Seminar FAQ Flashcards
(13 cards)
How did you get my name?
We purchase our mailing list from a company that specializes in targeted marketing.
The company does not reveal its exact methodology - but I assume it is based on zip code and public records.
They have assured us that the data is legitimate and their methods do not violate any privacy rules/regulations.
Average sized ($) account?
The average account size is $1.5M
What are your fees?
We use a blended fee schedule - meaning certain levels of assets are billed at different percentages - which then get blended together to realize the final and total fee.
1.20% on first $500k – ($0-500k)
0.95% on the next $500k – ($500k-1M)
0.75% on the next $1M – ($1M-2M)
0.50% on the next $3M – ($3-5M)
$5M and above = negotiable
Ex: 1.5M calc:
- First $500k billed at 1.20% or $6,000
- Next $500k billed at 0.95% or $4,750
- Final $500k billed at 0.75% or $3,750
Total = 0.97% or $14,500
What are the different types of fees clients pay?
- Advisory fee: The advisory fee for managing assets. This is the only compensation Cassaday & Company receives.
- Internal fund fees: Our portfolios consist of mutual funds and ETF’s. Each of these investments have internal fund fees. Each client is responsible for these fees. However, we are able to utilize our scale to negotiate the lowest possible expense ratios within each of these funds, significantly lowering the cost compared to an individual purchasing the fund independently. These fund fees weighted total is approximately ~0.60%. We receive zero part in this expense.
- Wholesale “transaction” fees: there may be wholesale transaction charges associated with changes to the portfolio; These are transaction costs paid to our custodian (Pershing) for buying and selling in and out of the market. These are usually, but not always, less than $100 per year per account.
What are 12b-1 fees and do you charge them?
Fees charged to fund holder to pay for marketing and distribution costs. Baked into fund expense ratio.
Usually kicked back to advisors - however, if any of the funds we invest in have these, we refund 100% of these fees to our clients.
Who is Royal Alliance Associates?
Independent broker dealer and unaffiliated third party.
Primarily serves two functions:
1) they provide us with access to the capital/securities markets
2) they provide legal, supervisory and compliance oversight of Cassaday & Company.
- check investment recommendations and client suitability
- conduct on-site audits on avg twice per year - books and records are reviewed to ensure we are complying with industry rules and regulations.
- surveys our email traffic to watch out for misrepresentations or violations of client communication regulations.
Who is Pershing?
- custodian - they hold our clients money
- Largest independent clearing/custody firm in the world.
- Division of BNY Mellon
- oldest bank in nation
- founded in 1784 by Alexander Hamilton
- We like them because:
- strong balance sheet - financially secure
- During the financial crisis of 2008, the US GOV
selected BNY as the custodian for TARP (Troubled Asset Relief Program) - stabilize and restore economy through purchase of MBS and stocks - $425B invested - Cost effective
How do I know that you wont run off with my money?
You assets are held by a third party custodian - Pershing.
We, the employees, don’t actually have access to your money.
Our job is to pull the levers behind the scene to make sure your money is transferred appropriately from one destination to the other. But at no point do we have access to it.
- Checks must be made payable to Royal Alliance - not C&C.
How safe is my money?
- Protected against lost or stolen assets (bankruptcy of brokerage firm) by SIPC (Security Investor Protection Corporation) non-profit run by government - up to $500k per account owner/titling
- Additionally, Pershing provides coverage through Lloyds of London.
Why consolidate?
Simplification:
- Performance reporting - knowing your bottom line number
- Simplified money flows - Reduction in paperwork
- Simplified tax prep and record keeping
- Ensure beneficiary and title designations
- Centralized Estate administration
Do you confer with me before conducting any transactions?
- Initially, yes, through our IPS
- Then we have discretion and you will be notified via trade confirmations and most likely an email correspondence explaining the logic behind our trade.
- All trades are within parameters of your IPS
- Any “sacred cow” investments will not be sold until given permission/instruction to do so.
What is a fiduciary?
- Means we are obligated to act in our clients best interest - always.
- We cannot recommend investments that pay commissions because of this.
Employees seem young - why is this?
- Avg employee age is 33
- Avg client is 63 - meaning when clients are 83 our employees will be 53 and still actively involved in the firm. Provides continuity when our clients need it most.
- Financial planning is a multi-decade process. Young employees will be around to establish relationships with clients heirs.
