Frequently Asked Questions
Here are some questions which we are often asked. We hope the answers here are helpful. If you would like to speak with us directly, please give us a call.
What is a Registered Investment Advisor?
A Registered Investment Advisor (RIA) is regulated by the Investment Advisor Act of 1940. RIA's are held to a "fiduciary" standard which is the highest standard of care in the industry. A broker is held to a "suitability" standard which is a much lower standard.
What's the difference between a Registered Investment Advisor and a broker?
A Registered Investment Advisor is subject to a much higher legal requirement than is a broker. RIA's are held to a fiduciary standard of care which is the highest standard of care in the industry. A broker is held to a suitability standard which is a much lower standard.
What is a financial plan?
A financial plan is an analysis of your current situation complete with strategic recommendations.
Why do I need a financial plan?
A financial plan can uncover any "gaps" that may exist in your present situation. It will also provide necessary information to facilitate prudent decision making. For example, it can determine the required rate of return necessary to meet your future goals. If your RRR was 8.0% but your current portfolio was expected to earn only 6.5%, you would likely fall short of your goals. Uncovering this "gap" would allow you to adjust your portfolio and increase the probability of reaching your goals.
In general, how are you compensated?
We are compensated by fees and not through commissions. We believe commissions influence an adviser's behavior and create a conflict of interest between their needs and yours. The only exception to this is when we place a life insurance policy. In this case, we may receive commissions. The "no load" life insurance industry is still very young and is often not as competitive as traditional life products.
What products do you offer?
Most advisors, whether they are with a large firm or independent can offer the same array of products. Through our custodian, we have at our disposal a large array of mutual funds, exchange traded funds, stocks, bonds, CD's, annuities, and money markets. We also have access to several alternative investments such as hedge funds, private equity, and more. We can also offer life insurance through a large number of different companies.
What services do you offer?
Our core services include comprehensive financial planning and portfolio management. In addition, some of our other services include a 3rd quarter income tax projection, a quarterly portfolio review, an annual financial plan update, plus a type of concierge service.
What is Monte Carlo simulation?
About Monte Carlo Simulation In the late 1940's, scientists at Los Alamos National Laboratory programmed their early computers to create random combinations of known variables to simulate the range of possible nuclear-explosion results. They nicknamed the program Monte Carlo after that city's famous roulette wheels, and used it to find patterns that would let them plot the probability of different outcomes.
What is a "Strategic Allocation Policy?"
Under this type of approach we establish a general allocation percentage between stocks, bonds, cash, and alternative type investments. We then seek to maintain a reasonably consistent relationship between each of these broad categories.
What is a Strategic Allocation Policy with Tactical moves mean?
After creating the strategic policy we will seek to exploit current market conditions as the situation warrants. For example, if interest rates were low, we may re-adjust the bond portion of the portfolio by increasing the percentage allocated to bonds which tend to outperform when interest rates rise.