Portfolio Management is the Foundation of Financial Wellness
There are many facets to achieving long term financial wellness: portfolio management; financial planning; tax planning; and estate planning. All are important components but not equal in their impact on financial wellness. NS Capital believes that high-quality portfolio management–how your assets are managed and what you pay–is the critical component for long-term financial wellness. It is the foundation upon which all other facets are based.
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After we complete our advisory phase–which determines the wants and needs of each client–NS Capital focuses on portfolio construction and asset management exclusively. We are not a generalist firm because we know that high-quality portfolio management requires constant attention, which cannot be said of the other facets. This in no way negates the value of the other facets; but our approach is to partner with subject matter experts who also are focused solely on their specific discipline as we are on ours.
Planning decisions are event driven and require periodic attention.
When it comes to asset and portfolio management,
nothing is static–there are no one-time decisions.
1. Recognize the Two Types of Asset Management
PROFESSION
The goal is the intelligent management of an investment portfolio for superior long-term returns.
Success is determined solely on
client outcomes.
BUSINESS
The goal is to gather as many assets as possible to generate fees and create profits for the firm & its stockholders.
Success is determined by the firm’s stock price.
The business of asset management has an agency problem
In economics an agency problem is a mismatch of incentives between the principal (client) and the agent (fund company) whereby the agent profits at the principal’s expense.
2. Identify the Two Types of Advice
REGISTERED INVESTMENT ADVISOR (RIA)
Fiduciary
RIAs have a legal duty to act in a client’s best interests, which means they cannot parlay their position of trust for personal gain. Their compensation comes solely from their clients and nobody else.
REGISTERED REPRESENTATIVE (RR)
Agent/Broker
RRs recommend products selected by the firm that are deemed suitable with no regard to costs or conflicts. Their compensation comes from the firm and the providers whose products they sell.
Advice breaks out along very similar lines as the profession and the business.
3. Understand the Two Factors That
Impact Performance
SKILL
An active manager's selection should reflect their unique insights and abilities that can produce superior returns over time.
COST
The single best way to improve your investment performance is to ensure you receive value for the fees you pay.
Together, Skill and Cost are strongly tied to success.
4. Demand Full Transparency
Information you need to make good decisions in a form that is accessible at a time when it is needed
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What are all the fees and costs?
Commissions, asset management, 12b-1 fees, advisory fees, expense ratios, wrap fees, trading costs, underwriting fees, origination fees…
What are the conflicts of interests?
Revenue sharing (“pay-to-play”), proprietary products, directed brokerage, sub-transfer agency, affiliate ownership, platform arrangements, sales incentives, principal transactions…
Is there current and past litigation?
These “Brands” have paid over $321 billion in fines since the financial crisis.
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Is there an alignment of interest?
Simply stated, are the people advising and investing your money invested alongside you?
Better Information
Better Decisions
NS Capital's Transparency Analysis provides data driven insights to help you make informed investment decisions.
Contact us and we'll show you how transparency can protect your financial interests.