We recommend you choose us to be your primary investment advisor and financial planner. We like to let our prospects know this on the front end so they understand our philosophy around consolidating their investments with Bragg Financial Advisors. Just as it does not make sense to have two or three primary care physicians, having multiple advisors can make it difficult to navigate strategically and practically. Your primary care physician should pull in a team of specialists when needed, and we also recommend you have specialists; part of our planning offering is to work and coordinate with your attorney, CPA, and insurance advisors.
Here are the practical reasons why having one investment advisor is almost always best:
Correct Asset Allocation: Even if a client’s overall investment allocation is the same with multiple advisors, they may end up with concentrations in one holding, sector, or asset class. Portfolio Managers at Bragg pride themselves on thoughtful security selection, position size, asset location, and allocation decisions.
Security Selection: The larger the size of the portfolio, the more we can invest in individual stocks which are more tax efficient than mutual funds and which have significantly lower ongoing holding costs.
Asset Location: It is difficult for Bragg to employ our asset location strategies when assets are spread among various firms. Asset location refers to the practice of owning the appropriate allocation and securities in the appropriate accounts based on how those accounts are taxed and when they are likely to be relied upon for cash flow. You can read about asset location in the article Asset Location for Tax Efficiency.
Wash Sale Rules: If a security is sold at one firm for a loss and repurchased at another firm within 31 days, your ability to take a loss on the sale is disallowed.
Taxes: Portfolio Managers at Bragg are extremely aware of our clients’ tax situation. We set capital gain tolerances and work within them. With assets held away, we are not aware of and cannot control income from other sources.
Reporting: Clients benefit from single-source comprehensive reporting. Our performance reports include net performance figures and appropriate benchmarks for comparison purposes. Clients can easily find the answer to the question, “How did my portfolio do compared to the appropriate market indices?”
Meetings: Clients benefit from meeting with one advisor versus trying to schedule multiple review meetings each year.
Holistic Planning: We can offer our clients the best and most informed comprehensive financial planning. You will have access to a team of professionals who offer depth and specialization in many areas of wealth management, ranging from tax planning, portfolio management, charitable and estate planning, education planning, risk management, and debt, cash flow and retirement planning.
Cost: Last but not least, fee schedules are regressive. That is, the percentage fee you pay your advisor(s) declines as the assets under management increase. Therefore, the “expensive” part of the advisory fee is on the first dollars in the door. As the level of assets under management increases, the effective fee as a percentage of the overall account declines significantly. Aggregating all assets under one fee schedule will typically result in significant savings.
All of the above may sound logical, but what about the “Don’t put all your eggs in one basket!” philosophy we have heard for so many years? As it pertains to investment expertise, we would encourage you to choose one advisor who can allocate your dollars among multiple asset classes and fund managers. This ensures that, from an investment risk standpoint, you are deliberately NOT putting all of your eggs in one basket as the advisor is deliberately building a diversified portfolio.
But what about the risk that your advisor has access to ALL of your nest egg? The way to mitigate this risk is to use an advisor who does NOT have direct custody of your assets. Bragg has never held custody of any of our clients’ assets. All client assets are held by third party custodians—either Pershing or Schwab. Pershing is a clearing and custodial firm owned by Bank of New York Mellon and is one of the larger clearing and custody firms in the US, responsible for the custody of over $1 trillion in assets. Charles Schwab likewise has custody of over $1 trillion in assets. Our clients never write checks to “Bragg;” instead all checks are written and directed to Pershing or Schwab. These third party custodians report directly to the client with monthly statements, trade confirmations and activity summaries and tax reports.
At Bragg, we get excited about making a big commitment to our clients. As a team, we welcome and celebrate when a new client joins our firm and the entire Bragg team commits to giving each client the best service possible. We want to establish a strong foundation for a long-term relationship. Just as we make a big commitment to our clients, we hope our clients will carefully consider this important decision and make a commitment to Bragg as well. Thank you for considering Bragg as your primary investment advisor. We welcome the opportunity to discuss your plans, goals, and questions.
Disclaimer: We are happy to share these ideas with you. Please know we do not practice law and we are not attorneys. We are happy to partner with you and your attorneys to help you accomplish your goals.