How was IDA established?
IDA was originally established in 2009 as Labrum Wealth Management. In 2019 we re-branded to IDA – Intelligence Driven Advisers, LLC in order be better identify who we are and what we do for clients which is helping them create financial strategies and tailor investment portfolios to meet each client’s individual goals and objectives. As full-time, all-the-time Fiduciary Wealth Advisers, we help our clients by putting their interest first in every situation.
Why is being a TRUE fiduciary so important?
Providing advice that is always in the best interest of the client under the duty of loyalty and duty of care is what being a fiduciary means. In our world, you can’t do this part-time. It’s and all or none sort of thing. If an advisor is not a full-time, all-the-time fiduciary they can suggest investments that are “suitable” and not necessarily in the “BEST” interest of the client. Financial Advisers and firms who are not full-time, all-the-time, fiduciaries often receive additional compensation which is not disclosed to the client for selling certain products vs. others. This very act is a conflict of interest which can result in bias toward something that is not the absolute best for the client.
For example, there are investment companies with household names, who represent themselves as a discount model or somehow lower cost and that they are serving the best interest of their clients. However, when you peel the layers you will find their advisors are getting paid, sometimes as much as 3x, for selling the “house” product or proprietary product. Unfortunately, that very product that pays more to the adviser is NOT in the client’s best interest, but the individual client goes completely unaware of the deception that is perpetuated on them.
So, I ask you this question. Does it make sense to pay for and receive financial advice from someone who is not obligated to act in your best interest in every circumstance? If you don’t believe so, then we invite you to talk to one of our advisers at IDA.
What is the difference between and Advisor and Adviser?
The Investment Advisers Act of 1940 is U.S. federal law that defines the role and responsibilities of an investment adviser. The law was created to protect consumers against misleading and fraudulent investment advice. While both terms can be used interchangeably, we believe that acting under the duty of loyalty and duty of case as a full-time fiduciary is what advisers do, while operating under the “suitability” rules is what “advisors” do. To be clear, we are not stating this is law, just simply our view. However, since the act is called “Investment Advisers Act of 1940”, we think the right term is Advisers.
How is IDA compensated?
IDA is compensated by a fee for assets under management. This fee starts at 1% and is reduced as assets increase. There are situations where we charge a financial planning fee in addition depending on the client complexity and situation.
Neither our firm nor Advisers receive compensation from the investment products we offer. When we provide insurance solutions there are situations where we are paid commission by the insurance agency. We believe it is important to disclose that compensation to our clients. At IDA potential conflicts of interest are ALWAYS disclosed, and IDA has a strict policy for reducing any product bias that may exist. As Fiduciary Wealth Advisers we are committed to service our clients as financial planners and investment advisers from a fiduciary perspective.
Are fees for Financial Planning and Tax Planning separate from management fees?
Depends on the client situation. Financial planning is very customized and should be evaluated on an individual client basis. There are times when there is complexity that warrants a financial planning fee. If there is an additional cost for planning, it is discussed and fully disclosed and agreed upon prior to the start of a relationship.
Who is the custodian of all IDA assets?
We custody assets at Charles Schwab and Fidelity
What type of Tax Planning does IDA provide?
Our entire financial planning process is inclusive of tax planning and the tax aspect of our clients. Taxes play a major role on the NET returns to clients. As financial planners and investment advisers providing holistic wealth management advice, we think it’s very important to plan for taxes. We also work closely with our clients CPA’s and tax professional to coordinate the advisory circle. IDA does not provide specific tax or legal advice; any tax or legal questions should be addressed with your tax and/or legal advisor.
What type of Financial Planning does IDA provide?
Our Financial Planning is comprehensive and holistic in nature. We have CERTIFIED FINANCIAL PLANNER™ staff who prepare and review plans helping to make sure we cover all aspects of a client’s financial life. At IDA we use a cash flow financial planning software which is the most sophisticated planning software allowing us to evaluate the cause and effect relationship of an unlimited number of scenarios. In our opinion, the right financial planning process coupled with a discipline investment philosophy will help clients find True Financial Peace of Mind.
