Investment Management Services
Personalized Investment Solutions:
Legend Financial Advisors, Inc.’s® (Legend) Investment Management Services Include Designing Dynamic, Creative and Personalized Investment Solutions for Individuals, Business Entities, Retirement Plans as well as Non-Profit Organizations. Legend is a Fee-OnlyxThe National Association of Personal Financial Advisors (NAPFA) Defines a Fee-Only Financial Advisor as One Who is Compensated Solely by the Client with Neither the Advisor nor any Related Party Receiving Compensation that is Contingent on the Purchase or Sale of a Financial Product. Neither Advisors or their Firms May Receive Commissions, Rebates, Awards, Finder’s Fees, Bonuses or Other Forms of Compensation from Others as a Result of a Client’s Implementation of the Individual’s Planning Recommendations. "Fee-Offset" Arrangements, 12b-1 Fees, Insurance Rebates or Renewals and Wrap Fee Arrangements that are Transaction Based are Examples of Compensation Arrangements that Do Not Meet the NAPFA Definition of Fee-Only Practice.
Source: NAPFA.org1, FiduciaryxThe Department of Labor’s Definition of a Fiduciary Demands that Advisors Act in the Best Interests of their Client, and to Put their Clients’ Interests Above their Own. It Leaves No Room for Advisors to Conceal any Potential Conflict of Interest, and States that all Fees and Commissions Must be Clearly Disclosed in Dollar Form to Clients.
Source: Investopedia U.S. Securities and Exchange Commission Registered Investment Advisory Firm.
Investment Portfolios are Developed to Attempt to Fit the Client’s Long-Term (at least 12 or more years) Desired Return Goals and Appetite for Risk (Please Note: Low Risk Generally Means Accepting Lower Returns Over Long Periods of Time. Accepting Higher Levels of Risk will Potentially Result in Higher Returns Over those Same Long Periods of Time, but will likely be More Volatile over Shorter Periods of Time.).
The Client with a Legend Advisor’s Assistance, will Determine An Appropriate Mix of Investment Risk and Return, Upon Completion of Their Personal Risk Assessment also known as Their Personal Risk Score. If a Client’s Long-Term Return Desires Do Not Match the Risk Level they are Willing to Accept, Then an Ensuing Discussion with a Member of Legend’s Advisory Team will Occur. Once an Appropriate Mix of Investment Risk and Return is Agreed Upon, Legend’s Advisory Team will then Develop a Investment Portfolio Strategy to Address the Client’s needs and long-term goals.
Legend Believes that Educating Clients is Vital to the Investment Process. Legend is Dedicated to Educating Each Client About Different Asset Classes and How they Relate to Market Volatility, Time Horizons and Investment Returns. In Addition, Legend, Through its Many Publications, Videos and Webcasts Proactively Informs its Clients Regarding these Issues.
Investment Portfolio Strategy:
Legend will Propose Investment Portfolio Strategies to be Directly Managed for a Client’s Personal Assets as well as IRA-Type Accounts Specific to the Client’s Situation.
For an Individual’s Self-Directed Employer Retirement Plan Assets, Such as 401(k)s, 403(b)s, and 457 Plans, Legend can be Retained to Create Personalized Portfolio Strategies upon which it can Consult (Provide Investment Guidance) and/or sometimes manage directly.
Other Personalized Investment Portfolios can be Developed Around the Client’s Existing Holdings that have High Income Tax Ramifications, if sold.
For Examples of Sample Portfolios, Please View Legend’s Risk Spectrum.
Investment Market Research:
Legend Performs Wide-Ranging Research on the Financial Markets and the Underlying Securities. Emphasis is Placed on Investment Strategy Types that have a Goal of Producing Better Risk-Adjusted Returns (Higher than Normal Returns for the Amount of Risk Taken).
Legend Utilizes Many Sources Of Academic And Institutional Research, Including But Not Limited To:
- Nationally-Renowned Universities Known for their Academic Investment Research, including The University of Chicago, Yale University, and Harvard University, Among Many Others.
Numerous Investment Management Organizations and Research Services Including:
- Morningstar, Inc.
- Bloomberg Professional Service
- Zacks Investment Research
- Ned Davis Research, Inc.
