Why should I choose you over another advisor? Are you better than other advisors?
You would chose me over another advisor based on my experience and competence in advising affluent individuals. If that is what you’re looking for, we might make a good fit. Obviously it would be important for you to like me and to feel comfortable working with me.

Whether or not I’m better than other advisors is not for me to say. I believe I am highly competent in my field and I truly care about my clients. If that’s what you’re looking for in an advisor, then you should consider my services.

What is the profile of a typical client?
The profile of a typical client is a financially-comfortable retiree or someone nearing retirement. His or her main objective is Moderate Income, Moderate Growth & Income or Long-Term Growth & Income. Some of my clients have a high understanding of the financial markets, and some of them have little interest or understanding of the markets. What they have in common, is that they would rather have someone else handle their investments for them. Most of my clients are interested in cash flow and income and some growth potential from their portfolios.

How would our relationship work if I hire you?
If you decide to hire me you would have to indicate at the outset exactly what kind of service you expect. I generally meet with clients at least on a quarterly basis and communicate with them on a consistent basis either through e-mail or on the phone. This will often depend on your financial situation and what type of portfolio management I am providing.

What is the minimum investment to work with you?
$500,000. I also have an investment program for accounts beginning at $250,000. These accounts may be managed using baskets of securities (exchange-traded funds). Larger accounts will typically be comprised of individual securities (dividend-paying stocks and corporate bonds) and they may also hold basket securities too. Note, in certain circumstances both of the above-mentioned minimums may be waived.

How are you compensated? How do you calculate your fee?
I am paid on a fee-only basis. I do not receive any commissions or “kickbacks” from third-parties. I offer objective, unbiased advice. My fee is calculated based on the assets under management at the end of each quarter. The fee typically will range from 0.50% to 1.5% annually.

Are there any fees, other than your management fees, if we work together?
Yes. In addition to my quarterly management fee you will also be responsible for paying any commissions or transaction fees to your custodian. And, you will also have to pay any custodial fees if applicable. Furthermore, if you purchase exchange-traded index funds or traditional mutual funds, you will have ongoing management fees payable to the fund management companies. These fees and any other fees are outlined in each fund’s prospectus.

What is the process for opening an account with your firm?
During our first meeting, you will fill out a Risk-Profile Questionnaire that will better help me determine your tolerance for risk and investment experience. After our meeting (or conference call) I will generally send you a review of your present portfolio with a summary of our meeting(s), along with an Investment Policy Statement for your review. In this review I will make recommendations as to any changes to your portfolio and how I think you should proceed. We generally meet for a third time to review the Investment Policy Statement and to address any questions or concerns you may have. If you decide to work with me I help arrange the account opening at the brokerage firm or financial institution of your choice. I typically recommend clients custody their assets with a major discount brokerage firm, but you have the choice to custody your assets wherever you wish.

At the time you open your account with your custodian, you will also sign a limited power of attorney with my firm that allows me to manage your assets either on a discretionary or non-discretionary basis, whichever is more appropriate for your situation.

Where are my assets held if I decide to work with you?
Your assets will be held at the brokerage firm or financial institution of your choice.

Who has access to my account? Do I have access at any given time? Can I effect transactions on my own?
I have access to your account for trading purposes only. You may also have access to your account by either contacting your custodian or via the online services provided by your custodian. If we have a non-discretionary agreement then I will have to get your approval before effecting transactions in your accounts. If we work together on a discretionary basis then I can make changes in your accounts without your prior approval, based on your investment objectives determined at the outset. Either way, we will set guidelines and asset allocation objectives at the beginning of our relationship.

Are you able to make withdrawals from my account without my permission?
No. I am only able to instruct the custodian to send you money from your account, when you instruct me to do so. Money may be sent payable only to you and only to the address of record on your account. If you want money sent to a third-party or to a different address payable to you, you will have to sign for this and give instructions directly to the custodian. This is for your protection. The only withdrawals I can make from your account are for my ongoing quarterly management fees, which are automatically deducted at the end of each calendar quarter.

