Frequently Asked Questions

Why is it important to be an independent advisor?

An independent advisor, acting as a fiduciary, is entrusted with the management of the client's investments. Unlike brokerage and insurance companies, as independent financial advisors we do NOT accept sales commissions, soft dollars, or use propriety investment products. Therefore, we work only for you, and you receive unbiased, objective advice.

What is your fee structure?

Asset management fees are negotiable but start at .75% annually on the value of the accounts under management.

What type of accounts do you manage?

We specialize in management accounts for individuals, families, and foundations. Account registrations include individual, joint, and corporate brokerage accounts, trusts, charitable gift funds, and retirement accounts, such as Traditional or Rollover IRAs, Roth IRAs, and SEP IRAs.

Can you also help with my 401k or 403b plan? How about my child’s College Savings Plan?

Yes. While the firm cannot directly manage those accounts, we can provide advice on how to invest within the plans.

When constructing and managing portfolios, we focus on asset classes, not individual stocks or bonds.

What is an asset class?

An asset class is a group of investments with similar characteristics that generally react similarly to economic and political events.  Stocks and bonds are the most commonly identified asset classes.   However, both categories can be further divided into smaller groups.  For example, stocks can be subdivided into large company and small company stocks; bonds can be subdivided into government, corporate, municipal, and mortgage bonds.

How do you use asset classes?

We buy mutual funds that invest in various asset classes, creating a highly diversified portfolio with an eye to maximizing your profit while minimizing your risk.

What is risk?

Standard Deviation is the statistical measure most investment professionals use to evaluate risk.  Basically, it measures the variability of your account value, or the bumpiness of your investing road.  Some assets, like stocks, are risky because their value can change dramatically in a short period of time.  We try to combine risky and conservative assets into a mix that balances a client’s need, desire and ability to accept risk.

Why Diversify?

Diversification can significantly lower portfolio risk, sometimes with little or no sacrifice in performance. Risk is reduced because asset classes react differently to various economic and political changes.

Diversification does not work at every point in time, but is very effective over time.¹ In most economic environments, holding a diversified mix of investments "smoothes out" performance.

Asset classes, not individual securities, are considered when building portfolios. Mutual funds are used to diversify within the asset classes.

What is a Mutual Fund?

A Mutual Fund is a corporation formed specifically for the purpose of buying investments. These investment companies must register with the SEC (Securities and Exchange Commission) and are subject to extensive regulation.

Each fund buys a group of investments for their portfolio. The variety of mutual funds is as endless as the ways you can combine the existing stocks and bonds of the world.

Investors in mutual funds buy shares of the company and thus buy into a portion of the investments that the company owns. The value of an investor's shares is tied directly to the underlying investments. The share price is called the NAV (Net Asset Value). Unlike stocks that change price continuously throughout the day, the NAV is calculated at the end of the trading day.

Why invest in mutual funds rather than individual securities?

Mutual funds provide low cost diversification and access to otherwise unreachable asset classes.

By definition, a mutual fund holds many securities, providing instant diversification. Owning a single stock or only a few individual stocks or bonds is very risky. As we have seen in the recent past, corporate bankruptcies can happen fast — Enron, WorldCom, Global Crossing, United Airlines, Lehman Brothers — wiping out an investor's hard-earned money. Holding broadly diversified mutual funds insulates you from the economic bad times of one company, country, region or asset class.

Mutual funds can use their size and buying power to purchase securities at lower transaction fees than individual investors. A cost savings is passed along to the individual investor since a mutual fund allows a person to buy many stocks for just one transaction fee. If the securities were to be purchased separately, the individual investor would be charged a fee for every purchase or sale of a stock, bond, or mutual fund, rapidly eroding the portfolio’s value.

Why use Index Funds?

The hard facts support the benefits of the index fund strategy: Performance, low costs, and tax-efficiency generally surpass actively managed mutual funds. Please read the Advantages of Index Funds section of our website or call us for complete information.

We focus on asset class returns, risk reduction, and diversification to create individualized Strategic Asset Allocation.

What is Asset Allocation?

Asset Allocation is a method of portfolio management that spreads investments across multiple assets classes. Like traditional portfolio management, the goal is to diversify, placing your eggs in a variety of baskets. Unlike traditional portfolio management, our process focuses on portfolio structure and NOT on stock picking or market timing.

Rather than try to “time the market,” we use strategic asset allocation. Our method helps you define your portfolio in terms of asset classes. A percentage of the total portfolio is devoted to each appropriate asset class.

Strategic asset allocation helps you stick to your original plan through thick and thin. The allocation should change only if the investor's circumstances change or a new asset class becomes available and attractive. Such a strategy takes emotion out of the equation.

¹ Past performance is no guarantee of future results.