How
to Invest
at Conservative Wealth Management LLC
Q: How do I become
a client?
A: Send us an e-mail
or give us a call: (323) 876 3300. Let's talk. If you want to
fax me your latest statement, we can talk about that, too. Just
fax it to (323) 843-9929 -- any length, no cover page required.
Q:
What is your minimum?
A: One million dollars.
Q:
What are your fees?
A:
Under
1% on the first million, falling steeply thereafter, for our
typical low-maintenance client. Our
goal is to be affordable and easy to work with. We are a fee-only
advisor and do not sell any commissioned products.
Q:
What's your track record?
A: 2008: underperformed benchmarks by
several percentage points. If you did not underperform the benchmarks
during the market panic, you are probably doing something wrong.
It suggests that you are making seat-of-the-pants timing calls
of the kind that no one can make reliably, or that you hold
an underdiversified portfolio with questionable long-term risk/return
trade-offs. The fact that you had a lucky outcome does not mean
that your strategy was correct.
The
Dimensional Fund philosophy has been outperforming since March
2009. It outperformed during the 2000-2003 market collapse and
throughout the subsequent 2004-2007 bull market. It underperformed
during the 1997-2000 tech bubble, as did virtually everything
that wasn't tech.
The
highly diversified investor always owns some of everything.
He wishes he owned more of the winners and fewer of the losers,
but he recognizes that today's losers are just as likely to
be tomorrow's
winners and vice versa.
The
steadying influence of an investment advisor can help you secure
the long-term returns that the stock market tantalizingly promises,
yet rarely delivers, due to investors' in-and-out, counter-productive
performance-chasing ways.
Wall
Street is a school with an expensive tuition. Very smart people
lose money there every day. Over the long run, success comes
from careful risk management, not from being a genius stock
picker. Chasing yesterday's returns condemns you to be forever
running behind a train that has left the station.
Q:
How do you construct a portfolio for me?
A:
Here
are the general steps:
1)
Construct an efficient equity asset allocation to capture the
returns from the global market.
2)
Diversify with commodities, real estate investment trusts, market-neutral
funds, and other instruments to try to optimize the forward-looking
risk-adjusted returns.
3)
Add bonds as required to reduce risk in the service of your
portfolio's objectives.
4)
Periodically adjust the target asset allocation according to
the relative valuations of each component asset class. This
is determined by comparing their valuations today with their
historical valuations. This is called tactical asset allocation
or long-term market timing and is
consistent with a passive index philosophy.
That
said, all portfolios are custom-tailored to the individual situation
of the investor.
Q:
How do I know that you're not the next Bernie Madoff?
A: You don't. That's why the following safeguards are important:
1)
We do not accept custody of client assets.
2)
Your money is held at Fidelity
Investments -- one of the world's largest investment firms.
3)
The account is held in your name, and the money in the account
can only be transferred to another account with the same registration.
4)
Fidelity sends you monthly statements, and you can look at your
account online whenever you wish.
5)
All accounts are non-discretionary. You are in control,
and nothing is bought or sold in your account without your prior
written approval. With your permission, we deduct our management
fees from your account on a quarterly basis.
6)
We do not do the performance reporting on your portfolio. You
check it by logging on to the state-of-the-art Black
Diamond online portfolio performance reporting. Positions
and transactions are downloaded, reconciled, and valued daily:
you can check your performance yesterday or over any time period
you desire. There's plenty of drilldown and export capability
as well.
Are
you still scratching your head trying to figure out those intentionally
confusing paper reports from advisors and custodians? You are
going to love Black Diamond, which makes everything as transparent
as plate glass. We can even pull in the data from your outside
accounts so you can monitor all your investments at one place.
Q:
What if you become incapacitated?
A: In the event of our inability to continue as your advisor
for any reason, you will be referred to an advisor with a similar
investment philosophy so you won't have to sell anything. The
accounts are always in your control so that you have complete
access to them at all times.
Now
turn the question around: what if you die or become incapacitated?
Who is going to fend off the slick financial predators that
will descend on your family? An investment advisor like Conservative
Wealth Management LLC has a fiduciary responsibility to its
clients.
Q:
But you're in Los Angeles and I live in North Dakota…?
A: With the advent of the Internet, the fax machine, e-mail,
the telephone, Federal Express, not to mention the U.S. Postal
Service, this does not present any difficulty. We have clients
all over the country, most of whom we have never met.
Q:
Who is your typical client?
A: The usual mix of entrepreneurs, executives, and professionals.
For some unknown reason, we seem to attract clients who are
already successful investors on their own. A disproportionate
number also have what might be called a scientific or engineering
orientation.
Q:
Will Ben Stein be managing my money?
A: Ben is a dear friend and a client, and we discuss the market
constantly -- some would say, obsessively. However, he is too
busy topping off his own money bin to manage anyone else's.
Q:
What's your outlook for the market?
A: Irrelevant. We do not invest according to market predictions.
Q:
How can I learn more about what you do?
A: Look at my writings...
