Our comprehensive investing program is designed to implement the investment plan of the Monitored Investing package in the best client-facing way possible. What does that mean? It means we look at the best way to invest through the eyes of the client and not the quickest way to profit.
All firms that do investment management have strengths and weaknesses based on their business model. We have taken the best practices of our industry and made them a core mission for our investment management services.
Areas of Investment Management:
1. Selection Of Actual Investments
Picking what stocks, bonds, mutual funds, or exchange traded funds (ETFs) to use in client portfolios is crucial. Depending on a firms philosophy, two methods are used in the selection process, top-down or bottom-up.
The top-down approach looks at all investment options and seeks out opportunities based on the philosophy of the firm.
The bottom-up approach begins with rejecting opportunities based on set criteria and then overlays the firms philosophy.
Problems with each method:
Top-down leaves no stone unturned, but if the philosophy of the firms is either out-of-favor in the market or wrong, the investments will return poorly.
Bottom-up focuses on fundamentals, which are quantifiable, but ignores the client’s needs. In bottom-up, everyone would have the same portfolio, regardless of suitability.
We’ve developed a hybrid of these which starts with suitability. It is called Open Archectecture. Instead of the firm’s philosophy, we develop a client philosophy. We use a top-down approach for investment options, put those on a watch list, and then overlay the client’s philosophy (created in the Monitored Investing program) which act as the guidelines for selection from the watchlist.
2. Quarterly Reports Are The Way To Track How Your Investments Are Doing
We give more than a beginning and ending balance. We show a full breadth of information to see and compare your investments to various benchmarks. You will always know where you stand with these reports because they are comprehensive and easy to read.
3. Tax Loss Harvesting — The Friend To Taxable Accounts
This is a sophisticated strategy to minimize taxes due based on the gains in the portfolio. We continually look at the portfolios to see where we can eliminated taxable gains with losses. By doing this, you keep the increased value of the investments, and by selling off others and reinvesting them in similar vehicles, you avoid paying unnecessary taxes.
4. Conflict Of Interest Free
Perhaps the hallmark of our firm, implementing an investment plan must be without conflicts-of-interest. We are independent — fiercely! It is not uncommon to see a brokerage firm (and it is actually institutionalized) place investments into client portfolios because they have underwritten the investment. That is, they dump inventory on to their clients because “it’s a great investment opportunity.” Makes us wonder, if it is so good, why wouldn’t they just hold on to it?
5. No Transaction Fees Has Always Been The Norm At Fiscal Dynamics
Since we are an RIA (Registered Investment Advisory firm), we use a custodian to implement trades and track portfolio balances. This protects investors from Ponzi schemes and other nefarious actions. In some circumstances, the custodians may charge a transaction fee (it is one way they make money) but they are not able to execute a transaction unless the client or Fiscal Dynamics instructs them to.
Simply: We do not charge fees for transactions.
6. No Hidden Fees: Frontend and Backend Loads, etc.
Some investment professionals will get a 12b1 fee, the fee (or commission) if paid to the advisor by the mutual fund company. We don’t think that’s right. We get paid by you to work on your behalf. No one else.
These is also a very common commission practice called loads. These are also commissions paid to the advisor from the mutual fund. They come in two types.
1. Front End Load: Paid upon initial purchase of investment.
2. Back End Load: Paid of the investor leaves or sells the investment.
No one can serve two masters. We have chosen to serve the client, not a mutual fund.
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