Why do I need an Investment Advisor?
The simple answer is that most people do not have the knowledge, experience, or time required to deal with the complexities of investing in real time, rapidly developing situations. It is the same reason many people do not do their own taxes or handle legal matters without help.
Many investors try to do their own investing in order to save a few bucks on management fees and commissions only to find that the constant barrage of news, earnings projections, and advice from respected professionals streaming in over the Internet hasn’t provided an easy solution to the age-old problems of successful investing. Even worse, for many investors panic sets in at the first signs of trouble, and they abandon a solid investment strategy.
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What you should expect from an Investment Advisor
According to Charles Schwab & Company, there are currently 16,000 Investment Advisors of various sizes and types (i.e., money managers, investment counselors, etc.) registered with the Securities & Exchange Commission. History has shown that an effective and efficient use of a money-manager should have the following ingredients for success:
There should be little or no conflict of interests in the advisor’s investment choices due to their independence from brokerage house influences. Most investment advisors work on a fee basis thus avoiding the conflicts surrounding commission pay structures.
It is also important that a client shares the same view of the investment world as the advisor. For example, growth investors should seek out investment advisors who use a growth-based investment philosophy in portfolio management.
Successful “money managers” have experience in dealing with a variety of market conditions and have the knowledge and capability to handle “easy money” bull markets as well as “terrifying” bear markets.
There are many time-tested strategies to the art and science of investing and all of them have good and bad years! An investment advisor provides a disciplined approach to managing a client’s investments and strikes a balance between yearly performance and investment-related taxes.*
Communication is key to a successful relationship, and every client should have direct access to the people who actually make the investment decisions. A client should have the same type of relationship with the investment advisor as he/she has with an accountant, an attorney, or a doctor.
There are many things to consider in evaluating an investment advisor. While many people intensely review the advisor’s performance track record, they often forget to ask for additional information such as client references. There is no magic formula to selecting a money manager! Make sure to evaluate candidates from many different perspectives.
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Portfolio Flexibility
Large investment advisors often use the "cookie cutter" approach in order to manage their huge amount of client assets. The investments are generally identical, regardless of whether or not they meet the individual client’s temperament or preferences.
At Winans International, each portfolio is “tailored made” to meet the exact needs of the client, and to allow the client a proactive voice in the management of his or her investments.
We can do this because of our technological capabilities! Mr. Winans' time-proven computer based investment research, and proprietary portfolio management systems allow, Winans International to maintain portfolios with vastly different goals, asset allocations and client preferences.
Our structure allows us to easily handle client requests such as:
- using various brokerage houses
- working with multiple accounts
- handling individual investment restrictions
- working with investments bought by the client
- implementing tax reduction strategies*
- holding client requested cash reserves
In addition, we can work with an existing portfolio, which eliminates liquidating the assets, thereby avoiding exposure to tax liabilities* and unwanted transaction costs. All accounts are held with brokerage houses who are members of SIPC, and Winans International only has discretionary authority to manage the accounts.
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Performance Goals
As the developer of market indices such as the Winans International Preferred Stock Index (WIPSI)™ and the Winans International Real Estate Index (WIREI)™, we know the pitfalls with managing portfolios based solely on quarterly comparisons to a popular market benchmark.
In his book Preferreds - Wall Street’s Best Kept Income Secret, Ken Winans spells out the problems with using benchmarks. “Unfortunately, the investing public blindly misuses broad indices in quarterly head-to-head comparisons and quickly makes asset allocation changes on the reported performance like it is some kind of race. While indices are useful in showing overall price trends, they are not useful as a sole performance gauge without an understanding of the assumptions used in the calculations of the indices.”
Winans International, and its clients, judge investment performance on a fixed five-year cumulative performance goal based on the long-term historical returns of the growth and income investments held in each portfolio. This approach allows our clients to maintain the investment discipline required to take profits in an “easy money” bull market and buy during the financial “carnage” of a bear market.
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Tax Considerations*
The primary job of an investment advisor is to exceed the client’s overall investment goals during good markets and to minimize losses during bad markets. Unfortunately, many investment advisors focus on short-term capital gains for higher gross quarter-to-quarter performance and cause their clients to pay unwanted taxes at the end of the year.*
At Winans International we pay close attention to after-tax returns where emphasis is placed on investment quality rather than short-term trading to achieve portfolio growth. We also emphasize investment placement within taxable and tax-deferred accounts to maximize after-tax returns.*
At Winans International, the client’s tax issues usually take priority over our performance track record.
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Broad range of investments
Many of our competitors specialize in only one type of investment, and their clients need to hire additional advisors to handle the other investments in their portfolio.
In order to help meet our client’s various investment goals and levels of sophistication, we have experience using the following types of investments with long, short and hedging techniques:
- stocks
- bonds
- real estate
- mutual funds
- commodities
- stock options
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Defensive Cash levels
While many of our competitors adhere to a policy of being "100% invested, 100% of the time", we often maintain large cash levels in uncertain times.
History has shown that there are times when investors should be cautious and keep money temporarily on the sidelines. Our policy is to hold cash in money market accounts until we find what we believe are the best investments, at competitive prices, in a favorable investment climate.
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Timely Customer service
Many people know their accountants, doctors, and attorneys well, but have never met the people who actually manage their money. They probably know their brokers, but what about the people who make the decisions within the mutual funds held in brokerage accounts?
Our staff is very familiar with EACH of our clients’ needs. Most issues are handled within 24 hours and our clients have direct access to our President & Founder, Ken Winans. In fact, we are one of the few investment firms that still make "house calls", where clients can meet with our staff in the privacy of their own homes.
Or, if you prefer, we also have video conferencing capabilites through Sightspeed.
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Reasonable fees
Unlike the hard to find, often excessive, fees charged by many mutual funds, annuities, and investment management programs offered through brokerage houses, our compensation is straightforward and is based on a percentage of assets or on an hourly basis. Our management fees are normally posted on the front page of our quarterly Portfolio Overview, so that our clients can easily review them.
We offer our clients a fee discount by having the value of WI managed portfolios from different family members combined in order to receive the reduced fee given to a larger single portfolio.
Winans International also conducts investment research services on an hourly basis.
Our fees may be tax-deductible.*
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Easy to read reports
While most investment advisors give their client’s reports showing performance, not all reports are the same.
Our quarterly "Portfolio Overview" report is all-inclusive and is designed so investors with various levels of experience can easily follow their investments with one report. In fact, investment related tax information is provided quarterly, so that clients and their accountants can plan accordingly. We think it is the best report in the industry!
The client also receives transaction receipts and monthly statements directly from the brokerage houses holding the client’s assets.
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