Important Questions and Answers


How Can You Do It For So Much Less?

It’s not so much a question of how we can do it for so much less. It’s more a question of how others have the nerve to do it for so much more.

Let’s provide context to what “less” means with a given $3 Million client. At another Registered Investment Adviser, call it “Wisher Investments,” the client would pay 1.25% on her first $1 Million, and then “only” 1.125% on her next $2 Million. Total advisory fee would therefore be $12,500 + $22,500 = $35,000 for the year.

For that, she would get a diversified portfolio of stocks, which effectively amounts to an actively-managed stock mutual fund.

For that fee, the Registered Investment Adviser, given its economies of scale, but not doing any tax planning, Social Security planning, or anything else besides investment management, likely exerts 5 or so hours on the client’s behalf each year. So, call it a $7,000 per hour wage, to manage a strategy that has roughly a 97% chance of underperforming a much lower-cost passive investment strategy (if reams and reams of historical data on the relative inadequacies of active management are any indicator).

Another way to consider it is, given those fees, over a 30-year relationship with “Wisher Investments,” the client would have put up 100% of the money, taken 100% of the risk, and realized approximately 50% of the profits.

So, again, we feel the question isn’t so much how can we do our job for so much less, but rather, how other companies justify charging what they charge and taking what they take. We know the reason they do: because they can, because their customers don’t ask about it, and because their customers don’t know that there are better, far less-costly choices.

As stated on our 5 Ws & H page, we’re here for clients who do know enough to question it and want better, far less-costly choices.

Given our tax focus and extra planning, we target 10 to 20 hours per year for each of our client relationships. To be sure, some years require more hours, and some fewer. But at that time requirement, our $5,000 annual wage falls somewhere in the $250 per hour to $500 per hour range, the very same range a person would expect to pay competent tax and legal counsel. We fully admit that it’s a good wage, and by any reasonable consideration, it’s “enough.” And for it, we provide true best-interest advice and work.

Is It Hard To Become a Client? Do I Have To Talk To My Current Advisor If I Move To You? And Where Does My Money Go?

No, it is not hard to become a client once we determine that we are the right fit for each other. It is quite easy, actually.

And no, you do not need to talk to your current advisor if you choose to work with us (but you certainly may if you feel it’s best to).

If you do choose to work with us, we will help you with the simple paperwork to move your accounts from where they are currently to TD Ameritrade, our financial custodian. This can easily be done using internet technology, or the “old fashioned” way using snail mail or in-person meetings.

Some people are suprised to learn that their money doesn’t come to us, per se. We never touch a penny of our clients’ money. TD Ameritrade holds every penny of it. It gets to TD Ameritrade via electronic transfer, or, in some rare cases, via certified check made by your current financial custodian.(Unless you keep it “under the mattress,” you have your money in the care of some financial custodian, even if it’s all in the bank.)

While we direct client money under the control of the very low-cost stock, bond, and cash managers who manage it, it stays at TD Ameritrade, and only you have access to it. (Technically, we have limited access to it, only enough to debit it for our quarterly advisory fees, which are closely monitored by TD Ameritrade.)

What Can I Expect When I’m a Client? How Often Will I Hear From You?

You will hear from us as often as you ask, but no less often than once a quarter, when we email fee invoices for your records.

Concerning when markets get scary, one point we emphasize from the start is that there are two keys to dealing with the volatility of markets: prudence and faith. That’s to say, we custom-design every client’s plan and account for the very worst conditions the world has ever brought, and then some, so that we can conclude with confidence that the plan will “work.” That’s the prudence part.

The faith part is sticking with the plan, even when that is difficult. That may become difficult when markets get “hot” and you’re sure you could earn more if only you had more invested in…whatever’s “hot.” More typically, it will become difficult when markets have dropped significantly and you become certain it is time to sell out. Our job in each of those kinds of market conditions is to tell you, “No.” Fear and greed are your biggest enemies, and we make sure you won’t give in to them.

The reason is because history, through reems and reems of data, proves that investors do far more damage to themselves with a “Don’t just stand there! Do something!” attitude than with the simple faith of “staying the course.” That job of insisting you stay the course is perhaps our most important and valuable one.

All that is to say that we are always here for our clients, always very quickly responsive (never more than a few hours’ delay in responding), always updating quarterly, but also always wary of your emotions and aware of the imperative that we keep you on course.