A solid financial plan is the best anxiety reliever.
Where are my assets held?
Our clients’ assets are held at Pershing LLC, a wholly owned subsidiary of the Bank of New York Mellon and the world’s largest custodian of assets. Your statements will come from Capitol Securities Management, our local broker/dealer partner, which processes all the trades and investment activity locally for Pershing.
Are my investments insured?
Only certain assets held by banks – checking and savings accounts, CDs, etc. – are FDIC-insured against loss of principal for amounts of up to $250,000. All other assets in your account are insured for replacement by the Securities Investor Protection Corporation (SIPC) for amounts of up to $100,000 for cash and $500,000 for securities like stocks, bonds and mutual funds. In addition to the SIPC coverage, Pershing LLC has reinsurance through Lloyd’s of London for each individual account, up to $1.9 million in cash awaiting reinvestment and $1 billion in total assets. Should anything happen to Capitol Securities or Pershing LLC, your accounts would be covered up to these aggregate levels.
What happens at the first meeting?
We’ll sit down with you – at your home, your office or in our offices – to discuss your short- and long-term financial goals and how to reach them, your tolerance for risk, your time horizons and your expectations for the future. We’ll factor in family matters, future college expenses, your vision for your retirement years, estate planning, etc. And we’ll inventory your current financial status – income, investments, retirement plans, employee benefits, mortgages and home equity, etc. Then we’ll follow up with a personalized financial plan based on our discussion, and go from there.
How am I kept informed about the performance of my portfolio?
You will receive a detailed paper statement from Capitol Securities each month when there is activity in your account and quarterly when there is no activity. You can also access your account information 24/7 via their website — just click on the "client log-in" button on our home page. At Virginia Managed Investments we track your portfolio on an ongoing basis – including looking for higher-value and lower-risk alternatives to current holdings. When there is something you need to know about or a decision you should consider, we will contact you to discuss it.
How are you compensated for your services?
Generally speaking, there are three ways clients pay for advisory and asset management services in the financial services industry: asset-based fees, fees-for-service, and commissions. While we can and do accommodate all three approaches, our primary focus is on the asset-based fee model. Our fee structure is:
1.25% on the first $1.5 million in assets
1.00% on the next $1.0 million in assets
0.75% on all assets above $2.5 million
We believe this model is best for most of our clients for a number of reasons:
The client knows exactly how much they are paying.
It aligns advisor and client priorities (growing the asset base); there is no commission incentive for the advisor to “trade” the account.
Expenses are generally lower than those a client would pay in an actively managed commission-based account. This is because there are no commissions, ticket charges, statement fees or postage and handling fees associated with the accounts.
The other two models are:
Fee for service — We jointly define a scope of work and agree to a flat fee for the performance of that work. For example, you may engage us to conduct a review of your current financial situation. You may want to maintain your current advisor relationship, but have us prepare recommendations for making specific changes such as concentrating on debt reduction, refinancing your mortgage, reallocating assets or establishing a financial plan for another specific goal.
Commission-based — You pay a transaction expense each time you buy or sell a security. Generally, this is only advantageous for “buy and hold” investors. It is best used when products like mutual funds and annuities are utilized, because the companies that offer these products generally charge a fee or impose a surrender charge to the client and offer compensation to the advisor.
The key here is discussion and disclosure. Working together, we can determine the arrangement that is in your best interest.