Long Run Investment Management LLC

 

 

 

 

 

For Email Marketing you can trust

 

 

         

 

 

Who holds my securities / investments?

 

What should I expect?

 

Why primarily use Mutual Funds and ETFs instead of individual stocks, like some firms do?

 

I already have a portfolio. Will you sell my current investments?

 

What is fee-only?

 

I already have a broker, why should I select a fee-only advisor?

 

Why should I care about the "alphabets" after an advisor's name?

 

After my investments have been selected, why keep on paying a fee?

 

Long Run Investment LLC Securities and Investments
 
Who holds my securities / investments?

All assets are held by a third party, not by us. We partner with TDAmeritrade to use as your custodian. Your accounts will be held directly in your name. Superior customer service is enhanced through our direct computer links with TDAmeritrade. In this way, we monitor your account, check balances and efficiently make changes to your portfolio when warranted.  You will have full access to your investments and will receive trade confirmations and quarterly statements directly from TDAmeritrade to ensure complete peace of mind that you have control of AND access to your money.

 

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What should I expect?

Helping you achieve your financial goals is our most important job. Once your needs are understood and documented, we will manage every aspect of the portfolio implementation. We will guide you in moving accounts from your existing custodian, create a portfolio tailored to your needs, and implement the portfolio. You will receive trade confirmations of all trades that were executed, and we will send you a holdings summary once all aspects of your portfolio have been implemented. Your portfolio will then reflect various disciplines and global markets, adjusted for your personal situation, investment objectives, and risk tolerances.

 

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Why primarily use Mutual Funds and ETFs instead of individual stocks, like some firms do?

We use mutual and exchange traded funds, rather than individual securities, as the primary investment vehicle to manage our clients' portfolios for sever-al reasons. First, diversification offered by mutual funds as compared to individual securities is difficult to duplicate. Even with a large number of individual holdings, it would be difficult to get a well diversified portfolio in all key market segments, such as large, mid, and small cap stocks, foreign stocks, and other alternative investments such as real estate and commodities.

 

Second, even if you could build a portfolio with enough individual holdings to get reasonable diversification across all of those asset classes, it is unlikely that one manager could be an expert in all of them. Most managers specialize in one area, such as small to mid cap growth. They may follow 100 + stocks, and invest in 3080+. Many times , institutional managers (those managing mutual funds and ETFs), use a team approach, where each team member is assigned an industry to follow. But with mutual funds and ETFs, we can tap top investment experts worldwide that specialize in those areas. Plus, with some of our passive funds, the cost of ownership and liquidity is far superior than owning individual stocks.

 

Third, using funds allows us to adjust your portfolio quickly and efficiently when market events or your personal circumstances require action. And since we leave the specific security selection to others, we spend more time monitoring your account and making sure it is properly positioned to meet your investment objectives with a minimum amount of risk.

 

We will use individual securities in certain circumstances. By using funds, we can then purchase a few individual stocks to supplement your income portion of your portfolio. Also, depending on the size of your portfolio , we will develop a structured portfolio of individual bonds, which provides greater control over principal while reducing the impact of interest rate fluctuations.

 

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I already have a portfolio. Will you sell my current investments?

Yes, probably, over time. We will first determine the tax implications of doing so. If you have unrealized losses, it is likely well sell your current investments. If you have unrealized gains, well weigh the tax implications of sales against the advantages of rebalancing, your overall objectives, and your risk parameters. For example, if you hold a large, single position, we will work on reducing the risk of holding such a large position over time. We will also look at your different asset classes. If you hold all large cap stocks, we, again, will reduce the position to both reduce the risk and increase the potential of higher returns. Beyond tax implications, new clients may own mutual funds that have backend loads; we refrain from selling such funds until backend load periods elapse. We only sell existing investments after thorough analysis of the advantages and disadvantages of doing so. We generally wont liquidate individual bond holdings unless it is advantageous to do so. Rather, we will hold them to maturity.

 

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What is fee-only?

The fee-only advisor has been becoming more popular within the past few years. Although they have been around for quite some time, it hasnt been until recently where they have gotten much more traction. The fee-only investment advisor has been around for decades for the institutional investor and trust clients. Many larger banks always offered investment management services to high net worth individuals, usually associated with their trust department. I worked with Bank of Americas investment management department, where we split our resources between institutional clients (pensions, mutual funds, and foundations) as well as high net worth clients (those who had various trust accounts as well as other type of accounts).