- Ford Equity Research
- Thomson Financial First Call
- Standard & Poor’s Ratings Services
- Other Web-Based Investment Research Services
- Numerous Investment Newsletters, Newspapers, Periodicals, Research Publications, Professional Journals, and Webcasts
- Portfolio Manager Interviews (Legend Interviews Several Portfolio Managers Annually)
Investment Securities Research:
Legend Performs Extensive Research on Thousands of Securities that can be Used to Structure Investment Portfolios Including:
- Over 30,000 Open-End Mutual Funds
- Over 2,000 Exchange-Traded Funds (ETFs) and Exchange-Traded Notes (ETNs)
- More than 500 Closed-End Mutual Funds
- Over 5,000 Domestic and International Stocks (Including Exchange-Listed and Over-The-Counter Securities)
- In Excess of 100 Master Limited Partnerships (MLPs)
- More than 200 Preferred Securities
- Alternative Investments – Where Possible
To Research Such a Large Quantity of Securities, Many Investment Software Screening Tools are Utilized from Leading Investment Organizations that were Mentioned Above to Complete the Quantitative Analysis Portion of the Securities Research Process. Legend’s Advisory Team then Performs the Qualitative Analysis Where Necessary to Select the Investment Securities to be Utilized Within Investment Portfolios.
Minimizing Securities’ Investment Management Costs:
Legend Strives to Seek Out the Lowest Cost Securities, Where Possible, when Selecting Open-End Mutual Funds (Institutional Share Classes are Generally, the Lowest Cost Mutual Fund Share Class.), Exchange-Traded Funds and Notes and Closed-End Mutual Funds Without Sacrificing Performance. This Effort Reduces the Total Cost of Investing to the Client. Other Costs are Addressed in the Sections Below (Click Here).
In Addition, Legend Manages Individual Stock Portfolios to Eliminate the Management Costs of Mutual Funds and ETFs. Please Note, there May be Nominal Trading Costs Charged by Some Custodians (Where Assets are Held).
Investment Portfolio Construction:
When Constructing Portfolios that Do Not Own Individual Securities (Ex. Stocks), Legend’s Investment Process Incorporates Low-Cost Securities, Where Possible. These Securities are Allocated and Traded in an Income Tax-Efficient Manner, Where Possible, (See the Tax-Efficient Investing Section Below) when the Opportunities are Available.
These Low-Cost Investments can Include Open-End Mutual Funds (Institutional Share Classes When Available) as well as Exchange-Traded Funds and/or Notes When Appropriate (Assuming Performance is Not Sacrificed). Other Securities Including Individual Equities, Closed-End Mutual Funds, Preferred Stocks, and Master Limited Partnerships may also be Utilized Depending upon the Portfolio Strategy Desired by the Client.
Legend’s Focus on Minimizing Investment Management Costs will Reduce the Total Cost of Investing to the Client which Increases Investment Returns.
Ongoing Investment Management:
Legend Utilizes its Many Investment Resources to Determine Appropriate Positioning of Investments, for Each Portfolio Strategy, to Attempt to Take Advantage of Financial Market Opportunities, as they Arise. Legend Incorporates Hundreds of Sophisticated Economic and Investment Monitoring Analyses (Charts and Graphs) as well as Over 100 Risk Monitoring Tools (Also Charts and Graphs). These Tools Support the Positioning of Each Investment Type, while Striving to Maximize Investment Opportunities and If Possible, Minimize Losses. Portfolio Adjustments are Made on a Discretionary Basis When Appropriate.
When Managing a Portfolio, Legend Focuses on Income Tax-Efficiency, Where Possible. However, Legend Does Not Let the Income Tax Tail Wag the Investment Dog (Income Taxes Should Not Drive Decisions About Selling Securities). Nevertheless, Legend Focuses on Improving Income Tax-Efficiency Predominantly in Four Areas:
Securities With Favorable Income Taxation:
This Category Includes Securities that are Tax-Exempt (Municipal Bonds) or Tax-Favored (Capital Gains-Oriented). One Example of Diving Deeper into Income Taxation Issues would be that Legend May Utilize Equity-Oriented Exchange-Traded Funds and/or Notes that are More Income Tax-Efficient than Equity-Oriented Open-End Mutual Funds Assuming Performance is Similar for Both Types of Investment Vehicles.
