Meritocracy Capital Partners Inc. (“MCP” or “we”) is a boutique investment management firm located in Vancouver, British Columbia. Registered as a Portfolio Manager with the B.C. Securities Commission, MCP is an adviser for high-performing professionals and entrepreneurs that seek a value-focused and performance-driven approach to how their wealth is managed.
MCP was created to solve a problem Canadian investors of all sizes face: chronic underperformance. We assert this problem exists in the investment industry because of the way it is structured. The underlying issues are threefold:
1. Zero Fiduciary Duty: Most investment “advisors” are really just salespeople. Their interests are conflicted because they work for companies that want to sell you more stuff. As a result, these salespeople have zero fiduciary duty to their clients. “Advisors” are not required by law to put their clients’ interests ahead of their own. In fact, clients commonly come last.
2. Expensive Fees: Without fiduciary duties, a sales-driven culture of “asset gathering” was long ago created in the investment industry. That culture continues to motivate investment salespeople to push expensive investment products. In fact, a 2013 report from Morningstar Fund Research indicated: “Canada fails in Fees & Expenses. Among the 24 countries in this survey, Canada has the highest annual expense ratios for equity funds, the second highest for bond funds, and the highest for allocations funds.”
3. Fixed Fees: These investment products also come with fixed fees. In other words, these expensive fees are fixed at the same rate even when clients are losing money. This begs the question: are there any incentives to even try to perform?
If this continues, then we maintain investors of all sizes will find it challenging to meet their financial goals. Compromises will need to be made to offset these financial shortfalls. For retirees, this may require working longer and moderating their original retirement plans.
How do we fix the misalignment? MCP believes the solution is with incentives. Investment “advisors” are salespeople motivated to sell you stuff you may or may not need. As a CBC report indicated, “advisors” can sell you the third, fourth, fifth or least beneficial product to you. They is no alignment and the incentives are perverse. In the spirit of Warren Buffett, we believe there is an “institutional imperative” that motivates most investment “advisors” to focus on keeping their jobs (selling you stuff) vs. actually doing their jobs (protecting & growing your wealth). The self-made billionaire investor added:
Most managers have very little incentive to make the intelligent-but-with-some-chance-of-looking-like-an-idiot decision. Their personal gain/loss ratio is all too obvious. If an unconventional decision works out well, they get a pat on the back, and if it works out poorly, they get a pink slip. Failing conventionally is the route to go. – Warren Buffett
MCP believes the institutional imperative to fail conventionally can be solved if investment “advisors” would align their incentives to their clients’ objectives for wealth preservation and growth. Having alignment is paramount. Why? According to Mervyn King, the former Governor of the Bank of England, who oversaw several bank failures during the Global Financial Crisis:
Those who manage other people’s money are more careless than when managing their own. – Mervyn King
We contend alignment will lead to intelligent investment decisions that can alleviate the gap in investment performance. Consequently, we are confident alignment will also allow investors to better meet their financial goals and live their lives without compromise.
We Treat Our Clients’ Money Like Our Very Own™
With this ambitious goal in mind, MCP has aligned itself to its clients through a performance-driven fee structure and by eating its own cooking. This tangibly reinforces our fiduciary duty to place our clients’ interests ahead of our own.
MCP voluntarily chose to do business this way because it believes investors need a real alternative to the institutional imperative of conventional failure that most investment “advisors” practice. By aligning our incentives to our clients objectives, we treat our clients’ money like our very own.
Giving Back to the Community
MCP had the privilege of being an organizing sponsor of Working Gear’s first annual Gear to Give fundraising event. Working Gear is a not-for-profit that partners with government agencies and local community groups in helping low-income, unemployed men re-enter the workforce. It does this by providing them with secondhand clothes, including suits and steel toe boots. In addition to a truckload of gently-worn suits, approximately $19,000 was raised that incredible evening. Highlights of the event were captured in the accompanying video.
If you would like to help low-income, unemployed men rediscover dignity, then please contact Working Gear.
Entering the financial services industry was a bewildering experience for Mr. Ma. He realized many investment advisor had a different set of values than the working class ones he inherited from of his family. It was obvious and normal for conflicts of interest to be mismanaged. He also saw how a majority of clients were not receiving value for the services they retain. He felt a sense of meritocracy was sorely needed in his industry.
After more than a decade advising investors of all sizes, Mr. Ma created MCP to challenge the status quo of conventional failure by aligning his incentives to his clients’ objectives for wealth preservation and growth. He chose this unconventional approach to wealth management to take a stand for what he believes in and to constantly remind himself of the fiduciary duty and commitment he has for his clients.
Prior to founding MCP, Mr. Ma worked in mergers & acquisitions, private equity, mezzanine finance, and discretionary portfolio management in the cities of Toronto, Victoria and Vancouver. His credentials include the Chartered Financial Analyst (CFA) designation and an Honors Degree (First Class Standing) from Simon Fraser University, where he double-majored in Business Administration and Economics. More details of his professional background are available on LinkedIn.
(Photo credit: Philosophic Photography)
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