Do you offer unbiased advice or do you have a financial incentive to offer certain investment products?
As a fee-only advisor I offer clients unbiased and objective advice. I have no financial incentive to push any financial products. I always act in the best interests of my clients.

How do you decide what my overall asset allocation should be?
Your overall asset allocation will depend on several factors: 1) What is your tolerance for risk? 2) What is your financial objective? And, 3) What is your investment time horizon? By far the most important questions concern your tolerance for risk and your time horizon. The asset allocation policy will be determined before effecting any transactions in your account. The Risk Profile Questionnaire and subsequent Investment Policy Statement, will dictate an appropriate allocation for you, although, depending on your financial situation and tolerance for risk, the allocation may change during our relationship. In addition, if your financial situation or risk tolerance changes, you should notify me immediately.

What type of investments do you recommend?
I typically offer clients the choice of either a structured, dividend-paying, index-based portfolio using ETFs (appropriate for smaller accounts), or a value-oriented, individual dividend-paying stock portfolio. The stock portfolio will typically generate income and also offer growth potential.

 

For fixed-income securities I generally recommend purchasing investment-grade corporate bonds. Treasuries or municipal bonds (short- to intermediate-term maturities) may also be appropriate. In addition, fixed-income exchange-traded funds may also be purchased.

 

Most investors would like some income from all their investments, so both the equity and fixed-income allocations will typically offer income.

How often do you make changes to my portfolio?
I’ll advise changing your portfolio’s allocation if your financial situation changes, or if the financial markets warrant making a change. I do not believe successful portfolio management is a static process. The economy and financial trends are constantly evolving and what was once a successful investment strategy or profitable investment may no longer be attractive. I think it’s important to recognize trends in the markets and to try to capitalize on them. I also try to focus on protecting capital and control risk whenever possible. Having said that, I do not like to make portfolio changes too often, and transaction fees and taxes must always be considered beforehand. For example, if I'm purchasing individual stocks for a client, I will do so with a 3 to 5 year time horizon. In other words, as long as the stocks I've recommended remain investment-grade companies with attractive and safe dividends, I will try to hold these companies until they become overvalued. On the other hand, there are many valid reasons for selling stocks or ETFs, for that matter. For example, if a company reduces or eliminates its dividend, or its P/E becomes too high to justify owning the stock, it may warrant a sale. Furthermore, if a stock's price rises to such an extent that the yield is too low to attract investors, this may also justify a sale.

 

On the fixed-income side, individual bonds are usually purchased with the idea of holding them to maturity, although in certain circumstances they may be sold prior to maturity (e.g. tender offer, tax-loss selling, downgrade below investment grade).

 

Changes in a portfolio, which may be somewhat frequent, depending on the volatility and valuations of the market, are always made with the client's best interest in mind.
 

Will you manage my fixed-income portfolio for me if I’m not interested in owning stocks?
Yes. Fixed-income portfolio management is a less active process than common stock management. There will be times when you have principal returned to you and this money must be reinvested in other bonds. And, we will also occasionally perform bond swaps for tax purposes. Bond ladders are typically constructed for clients seeking Moderate Income and as bonds mature the proceeds are either reinvested out to later maturities or used for income needs.

How often do we talk and how often do we meet? Where do we meet?
This will depend on you. I offer to meet clients on a regular basis. I often also communicate either by phone or via e-mail with many clients too. I will also offer to meet clients at their residences or offices for their convenience. My client meetings are generally after the close of the markets (1:00 p.m. PST).

Do you help me with tax reporting or estate planning issues?
Yes. As I mentioned earlier, I provide you with detailed tax reporting information that should be reviewed along with the 1099 from your custodian. I also have close contact with many CPAs and estate planning attorneys for your tax and estate planning needs.

What sort of portfolio reporting do you provide clients?
I provide clients with detailed portfolio statements on a quarterly basis. My statements should be reviewed along with the monthly statements provided by your custodian.

Can I have a list of references?
Yes.

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PreservingWealth.com