Tim Hayes AIF®, CRPS®, AWMA®, CFS®, APMA®
Step 1: Review Your Current Investments
I use fi360’s Proposal Report™ to compare your current holding to a portfolio developed from your risk tolerance. The review can Include all of your accounts: 401(k), IRA, 403(b), annuities, brokerage accounts, mutual funds, stocks, bonds.
- Executive Summary — Overview of the proposal, our firm, and the services we offer
- Holdings Summary — present the allocation of your proposed and current investments
- Style Analysis — by U.S. equity, international equity, and fixed income
- Portfolio Performance Analysis — compare the performance of your current and
- Fee Analysis— current vs. proposed
- Risk Tolerance Report
- Closing comments and items for your consideration
Whether you’re looking to change jobs, shifting gears into retirement, or already participating in a investment plan at work (401(k), 403(b), etc.), you owe it to yourself and your family to make sure you’re doing the right things at the right time.
Step 2: Risk Tolerance
For others, the opposite is true. You might need to take more risks to reach your financial goals. As you financial advisor, I need to alert you and give you options: take more risks, save more money, diversify your investments more, etc. Obviously, each client’s individual risk profile must be respected.
Step 3: Mutual Funds and Exchange Traded Funds (ETFs) Due Diligence
I screen 10,000+ funds down to a couple hundred eligible for use in your portfolio. The process screens for manager tenure, fees, performance, and style.
I cross-reference my results with fi360’s Fiduciary Score. That score is an easy-to-use use and easy-to-understand method for objectively comparing peer investments and determining their overall appropriateness.
It is a ready-made solution for due diligence that can help advisors show a careful investment choice and monitoring process.
Step 4: Account Size
$100,000 or Bigger
The client needs a minimum of $100,000. It can include just about any account: IRAs, 403bs, joint accounts, personal brokerage accounts, etc.
- The fee charged depends on the size of your account and the complexity of your wealth management but it is never greater than 1%.
- The accounts are primarily invested in mutual funds and exchange-traded-funds (ETFs). All the funds have passed my rigorous due diligence process.
- I design the portfolio to meet your goals consistent with how much risk you are comfortable taking.
- After the account is set up you receive monthly statements and you can follow your account online with CirStatements.
- We periodically meet to check the portfolio and to discuss performance and re-balancing and to check if you are on track to meet your goals.
If you don’t have $100,000 to invest
Because my fee-based accounts need a minimum of $100,000 if you have less than this to invest I usually charge a commission or an hourly rate.
- However, I use the same due diligence process for building your portfolio. I use mutual funds and exchange traded funds (ETFs) that have passed my due diligence process screening for low fees, historically competitive performance, low fund turnover, and long manager tenure.
- I work with all types of account registrations: IRAs, Roth IRAs, 403(b)s, SEPs, SIMPLES, 529 Plans, etc. After the portfolio is set up, you receive monthly or quarterly statements, and you can follow your account online at CirStatements.
- The custodian for the accounts will be either Pershing, a Bank of New York Mellon company or directly with the fund family.
- Periodically we meet to check if the portfolio is on track to meet your goals and to check performance and discuss rebalancing.
Step 5: Level of Care
Many financial advisors are dual-registered—that is, they are a registered representative of a broker-dealer and an investment adviser representative of an investment advisor.
Each registration has their own requirements of the level of care. An investment advisor is a fiduciary. That means they owe the client a higher oath of loyalty. They must act in their best interest and disclose any conflicts of interest.
The Level of Care You Receive
Most of my business (90%) is as an investment adviser representative where I charge the client a level or flat fee usually based on the size of their portfolio.
Occasionally, I do receive commissions through my work as a registered representative. If the client has a smaller account such as a Roth IRA, 529 Plan, or a teacher saving in a 403(b) plan at work. Most of these clients end up paying less with a commission product. And maybe they do not need the same level of time as clients that are being charged an annual fee.
Registered Representatives are not fiduciaries. But they do have a standard of care required called suitability. The advice they offer must be suitable for a client based on the customer’s particular situation. However, they do not have to show their or their employer or broker-dealers conflicts of interest.
A Uniform Standard of Care
Under the 2010 Dodd-Frank Act, Congress directed the Securities and Exchange Commission (SEC) to study the need for establishing a new, uniform, a federal fiduciary standard of care for brokers and investment advisers.
The SEC recommended after the study that registered representatives adopt the same standard of care as investment advisors.
Having a uniform standard would make it easier for investors. As many are unaware that there are two standards and that the same financial advisor could be wearing both hats.
If that is not confusing enough, there is already a third standard.
This is a fiduciary adviser that fall under ERISA. They have the highest standards. Unlike investment advisors who can have conflicts as long as they get disclosed. A fiduciary adviser must cut all conflicts.
If you're concerned about your financial future, lets talk
Past performance is no guarantee of future results. All investing involves risk. Depending on the types of investments, there may be varying degrees of risk. Investors should be prepared to bear loss, including total loss of principal. Diversification and asset allocation strategies do not assure profit or protect against loss.