We ask you to sign a Client Service Agreement, which explains the services provided, authorizations, compensation, and other provisions of our relationship with you.
There is no minimum. We do not use your portfolio size to determine services provided or fee amounts. This keeps you in control of determining if our fees are reasonable relative to your situation.
Your cash and securities are held by a qualified independent custodian. Most Altiora clients use Charles Schwab Institutional, Fidelity Institutional, and/or TD Ameritrade Institutional.
We recommend transferring your existing holdings in-kind when possible. We then mutually agree to hold or sell positions depending on whether the benefits outweigh the costs.
By check, bank transfer (ACH), wire transfer, or account transfer (ACAT). At no time is Altiora in possession of your funds. All funding is directly between you and the custodian. To simplify the process, we recommend establishing standing instructions between the custodian and your local bank account. Deposits or withdrawals can be set up as automated or on demand. All 3 custodians maintain local branch offices in most major cities if you prefer an in-person process.
Altiora charges a flat fee for each service. Your fee has no relation to your portfolio size. We are 100% fee only, but in a way that maximizes transparency and reduces conflicts of interest. For simplicity and convenience, the default method of paying our fee is an automatic deduction from your brokerage and/or bank account(s). You can opt-out if you wish to be billed separately and pay by check. Fees are billed quarterly in arrears. Learn more.
Your assets are held in an account at an independent, third-party custodian, typically Charles Schwab Institutional, TD Ameritrade Institutional, or Fidelity Institutional Wealth Services. That account is protected by SIPC insurance plus additional coverage through companies such as Lloyd's of London up to limits detailed by each respective custodian.
Only if you engage us to perform specific activities under our tax management or Personal CFO services, such as paying bills on your behalf. This is defined by the SEC as us having "custody" of those assets. For those accounts, we are subject to surprise visits by an independent auditor. If you do not engage us for those services, then we in no way have access to or custody of your money. You would grant us a limited power of attorney to conduct one or more of the following activities: Place trades through your custodian within the constraints of your agreement and investment policy; Make a request to your custodian to send a check to you directly at your address on file or send money by ACH or wire directly to your local bank account based on standing instructions approved in advance by you; Send your invoice to your custodian for payment of our quarterly fee from your account(s) based on the terms of our agreement with you.
Any time a request is made to transfer money to a third party, both Altiora and your custodian require confirmation of that request directly by you.
We encourage you to be fully aware of activity in your accounts. An example of how this can be easily accomplished is by setting up email, phone, or text alerts triggered by account activity.
Yes, we carry Errors and Omissions insurance, Cyber and Data Privacy insurance, and Employee Dishonesty coverage.
Conflicts arise where the interests of one party are best served by one course of action, while the interests of the other party are best served by an alternative course of action. The conflict may encourage or reinforce a certain kind of behavior or action to the benefit of one party over the other. With percentage fees, the adviser is paid if they gather client assets in a way that lets them calculate and charge a fee on those assets. The conflict exists because gathering assets is in the best interest of the adviser, even if it's not in the best interest of the client, such as situations where depleting assets under management makes sense (paying off debt, making charitable or estate planning gifts, a business investment, the ability to take on a higher withdrawal rate to improve standard of living, etc.). With flat fees, that conflict is largely eliminated.
Flat fees are linked directly to our professional qualifications, experience and expertise, service, and reputation, and allow us to offer a wider variety of services to a more diverse group of clients.
Yes, we want you to have a successful investment experience, but tying our compensation to your portfolio size is not the answer. The idea that a percentage fee puts us or any adviser "on the same side of the table" assumes that 1.) we are the source of performance and 2.) it eliminates conflicts of interest. Both are false. Markets produce performance, not advisers, and the primary incentive offered by the percentage fee is to gather more assets. Growing assets is a different matter. Our role is to help you fully experience what markets have to offer, and not attempt to create performance via speculation or claim credit for returns created by markets.
Of course. But again, a fee based on portfolio size isn't the answer. This question speaks to whether discipline or behavior is related to portfolio size. An advisory relationship involves mutual accountability to your plan. That accountability is not variable with your portfolio size, so why pay us on that basis? We can influence behavior by creating a structure that promotes discipline, but a compensation structure that assumes you need more discipline as your portfolio becomes larger is counterintuitive.
