Are you completely happy with your portfolio and investment professional? Or are you stuck in the 20th century model where they make, you buy, whether it fits or not? Despite all the positive changes happening in the investment industry, many providers have been slow to give investors the options, transparency and value they deserve. To all those investors, we have one message: RAISE YOUR EXPECTATIONS.
What it means to expect more
Reduce my costs. Expense ratios – the overhead investors pay on actively managed funds — average more than 100 basis points (1 percent). By contrast, the average diversified Osbon Capital portfolio has an expense ratio of 17 basis points (.17 percent). Our advice is: get more and pay less.
Reduce my costs more. The Osbon Capital investment advisory fee declines with individual asset size. Makes sense, since it doesn’t cost twice as much to manage $10 million than $5 million. A sure way to boost your returns is to cut costs, our own included. Fair is fair.
Produce more money, not more taxes. Another surefire way to boost your returns is to pay less in taxes. There are many ways to do this. Your advisor should take advantage of as many as possible. All it takes is attention to detail, discipline and planning. In general you should expect, through tax efficiency and tax loss harvesting, to keep more than 90 percent of your pre-tax gain.
Put my money in the right places. Accounts are different: use them. Sort investments by tax treatment into personal, IRA and Roth accounts. Tax generating investments with interest and dividends go into tax-deferred accounts. Assets held for appreciation go into personal accounts to be held “forever” and tax-efficiently rebalanced. Vanguard estimates that getting this asset location right adds up to an additional 75 basis points to your bottom line each year.
Give me what I need, not what you sell. If you are being pitched to own the investment firm’s proprietary products, that’s a sure sign you’re in a high cost, quota-driven sales shop, with lots of mouths dining at your table. I know, I use to run one. Raise your expectations and go bespoke. Work with a fee-only independent advisor who earns no commissions, rebates, kickbacks – nothing. That’s your money. Require investment strategies that are custom tailored to you
Show me the numbers. This one is so easy! Require performance reporting on all your assets regardless of location or manager. All the data is out there and you should have it. Don’t let your advisor tell you otherwise. Call us if you want to see how it is done.
Treat my portfolio as a whole. Clients often show us portfolios that have been treated as a bunch of separate “buckets,” all managed independently. Buckets may work for slop, but for your hard-earned money, you should expect one unified portfolio managed to your big picture goals. Require that all your investments are designed to work together. No stray actors.
Do your portfolio, investment products, manager and investment information measure up to these higher expectations? Not sure? Let us know. We’d be happy to discuss these 7 essential criteria with you.
– John Osbon
This communication may include forward-looking statements. All statements other than statements of historical fact are forward-looking statements (including words such as “believe,” “estimate,” “anticipate,” “may,” “will,” “should,” and “expect”). Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to be correct. Various factors could cause actual results or performance to differ materially from those discussed in such forward-looking statements.”
“Historical performance is not indicative of future results. The investment return will fluctuate with market conditions.
Past performance is not indicative of any specific investment or future results. Views regarding the economy, securities markets or other specialized areas, like all predictors of future events, cannot be guaranteed to be accurate and may result in economic loss to the investor.
Investment strategies, philosophies, allocations and holdings are subject to change without prior notice.
This communication is intended to provide general information only and should not be construed as an offer of specifically tailored individualized advice.
While the Adviser believes the outside data sources cited to be credible, it has not independently verified the correctness of any of their inputs or calculations and, therefore, does not warranty the accuracy of any third-party sources or information.
Adviser does not endorse the statements, services or performance of any third-party vendor.
Unless stated otherwise, any mention of specific securities or investments is for hypothetical and illustrative purposes only. Adviser’s clients may or may not hold the securities discussed in their portfolios. Adviser makes no representations that any of the securities discussed have been or will be profitable.
Any IPO alerts are purely informational and should not be construed as recommendations to invest.
Adviser is not licensed to provide and does not provide legal, tax or accounting advice to clients. Advice of qualified counsel or accountant should be sought to address any specific situation requiring assistance from such licensed individuals.
Any case studies or hypothetical client profiles are for demonstration purposes only. They illustrate the breadth and depth of the many clients we represent at various life stages. Any similarities to actual Adviser’s clients past or present are strictly coincidental. Individual advice and results will vary based on each client’s circumstances, objectives and prevailing economic conditions.