 

The concept of fee-only is straight forward there are no products sold to investors. There are no contests pushing brokers to sell $1,000,000 worth of limited partnerships (as I experienced as a broker myself in the 80s). There is no pressure to sell the latest product that marketing has developed. All fees are disclosed before the relationship begins, and all potential conflicts of interest are disclosed as well. These investment advisors are not affiliated with a broker/dealer.

 

There are some independent brokers who are also fee-only. They generally have two segregated firms, one specifically for brokerage accounts, charging commission, and a segregated firm specifically for fee-only. Large Wall Street firms also offer some fee-only services, but are generally more expensive and much more limited in the securities they offer.  Many fee-only advisors are strictly financial planners, charging a flat fee for specific planning needs, such as college education advice, or retirement planning. They then may also offer asset allocation services. Other fee-only advisors focus more on investment management, and use financial planning as a holistic approach to investing. This is the approach we take.

 

Almost all fee-only advisors have earned the CFP designation or are a CPA-PFS (Personal Financial Specialist). A few advisors have earned the CFA designation.

 

Fee-only advisors are considered Registered Investment Advisors and are regulated by either the SEC or within the state where they do business. All fee-only firms must file an ADV form, which discloses, among other items, investment style, services provided, potential conflicts of interest, and fees.

 

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I already have a broker, why should I select a fee-only advisor?

Fee-only advisors are paid for their expertise. Brokers, like those in Wall Street or from and insurance company, are usually paid for selling financial products. With a fee-only advisor you avoid the conflict of interest inherent in someone selling products that primarily benefits themselves more than it benefits you.

 

With many brokers, its a one and done deal. You may get a "no-load" fund. But that typically has a backend load AND high 12(b)1 fees. These fees may be, and usually are, higher than fee-only advisors! Fee-only advisors have your best interest at hand.

 

When hiring a fee-only advisor, especially one that has either a CFP designation or is a CFA charterholder, you get complete, unbiased advice that takes into account your needs, not what product will make us the most money today. You usually get better educated, better informed, and unbiased opinions than you would dealing with a Wall Street focused broker. For more information about fee-only advisors, see what others are saying at:

http://moneyover55.about.com/od/findingqualifiedadvisors/tp/bestfinancialadvisor.htm  

 

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Why should I care about the "alphabets" after an advisor's name?

This is one of the most important aspects in selecting an investment advisor. There are many designations after advisors names. The three most common in the financial planning and investment management business are the Chartered Financial Analyst (CFA), Certified Financial Planner (CFP), and the Certified Public Accountant / Personal Financial Specialist (CPA/PFS). All three designations show that the holder demonstrates a higher level of investment management achievement and skill certainly something investors want and need. Without at least one of these designations being achieved by your financial advisor, you may be dealing with someone who simply isnt educated and lacks the credentials necessary to manage your finances. For more information, please click on the following link.

http://www.investopedia.com/articles/01/101001.asp#axzz1bGIuMszB

 

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After my investments have been selected, why keep on paying a fee?

Investment management is not a stagnant process. Although it is our intent to have very low security turnover, there are many variables that will cause us to make changes. Research has suggested that 10% of your return can come from rebalancing your portfolio.
 

We make changes to our proprietary models as interest rates rise. When we see a longer term rise and plateau, our strategy for generating income will change from holding less debt to once again holding certain bond types. We may hold more TIPS than corporates, or may want to exploit municipal bonds in taxable accounts. We will also favor different industries and sectors during different economic times. Although these changes dont occur over-night, they do need constant review and diligent research. Other factors include the need to rebalance back to the proper asset allocation, and ensure the investments that we pick are performing to our satisfaction. We do invest for The Long Run, and continually manage your portfolio to maximize your return while minimizing risk.

 

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Investing for The Long Run


 

Copyright 2011 Long Run Investment Management, LLC. All rights reserved.
This website is not intended to give financial advice.  Please request a copy of our Form ADV Part 2A for details about our advisory services and fees.