Susyn Wagner’s experiences have taught her that sticking to a strategy will pay off in the long run
Name: Susyn Wagner
Title: Vice-president and portfolio manager
Practice: Wagner Investment Management Team
Firm: CIBC Wood Gundy
Location: Calgary, AB
Years in the industry: 32
Certifications: CIM, FCSI, CFP
Although she began her career just in time for the financial crisis. The 2008 recession forced Wagner to weigh her options as to how to handle the situation. She chose to stick to the rules-based, disciplined approach she had developed, which turned out to be the right decision, as her portfolios came out of 2008 to post positive returns in 2009–10. Now, she can look at that track record for inspiration when other periods of volatility arise.
“I became a discretionary manager because, at the time, many of the mandates I was using weren’t performing well,” she recalls. “When I explained to my clients why they weren’t doing well, it sounded hollow. I felt that I could develop a disciplined process that would provide similar rates of return at a lower cost.”
Wagner’s strategy includes using Morningstar CPMS software to help with stock selection. When she began, others were using it, too, but they weren’t getting the desired results. So Wagner combined the tool with her own disciplined approach.
“Our system involves buying based on the fundamentals of a company,” she says. “If things with a company change and it is necessary, we make a change to the portfolio. We turn over the portfolios 20% to 30% a year; in more volatile markets, that can be even more. You have to be patient, but if earnings or valuations in a company change, and if you have a specific rule, then you have to implement it. It’s important to follow the process.”
In 2007, Wagner rolled out three portfolios: an all-equity strategy that contains US and Canadian equities, supplemented with In 2007, Wagner rolled out three portfolios: an all-equity strategy that contains US and Canadian equities, supplemented withETFs for international exposure; a balanced strategy with income-oriented investments and equities; and a core Canadian strategy. Not long after, the 2008 financial crisis began, and many of the portfolios were underperforming.
“It was a difficult time,” she says. “Many portfolios were down, but that is when I truly learned to follow the discipline, even if I felt uncomfortable. By following it, our portfolios did turn around.”
One of the reasons Wagner believes her portfolios were able to rebound is the importance she places on having healthy cash reserves. She says that in addition to making sure her team knows each client and their risk tolerance, having that cash is key.
“[The financial crisis] is when I truly learned to follow the discipline, even if I felt uncomfortable. By following it, our portfolios did turn around”
“We concentrate on the needs of the client from an expense perspective,” she says. “We always make sure we have good cash reserves in place so we don’t have to access the growth-oriented investments. In 2008, all of our clients had good cash reserves, so we didn’t have to go in and access equities, which allowed our portfolios to recover. That helps with returns because you don’t have to access investments at the worst possible time.”
Having that cash reserve as part of her portfolios continues to help in today’s volatile investment landscape. “There are so many unknowns in today’s market, such as Brexit and trade discussions,” she says. “With all the unknowns, I err on the conservative side when it comes to cash flow or having a cushion in the account for clients, in the event of a pullback.”
The cash reserve provides a stable source that clients can draw from and is strategically replenished during optimal market conditions while the growth portions of Wagner’s portfolios remain untouched. This investment methodology is important for her clients, who are primarily retired or near retirement and often aren’t in a position re-create their wealth.
“Knowing when to buy a stock is as important as knowing when to sell,” Wagner says. “Both of these actions mean that you need to be patient, especially in down cycles. Sometimes the mere act of doing nothing can help you more than any other rule with investing.
“We all question our decision-making process in times of volatility,” she adds. “When things are on the upside and we are doing fine, we think we’re heroes. When it’s not, we feel like goats. Being able to have confidence in your investment strategy is key to be a successful manager. Unfortunately, that takes time – time in the markets to experience the ups and downs.”
While a confident, disciplined approach is a must, Wagner believes the most important skill a portfolio manager must have is the ability to listen to the client.
“It is by far the most important tool,” she says. “Know your client and make sure you keep in contact with them when the markets are volatile so they don’t panic and cause you to make inappropriate changes. The management of the equities is a small part of what we do; it is managing client expectations that is most important.”
