Portfolio manager on communicating with the public, selecting clients and growing his practice as a "retirement transition specialist"
Clients can never accuse Faisal Karmali of radio silence … literally.
The portfolio manager and investment advisor at Popowich Karmali Advisory Group, CIBC Wood Gundy, is happy to share opinions and strategy ideas with co-host and fellow principal David Popowich on their weekly 770 CHQR radio show More Than Money, which provides insights into retirement, financial and economic issues.
They also give their verdicts on the market for NewsTalk770 and CTV, happy to get their approach as “retirement transition specialists” out to the masses.
Karmali joked with WP that he remains unconvinced he’s any good behind the camera but believes it’s an effective way of engaging with a wide audience. Money managers come on the one-hour radio show to explain their products, while clients also provide feedback.
He said: “It gives us the opportunity to communicate with hundreds, if not thousands of Calgarians and southern Albertans every single day about important topics for them. Our clients give us important feedback about what they’d like to hear more of so we can build a good radio show for them.”
It’s all part of the practice’s efforts to establish and maintain a presence, and earn the ongoing trust of clients or prospective ones. Through social and conventional media, Karmali wants to educate and inform, which often leads to people coming to him for a second opinion about their retirement plan.
With AUM up 11%, Karmali and the team’s ethos is clearly resonating but a vital part of growing the book, he said, is accepting the right clients. About only 1 in 10 of individuals or couples seen are taken on after a selection process that includes both sides interviewing each other to see if it’s a good fit. He said there are three main points to selecting clients:
1, The math: does a prospective client have enough to reach their goal? If their means are substantially below what they need, Karmali said expectations of the practice are too high and impossible to deliver.
2, Investment style: potential clients must be OK with working with discretionary portfolio managers. Karmali believes his team’s approach requires a certain type of individual to relinquish their day-to-day money management, yet still be engaged in the planning.
3, Personality fit: everyone has to get along to avoid conflict.
Once onboard, Karmali undergoes a large filtering process when it comes to high-cost pools and mutual funds after starting off with the most passive, cost-effective vehicles that fit a client’s needs. The former involves meeting money managers to understand portfolios and investment policy statements. Again, the radio show plays a role, with some happy to go live and explain to the public what they are doing.
Karmali said: “We do a lot of due diligence directly with those funds companies. Before we even invest a dime, we do a lot of tracking and research in them – we don’t just sell product, we provide strategies to meet our client’s goals.”
With these clients either in retirement or in the last 10 years before they stop work, concern about running out of money is the number one issue for them, closely followed by worries about whether they have to change their lifestyle in retirement.
The other immediate challenge is tax – and it’s an area of the industry Karmali believes is routinely underappreciated.
He said: “Tax and budgets from provincial governments consistently change. Staying on top of that and having a collaborative approach with us and their tax advisor is key. I think that is being missed in the industry at this point in time.
“We even have our own tax and financial planning experts on our team that work with accounts to give different ideas and ways to minimize the tax, so the client can have more money in their pocket and rely less on the portfolio to reach their goals.”
The practice’s portfolios are focused on four different buckets: income; dedicating assets to growth; healthcare costs; and estate planning upon death.
A number of advisors have expressed their frustration to WP recently about the industry’s obsession with the accumulation phase compared to the relative indifference about retirement income. Karmali believes that generating income and cash flow is best done by keeping things straightforward.
He said: “We take the concept of making things very simple, using conservative strategies in our income bucket and let the growth portfolio do the growth over the long term. We’re a bit unique to what we are seeing in the industry. I don’t think we have to get too innovative and too complex; I think the basics that are out there can really meet the need.
“From my perspective, we can just do basic, back-to-boring investments such as GICs, bonds, annuities - things that are low volatility or no volatility and that will actually secure people as they go through retirement.”