On our recent webinar, “Investor One-on-One: Exclusive Interview – Discover Strategies for Passive Income & Retirement” Morrison Financial’s Vice President, Matthew Solda, MBA, and special guest investor1 who revealed his disciplined approach to achieving passive income and capital preservation in volatile markets.
The investor was a lawyer with a 25-year background on Bay Street and in real estate, recently faced a fundamental challenge: how to reliably invest the capital he had accumulated over a quarter-century?
His story is a masterclass on investing strategy and discipline. We summarized the discussion into 5 parts in this article.
Part 1: Building Capital from the Ground Up
Like majority of the Canadian population, the investor started building his wealth from the ground up. There wasn’t a sudden windfall; it was a disciplined, 25-year process.
“I started out extremely small,” he shared. “I tried to… set aside some savings from my career… and I did so in my… small and humble way.”
His strategy was simple but effective:
- Investing Savings: “What worked for me,” he explained, “was passive real estate investing… I would just look for properties that I could rent out and the tenant would manage, with little Landlord responsibilities.”
- Building Equity: “Adding some value [to the properties]… allowed me to get a little more equity in each one of those properties.”
- The Snowball Effect: “And when the equity grew, it gave me an opportunity to acquire another small property.”
“The plan just repeated itself,” he summarized, “for the last 25 or so years.” It was this portfolio, built brick by brick, that was later sold in a single moment—his “big sale event.”
Part 2: Dilemma Following the “Big Sale Event”
Holding the result of his 25 years of investing, the investor faced immense pressure to re-invest this capital but doing so in a way that preserves his wealth/capital.
“I absolutely needed to protect my capital,” he shared. “It took a quarter of a century to build it up, and I couldn’t live with myself to put it in investments where that would be highly at risk.”
His primary concern was volatility. He didn’t want the risks of the stock market (“financial noise”) or the stress of actively managing real estate in an unstable climate.
Part 3: Strategic Shift — From Equity to Debt Investing
Remembering the 1990s real estate recession in Ontario, the investor saw the current market cycle as a “period of price adjustment.” He concluded that owning real estate (Equity) was currently too risky.
His solution was a strategic shift to private Debt investments. In our current market, instead of owning an asset (Equity) and bearing the risk of its devaluation, it is better to be the lender, whose investment (Debt) is secured by that asset while still earning passive income from interest payments.
Part 4: In Depth Research — The 18-Month Review of 14 Firms
The investor was not looking for shortcuts. He rolled up his sleeves and began an in-depth 18-month process to search for the new home for his capital. In this process, the investor selected and reviewed 14 firms – from major wealth management firms to highly specialized funds (i.e. traditional equity, REITs, MICs, mortgage funds).
“I went out and tried to find the absolute best wealth managers.”
His due diligence process went far beyond just ‘browsing websites’. It included:
- Direct interviews with senior management.
- Speaking with the firms’ current investors.
- Analyzing public and non-public disclosure to understand the companies’ better.
Part 5: The 4 Criteria for Selection
Beyond standard due diligence, the investor followed a simple 4-criteria framework to assess each of the 14 firms.
- Transparency
He was looking for each firm’s willingness to engage, not a sales pitch.
“Did they put their… bios and names on a website? Was there an email that I could reach out and contact and speak with someone?… What I found [is] that some companies are more transparent than others.”
- A Flawless Track Record
He consciously avoided firms promising the highest returns. His key question brings a different perspective:
“Have they ever suspended distributions or redemptions? To me, making sure that they had never suspended distributions or redemptions was very important.”
- A Conservative Philosophy and Risk Management
Leveraging his experience as a lawyer, the investor deeply analyzed how firms behave in a crisis. This was his key test for effective risk management.
“Were they ‘conservative’ or ‘very aggressive’? Were they ‘collaborative’ when there’s trouble, or are they ‘combative’?… Would they shoot out lawyers’ letters… or would they sit down with the borrower and try to work out a solution?”
He finds that a firm that is willing to work with their clients better aligns with his philosophy.
- Platform Efficiency (RRSP/TFSA)
As a savvy investor, he understood the importance of tax efficiency.
“Could one invest their registered accounts? RRSPs, TFSAs… Was the platform friendly?”
Conclusion: Making the Decision
Through this review process, the investor proceeded to invest with two companies that satisfy his criteria.
“From the 14 wealth managers and firms that I went out to examine,” the investor concluded, “I ended up, so far, picking two. And one of those two was Morrison Financial Mortgage Income Funds.”
At Morrison Financial, we are proud to be a part in delivering strong and consistent returns for our investors, even during a volatile market.
Note 1: For privacy reasons, we have kept the investor’s name private.
Introductions are permitted exclusively through registered dealers. Morrison has retained Belco Private Capital as its exempt market dealer. For further information, please contact Tarik Ansara (tarik@belcopc.com) who is a registered dealing representative with Belco. Under no circumstances should this marketing be construed as an offering of any securities for sale directly or indirectly in any province or territory of Canada. Any offering is made only pursuant to the relevant offering documents together with the relevant subscription agreement, both of which should be read in their entirety. No offer to sell securities will be made prior to receipt of these documents by the offering, and no offer to purchase securities will be accepted prior to completion of all appropriate documentation. No securities regulatory authority of any Canadian jurisdiction has passed upon the accuracy or adequacy of this information material, and any representation to the contrary is unlawful.
