WPTV Special: For LePoidevin Group, success stems from thinking outside the box

Founder David LePoidevin shares how 5-Star Advisory Team has achieved client growth by anticipating and positioning for down markets.

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James: [00:00:32] And everyone and welcome to this WP TV special. My name is James Burton, managing editor of Wealth Professional Canada. Today, I'm delighted to welcome David Lepoidevin, founder of Lepoidevin Group and senior portfolio manager at Canaccord Genuity Group. David, thanks for joining us. 

David: [00:00:50] Welcome. Glad to be here. 

James: [00:00:52] Now, David is a hugely successful advisor, having doubled his assets under administration to 2 billion since joining Canaccord in 2016. And he was recently named WP five star advisor for 2022. So David, congratulations, first of all. And also what's been your key attribute? Would you say that's enabled you to grow your practice so substantially? 

David: [00:01:16] You know, it's kind of an under looked question, but we've done very well for clients, and I think the performance is really the thing that that sets us apart from our competitors. We left one of the major Canadian banks because we didn't want to be stuck into a zombie 6040 portfolio. And so we we really think outside the box. And when we go back, this is a bit generic because people put money in on a different day or take it out. But our worst year in the 35 years I've been a portfolio manager and an investment advisor is minus three. So, you know, I think at the end of the day we had a lot of referrals and in previous down markets and we've done very well here and it's mostly word of mouth, it's mostly referrals. Question. 

James: [00:02:17] Now, I know, David, you spoke to us before about 2008 and how you foresaw some of those difficulties. What skills do you need to have in order to be able to navigate difficult markets like that and such as the pandemic that we've just experienced? 

David: [00:02:33] Yeah, that's an interesting question. The pandemic we did not see coming and the 2008 we did see coming, 2008 was a bit of a slow train wreck, but there were plenty of signs of the housing bubble and the credit bubble in the United States. And I think, you know, at the end of the day, if you look at our website at the point of growth, you see a letter that we wrote in 2007 warning of the subprime crisis and they were beginning. You know, if you watch the movie Margin Call, it's like it happened overnight in the movie. But this is actually something that took many, many months. And there were plenty of warning signs that this was rolling over. So we got very, very defensive and had a very large percentage of our portfolio in 2008 in bonds. I would also suggest that the best stock market timer of all time was a guy named Marty Zweig, and he wrote a book called Winning on Wall Street. And I would highly recommend it to anyone that is a do it yourself or has a keen interest in the markets because it's you know, the bottom line is don't fight the Fed and the Fed had raised rates 17 times and here we are again. So these are some important lessons that that markets don't always go up. So how do we deal? It's not how do we make money, but how do we not lose money? There's two sides that we have to remember. Both are important. 

James: [00:04:05] Now, you alluded that to interest rates. Obviously, one of the current challenges that we're facing as well as rising inflation, you know, how were you able to see that coming and how did you adjust portfolios accordingly? 

David: [00:04:21] That's a good question. One of the things that we did in the bond in the mid eighties when my starting job was on the bond trading desks and even though I was the young guy, I learned a lot. And one of the things that back in the eighties that people used to hang off was the money supply and the root cause of the inflation was the money printing after World War Two, which culminated in the seventies. And the root cause of of inflation is money supply. Look, a can of coke when I was a kid and you guys aren't old enough, but a can of coke was $0.10. And let's call it a loony now in a soda machine, or maybe even more. But the coke is not ten times more valuable in society. It is a fact that money supply has has grown significantly and we saw the 40% increase in the money supply. A pandemic is a deflationary event. It could have been the 1930s. So to offset they printed money. Unfortunately, they probably went a little too far. There were too many free cheques being sent out. The money supply and interest rates went a little too low in hindsight. So we were able to say, we even said in the right, in the throes of the pandemic, we said the problem is going to start when the pandemic is over. And even though it's still around us and our prime minister has COVID, you know, it's not the same health threat and nobody's worried about Trudeau's health. So at the end of the day, you know, here we are and we're dealing with the effects. There was an interview on 60 Minutes with Jerome Powell, right, right. When the pandemic started. And they were talking about deflation and the and the seriousness of the economy about locking down. He said, well, he said right in the interview, we're printing money. They stopped using code words and he just said, we're printing money. And they said, isn't this going to lead to inflation? He said, We'll deal with that later. So later has come. So we were able to position portfolios, obviously avoiding bonds, but positioning ourselves into things like floating rate preferred stocks, which are benefiting actually. And there are some shocking dividend increases as the reset comes through. So like an Enbridge series, B was paying $0.85 and that dividend just got increased to $1.30. And there's going to be a series of dramatic rate increases because as the five year anniversary of your preferred rolls over, you're going, we're significantly higher today than we were five years ago. So we've handled this year as well. Well, because it was pretty evident to us that this is the year that rates go up. 

James: [00:07:11] Thanks, David. Now, as you said, you've been in the industry a little while. Entered in 1986, I think. So what's the biggest difference between life as an advisor then and now? 

David: [00:07:22] I started as an advisor in 1988. And, you know, there was no such thing as a fee based or discretionary accounts. We were pounding the telephone. And so it has changed a dramatic amount, and I think it's for the better. But, you know, there's so many differences in the intricacies of the of the financial markets. For years, I didn't own a stock, even in my own accounts. My pitch was you ought to buy 20 year bonds at 11%. These are government bonds, you know, and I think at the end of the day, the bond market is proven to be risky in a rising rate environment. And so, anyway, the main the main difference is the rate environment back then and now, and the fact that equity ownership is far more accepted. I mean, Canada savings bonds were the number one investment vehicle in Canada. They don't exist anymore. 

James: [00:08:28] Superb. David has a nice little comparison between then and now, and that wraps up another WP TV special. Thanks, David, for joining us and sharing your insights. 

David: [00:08:37] You're welcome. 

James: [00:08:38] So you can find out more information on David's group at lepoidevingroup.com. And don't forget also to check healthprofessional.ca for all the latest news and views on the industry. And if you haven't already, please feel free to sign up to our free daily newsletter. I'm James Burton. Until next time.