Convenient, Low Cost Portfolio Management
Our Professional Asset Management (PAM) service focuses on working with clients to define financial goals and implement concrete steps to achieve those goals. PAM accommodates taxable accounts, IRAs, pension plans, trusts, and other account types individually, or on a combined basis. We provide efficient account administration, detailed performance reporting, and full transparency with regard to investment-related costs. PAM is designed for clients with investable assets of $300,000 or more. If your investable assets fall below this level, it may be more cost effective to utilize our Portfolio Allocation Service (PAS).
Our process is as follows:
- Establish clear and attainable financial goals, including but not limited to retirement planning, saving for college, debt management, tax planning, and legacy planning.
- Gather all relevant financial data, including but not limited to expenses and income, tax data, current account balances and allocations, home equity and mortgage balances, outstanding debt, insurance, and any other material financial data.
- Analyze the data and develop potential recommendations around investment strategy, retirement distribution planning, tax efficiency of accounts, and legacy planning.
- Work with an adviser to form and maintain an allocation plan tailored to your goals and risk tolerance. Our portfolios are designed with cost efficiency as a key concern. For stocks, we seek to improve long-term gains by “tilting” the portfolio toward value and size premiums. We do not seek to time markets or to actively select securities. We coordinate the portfolio allocation across all client holdings and with long-term goals in mind. We may choose to incorporate out High Yield Dow (HYD) strategy for certain clients.
- Work with your adviser to implement agreed-upon recommendations. AIS will set up an account with a qualified, independent third-party custodian (Charles Schwab Institutional, TD Ameritrade Institutional or Fidelity Institutional Wealth Services) where we will have discretionary authority to manage assets on your behalf. You will receive all transaction confirmations and monthly reports from the custodian, and detailed quarterly reports from AIS. We provide full transparency with regard to investment-related costs.
- Monitor the progress. We will make sure the portfolio allocation stays within a target range, regularly rebalancing when it is cost-effective. We will send quarterly performance reports and have regular conversations about progress toward financial goals. If necessary, we will make adjustments to the plan or conduct additional analysis as life circumstances change. In taxable accounts we will optimize your after-tax returns through year-end tax-loss harvesting. We simplify your year-end tax filing efforts by tracking your cost basis, and summarizing your realized gains and losses. We will assist with any financial questions that arise.
The following charts depict hypothetical allocation plans and returns for investors with differing tolerances for assuming risk (i.e. conservative, moderate and aggressive). This is provided only to demonstrate our general approach to asset allocation. PAM clients are not required to adopt a pre-established allocation plan; we will work with you to provide a customized allocation plan to meet your needs.
AIS PAM ADVISORY FEE
Our effective annual advisory fee ranges from 0.78% for AUM of $300,000 to 0.275% for AUM of $20,000,000 or more.
We have a tiered, cumulative fee structure based on assets under management (AUM) where AUM is the combined market value of all the accounts under our management. Our only source of management revenue is the fee we charge to you directly. We do not earn any commissions or other compensation from any third party.
We have established transaction fee schedules with discount brokers Charles Schwab Institutional, TD Ameritrade Institutional and Fidelity Institutional Wealth Services, who compete for our business. These fees are generally equal to or below retail fees offered by these firms.
MUTUAL FUND EXPENSES
We typically purchase open end mutual funds and exchange- traded funds (ETFs) in our PAM program. We screen carefully to find the most cost-effective index-type funds for capturing the returns of our recommended asset classes.
A mutual fund's expense ratio measures a fund's annual operating expenses as a percentage of assets held in the fund. Currently the average expense ratio assessed by our recommended funds is 0.30%.
PAM INVESTMENT RELATED COSTS
The total investment related costs assessed under PAM are extremely competitive.
As a client of our PAM program you will encounter three types of expenses:
- AIS PAM advisory fee.
- Expenses incurred within index-type mutual funds and ETFs
- Transaction fees (brokerage commissions)
- Example: The following summary provides an estimate of total annual costs incurred by a PAM client with a portfolio valued at $500,000.
|PAM Advisory Fee1||$3,6522||0.73%|
|Mutual Fund Expenses2||$1,533||0.31%|
1 For our complete fee schedule see our firm disclosure document or "brochure" (ADV Part 2A).
2 Calculated as a weighted average of mutual funds utilized in the AIS Moderate Risk Portfolio.
3 This estimate includes an estimate for first-year transaction fees, in which we assume full reinvestment of an initial $500,000 portfolio. Subsequent years' transaction fees typically involve only occasional rebalancing and therefore could be significantly lower. For a complete transaction fee schedule, see our Overview of Fees insert, or visit our web site www.americaninvestment.com.