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Convenient, Low Cost Portfolio Management
Our Professional Allocation Service (PAS) focuses on working with clients to define financial goals and implement concrete steps to achieve those goals. PAS is designed for as a cost-efficient solution for clients with investable assets in a single account less than $300,000. For clients with more than $300,000 or multiple accounts to manage, we suggest using our PAM service.
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 retirement distribution planning, tax efficiency of accounts, annuitization, debt financing, and legacy.
- Select from one of six low-cost model portfolios, designed to fit a range of risk tolerances (examples of our aggressive and moderate allocations are shown in the pie charts to the right). Our portfolios are designed with cost efficiency as a key concern. We rely on index-type funds to gain exposure to domestic and international stocks and bonds. 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 with our clients’ other holdings (e.g., 401(k)) and long-term goals in mind.
- Work with the client to implement agreed-upon recommendations. We will help you to 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 your assets on your behalf. You will receive all transaction confirmations and monthly reports from the custodian, and detailed quarterly reports from us. 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 (at least annual) conversations about progress toward financial goals. If necessary, we will make adjustments to the plan or conduct additional analysis as life circumstances change.
What sets AIS apart?
Many investment advisers offer targeted guidance on the selection of a portfolio of investments. On the other side, many financial planners offer “big picture” guidance on financial topics such as taxation, long-term planning, and debt management. AIS has been managing investments for nearly 40 years using analytical rigor and research. Our PAS offering starts by looking at the “big picture” of your financial situation. Then, only after we’ve agreed upon your financial goals, we will develop a practical portfolio allocation strategy and financial plan based on your financial inputs and our investment expertise.
We are independent, meaning we have no product to sell. We emphasize cost-effective solutions. We dissuade clients from seeking services unless we agree that the benefits may outweigh the costs. Finally, we come from a background of analytical rigor. We provide research-based solutions for most any financial issue that arises.
We work best with clients who are analytical and thoughtful. Successful investors typically resent being sold a product, and instead want to understand the inevitable trade-offs associated with different investment options. We believe that doing the right thing for our clients will create goodwill that will sustain our business.
AIS PAS Advisory Fee
We assess a fee of 0.75% of your account’s value on an annual basis. Our only source of revenue is the fee we charge to your account. We do not earn any commission or other compensation from any third party.
We have established transaction fee schedules with discount broker Charles Schwab Institutional. These fees are generally equal to or below Schwab’s retail fees.
Mutual Fund Expenses
We generally purchase open end mutual funds and exchange- traded funds (ETFs) in our PAS 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%.
PAS Investment Related Costs
As a client of our PAS program you will encounter three types of expenses:1. AIS PAS advisory fee.2. Expenses incurred within index-type mutual funds and ETFs3. Transaction fees (brokerage commissions)
Example: The following summary provides an estimate of total annual costs incurred by a PAS client with a portfolio valued at $300,000.
|PAS Advisory Fee1
|Mutual Funds Expenses2
1For our complete fee schedule see our firm disclosure document or “brochure” (ADV Part 2A), available at www.americaninvestment.com. 2Calculated as a weighted average of mutual funds utilized in the AIS Moderate Risk (PAS) Portfolio. 3 This estimate includes an estimate for first-year transaction fees, in which we assume full reinvestment of an initial $200,000 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.