What is the key difference between a broker and a Registered Investment Advisor (RIA) like Victrix?
The most significant differences between a broker and an RIA come down to “fiduciary duty” and commissions. Brokers are not fiduciaries and they earn commissions. RIAs like Victrix Investment Advisors are subject to the fiduciary standard and do not earn commissions. In our view, the Fiduciary Standard is the ‘gold standard’ of care for clients. This link from the Wall Street Journal explains the important differences between RIAs and brokers.
You suggest that fees at Victrix Investment Advisors are lower than many of your competitors. Are you doing something different that gives you a competitive edge?
At Victrix, we utilize Exchange Traded Funds (ETFs) and individual securities to build client portfolios. We are diligent about costs, and we normally select ETFs that have expense ratios in the bottom quartile. Frequently, we purchase individual securities which have no expense ratio. Many of our competitors use actively-managed mutual funds. This practice creates a second layer of fees for the client. According to the 2016 Investment Company Institute Factbook, the average fee for actively-managed stock mutual funds in 2015 was 0.84% (ICI 2016 Factbook). Fees like these are in addition to the advisory fee charged for selecting your mutual funds and managing your asset allocation. The clients’ fee at Chapman Capital is very competitive because we employ low-fee ETFs or no-fee individual securities, or a blend of both.
What is a CFP®, CERTIFIED FINANCIAL PLANNER™?
They are certification marks owned by the Certified Financial Planner Board of Standards Inc. (CFP® Board). The CFP® designation helps you identify financial planners who are both competent and committed to ethical professional behavior. To become certified by the CFP® Board, one must first pass five graduate-level examinations in the areas of financial planning, taxes, insurance, estate, and retirement planning. Once these preliminary exams are passed, the CFP® candidate must pass a comprehensive ten-hour certification exam, as well as fulfill the industry years-of-experience requirement.
What is a CFA® , Chartered Financial Analyst ?
The CFA® charter is awarded by the CFA® Institute. (CFA® Institute). To earn the CFA® charter, candidates must sequentially pass three six-hour exams that are widely considered to be the most rigorous in the investment profession. The CFA® Institute reports that the average candidate studies 300 hours for each exam. In addition, the CFA® charter candidate must accrue four years of relevant work experience. The CFA® curriculum includes ethical and professional standards; financial reporting and analysis; corporate finance; economics; quantitative methods; equity, fixed income, alternative investments; derivatives; portfolio management; and wealth planning. It is one of the most respected post-graduate certifications in the field of investment management, and is considered by many to be the gold standard in the field of investment analysis as a whole.
How can I be confident that Victrix is not another ‘Bernie Madoff?’
At Victrix, we have important safeguards in place to give our clients confidence their assets are being handled with the utmost integrity. First, Charles Schwab is the independent custodian for our clients’ accounts. Charles Schwab is the largest custodian of client assets for independent advisors, with $800 billion in their custody as of 2015. Since our clients’ investments are held at Charles Schwab, the client account statements are produced by Schwab, not by Victrix. Employing a respected custodian such as Charles Schwab provides transparent and independent reporting for our clients. In addition, our clients can view their assets from any computer or device by logging on to Charles Schwab online. Using Charles Schwab as an independent custodian is a vital check and balance measure which helps protect our clients from fraud or identity theft.
How does Victrix manage money through the roller coaster ride of the investment markets?
Our disciplined process helps our clients avoid making investment decisions based on emotions caused by market volatility. We rely on our decades of experience to remain calm when markets look bleak, and to remain steady when the market is irrationally exuberant. We remain even-tempered, and this centered approach helps our clients remain resolute in the face of market volatility. The consistent focus on our clients’ long term goals, supported by our even-tempered approach, improves our clients’ probability of success over time.