1. How do you get paid for your services?
It’s important that you understand all areas of your financial advisor’s compensation. They usually either get paid for their time, a fixed rate for a given service, a percentage of assets under management, a commission, or some combination of the above. A competent professional deserves to get paid for his or her time, but you should also get a fair deal and know exactly what you’re paying for what you get.
If you don’t ask that question, you may be paying substantial hidden fees without realizing it. For instance, several mutual funds, insurance policies, and particularly annuities have high embedded fees, some of which go to pay the representative selling the policy. You may not be paying the bill directly, but you are paying for it through those high costs that eat away at your potential returns.
At TTG Financial, we are a Fee-Only advisor and receive no commissions or fees other than what we receive from you. These fees are charges as a percent of your assets under management, charged to your account at the end of every quarter, so we do better when you do better.
2. What type of entity is TTG Financial?
TTG Financial is a corporation and a Registered Investment Advisor under the auspices of the United States Securities and Exchange Commission.
3. Is an Investment Advisory account right for you?
There are different ways for you to get help with your investment decisions. You should carefully consider what types of accounts and services are right for you. Before investing you should also review our form ADV II and our Investment Policy Statement.
4. What is the difference between a Brokerage account and an Investment Advisory Account?
A brokerage account is an account set up with a brokerage firm that allows for the purchase and sell of various types of securities such as stocks, bonds, mutual funds and many others.
There are two categories of brokerage account: self-directed and broker assisted.
A self-directed brokerage account is one which you set up and manage on your own – that is you select your own investments. The fees and commissions you pay will depend on the investments you select.
A person known as a stock broker generally helps you set up a broker assisted brokerage account and helps you select the investments for said account. The fees and commissions you pay will depend on the investments you select and the stock broker generally receives commissions on the investments selected.
An advisory account also starts with brokerage account that is set up with a brokerage firm that allows for the purchase and sell of various types of securities such as stocks, bonds, mutual funds and many others. A Registered Investment Advisor generally helps you set up this account and manages the selection of investments within your account.
Most Investment Advisors retain discretion over the investments to be selected in this type of account, but in some cases, you may select some of the investments in your account. Investments Advisors charge a fee (generally at the end of each quarter) to manage your account which is generally equal to a certain percentage of your account value at the end of each quarter. Some Investment Advisors charge you by the hour and some may charge a flat fee – but the most common type of compensation for Investment Advisors is a percentage of assets.
There is free information available to help you decide on the course of action best for you at www.investor.gov. Here you will find information available on specific brokers and advisors as well as general educational material.
5. What’s your own investment philosophy?
A good financial advisor will tailor advice to you based on your needs, rather than on his or her own perspective of how to invest. Still, it makes a great deal of sense to ask how we think about managing your money. That way, you can be on the lookout for strategies that are too aggressive, too conservative, or too complicated for your own personal needs.
We are generally more conservative investors, although we manage client portfolios across the full range of risk profiles from conservative income to aggressive growth. Attempt to guard against large losses when the Market turns negative, which it will often do, and refocus on gains and growth when market conditions permit. As the long-gone actor/comedian Will Rogers once said, “We are more concerned with the return OF your money than the return ON your money.”
6. How will you invest my money?
There really is no “one size fits all” strategy for investing, but there are still some very good guidelines that smart investment advisors will follow when building your plan. We will tailor your investments to several factors including:
Age — Investments appropriate for a retiree don’t always make sense for a 20-something. The reverse is also true.
Risk tolerance — No matter what the potential return, if you’re not comfortable holding a position because of its risk, it’s not the right one for you to hold.
Investing goals — A person saving to buy a car in the next year or so will have a different set of appropriate investments than a person saving for a retirement that’s decades away.
Available accounts — Depending on what you’re investing for, you may have special accounts like IRAs (retirement), 529 plans (college funding), or HSAs (medical bills) that can provide tax benefits for you. While it’s never a good idea to let the tax impacts dominate your investing decisions, it is a good idea to be efficient in pursuit of your goals.
State of the Market—The Markets will move through long cycles of ups and downs, periods of time when you should be more or less committed to that Market. At TTG, we will make regular adjustments to your holdings that reflect the current Market conditions.
7. What are your credentials?
There are very few requirements involved in becoming a financial advisor. Just about anyone can call themselves a financial advisor. This differs dramatically with a Registered Investment Adviser (RIA), a fiduciary. With this designation, you have to register with the Securities & Exchange Commission or your state as an Investment Adviser, and are held to the higher Fiduciary standard. At TTG Financial, we are Fee Only Registered Investment Advisers.
There are dozens of available credentials in the financial services sector, a veritable alphabet soup of designations to consider. Some will be relevant to you and some may not. Following is a synopsis of our current advisers’ qualifications:
Jim Kotagides is our President. He has been in the Financial Services sector since 1996. He has an MBA from The University of Michigan with an Undergrad in Econometrics from The Ohio State University. He also holds the professional designation of Master Registered Financial Consultant from the International Association of Registered Financial Consultants.
