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Role of a Registered Investment Advisor
Q. What is the difference between a fee-only Registered Investment Advisor and a stockbroker?
A. A stockbroker’s primary function is to make money for his company, not necessarily for his client. They find merchandise, give quotes and execute orders. Since most stock brokers make their money on a commission basis on purchases or sales, they can be pressured to meet quotas, follow a particular company policy, or even be tempted to boost their income by selling you something that may not be the best or most appropriate thing for you. The potential for a conflict of interest is built in. A fee-only investment advisor, on the other hand, does not make money on the purchase or sale of any security. Our fee is based simply on a fixed percentage of the market value of the assets under our management. We receive no other form of remuneration.
Crow Financial Advisors is a Registered Investment Advisor. All employees who manage investments meet all applicable regulations and hold all related licenses as required by federal and state law. As Registered Investment Advisors, we have a fiduciary duty to our client, meaning your best interests come first. Period.
Q. What does an investment advisor do, exactly?
A. Our primary responsibility is to manage those assets placed under our guidance. This includes developing overall philosophies and policies, making specific investment decisions, properly balancing and structuring investment portfolios in marketable securities to meet your economic and personal requirements, and to conduct continuous, personalized supervision of your investment program. We have “discretionary” authority, or the authority to make day-to-day transaction decisions on your behalf.
Q. Is a Crow Financial Advisor a financial planner?
A. No. As investment managers, we do not create financial plans or carry the CFP® (Certified Financial Planner) designation. Jenny Migdal, with Forthright Financial Planning LLC is located in our office if you need a more in-depth analysis of your overall financial picture.
Why use a Registered Investment Advisor
Q. What is the advantage of having my money managed this way?
A. Professional expertise and objectivity. Even the most dedicated investor rarely has the time or resources to keep up with today’s market on his/her own. Crow Financial Advisors are full-time professionals whose years of experience are supplemented by daily monitoring of economic conditions. As our modern economies become more complex, this kind of full-time management becomes more vital than ever. In addition, having professional management not only affords the investor an extra measure of peace of mind, but allows him/her more time to attend to other interests, whether business or leisure.
Q. Who uses this type of service?
A. Our clients are as varied as people themselves. They have included a diverse mix of employment fields and backgrounds from ranchers to professors, as well as colleges, small businesses, corporations, foundations, pension and profit-sharing plans, trusts, and more. Virtually any investor, whether individual or institutional, can benefit from our service.
Fees
Q. How is an investment advisor remunerated?
A. Crow Financial Advisors offers only 100% fee-based investment management. Portfolio managers are paid a base salary, and share in an annual bonus pool. Your advisor participates in your portfolio’s gains or losses directly because fees increase as your account grows. 100% of Crow Financial Advisors’ revenues come from client fees. We do not share in trade commissions or mutual fund fees.
Q. But my broker now offers a “fee-based” investment program…what’s the difference?
A. Perhaps nothing, but you should carefully read the fine print in your management agreement. In most cases, your account is still a brokerage account, and your broker has taken on no additional responsibility to act in your best interest. Chances are the brokerage has determined their revenues from your account would be higher under a fixed-fee arrangement than commissions. Ask your broker if he or she is acting as a registered investment advisor held to a “fiduciary” standard.
Bank Trust Accounts
Q. If I have a trust account at a bank, can Crow Financial Advisors manage the investments?
A. Yes, if you are a participating trustee. You can also recommend to your executors or trustees that they retain Crow Financial Advisors to manage the assets of any trust account you set up. If you are not happy with your current trustee or custodian, talk to us. We may be able to recommend an alternative.
Q. Why is an investment advisor better than a bank trust department?
A. Aside from the bank’s custodial fees, which are usually high, bank trust departments manage investments via committee, which tend to be slow and unwieldy, inhibit fresh ideas and initiative, and are not accommodating to the particular interests of any individual investor. Worse yet, your investments may be completely outsourced to an outside investment company. In either case, your funds are usually pooled with those of many other investors whose goals may not be the same as yours. In addition, banks are required by law to invest “prudently”?a vague term, which in practice means conventional wisdom is followed and therefore, the market averages are rarely exceeded.
Crow Financial Advisors manage each client’s account as a separate entity. There is collaboration between managers, but there are no committees and absolutely no pooling of funds. Your portfolio will contain carefully selected securities tailored to your goals. This allows decisions to be made based on what is best for you. The investment manager has the flexibility to make the best moves at the best time.
Decision-making and Control
Q. Will I still retain control over my investments (stocks, bonds, money funds)?
A. Yes. As your manager, we have discretionary authority to make decisions, but we never actually have your investments in our possession, nor do we have direct access to them. Your investments remain in a custodial account with your bank or brokerage firm. Crow Financial Advisors provide a management service, i.e., we make purchases and sales at the times we deem appropriate. We are your investment manager, but your money remains your money and is always under your ultimate control.
Q. How does Crow Financial Advisors maintain continuity of decision-making in an account?
A. Primary responsibility for an account remains with your own particular investment manager. There is always the possibility that more than one manager is working or consulting on behalf of your account in their specific area of expertise, but your investment manager will be the one with the ultimate decision authority.
Advice and Counsel
Q. Do you advise on other investments besides stocks, such as real estate, art, antiques, etc.?
A. Yes, with the help of professional specialists in those fields. We are more than happy to assist you in many different ways to help you attain a healthy, well-rounded financial program.
Q. Do you give counsel on tax shelters, options, commodities, selling short, etc.?
A. Yes. While we may not recommend them, we will review all of your needs and current holdings and advise you accordingly.
Q. What if I want to set up a trust, have my insurance reviewed or even start an employee benefit plan for my business?
A. We work with professionals in these areas and see to it that your expectations are exceeded. Since we have nothing to sell you, you can rest assured our recommendations are made with only your best interest in mind.
Reporting
Q. How will I be informed about what is happening with my account?
A. We notify you, by mail, of each transaction and sometimes discuss transactions with you by telephone as well. Quarterly evaluations will enable you to easily determine the progress of your investments. You will also receive statement(s) from your bank or broker. We take care of adjusting records for splits, tender offers, rights offerings, stock dividends, etc. Records regarding dividend interest and capital gains or losses are kept and can be provided to you or your accountant each year. You will gain a sense of security knowing all your investments are being monitored regularly. We are always available and accessible to our clients.
Relationship with Stockbroker
Q. If I should decide to go with Crow Financial Advisors as manager, how will my present stockbroker be affected?
A. We may be able to recommend a lower-cost custodial arrangement, but should you decide to remain with your present broker, we would be your investment manager with discretionary authority over your account, which simply means we would be making the daily decisions with no requirement for your prior approval of a transaction. Your broker, acting on our instructions, would still be making the actual transactions, i.e., the actual buying/selling, handling of dividends, and keeping you and Crow Financial Advisors apprised of any important developments. We will work with your broker in a spirit of cooperation to ensure the best executions, ideas and discounts are available to you.
Minimum Balances
Q. Is there a minimum amount of money required to open an account?
A. No. At Crow Financial Advisors we believe everyone needs quality investment management and advice, not just the wealthy. There is no minimum amount required and we currently manage a wide range of account sizes, from hundreds of dollars to multi-millions. We make sure all prospective clients understand the risks involved in investing in stocks. We have diversified investment portfolio solutions for any account size. We feel so strongly about this that we will help you get started at no cost. Talk to us and find out how.
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