Back in the 1900’s retail stockbrokers were called “ customer’s Men. “ The logic was that they served the customer’s needs first before the firm’s needs. I am not arguing that they did not make mistakes but the ethic was that they served the customer. If a firm desired to develop a new service they asked the customer’s man first.
Today the customer’s man is called a registered representative, a financial advisor or a vice president. Today’s stockbroker is primarily a salesman not a money manager. A retail salesman today generally sells the firm’s mutual funds perhaps on a wrap fee basis, asset allocates using ETF’s and buys firm recommended stocks. He also sells packaged products like annuities . The firm trains their salesmen to asset allocate, rebalance and generally hold assets longer term.
New DOL regulations are likely to put more restrictions on what is recommended, perhaps lower costs and generally will result in a lot more paperwork and fewer innovative solutions.
We can see the direction financial services is moving by looking at retirement plans like 401k and 403b plans. They have fewer choices made up of larger funds that correlate too closely with each other. Costs are being reduced and the main logic of investment is buy and hold, asset allocation and perhaps rebalancing. There is no customer’s man to aid the participant to reduce risk in difficult times or to add risk at low risk times. In fact the sponsoring funds often deny the participant this opportunity by limiting his ability to make changes over a short period of time.
Dalbar,s Investment Survey’s Results
30 year composite results 2.47%
30 year Equity Funds 3.79%
30 Year Asset Allocation Funds 1.78%
Considering that inflation has averaged 2.70%
These results are not attractive.
Unfortunately this investment logic is pervasive in investment offerings today.
Asset allocation, buy and hold index investing and reallocation are techniques that seek average results especially for the average investor.
Today the newest offerings to investors include reducing fund costs, using low cost ETF’s and now using asset allocation devices called robo investing.
Why? Primarily because these services do not require the cost of active investment managers and because it is difficult to manage large amounts of money for small investors in an active fashion.
Mutual funds today look very much alike because they hold so many stocks. The largest ones cannot move assets quickly for a number of reasons. They invest to compete with their peer group in performance as opposed to seeking the highest nominal return. They generally keep minimal cash balances.
Compare Results With A Smaller Active Manager Seeking Excellence
- A focused portfolio of a maximum of 20 stocks generally paying dividends.
- Concentrating on leading stocks in the top performing industry sectors.
- Concentrating on securities with high earnings growth.
- International as well as domestic issues.
- Only purchasing securities that the metrics allow for the expectation of a 30% rise in price.
- Risk control designed to sell any issue that declines by 15%.
Compare the Results:
We call this portfolio The Disciplined Earnings Growth Portfolio.
It has audited results since 2007.
This is an individually managed account not a mutual fund.
The Disciplined Earnings Growth Portfolio
This portfolio strategy has an audited track record and creates wealth with lower risk than most mutual funds. I particularly like it in combination with option writing and option protection at high risk points.
$500,000 to $4,300,000 in 8 years.
No big down years since 2007.
Of course past performance is no guarantee of future results
The Dalbar survey results over 10 years in an equity account earned 5.26% per year. If an account with $400,000 earned 5.26% per year it would grow to only $667,872.63. Of course the sequence of returns might make the total much lower. The DEGP account had no significant down years where in 2008 the Dalbar calculations most likely had substantial losses.
This is the difference between seeking excellence verses accepting the average. Of course past performance is no guaranty of future results. You may see the audit and the historical performance of the DEGP upon request.
It does make sense that focusing on the best up trending stocks while eliminating the losers would work better, especially in rising markets rather than holding a large number of both rising and declining stocks.
Look at the charts of a great many name brand funds and you will see a correlation between the movements of the fund prices. You may own a lot of them but you are receiving a similar result.
Today markets are high and risks are great. I believe you need someone like a customer’s man to serve you. You need a plan for risk control. This cannot be done by large service providers.
Advisor’s Capital Investments Inc. is Setup to Be Your Customer’s Man.
- We are independent.
- We do not hold or have access to anyone’s money.
- We are small enough to provide daily account monitoring to all of our clients.
- We have large company partners to serve our clients unique needs.
- Our clients have access on line to their accounts daily.
- We execute transactions through discount brokers like Interactivebrokers LLC. We have access to using Fidelity for accounts preferring Fidelity through Capital Markets IQ.
- We use Trust Company of America for trust services at very low cost.
- Through our holding company we have access to the top insurance companies for the most competitive annuities and insurance contacts.
We refer clients to larger advisors who manage far larger assets than we manage who offer specialized services like:
Advisor’s Capital Management www. advisorscenter.com
Horter Investment Management www. horterinvestment.com
Capital Markets IQ www. capitalmarkets.com
I partner with these firms in order to remain independent while leveraging my ability to serve the unique individual needs of my client.
The portfolio manager managing the Income and Growth portfolio at Advisor’s Capital Management is Dr. Charles Lieberman. He holds a B.S from M.I.T. and a PhD in economics from the University of Pennsylvania.
Dr. Lieberman joined the Federal Reserve Bank of New York as head of its monetary staff. In 1986, he joined Manufacturers Hanover Bank as chief economist and head of research and held that position through mergers with Chemical Bank and Chase Manhattan. In 1999, Dr. Lieberman co-founded Advisor’s Capital Management. DR Lieberman has a very sophisticated trading capability.
Horter Investment Management LLC. is one of the fastest growing R.I. A. firms in the U.S. They specialize in Tactical Asset Management and in helping retirees to preserve capital with less volatility. They manage over 1 billion dollars and are growing very fast based on their consistent results.
Finally, Capital MarketsIQ is a sophisticated advisor that offers specialized services to institutions and individuals.
You will find information about their star advisor, Dr. Robert Schreiber at my website www.retirementadvice.us. He has had exceptional performance working at Morgan Stanley and UBS.
He began working for Capital Markets IQ in 2010. What I like about Bob is that he has had no down years before fees since 2007. In 2008, when the S&P 500 declined by over 36%, he had a positive return. The actual numbers of his own account performed several times the gains of the S&P 500 with about half of the risk. Of course past performance is no guarantee of future results.
Over any given time frame accounts may experience a loss of principal.
For clients who have sophisticated tax and estate needs I work with a top group of specialists nationwide.
What is required from you?
We are only looking for clients who take responsibility for the choices they make. We do not want uneducated clients who do not desire to learn or participate in how their account is managed. Ultimately, you are responsible for the management choices that are made.
Our responsibility is to listen to you in order to learn about your financial situation, your risk tolerance, your experience and your goals. We are a fiduciary as an investment advisor and have been for many years. We offer you well researched solutions that we believe will fit your needs. We explain the risks, rewards and volatility component you need to accept to properly utilize a given solution. You give us your ideas, we offer our ideas. You make choices and we put together a plan for your use. We can help with paperwork. We can execute and monitor a given solution for you or we can refer you to a manager to do this for you.
We monitor, advise and continually keep you updated to make sure the plans you have put into practice are working correctly even if another advisor is managing your funds.
We are one of the last of the customer’s men. You are the one we serve and we do not have to serve any other master. Our mission is not to grow big but to achieve excellence for our clients benefit.
Making decisions may seem difficult at first but we are patient and have experience making complex ideas understandable. Before you make any decisions we will make sure you understand and are very comfortable with the decisions you make. We use visual aids that are very easy to understand.
We allow our clients to start slow and be comfortable and secure before they make larger commitments.
We intend to earn your respect and your trust.