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 How was IDA established?

IDA was originally established in 2009 as Labrum Wealth Management.  In 2019 we re-branded to IDA – Intelligence Driven Advisers, 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 Consultants, we help our clients by putting their interest first in every situation. 

Why is being a TRUE fiduciary so important?

Advisers vs. advisors is the different between providing advice that is always in the best interest of the client under the duty of loyalty and duty of care.  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.  Other issues also exist when hiring a financial advisor vs. a financial adviser.  Financial Advisors and firms who are not full-time, all-the-time, fiduciaries can 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 totally interested in serving the client.  However, when you peel the layers you will find their advisors are getting paid, sometimes as much as 3 times, for selling the “house” product or proprietary product.  Unfortunately, that very product that pays more to the advisor is NOT in the client’s best interest, but the individual client goes completely unaware of the deception that is perpetrated 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 goes down from there based on the amount of assets managed.  There are situations where we charge a financial planning fee in addition depending on the clients complexity and situation. 

Neither our firm nor our Advisers receive compensation from the products we offer, excluding life insurance products.  Any potential conflicts of interest are ALWAYS disclosed and IDA has a strict policy for reducing any product bias that may exist.  As Fiduciary Wealth Consultants we are committed to serve our clients as financial planners and investment advisers from a fiduciary perspective.

Are fees for Financial Planning and Tax Planning separate from management fees?

It 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 allows us to sell high and buy low, through discipline and not market timing or guessing.  Using a sophisticated rebalancing algorithm, we are able to look at each client’s account every single day to see if the minimum or maximum tolerance bands have been breached.  Certainly, you heard of the old adage “there is never a free lunch”, well that is true in investing with a few exceptions – Asset allocation, rebalancing, and low-cost investments are some of the strategies to help you get the most return for a given level of volatility. 

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.  Helping our clients achieve the most from their wealth is our goal. Whether it’s travel, giving to charity, helping future generations, we will derive a plan and strategy which can create a reliable financial journey full of peace of mind.

What asset allocation does IDA use?

We have structured portfolios from 0 – Capital Preservation to 10 – Aggressive Growth and individual allocations along the spectrum.  Each of those portfolios have an asset allocation that is designed to provide the best return for a given level of volatility.  We help clients determine what the target rate of return 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 equities, 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?

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?

Every client will have access to their accounts through our private client portal which can include the clients financial plan and financial planning tools.  In addition accounts can be accessed through the custodian where the accounts are held.  We also have an app for iPhone or Android so accounts are easily accessed.  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 the large majority of publicly available information is already priced into securities and thus the current price is a very accurate reflection of the 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.  As an example, approximately 87% of the stock and bond picking active money managers have underperformed their benchmark, and those that did often cannot repeat it. (need to add source)  In our opinion, 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.  It is similar to a mutual fund except ETF’s trade throughout the day with a bid/ask whereas mutual funds 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.

What effect does a pandemic like Coronovirus have on the market/ my performance?

The average equity fund investor has had an average return of 3.98% the last 30 years at the same time the equity markets have returned 13.3%. (add source) 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.


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