Definitions and Explanations of Services - Investment Management vs Wealth Management

In our most recent blog post, we covered the Services We Offer.   In this post we would like to review the Definitions and Explanations of those services. 

Definitions and Explanations of Services

We are a fiduciary for all clients which means we act in the best interests of the client. 

Funds Used: Dimensional Funds

View our post “Why Dimensional Funds for Our Client Portfolios?”

Investment Recommendations - Recommending the appropriate portfolio based on the clients goals, values, tax sensitivity, previous experience and risk tolerance survey. We analyze their current situation, how much they need to save and incorporate their risk tolerance to recommend a diversified portfolio of mutual funds.

Account Set Up & Transfers – We complete all forms in for account setups and transfers and have them ready for your signature.  Once signed, we will submit and follow-up on the progress, handling any problems along the way, until completion. 

Investment Implementation – Process transfer of assets and consolidate accounts to preparation for trading and rebalancing.

Trading & Rebalancing - Selling old assets and buying new ones in a tax efficient manner. We’ll make all trades that are necessary to implement the proposed investment recommendations.

Tax Efficient Investing - Purchasing tax managed funds for taxable accounts. These funds minimize capital gains that it distributes to the client. This allows the advisor to better control the tax burden for the client.

Asset Location - Locating tax inefficient assets in retirement accounts and tax efficient assets in taxable accounts. For example, locating tax managed stock funds in taxable accounts and bonds and real estate funds in IRA’s. Aggressive funds go into Roth accounts. This strategy maximizes the after tax rate of return for a client.

Rebalancing & Disciplined Investing - Rebalancing client portfolios on a periodic basis as dividends, capital gains and cash come into the account or when cash is needed for a distribution. We don’t time the market and maintain a disciplined strategy for investing. For example, if a client has $1 million and their target allocation is 50% stock funds and 50% bond funds and their current allocation is 55% stock funds and 45% bond funds, we would sell 5% of the stock funds and add the proceeds to bond funds to bring their allocation back to 50/50. All rebalancing is done to minimize the capital gains a client pays.

Minimizing Capital Gains & Cost Basis Tracking - When a client requests money, we look at the cost basis on assets and sell the assets which have the smallest tax impact for the client and then send out the money. When we rebalance accounts we take into consideration tax consequences of selling assets in the taxable accounts. If we can rebalance in a tax deferred account to minimize tax we will do so. When assets are transferred in we verify their cost basis is correct. If we don’t have the cost basis, we will make every effort to get the costs basis and enter in the information.

Tax Loss Harvesting - We constantly monitor accounts for assets that have gone down in value due to market movements. If the loss is large enough we take the loss and buy another similar fund on the same day. The loss can be used to reduce a client’s taxes. 

Performance Reporting - Each quarter clients receive a report showing how their accounts have performed for the quarter, 6 months, 1 year, 3 years, 5 years and since inception. Their performance is compared to a custom benchmark for their target allocation.

Maximizing Retirement Plan Contributions - Based on your personal situation we assist you in maximizing your Retirement Plan Contributions.

Coordinating with your Accountant – We can work with your accountant to supply documents in regards to their capital gains and fees paid, coordinate the setting up of retirement plans and contributions, how accounts are funds and review tax returns for possible errors.

Mortgage Consulting – We can assist our clients with the many questions that have about refinancing their current home, the best type of mortgage they should get for a new or second home purchase, are their quotes for rates were inline, if not we can assist in finding a better rate.  

Robert J. Pyle, CFP®, CFA is president of Diversified Asset Management, Inc. (DAMI). DAMI is licensed as an investment adviser with the State of Colorado Division of Securities, and its investment advisory representatives are licensed by the State of Colorado. DAMI will only transact business in other states to the extent DAMI has made the requisite notice filings or obtained the necessary licensing in such state. No follow up or individualized responses to persons in other jurisdictions that involve either rendering or attempting to render personalized investment advice for compensation will be made absent compliance with applicable legal requirements, or an applicable exemption or exclusion. It does not constitute investment or tax advice. To contact Robert, call 303-440-2906 or e-mail info@diversifiedassetmanagement.com.

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