cREATING INvESTmENT INcOmE WITh TRANSPARENcYgether to minimize the overall risk to the client’s portfolio while provid-
ing other investment needs to the portfolio.
Instead of simply dumping a client’s money into a mutual fund portfo-
lio and collecting a commission as some brokers might, spreading out
investments into multiple asset classes can better meet the needs of the
clients. The best advisors don’t just “do” insurance or just “do” stocks.
In fact, the only singularly minded thing a great advisor will do is advise
clients. Many traditional brokerage firms put together packages of prod-
ucts (funds) for resale to the public. They make money for their share-
holders first, themselves second and the client third. If a client purchases
a product that does not meet their needs or is not right for them, oh well,
the broker still made money for the firm. The practice of repackaging
and reselling products at a higher cost to the client equates to the client
purchasing at retail pricing. Just as it is more advantageous for the client
to have a diverse investment portfolio, it is also more advantageous for
a client to purchase investments at wholesale pricing.
keY thRee: tRAnsPARent InCoMe PlAnIf you were purchasing a new car and you had the choice to pay the
wholesale or dealer price for the car or the regular retail price for the car,
which would you choose? You would certainly want to pay the whole-
sale price and eliminate markup to the middleman. An investor should
avoid markups paid to a middleman as well. Wholesale investments re-
quire doing things differently than other firms. For example, our RIA,
Global Financial Private Capital hired a chief investment officer Chris-
tian Bertelsen. Chris and his team act as our primary money manager.
They manage eight investment portfolios for us with a very low cost
structure, very transparent portfolios. What is normal in the industry is
for the person with whom you meet and from whom you receive advice
to be the person also managing your money. We found that system to
be very inefficient, because if an advisor is meeting with the client and
spending adequate time learning his needs and assessing his risks, that
advisor cannot also effectively be managing investments. Therefore, we
designed an approach, in which the advisors coordinate the client plan-
ning and relationship building while some of the best professionals
available manage the investments. Called a separately managed account
in investing, it is vastly different from a mutual fund. A mutual fund
is a retail product packaged and sold by somebody else. A broker can