An Individual’s Investments that are Income-Tax Inefficient are Placed Tax-Efficiently in Tax-Deferred and/or Tax-Exempt Type Accounts Such as IRA-Type Accounts, Roth IRAs and Health Savings Accounts (HSAs), Versus Taxable Accounts. For Example, Taxable Interest-Generating Investments are Best Placed Inside of IRAs or Roth IRAs to Avoid Taxation. Capital Gains-Type Investments, which are Tax-Favored, would be Best Placed in Taxable-Type Accounts if there are No Additional Monies Available Within IRAs or Roth IRAs.
Income Tax-Efficient Trading:
Securities, When Sold, are Traded in an Income Tax-Efficient Manner, Where Possible. If a Security has been Purchased Multiple Times at Different Time Periods (Commonly Referred to as “Trade Lots”) Legend Will Attempt to Match Trade Lots with Losses Against those Securities with Gains. This Minimizes Capital Gains Taxation and, Consequently, Income Taxes.
Tax-Loss Harvesting (Also known as Income Tax-Loss Harvesting), is a Strategic Method of taking Investment Losses to Offset Income. Tax-Loss Harvesting Enables Investors that Own Investments Outside of Tax-Sheltered Accounts such as 401(k)s, 403(b)s, 401(a)s, 457 Type Plans, Pension and Profit-Sharing Plans and Individual Retirement Accounts (IRAs), Roth IRAs, etc. to use Investments with Losses to Offset Realized Gains of Taxable Investments. Total Net Losses (Capital Gains Are Offset Against Capital Losses. The Result is Either a Net Capital Loss or a Net Capital Gain.) of up to $3,000.00 Annually can be Offset Against Ordinary Income such as Salaries. Lower Investment Income Often Means Lower Income Taxes.
Tax-Loss Harvesting is a Sound Investment Practice. How Well it Works Depends upon an Investor’s Individual Circumstances. Income Tax-Loss Harvesting Benefits Realized by any Investor Depends on their Portfolio and Their Specific State and Federal Income Tax Rates that Apply to Them.
For More Information on Tax-Loss Harvesting, Please Read the Article Entitled: HOW WELL TAX-LOSS HARVESTING BENEFITS THE INVESTOR DEPENDS UPON A NUMBER OF FACTORS
Legend’s Focus on Income Tax Minimization Reduces the Total Cost of Investing to the Client Which Increases Investment Returns.
LEGEND DOES NOT CHARGE COMMISSIONS OF ANY TYPE!
Institutional Custodians and Trading Costs:
Legend Utilizes Institutional Custodians to Minimize Securities Execution (Trading) Costs (Custodial Trading Commissions). Stock Exchange-Listed Securities such as Individual Stocks, Exchange-Traded Funds and Notes, Preferred Stocks, Closed-End Mutual Funds, and Master Limited Partnerships are Traded at Ultra Low-Cost Rates (At No Cost In Many Cases).
Lowest Cost Methods Of Trading Mutual Funds:
Legend Trades Mutual Funds at $24.00 or Less. While Some Mutual Funds are Known as No Transaction Fee (NTF) Funds. However, Please Keep in Mind that the Underlying Fund Expenses Within these Funds are Probably Higher than Institutional Mutual Funds. Legend Almost Always Uses the Lowest Cost Mutual Funds Available.
Cost Effective Methods Of Trading Exchange-Traded Securities:
The Average Investor and Many Financial Advisors Who Do Not Have Expertise In Trading Exchange-Traded Securities [Exchange-Traded Funds (ETFs) and Notes (ETNs)] May Not Be Aware of the Complexity and the Potential Costs Involved When Trading Such Securities. Legend Typically Trades ETFs and ETNs with Limit Orders to Secure Pricing as Close to the Net Asset Value (NAV) of the Funds as Possible and Almost Never Utilizes Market Orders. Trading Practices that Utilize Limit Orders are Performed with the Goal of Avoiding Paying Premiums Over NAV when Purchasing Exchange-Traded Securities or Selling at Discounts Relative to NAV. This Practice can Potentially Prevent Paying as Much as an Additional 2.0% to 5.0% of the Purchase or Sale Amount Unnecessarily.
