sure you've got that mindset to get through it is the most important piece.

Jerome James  01:59

Interesting. And every individual has a different comfort level when it comes to investing. As a portfolio manager, how do you assess each client's unique risk? Like profile? 

Amy Dietz-Graham  02:13

And this is something oftentimes clients would be used to you having these questionnaires, right? And you fill out a questionnaire. Where do you fall? Do you feel like you're a growth investor or a balanced investor? And how do you handle risk? The way I look at it, when we start talking to our clients is you really want to understand their personalities. Right? So it's okay to check a few boxes, but really understanding your relationship with money. So a really good wealth advisor will spend the time getting to know you on a much deeper level. Questions things like, What's your first money memory? Because believe it or not, it sets the stage if you go way back in childhood of how you've engaged with money, how your parents interacted with money, what's your experience, will really set the tone of how you interact with money and going forward. You know, thinking about market volatility, if you remember seeing family members being really stressed about the environment that they're in, or maybe they had a good habit of investing, when times are down. Buying low, that will really come into play later on in life. So a good wealth advisor will ask you a lot of different questions to understand your comfort level, asking questions such as: If you had $100 and it dropped to 50, How are you going to feel? Are you going to feel upset about it? Are you going to feel okay? Are you going to want to invest more? All of these types of things will come into play to really assess your true risk. Because what often happens is people might think that they are a growth investor, meaning they're comfortable with equities, only to find out when they go through a difficult period, Wait a second, this is more risk than I really anticipated. I'm not comfortable, I want to flock to safety. And that's when you're making the ultimate mistake is you're selling into a down market to run to safety, when you really should be waiting and giving it time to come back. So doing that work up front is really, really important.

Jerome James  04:15

When you're assessing a client's risk tolerance. Does their socio economic background come into play? What how you said how their parents would handle money? Do you see certain techniques that are passed down for different groups and not so much for other groups? And how do you assess the gap of knowledge that you'd want to someone to have before they go into an investment?

Amy Dietz-Graham  04:51

So a big part again, is understanding all the different moving factors. So everything that you just touched on absolutely needs to be part of the conversation. And since we're talking with a group of engineers, I'm married to an engineer. So if we generalize for a minute, and we look at the traits of an engineer, what are some of the common traits? Will oftentimes they're curious people. So they like to understand the in detailed oriented people. Getting to know them on that level, so that you can engage them in terms of what they need to know, to feel comfortable with an investment is really, really important. So I know my engineering clients, for the most part, they like understanding why we selected an investment to really understand what makes it tick, because it's not a perfect science, as precise as we want things to be. There's a bit of an art when it comes to investing. So the more comfortable you can get, and understanding all the different moving parts. So when things are out of your control, the more likely you are to stick with the overall plan when times get tough. 

Jerome James  05:53

Very interesting. A lot of people are moving to that whole Do It Yourself model of investing online. Using online apps like Weath Simple, TD has platforms that are easy and accessible, with a few clicks. And I don't even know if you have to go into the branch anymore. What does an Asset Manager a Portfolio Manager brings to the table that some of these individuals may be missing out on?

Amy Dietz-Graham  06:25

It's a good question. And there's lots of people that do like to do things on their own. And now you need to have the level of time to do that. Again, when we're talking about behavior, you really have to be able to self assess your own behavior when times get tough. So why clients will ultimately work with an advisor oftentimes is, you know, I say it all the time, our clients are bright, brilliant people, they could do this on their own, but they're usually time constrained, busy doing what they love best, or when they do get downtime, they have other passions that interests them. And so they look to partner with somebody that truly understands them and their family situation, to put a plan into place that they're comfortable with. And then our job is to run it on a day to day basis for them. But often checking in to say, here's where we're at making sure if there's been any changes in their lives, but where our wealth advisor can really help is when things do get tough. And they always do. We go through these market cycles and right now you're hearing the word recession a lot. It's having that other point of contact, think of it as a coach, right? Lots of athletes have a coach, the coach isn't running the race, but they have the coach to see things that perhaps they don't see, or to give them a different perspective. And it's that different perspective and looking at all the different moving parts in their life and keeping them on track. That is really where you get that compounding or that gap up in terms of rate of return.

Female Voice  07:56

We hope you're enjoying this episode so far. At OSPE. We're here for you. Making sure government, media and the public are listening to the voice of engineers. You can learn more at OSPE.on.ca.

Jerome James  08:10

Engineers like to do things that are precise and predictable. That's what their trade kind of stands for. How do you get an engineer to invest in something that takes away that comfort level and puts them into unpredictable situations like an unpredictable market, 

Amy Dietz-Graham  08:34

It can be challenging, especially if you're used to having things that are predictable and precise. Investing can be really challenging and frustrating for oftentimes for engineering folks, because it just drives you crazy. As much research as you do, and as much planning and modeling as you do, it could still go sideways. And so the most, the way we look at it is really understanding the nuts and bolts of what we put together. So building a plan and we talk about financial planning, oftentimes people will say, Oh, you know, plan to talk about retirement, but it's so much more than that today. It's looking at, you know, what are some of your goals you have, children's education, a secondary property. Retirement is obviously on the list. A whole host of things that you can plan these different items out. We can put some rates of return to it, model inflation, which is a hot topic right now, and model out those different scenarios so that when we do go through times that maybe aren't predicted or what we didn't think have happened. We've built in buffers and parameters around that so that we can get ourselves through it because we thought through a number of different scenarios that if one goes one way, okay, well, we thought about it, we've got buffer on this side of the plan, that we're still okay and ultimately still able to achieve those goals. 