Jim Evans is our Vice-President and Chief Compliance Officer. He has been in the financial services sector since 1985. He holds the designations Certified Financial Planner from the CFP Board and Qualified Pension Administrator and Qualified 401k Administrator from the American Society of Pension Professionals and Actuaries.
Brandon DeCastro is an IAR. He has been in the financial services sector since 2006. He holds the designation Registered Financial Consultant from the International Association of Financial Consultants.
The various designations listed above generally require a number of years of experience as well testing in order to utilize each in good standing. The Bottom Line… when dealing with a financial professional, it’s important that you know the extent of his or her expertise in different areas of finance.
8. Are you a fiduciary?
As mentioned above, the Fiduciary standard is the highest of standards and requires a financial planner to recommend investments and give advice that he or she believes is in YOUR best interest. A Fiduciary must continually monitor their advice to you to make certain it remains in your best interests. The advisers at TTG Financial are Fiduciaries.
Up and until July 1 of this year financial sales people, such as insurance agents and annuity salespeople, who are not fiduciaries, were required only to make sure that the product they were selling was ‘suitable’ at the point of sale. The word ‘suitable’ proved to be largely ineffective at stopping the abusive sales of high cost financial products.
For instance, a high commission, high churn, high ongoing fee growth oriented mutual fund might be judged suitable for an investment for a growth-oriented client, but a lower fee option could achieve the same return?
And although an annuity, with its high commissions and low payout may also be judged as suitable for the client, there may be other ways to achieve equal or better payout with no additional risk, no severe restrictions and penalties and certainly no high commissions.
To its’ credit the SEC has recognized for some time that ‘suitable’ was ineffective. They first attempted to make everyone in the financial services industry fiduciaries. This was met with huge resistance from banks, insurance companies and brokerage firms as none of them wanted to take on fiduciary responsibility for the products they sell. These industries have very powerful lobbies. They were able to persuade legislators to let them off the hook for fiduciary responsibility. Instead, non-fiduciary financial product sales people must now make certain the product is in a consumer’s Best Interest on the date of sale. There is no ongoing requirement. Many consumer advocates have argued this really did nothing other than substitute the words ‘Best Interest’ for ‘Suitable.’
A Registered Investment Advisor takes on fiduciary responsibility for your account. In other words, they must always put your interests ahead of their own. Investments and advice offered via a stock broker or insurance agent do not at this time carry fiduciary responsibility. Rather they are offered on a “Buyer Beware” basis as are most other products that you consume. What is the difference? An example would be when you visit the Appliance store to purchase a new stove. The sales person shows you the stoves and, if he is fortunate, you purchase a stove from him. Upon delivery you find the stove does not fit in its’ assigned space. So, who’s fault is it? The fault is entirely yours. The sales person is not obligated to find you the best stove for you. He is compensated for selling stoves – period. This does not make him/her dishonest. It is just a fact. This is what we mean by “Buyer Beware.” In much the same way a stock broker or Insurance agent is paid to sell a product – they are not obligated to determine if the product is in your best interests – that is up to you.
It is TTG’s opinion that most people would find a benefit in working with a fiduciary on their financial affairs rather than under a “Buyer Beware” scenario.
9. What is included vs. what is extra?
Since you are paying TTG to manage your money and your financial plan for you, you should expect some level of service for those fees. We will include a full financial plan as part of our services. Additionally, if you need to sit with an attorney or accountant to execute Trusts or wills, or any other document required to execute your plan, then we will attend those meetings to add our expertise, and with no additional charge.
TTG offers Advisory accounts on a discretionary basis for an asset-based fee. For complete fees and disclosure information on TTG please request our Form ADV by using the “Contact Us” page on this web site. If you prefer, you can use our CRD number, which is 129004, on FINRA’s own web site.
TTG also offers financial planning, business planning and 401k and pension administration and consulting. These services are normally included in our asset fees – but depending on the scope of work there may be additional fees for these services. These fees – if necessary, will be negotiated with you. You will always be informed ahead of time of any additional fees.
We offer our services to individuals, businesses, trusts and retirement plans.
TTG selects your investments on a discretionary basis based on your personalized risk profile. Our clients are categorized into one of 6 risk categories. This allows us to more efficiently purchase and sell securities for our clients who have similar risk profiles. We monitor your investments and the market in general daily.
If engaged to do so TTG provides advice on general financial and business planning subjects. TTG provides advice that is complementary to that of your other professionals such as your CPA and attorney. If the scope of work is too large to include within our normal asset fees then TTG will provide you with an additional contract with the scope of work outlined along with the anticipated additional fees.