Utilizing Limit Orders When Trading Individual Equities:
Legend Also Utilizes Limit Orders when Trading Individual Equities (Stocks) that have Low Volumes to Prevent Paying Premiums or Selling at Discounts. As Mentioned Above, if Limit Orders Aren’t Used, these Types of Sloppy Trading Practices can Cost an Additional 2.0% to 5.0% of the Purchase or Sale Amount, Unnecessarily, when Trading Low Volume Equities.
Legend’s Goal is to Focus on Reducing Trading Costs to the Client, which Will Usually Increase Investment Returns.
Legend Offers Easy-To-Read and Understandable Portfolio Performance Reporting. Quarterly Meetings/Webcasts/Conference Calls are Offered to Each Client to Discuss Portfolio Performance and Composition. (See the Section Below Entitled Frequency of Client Contact/Advisor Availability for More Information.)
Monthly Account Statements, Daily Securities Valuations and Online Access from Custodians are Also Available via Legend’s Website in the Clients Only Section.
Income Tax Reporting:
In Terms of Income Tax Reporting, Legend Calculates the Cost Basis of All Securities Purchased as well as Transferred In, Assuming the Client can Provide a Transaction History of All Pre-Existing Securities Prior to Transfer.
Form 1099s are Provided by the Custodian to the Client for Any Taxable Event that has Occurred in the Prior Year.
Interim Realized and/or Unrealized Gain and Loss Reports for Income Tax Planning Purposes are Available Upon Request.
Clients May Call Legend’s Advisory Team as Often as they Deem Necessary. In Terms of Frequency of Contact, at Least Quarterly Discussions and/or Meetings/Webcasts/Conference Calls are Offered to Each Client to Discuss Portfolio Performance, Portfolio Construction, Changes in Investment Risk Tolerance Level, a Review of Client Goals as well as Any Other Matter that is of Importance.
Investment Management Fees:
Legend Charges a Fee for Discretionary Investment Management Services Only (Not Combined with Other Services) that is Recalculated Quarterly. The Fee will be Charged as a Percentage of Investment Assets Under Management. For More Information Regarding Legend’s Investment Management/Consulting Fees, Please Visit the Investment Management/Consulting Fees Section of the Website.
Investment Consulting Services:
Clients Often have Securities, Retirement Plans [Ex. 401(k), 403(b), 457 or 457 (b) Plans and Deferred Compensation Plans], Variable Annuities, 529 Plans and other Educational Accounts that Cannot be Placed Directly Under Management at One of Legend’s Preferred Custodians. In this Instance, Legend can be Retained to Provide Investment Consulting Services (Investment Guidance) on How to Invest the Above-Mentioned Account Types. In Most Cases, Legend can Also Assist the Client in Implementing any Recommended Securities Trades, if so Desired. In Many of these Instances, Legend can offer the Client Electronic Performance Reporting if the Underlying Account Offers Such Connectivity.
Investment Consulting Fees:
Investment Consulting Fees are Periodically Recalculated Based Upon the Same Schedule as that of the Investment Management Service. The Fee is Paid Quarterly. In Addition, Multiple Portfolios Including those that are Discretionarily Managed can be Included Under a Single Fee.
This Service could also Include Accounts and/or Investments that are Difficult to Value Except for Once per Year, Such as Retirement Plan Balances of the Individual Client(s) and/or Variable Annuities, or could Possibly be Aggregated with Accounts Not Held at One or More of Legend’s Preferred Custodians.
Furthermore, Legend May Not Have Discretionary Authority Over those Assets Held at Custodians Other than Legend’s Preferred Custodians [Ex. an Employer’s 401(k) Plan] in which case, Legend will Advise the Client as to How These Assets are to be Positioned and Traded and the Client Will Need to Implement the Trade. Legend can Assist the Client with this Process.
The Bottom Line:
Legend’s Investment Advisory Team Focuses on Personalized Client Financial Goals, while Attempting to Deliver Unparalleled Service, Performing Extensive Investment Research, Implementing Ongoing Income Tax-Sensitive Portfolio Management as well as Providing Unbiased Advice while being Compensated Exclusively By The Fees Charged To Clients. In Other Words, Legend Does Not Receive Commissions of Any Type!