What is your expected rate of return?

We get this question a lot and understand you want to know the bottom-line! The truth is there is no “one size fits all” answer, as the strategies employed depend on your individual financial situation, time horizon, and goals etc., and the market conditions constantly keep changing. However, we believe strongly in generating cashflow from your investments, and reinvesting these to the extent suitable for your portfolio, to compound your overall returns and minimize overall risk. Let’s discuss and understand your specific details better, for us to design suitable strategies that might best fit your specific situations.

how do i monitor my investments?

Each account is managed separately, and is held directly in the client’s name at TD Ameritrade Institutional (the custodian), one of the most widely used third party custodians in the US. You have full visibility into your account, all investments, and transactions etc. at all times. The custodian also sends you monthly statements, outlining all account activity during the period. Additionally, we periodically review with you the account performance on at least a quarterly basis, and more frequently, as necessary.

who do you work for and how are you compensated?

We are fiercely and proudly 100% independent, and do not even attempt to sell you any fancy financial products for a commission or get paid by anyone elseYour portfolio allocation is designed to suit your needs, monitored daily, and adjusted as often as necessary.

As your fiduciary, fee-only advisor, we ALWAYS put your interests ahead of ours. The only way we can be successful, is by helping you succeed!

how are you different from other fee-only advisors?

Most fee-only advisors tend to only rely on some flavor of a very limited “diversified model portfolio allocation” (60/40 or 50/50 stocks and bonds etc.), and passive periodic re-balancing approach to manage your investments, while charging an average of 1-2% of assets under management (AUM). In a lot of cases, the ongoing heavy-lifting of investment management is even outsourced to other sub-advisors, resulting in your advisor potentially being primarily focused on signing new clients and repeating the cycle, rather than generating ongoing value for you.

We specialize in growth, income, and protection strategies and strive to put cashflow and time on your side, to augment the longer term growth aspect, going way beyond the model portfolio allocation of yesteryear. We may also utilize situational protection strategies deployed during times of market distress to help protect your capital.

Finally, we walk our talk, which means we don’t advise you to do anything we’re not doing.

how are “fee-only” and “fee-based” advisors different?

Fee-only advisors are compensated only by the fees they directly charge to clients and not by commissions earned from a sale of a financial product. One of the major benefits of working with a fee-only advisor is that they have no inherent conflicts of interest and they generally provide more comprehensive advice.  Typically, fee-only advisors conduct their business under a “fiduciary duty,” which means by law, they must have their clients’ best interest at heart.

Fee-based or “fee and commission” advisors are generally compensated by both fees for advice and commissions on the sale of financial products that may be used to implement their advice. Many commission-based investment advisors (including full-service brokers) work for major firms. But these advisors are employed by their firms only nominally with a majority of their income derived from the clients they can bring in. They receive little or no base salary from the brokerage or financial services company, though the firm may provide research, facilities, and other forms of operational support. To receive this support from the investment firm, advisors must transfer a certain portion of their earnings to the firm, earned through commission-based sales.

The problem with this method of compensation is that it rewards advisors for engaging their client in active trading, even if this investing style isn’t suitable for that client. Furthermore, to increase their commissions, some brokers practice churning, the unethical practice of excessively buying and selling securities in a client’s account. Churning keeps a portfolio constantly in flux, with the primary purpose of lining the advisor’s pockets.

Most fee-based advisors hold licenses that allow them to sell investment products or insurance for a commission.  Fee-based advisors generally do not have a “duty to disclose” their method of compensation and this can confuse clients who may not understand their fee-based advisors are working for commissions.  This potential for confusion is why it is important to understand how your advisor is compensated.

There is an inherent “moral hazard” with commission-based advisors.  A moral hazard is a situation where a party has a tendency toward being more willing to take a risk, knowing that the potential costs or burdens of taking the risk will be borne, in whole or in part, by others. Basically, anytime someone is paid on a performance basis, there is going to be a natural motivation to sell products that pay out the highest commissions.

more questions?

Call or email us with your questions and see how we may be able to help?