10. What is your succession plan?
As you’re dealing with a person that’s in the business of helping others plan for retirement, you should hope that your financial planner has his or her own future mapped out as well. That person should understand that his or her own career won’t last forever and should have a good plan in place to assure your needs are met once that future comes to pass.
TTG’s Investor Advisors have an agreement to provide service for all TTG clientele. To this end all advisors actively work on all accounts. Per the firms buy/sell agreement, if an IA is unable to perform his duties, the remaining IA(s) will become the primary contact and be responsible for the effected accounts.
Should a disaster occur whereby all TTG employees are lost in one event (God forbid) you may still obtain service from Charles Schwab & Co. They can perform trades, make distributions and generally service your account. In the unlikely event that this situation was to occur you would have several non-time sensitive choices to consider:
1: Ask Schwab to become your primary advisor – they would assign you to a local office
2: Retain your account with Schwab but choose another Financial Planner that works with Schwab
3: Retain your account with Schwab and manage it yourself
4: Choose a new advisor and a new custodian thus ending your relationship with Schwab
11. How will you consider my assets that you don’t directly manage?
A good financial planner will recognize that your entire net worth won’t be tied up in assets under his or her direct control. You may have things like a 401(k) at your work or a rental property or some other form of investment that doesn’t necessarily make sense to turn over to your planner.
We will partner with you to develop a plan that incorporates your full financial picture, including the money and assets not under our direct control. You should expect to keep us abreast of the state of those other assets so that your end-to-end plan still works for you.
12. What happens if I die or become incapacitated?
This question is one of the key reasons to consider engaging the services of a financial planner in the first place. Even if you are one of the smartest money managers in the world, there will come a time when your capacity to manage your affairs is impaired, either through your passing or potentially through cognitive decline. You want your money to either be there to provide for your care in your decline or to efficiently transfer to those you care about once you’re gone.
We will be able to help you with both a good estate plan and with solid strategies for protecting your money from unethical characters that would take advantage of the elderly.
13. How often will we meet?
Especially early in your working relationship, we will want you to keep closely connected with your financial adviser. Once you’ve established a solid plan, meetings cab be less frequent, but you’ll still want regular touchpoints. After all, life happens, and the more in touch you and we are, the easier it will be to adapt your plan to the other changes in your life and priorities.
As a result, we will want to meet with you at least twice a year. That provides a reasonable balance between adapting to changes in your life while not being so overly reactive to daily changes in the market. That being said, at TTG, you are welcome at our office anytime and as often as you wish, to discuss your holdings and the performance of your plan. Our door is truly always open to you.
14. Where will my money be held?
Your funds and securities will be held at Charles Schwab and Company, one of the most reputable names in the business. No cash or equities will be held at TTG Financial. All transactions of cash will be to and from Charles Schwab and only to you, at your address of record. TTG also has the ability to use other custodians if the need should ever arise.
15. How do you measure success?
We will measure success based on how well your plan is progressing against the goals we discussed when your account was opened or when revised at one of your office visits. We will show how you’re performing against a relevant benchmark, and regularly send you reports documenting this performance. If for some reason your performance is off track vs. your goals or the benchmark, then we will come up with strategies to try to get you back on track.
The right benchmark is rarely just “am I keeping up with the market?” Indeed, that is only a reasonable benchmark for your longer-term financial goals and only if your risk tolerance will let you be heavily invested in stocks. For your more immediate needs or if you’re not comfortable with the volatility of a stock-heavy portfolio, a more conservative benchmark should be used.
16. How will you manage my accounts for taxes?
A key rule in financial planning is to not let the tax tail wag the investing dog. After all, a very easy way to keep a person’s tax burden down is to lose a lot of money investing, and on the flip side, taxes are ultimately a sign of a profitable investment move. That said, there’s a wide latitude between completely ignoring taxes and managing exclusively around the tax implications of moves, and a competent advisor should be willing to follow a decently balanced strategy.
In addition to individual investment choices and their tax implications, a we should be able to help you leverage tax-advantaged accounts. For retirement planning, there are accounts like traditional and Roth IRAs and 401(k)s. For college planning, there are accounts like 529 plans. Each of those accounts have advantages and disadvantages, and we will help you figure out how to balance your investments across account types to give you a decent shot at end-to-end success.
17. Do you have any conflict of interests?
TTG does not sell products nor do we have an employee relationship with any other firm that would create a conflict between your interests and ours. We do better when you do better.
That said, the principals of TTG would often like to own the same securities that we are investing in for our clients. This could potentially lead to a conflict known as ‘front running’ which is not legal. The idea is you purchase a security before making a large purchase for a big block of clients. The block purchase might potentially drive up the price of a security allowing the ‘front runner’ to make a short-term profit. This is forbidden in the industry and such behavior would and should lead to loss of license, restitution and fines. TTG prohibits front running.