'Would you recommend this stock to your parents?'

One of advisor’s core philosophies gets to heart of his success helping professionals and family businesses

'Would you recommend this stock to your parents?'

Not many kids read the stock market pages … and even fewer then recommend a stock to their dad.

David Barnsdale was that child, although his father gave him short shrift when told he should invest in Magna, the company he worked for.

Back then, the younger Barnsdale was warned that stocks are for gamblers and the rich, and that “people like us” should stick to GICs. Given that fatherly lesson, and after 32 years in the wealth management industry, the Mississauga-based advisor admitted it was “kind of ironic I got into the investment world”.

Those early days, though, have stood him in good stead. Now, as vice-president, associate portfolio manager, wealth advisor and financial planner at Barnsdale & Hussain Wealth Management Group, RBC Dominion Securities, he’s using his decades of experience to zero in on incorporated professionals and family businesses.

Barnsdale started in the industry in 1987 after graduating from York University with a degree in economics. He earned his securities and insurance licence and began his first job with Tax Advantages, where he specialized in mutual funds and insurance.

“The interviewer basically showed me a growth chart of the Templeton Fund,” he told WP. “My jaw dropped when I saw how much investors’ money had grown in the fund. They asked if I could recommend it to others, and I said, ‘absolutely, if that’s how their money can grow!’”

Barnsdale also had spells at Manulife, Midland Walwyn, Merrill Lynch and CIBC Wood Gundy before settling in at RBC Dominion Securities in 2008. Along the way, he earned his CFP, CIM and FCSI designations, along with hedge fund specialist, options and portfolio manager licences.

However, the certification a proud Barnsdale feels sets him apart most is the Family Enterprise Advisor [FEA] designation, something only a few dozen Canadian advisors have.

Working with family businesses looking to maximize a sale or transition is an area that needs special advice and understanding, something Barnsdale believes the certification has given him.

He added: “With a family business, you have three main factors to consider: running a successful business, ownership and family. These three circles can intersect and cause conflict. Advisors need to work as a team to bring the family together, ensure the success of the business and keep harmony.”

Barnsdale said that often business owners are focused on just running the business and neglect the planning required for a transition, which is where he can add real value.

One rule he sticks to when running – and growing – his book of business is to never recommend anything to a client you wouldn’t recommend to your parents. Coupled with the industry’s increased focus on fee compression and transparency, and his switch to a fee-based practice 20 years ago, it’s an approach he believes in and was cemented by one of his mentors, CFL great and former investment advisor Tony Gabriel, who Barnsdale worked with at CIBC.

“He basically said, ‘run a clean book of business and you never have to worry’. One of my core philosophies is to never recommend anything to a client I wouldn’t recommend to my parents. You have to ask yourself, ‘is this right for the client?’ If there is any hesitation, then you shouldn’t do it.”

He added: “The key for new advisors is team up with a seasoned advisor. If not, you need a good mentor and truly need patience, perseverance and to be willing to take some risks.”

Barnsdale’s approach mirrors that of one of his idols – with one exception.

He explained: “I have been a Warren Buffett fan forever. I have read his books, been to the shareholder meeting and met him. My approach is basically the same as his: buy great businesses at a reasonable price that have big barriers to entry and great management.

“The one significant difference is that Buffett doesn’t believe in dividends, and I am all about owning great businesses that pay dividends. Dividend growers have been one of the best asset classes, historically, and are more defensive in a down market.”