What benchmarks does IDA use when determining performance?
IDA uses a custom blended index strategy. We also look at all the major and common indexes. Our fiduciary financial advisers help clients understand the appropriate benchmark to compare performance against. Benchmarks and indexes are often misunderstood. For example, many people will ask about the markets when referring to the S&P 500, Dow Jones 30, or Nasdaq 100. While those indexes are a good representation of the US large cap markets, they are a poor representation of a total stock market and zero representation to the bond market.
What does Tolerance-Band Rebalancing™ mean?
Tolerance-band rebalancing is a proprietary trading methodology that helps us to sell high and buy low, through discipline and not market timing and guessing. Using a sophisticated rebalancing algorithm, we can look at each client’s account every single day to see if the minimum or maximum tolerance band have been breached. Certainly, you’ve heard of the adage “there is no free lunch”, well that is true in investing with a few exceptions – We believe asset allocation, rebalancing, low-cost investments help you get the most return for a given level of volatility. It’s kind of like a “free-lunch”.
What type of services do you provide for wealth management clients?
Concierge, comprehensive wealth management from a full-time fiduciary perspective. Each of our clients will have a financial planner who will guide them through a process of identifying their TRUE financial purpose. We think investing is more than just numbers, percentages and benchmarks. We think investing and planning is personal and should be based on the purpose of your life.
What asset allocation does IDA use?
We have customized portfolios ranging from capital preservation to aggressive growth and all along the spectrum. Each portfolio has an asset allocation that is designed to provide the best return for a given level of volatility. We help clients determine the target rate of return which is needed for them to achieve their financial goals and objectives, then we discuss the amount of volatility the client will experience in seeking to solve for that target rate of return. Asset allocations include equites, both US, International and Emerging markets. For bonds we include both high quality and high yield, short and intermediate maturities. We also include alternatives such as real estate, market neutral etc.
Does your wealth management service have a minimum of investable assets?
No. We help all types of clients. Most of our clients have at least 1mm in investable assets but we have certainly worked with clients who have less. We also work with several higher net worth families. More important to us is the type of person we are serving. We look for people who understand and appreciate the advice of a professional and those who are willing to invest based on a philosophy that is rooted in historic data, academia and investment truths.
When I become a client of IDA who will I work with?
You will have a lead adviser and servicing adviser as well as a client service associate. We have structure diamond teams to ensure the service to our clients never diminishes. We pride ourselves on prompt response time, high net promoter scores and client retention, thus we are extremely focused on the service and relationships we have with our clients.
How can I review my accounts and investment performance?
You will have access to your accounts through our private client portal which can include all your financial planning. You also can access your accounts through the custodian where your accounts are held. We also have an app for your iPhone or android, so your accounts are a close as you want them. Depending on a client’s preference we will customize the on-line experience best suited for their technological capabilities.
What is IDA’s investment philosophy?
We believe that markets work and are relatively efficient. We believe in global asset allocation and diversification and low-cost investments. Therefore, we want to build portfolios that deliver targeted rates of return for clients that match their financial plan, by executing our behavioral coaching, asset allocation, re-balancing, tax-loss harvesting, tax sensitive asset location we believe we can get better performance than the huge preponderance of investors simply by not making the mistakes most investors make. Discipline is critically important, and we help make the journey of investing peaceful due to a philosophy that is absent from magic wands and crystal balls. Instead, our philosophy is built on academic data, historic evidence and time-tested principles of investing.
Does IDA pick stocks and bonds?
We believe almost ALL publicly available information is already priced into securities and thus the current price is a good reflection of a company’s value. There is consequential evidence which shows investing in individual stocks vs. baskets of stocks through low cost mutual funds and ETF’s is not worth the additional risk. According to a “different way to invest by Dimensional funds” A large majority of stock picking active money managers do not outperform their benchmarks and those that do often do not repeat that outperformance. In our option, this single statistic is more than enough evidence to prove that investors and financial advisers should not be picking individual stocks and bonds. Individual stocks and bonds also expose portfolios to unsystematic risk which is unnecessary. We want to have the diversification of a larger number of holdings, so we use low-cost, tax-efficient mutual funds and ETF’s. In the end, we own hundreds if not thousands of stocks and bonds, and we are able to do this with just 10 to 15 positions in a clients account.
