Many clients who hire financial advisors are subjected to the same drill:  Answer a questionnaire, sign an agreement and hope for the best.  During this process the client may be asked inane questions like “If your account went down 10% in line with the markets, would you hold, sell or buy more?”  Some folks just rely on the advisor to help them choose responses.  The output goes onto an agreement to sign and then advisory fees are shared between the advisor and a third-party asset manager.  The reasons that this is so common can be unsettling.

With (highly appropriate) increased scrutiny on the industry, advisors are being held to a higher standard of acting in the client’s best interest.  One way to insulate the risks associated with this responsibility is to “hire out” the asset manager.  Why is this a bad thing, you may ask?  It’s not necessarily bad on its own but that asset manager does not know your personal situation.  They are beholden to keeping a static allocation, regardless of market cycles or gyrations because they’re in a symbiotic partnership with your advisor. 

When the market is going down and you’re freaking out, your investments are unlikely to have changed and you’re likely to hear the age-old phrase “Ride this out, we agreed it was the right portfolio for you.  It will come back”.  At Integras Partners, we subscribe to a totally different philosophy.  We employ a strategy of layered investments which keeps investment risks appropriate for the timeframes of your goals.

Another reason many firms use the “model solution” is that advisors are often beholden to a compensation structure that incentives acquiring new accounts.  By having your signed allocation agreement filed away, they may not reach out to you until it’s time to verify the questionnaire.

Younger clients, with steady jobs and significant income are more immune to the vagaries of market performance.  For retirees, the paradigm of “wait it out” can become dangerous.  Think of folks who in 2008 were drawing every month proportionately across a portfolio that was going down.  After several months, they were faced with the dilemma of cutting expenses or taking out a higher percentage of their portfolio.  Check out our previous blog on Why Systematic Distributions are Destined to Fail.

We manage almost all of our clients’ money internally, which keeps it personal, allows us to be more responsive and individualize our services.  Without sharing fees, we are very competitive and deliver great values in addition to active portfolio management.  For example, we help with retirement and education planning; employer retirement plans, stock options and benefit elections; and insurance reviews.  We also facilitate conversations between elders and their adult children to articulate plans for housing, care, finances, legal documents and personal and financial security.

As a private wealth management firm, we help clients in every stage of life. If you would like to discuss how we might be of service to you and your loved ones contact us at integras@integraspartners.com.