Jerome James  09:55

Okay, so the market moves unpredictably but their movements are in the realm of being able to be modelled so that they can give you a little bit of comfort and understanding of this was a percentage of a chance to happen, you're set because we took these parameters and precautions,

Amy Dietz-Graham  10:19

You got it. And a wealth advisor can help take the emotion out of it too, right? Because we can look at it from a different lens, and really partner with you to make sure that you're comfortable and talk the language that you're used to speaking and seeing that level of detail of what would make you more comfortable. And that's a big, important piece.

Jerome James  10:39

Who would you say, comes to the same level of an engineer with that kind of tact to the predictable? And how do you kind of work through those tendencies? I would like to know because I want to see if there's other people out there that have those same kinds of proclivities,

Amy Dietz-Graham  11:04

They are, you know, the medical community, I often find they like to understand all the moving parts, but again, most of them are time constrained, right? So as much as you would like to do it yourself, it's having that level of time to commit to it. So it's finding somebody that's going to be able to speak your language, to model it out so that you can see it in a fashion that you're comfortable with. And then to really understand what you're investing in, and why do you own it. And that can help you let go of the reins and let somebody else come in and help you. But making sure that whoever you're working with is checking in with you on a consistent basis because your life will change. And just like any project as you go through projects, different variables will crop up inevitably. So it's having somebody that's checking in to making sure that it's updated and consistent with your current situation.

Jerome James  11:59

Great. As a beginner, someone that's just starting out in investing. Are there assets that you may want to stay away from, or are there even assets that you would suggest that you take a look at before investing in other ones?

Amy Dietz-Graham  12:15

That's a good question. Because oftentimes, you'll hear the rule of thumb, when you're younger, this is when you can take on risks. But going back to what we talked about at the beginning, going back to your behavior. If you're just somebody who knows, like when times get risky, you're not going to sleep well at night, you're just going to be stressed out. I would argue you're better off to be a little bit more conservative than what convention would tell you, because you're more likely to stick with the plan. So it's sticking with it. And especially if you're young, just starting to save a little bit versus nothing. Think about compounding, we hear that all the time. But it's if you can start young, just do a little bit each month or line it with your paycheck. So it's all automated. So you don't even have to think about it. You'll be miles ahead of your peers just because you've started so early.

Jerome James  13:02

Right, right. I want to throw out some some terms here. What comes to mind when someone's like, I want to invest in ETFs, or I want to invest in Crypto.

Amy Dietz-Graham  13:13

Yep. Those are all tools, right? So the way we look at different investment options, GICs, bonds, equities, crypto, you name it. They're all just tools. But essentially bringing it back to the beginning, you really want to have a foundation of a plan. What is it that you're trying to do? What kind of rate of return do you need to get your goals? It's all interesting to think about, you know, what did the TSX do this year, the S&P 500? Interesting fact. But does it really matter if your rate of return to reach your goal, maybe you need a 10% rate of return, maybe you only need a 4% rate of return. That will tell us what tools we need to engage to get to whatever goal you're trying to do. So it's more about your personal benchmark versus what the indices are doing. 

Jerome James  13:59

Okay. That's interesting. So it kind of takes away the idea that, Oh, I have to be in one thing versus another. And it's okay. 

Amy Dietz-Graham  14:11

And again, aligning with your goals. So it's maybe a young person aspires to have a house, maybe that's their first big goal on their list. That's going to be in different engagement than somebody who perhaps has a longer term plan of you know, I've got my children's education 20 years down the road from now. That's very different. So to having those specific goals and specific conversations, that helps a wealth advisor figure out what tools we need to bring to bear in order to achieve those,

Jerome James  14:41

Right. So there's many different factors that go into making these life changing decisions.  

Amy Dietz-Graham  14:48

And the beauty is once you get to the bottom of the plan, it's time to start all over because your whole situation has probably changed again. So we start again, and we're always keeping up to date as life changes. 

Jerome James  15:00

Right. Interesting. Is there one particular piece of advice that is all encompassing no matter where you're starting from or what your investment goals,

Amy Dietz-Graham  15:12

I think having a real honest conversation with yourself as to what your true risk parameter is, so that you can set up a foundational plan. So that when you get through difficult times, it's you don't make the ultimate mistake, like we saw in 2008, where high proportion of Canadians sold to cash, only to miss the turn around of the market. We don't want people to go through that, because that can really have a really major impact longer term. So it's really understanding yourself, and then putting a plan in place and then to execute that plan ongoing.

Jerome James  15:49

Sounds like great advice. Thank you so much, Amy, for breaking it all down for us today. This was, you know, it's a complicated topic, but you spoke so eloquently and clearly on the topic. So that was great. 

Amy Dietz-Graham  16:03

Thanks, Jerome. 

Jerome James  16:04

Once again, I just spoke with Amy Dietz-Graham, who is a Senior Wealth Advisor, and Portfolio Manager with National Bank Financial. I'm your host, Jerome James. This has been Engineering The Future. Thank you for listening.

Female Voice  16:23

From all of us at OSPE, the Ontario Society of Professional Engineers, thanks for listening. Please be sure to subscribe so you don't miss an episode.