UlTImATE SUccESS GUIdEchoose to sell you that product, and you will likely have no idea who
is managing the changes of the investments within that mutual fund.
Alternatively, a separately-managed account adds to the transparency
of the investment strategy because the client owns a wholesale portfolio
and knows exactly who the people are who are managing their money.
Our portfolio managers came from the institutional side of investing and
are very highly recognized and respected in the management industry.
There are really only a handful of top portfolio managers in the United
States; they are like the Major League of investing. It makes the most
sense to have major league players, the best in the business, manage cli-
ent funds. We know from experience that if we are on the phone with a
client and there is a change that needs to be made, then our investment
committee deals with it while we continue to manage the other aspects
of our business. Without a chief investment officer and investment com-
mittee, either the client or the portfolio would suffer due to inattention.
Another aspect of a transparent income plan is the 50/30/20 rule for
individuals that are close to retirement or in retirement. The 50% rep-
resents the money that is conservatively invested in the market and ac-
tively managed. That 50% represents stabilized income. The next 30%
is invested in more stable, less risky investments such as fixed products
like fixed annuities, treasury bonds, CD’s, and money market with no
ties to the stock market. These investments typically provide guaran-
teed income. The final 20% goes into alternative investments; public
non-traded REITs (real estate investment trusts) or note programs that
generate a nice income but are not tied in any way to the stock and bond
markets. One can adjust these percentages based on a specific client
requests, but as a rule, this formula is a proven, effective strategy for
which investors nearing retirement should strive.
When a prospective client is going through this process, we show them
their blueprint or roadmap for retirement to demonstrate for them the
income they can expect. Experience says that too many people have dif-
ficulty transitioning from their growth years into the new position of this
(managing retirement investments) is their job now because they are no
longer earning money to invest. If a person is earning a conservative
5-7 ½% a year off his or her investments, that person cannot afford to
pay buried fees of 2-3%. This is what makes our transparent investment
strategies with a fixed, low cost fee for managing the portfolio so ap-