We sympathize with the growing legion of investors who are skeptical of today’s brokers, financial planners, and mutual fund companies. There is a growing sense that the financial industry is more focused on generating fees and commissions to enrich itself rather than helping people achieve their financial goals.
The prevailing model for many brokers and planners is one of high fees and commissions, subjective and idiosyncratic investing strategies, a lack of concern for clients’ after-tax returns, undisclosed third-party arrangements, and concealed conflicts of interest.
Jacobs Equity stands for transparency, objective and well-planned investing strategies, the avoidance of conflicts of interest, and a focus on enhancing our clients’ post-tax returns.
How are we different than many other financial planners, brokers, or investment advisers?
- Jacobs Equity is a Registered Investment Adviser (RIA). This means that Jacobs Equity has fulfilled all registration requirements with the appropriate government agencies in order to provide investment advice to the public. It also means that Jacobs Equity has accepted the responsibility to put its clients interests ahead of its own. As an RIA, Jacobs Equity is different from brokers, financial planners, and financial advisers that are not registered to provide investment advice. Non-RIAs such as stockbrokers and most financial planners operate as salespeople rather than trusted advisors. They are not required by law to put their clients’ interests first.
- We are a “fee-only” adviser. Simply put, this means we don’t work on commission, ensuring that our interests are aligned with those of our clients. Read more about the advantages of working with a fee-only investment adviser.
- Our management fee is competitive and often lower than other advisers. In our experience the overall fee paid by our clients, including all third-party expenses, is significantly lower than that paid by clients of most other advisers, brokers, and financial planners.
- We select investment products that minimize the fees and expenses our clients pay. For example, we do not buy class A or class C mutual fund shares. We do not buy investments with front-end loads, back-end loads, or surrender fees. Load mutual funds and other high-expense investments are not necessary for most investors.
- We carefully scrutinize investment products and service providers (e.g. brokers, custodians) to minimize commissions and fees that don’t add value to the investing process.
- We monitor and carefully minimize the brokerage commissions paid by our clients. In our experience the commissions paid by our clients amount to a small fraction of what they paid with their old advisers. Occasionally we are able to obtain free trades for our clients through broker promotions and bonuses. When such opportunities arise we pass through 100% of the savings to our clients.
- We do not charge an up-front or setup fee.
- We offer a free portfolio review or “second opinion” for investors who would like to know what we think about their portfolio. This offer is available whether the investor manages his or her own portfolio or uses an adviser.
- Most advisers collect their fee at the start of each quarter, so your first bill is due when you open the account and before your adviser manages your investments. We collect our quarterly fee at the end of the quarter. You won’t be charged an up-front fee.
- We do not charge any type of surrender fee. We hope to keep your business forever, but if you choose to leave we will not charge you a fee on your way out. We want our clients to stay with us because the relationship is working, not because they are “locked in” by punitive surrender fees.
Avoid Conflicts of Interest
- Jacobs Equity is independently owned. We are not owned by, nor affiliated with, any broker or investment company. As a result we do not share the debilitating conflicts of interest that plague the services of many other brokers and financial planners in the selection of brokerage services or investment products. In other words, we choose the best investments for our clients rather than the “fund of the week” pushed on us by “corporate.” We will always maintain our independent status. Our clients make more money because our advice is free from these types of conflicts of interest.
Client Account Sizes
- We serve both big and small clients. Most of our clients have an account size of $100,000 or greater. Unlike the vast majority of registered investment advisers, we also accept clients with smaller account sizes. Feel free to contact us to discuss whether our management services would be appropriate for your portfolio size.
Managing Client Accounts
- We personally make all investment decisions on all client portfolios. Unlike many financial planners, we are not a mere conduit to a set of third-party advisers that manage the account while imposing an additional layer of fees. We have heard from many investors that believed they had hired an investment adviser, but they had actually hired a salesperson who collected their money before outsourcing the actual decision-making to another firm. This can be bad for two reasons. First, it adds an unnecessary layer of fees. Second, often the relationship is not disclosed to the client. The client intended his or her account to be managed by the adviser, but that’s not what the client is getting.
- When our clients call our firm, they speak with us. We do not utilize a call center or automated phone tree. We do not employ an army of recent business graduates to handle phone calls. Our clients are never put on hold. They hear a familiar voice on the line when they call.
- We are an independent firm. We are not affiliated with a mutual fund company or brokerage firm.
- We encourage our clients to use an efficient and effective broker and custodian. The brokers that we recommend offer quality services at cost-effective prices. This means that our clients avoid paying for services they don’t need, resulting in better investment returns for our clients. Once a broker is selected we manage the relationship with the broker on behalf of the client.
- We work with a variety of clients. Most of our clients desire a “turn-key” solution where they can turn over the management of their portfolio. These clients do not want to spend time or energy thinking about their portfolio. A few clients prefer to watch the daily ups and downs of their portfolio. We have clients on either extreme as well as various shades of gray in between.
- We set up customized, optimized portfolios for each client. We do not simply place clients in a “box” or a “one size fits all” model portfolio.
- We respect and rely on the conclusions of the best academic research of the last several decades and continue to monitor the latest research. To the extent that it adds value, we incorporate it into our strategy. At the same time we recognize its assumptions and limitations and modify it accordingly to take into account real-world considerations such as the effect of taxes, fees, and emotions.
- We have considerable expertise in federal and state income tax. We pay a great deal of attention to the tax consequences of our investing decisions. To the extent possible we take into account each individual client’s tax situation in managing their portfolio. We actively help our clients reduce their tax burden by employing appropriate tax minimization strategies.
- In some cases we are able to help a client save or recuperate enough in taxes on a year to year basis to more than offset our management fee. In those cases the client is essentially receiving free portfolio management. Feel free to contact us to see if you might fall into such a situation.
- Most of our clients engage us to assist them in developing and reaching their retirement goals. Some clients have other life events in mind including saving for a house down payment or paying for their children’s college expenses. Whatever the goal(s), we use advanced quantitative techniques as well as our own experience and judgment to develop a concrete plan to achieve the goal(s). The plan will take into account the client’s financial status, risk tolerance, and time horizon. We utilize sophisticated portfolio analysis software to assist us in developing the plan and determining the likelihood of achieving the goal.