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Submitted by Matt Whyte on

Editor's note: The following comment has been edited with regards to length and formatting only.

Hey Greg. I would consider myself a long-time Cambridge supporter and am grateful for the performance that aided me in building my business. The Cambridge group continues to make up one of the more significant weightings within my practice. My clients are well versed in how Cambridge and other managers administer their portfolios. With that, I recognize that your point of view on this issue is both understandable and practical. However, I will posit that there may be a difference between the question you are hearing and the one we are asking.

I believe it goes without saying that "it depends" is a caveat, but shouldn't be a reason to avert the inquiry. Clients often ask us (advisors) the same "what should I (would you) buy" (and depending on age "what would you buy for your parents"). Most already have existing portfolios. What they may really be asking is "what should I buy right now". By not responding we essentially put the responsibility back to the individual asking the question. I would argue that in most cases, the reason advisors have clients in the first place is because they (clients) do not feel as well versed in investing. By extension, I will contend that advisors who buy Cambridge mandates will assert that they feel the Cambridge team is better versed than they are at investment market analysis.

Additionally, and to be very frank, advisors are not asking this question in a vacuum or without taking your response with a grain of salt. No manager is perfect, nor do we expect them to be. This question is asked to all managers. The notion is to get a better understanding of various theories, positions, and points of view. To be blunt, it’s not all about you.

In fact, by attending your workshop or road show, the advisor is showing that he/she has an interest in doing due diligence. And yours is not the only opinion, event, webinar, or blog they use to weigh their asset allocation decisions. I would never hold your answer against you based on your prevailing opinion at that point in time. Still, refusing to answer will also lead to advisors varying perceptions. Is it better to control the narrative or disengage from it? That’s your call.

Your assertion that a logical outcome of answering “what should I buy”, will lead to a corresponding “”what should I sell”, may also be a flawed perception. As advisors, many of us have various asset allocation or model type portfolios depending on client needs. You acknowledged that we periodically rebalance portfolios. When we do that, we look to do so with up-to-date information, so asking a professional PM their opinion is a valuable resource for us. Consider too that the Cambridge Asset Allocation fund and other mandates are tactically managed, as opposed to say strategic holdings in asset classes or sectors. Many advisors also eschew the strategic allocation you referred to due to evolving client objectives, changing product line-ups, macro-economic trends, and/or improved investment opportunities/products.

Again, it is our responsibility from a compliance perspective to manage client portfolios within their KYC instructions. Your reasoning/reluctance to not answer the question, with an idea to save or protect advisors from mismanaging a client’s portfolio, is misguided. Regardless of your or any managers’ response, we are regulated to manage within the KYC regime.

The moral is, we are asking your opinion on asset classes, not on asset allocation for individual clients. We think you are smart. Not perfect. We like you too, otherwise we wouldn’t be there putting up our hand or waiting to stick around to chat after the event is over. However, not answering, let alone telling us not to ask the question in the first place, probably doesn’t lead to positive outcomes either. Just my long winded 2 cents about a differing point of view.

We welcome your comments and questions for the Cambridge team and will respond as soon as possible. Please note that all comments are reviewed for their relevance to the topics discussed in the blog, and that comments may be edited.