Our incentive to increase revenue by serving more clients per adviser at the expense of quality service damages our reputation. That alone is a powerful incentive to not take this path. It's also more likely if we have no other source of revenue than investment services, or we have no way of charging a higher fee in response to the demand for our services. Fortunately, we do have other sources of revenue (tax, planning, CFO services) and our fee is designed to keep the adviser/client ratio in balance, resulting in a mutually beneficial relationship. Some clients pay more, some less depending on the complexity of their situation, but we always give them a choice over how they allocate their fee. If anything, the flat fee encourages us to eliminate waste and be as productive as possible.
Percentage fees are anchored to active investing where it's man vs. market, and that's perfectly fine. Active managers are paid to attempt to produce returns through some form of market timing or security selection (i.e. speculation). The odds of success might be small, but at least the compensation method makes sense. They are paid for performance under the assumption that they are the true source of that performance. Advisers who promote an evidence-based, factor-based, passive, or index philosophy, however, do not operate like active managers, so why should they be paid as if they do?
We carry liability (E&O) insurance to hedge this risk, and we also reserve the right to charge a higher fee for complicated engagements that may involve higher liability. With a passive approach, liability risk is reduced significantly vs. active management and is therefore best covered by procedurally prudent controls backed by insurance.
We follow Evidence-Based Investing (EBI), which is a disciplined approach to asset management that combines the data we have from the past and present with honesty about the unknowable future. Where others would use forecasts, relationships or emotions to guide their decisions, practitioners of EBI would substitute facts, logic and reason. EBI is commonly referred to as "index" or "passive" investing.
Your custodian sends periodic account statements, transaction confirmations, and tax-related documents. Altiora sends a quarterly Portfolio Appraisal which includes: Portfolio Performance Review – portfolio-level performance and activity; Position Performance Summary – position-level performance and activity; Asset Allocation – comparison of current allocation to target allocation; Portfolio Holdings – consolidated view of holdings; Portfolio Statement – holdings detail by account; Quarterly Market Review - market data and commentary; Invoice for the prior quarter; Additional reports as needed.
We do not rebalance your portfolio according to an arbitrary calendar date. Instead, we review your portfolio frequently and rebalance on a contingent basis by waiting for an event to trigger the process. That event is typically a cash deposit or withdrawal to/from your accounts, or when a particular asset class deviates significantly from the target percentage determined by your plan. "Significantly" generally means a deviation of 15% to 25% on a relative basis or 5% on an absolute basis, but is subject to your particular tax and risk circumstances.
We believe the purpose of rebalancing is to maintain your portfolio risk factor exposures, not to enhance returns. Your return is directly attributed to risk factor exposure less cost. All else is noise. Rebalancing simply helps you maintain risk consistency and gain higher confidence in your expected return.
If you hold accounts subject to different tax treatment (i.e., taxable, tax-deferred, tax-free), we locate your holdings to maximize tax efficiency depending on your specific tax cirucumstance. If you need to minimize taxable income from your portfolio, we look to avoid short-term capital gains and hold tax-managed or tax-efficient funds in your taxable accounts, and hold tax-inefficient funds in your tax-deferred or tax-free accounts. We may also create custom rebalancing guidelines where appropriate.
Our investment philosophy is inherently tax-efficient, but we look make further improvements through efficient portfolio design. For example, rebalancing within funds is more efficient that rebalancing between funds. That implies designing a portfolio with fewer moving parts to eliminate unnecessary trading costs and taxes.
Yes, but it depends on your situation. Some clients benefit from tax loss harvesting, while others benefit from tax gain harvesting. Our approach is unique to you.
Most clients hire Altiora to monitor and manage their portfolio on a discretionary basis according to an Investment Policy we agree upon in advance. Therefore, they do not need to give us prior approval to conduct routine trades and portfolio maintenance within the context of that Policy. We encourage them to monitor portfolio activity and contact us if they have questions. We also offer non-discretionary services for certain situations where the client is responsible for approving all trades.