What is an ETF, and will I have it in my portfolio?
An ETF is an exchange traded fund. Like a mutual fund except ETF’s trade throughout the day with a bid/ask whereas, mutual fund price at the end of the day. There are small pros and cons to each but none of which are compelling enough to use one or the other exclusively.
CURRENT EVENTS QUESTIONS
How does a pandemic like Coronavirus effect the market/ my performance?
The average equity fund investor has had an average return of 5.04% the last 30 years while at the same time the S&P 500 returned 9.96%. (Source: Dalbar, 2020 Quantitative Analysis of Investor Behavior, data ending Dec 31, 2019) The reason is simple. The average investor panics and are fearful when markets decline. We believe those that invest with discipline and ride the tide get rewarded with market returns and build real wealth.
So, let me ask you. Do you think Warren Buffet runs for the door when an investment he owns goes down? Or, do you think he buys more? Do you really think if you would get out now, you would get back in when things are worse, aka markets lower? Or, would you wait till things are better, aka markets are higher? I would dare bet the latter and then you would have average returns vs. Market returns.
We are here for you, to help avoid investment blunders that destroy long term returns. It’s why the cost to hire us is multiple times less than the benefit you will receive from following the IDA Philosophy and discipline.
We understand how it feels and we are invested just like you. It’s not easy, that’s why few can succeed. With over 350 years of collective experience on our team, 350 years of study, practice, application and discipline we have been through this before and have confidence in how to handle it.
For your financial future, believe that markets work, believe that capitalism (the creation of goods and services being sold for a profit) is not going away in our lifetime, believe in the data which is irrefutable. Yes, it’s a different name and event but markets have been volatile since the beginning, it’s how new information gets priced. This too shall pass.
When should I sell to prevent losses?
With a disciplined re-balancing strategy, you will sell at the top of markets when asset classes have grown. This very act of rebalancing will help you reduce the potential downside and volatility in your portfolio.
Intelligence Driven Advisers Disclosures
This information is for educational and informational purposes only and should not be considered investment advice, a recommendation to buy or sell securities, a solicitation, or intended to infer that the approach to investing discussed herein will assure any results. Unless otherwise noted, returns do not reflect fees, brokerage commissions or other expenses of investing. All investing involves risks and costs and clients may experience a loss.
The Dalbar study was conducted by an independent third party, DALBAR, Inc. A research firm specializing in financial services, DALBAR is not associated with Intelligence Driven Advisers. The information herein is believed to be reliable, but accuracy and completeness cannot be guaranteed. It is for informational purposes only and is not a solicitation to buy or sell securities. The Standard & Poor’s 500 Index – S&P 500 is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value. The S&P 500 is a market value or market-capitalization weighted index and one of the most common benchmarks for the broader U.S. equity markets. The Dow Jones Industrial Average (DJIA) is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq. The NASDAQ-100 (NDX) is a stock market index made up of 103 equity securities issued by 100 of the largest non-financial companies listed on the Nasdaq stock market. It is a modified capitalization-weighted index. The stocks’ weights in the index are based on their market capitalizations, with certain rules capping the influence of the largest components. Unless otherwise noted, index returns reflect the reinvestment of income dividends and capital gains, if any, but do not reflect fees, brokerage commissions or other expenses of investing. Investors may not make direct investments into any index.
Intelligence Driven Advisers is an SEC registered investment adviser; however, such registration does not imply a certain level of skill or training and no inference to the contrary should be made. For detailed information about our services and fees, please read our Form ADV Part 2A, which can be found at https://www.advisorinfo.sec.gov or by calling us at (760) 707-5555. The information presented here does not represent specific tax or legal advice, any tax or legal questions should be addressed with your tax and/or legal advisor.