BondStreet Wealth Management

This is a forum to submit questions to Brian Evans, owner and Wealth Manager of BondStreet.  Feel free to browse the questions and answers to see if your topic has been discussed.   If you have a query for Brian, please submit it below.  Let us know if we can post it online for others to view, or if you’d prefer a private reply. Your Question for Brian: Your e-mail address Can we post your question below?

"What goes up must come down, so you'd better diversify.  This mantra makes sense, but few know exactly what it means ― and fewer yet how to properly put it to work.  Learn your financial dashboard to map out your asset allocation flight plan ―  and avoid an investment crash-and-burn." Click here to learn about Brian's contribution to Larstan's "The Black Book™ on Personal Finance".

Question – What is Asset Allocation?

Brian Evans – It can mean many different levels of diversification.  Most stock brokers consider a 60/40 split between primarily large US stock and bonds to be adequate diversification.  I call this asset allocation 101.  The problem with this split is the reliance on one major area of the market and the lack of analysis as to whether these markets are overvalued or not.  In my book I talk about a way to limit risk and increase positive exposure by buying underutilized and undervalued areas of the market.  With as few as 6 segments you can create excellent diversity and more reliable returns.  That’s essentially asset allocation 201.  We use an even more advance strategy at BondStreet that actively seeks out multiple undervalued segments on an ongoing basis with regular re-balancing and allocation.

 

Q – Don’t Wealth Managers just work in East Coast big city offices?

BE – In general that is true, but I grew up on a farm in Mount Vernon, Washington and just happen to have a talent for accounting and finance.  My office is located in little old Everett, Washington but I have clients throughout the US who appreciate my holistic approach to managing their financial matters.  My clients like that I am more focused on making their net worth grow than on driving a fancy car or working in a big city office.  I’m responsible for people’s life savings when I manage their investments, so I take that very seriously. 

 

Q – Don’t Wealth Managers only work with the super-rich?

BE – Not this Wealth Manager.  Our average client is what the papers call “the Millionaire Next Door”; people who work and save their whole lives and know the value of a dollar.  They can’t risk their life savings on an investment scheme or with an inexperienced stock broker.  We have a low minimum account size, so almost everyone can benefit from our services.  True, we have some very successful clients that have us manage significant portfolios for them, but we treat everyone with respect, regardless of account size.

 

Q – Why does there seem to be a Financial Planner in every strip mall?

BE – Because Baby Boomers are starting to retire, there are going to be trillions of assets newly available to be invested in the next few years and a lot of people want to cash in on that.  Don’t be surprised if there are more stock broker offices than Starbucks over the next few years.  Some national brand investment houses are flooding the market with inexperienced financial planners who are hoping to take advantage of this situation.  The turn over concerns me, and the mass market mentality isn’t very appealing to sophisticated investors.  Just because a fast food place has 100,000 stores doesn’t make the burger good.  It’s just fast and cheap.  That’s fine if that’s what you want.  In investing the fact that the retail location is close to your home is no indication of the quality of the money manager.

 

Q – You don’t seem worried about the competition.

BE – It’s rare to have a Registered Investment Advisor that has the knowledge of a CPA firm and the experience and skill of a Wealth Management firm all wrapped up in one package, that charges low fees and caters to the regular investors to boot!  Once you take a good look at us, the competition disappears.

 

Q – Is there really a difference between investment managers?

BE – The investment industry is no different that any other industry; most of the companies are doing the same thing, and a select few stand out from the pack.  We chose to be different.  First we are not a broker-dealer, we chose to be an Investment Advisor.  That distinction is huge.  It means that we accept no commissions and we have a fiduciary duty to do what is right for the client (a stock broker does not).  Second, I have been a CPA for over 20 years, so I have more tax law and estate knowledge than the typical financial planner.  Third, we utilize an Asset Allocation strategy that I created to make the most of market opportunities with the least amount of risk.  Not to mention the people that work here – they are amazing at taking care of our clients.

  

Q – I’d really like to see your returns though.

BE - When you come in for a consultation we can show you the past performance of our model portfolios after we help you determine which one fits your specific needs.  That way you will chose a suitable portfolio based on important things like time horizon and risk tolerance.

 

Q – Does being a CPA really give you an advantage in investing?

BE – My investment strategy is based on the theory that all businesses are in business to make a profit, pure and simple.  If a company isn’t profitable and doesn’t have a strong chance of becoming profitable, we don’t want to own it.  I also factor in debt, price to earnings ratios, and expected growth of earnings.  By analyzing vast reports, attending many national conferences and studying the financial statement myself, I can draw my own conclusions.  The top money managers in the nation know how to read profit and loss statements because it’s important for us to know the health of a company, first hand, before buying.  I also use my CPA expertise to guide clients through estate and income tax quandaries that can rob people of a high percentage of their net worth.

 

Q – I see all sorts of designations like CFP, IAR, CPA… you’re a PFS?

BE – In the financial community there are a few key designations.  Stock Brokers take the Series 7 exam.  Insurance Agents take Life and Disability exams.  Investment Advisor Representatives (IAR) take the Series 65 exam.  Certified Financial Planners (CFP) take their exam.  Certified Public Accountants (CPA) take a 20 hour exam and need ongoing continuing education credits.  I decided that I wanted to be certified in all of the above areas, so I passed my CPA, the Series 7, the Insurance Exam, the Series 65, then passed the Personal Financial Specialist (PFS) exam.  It was a lot of work, a lot of classes and a lot of studying, but it includes me in a select group of Personal Financial Specialists.

 

Q – I wish you could manage the money in my 401(k) or my 403(b) too.

BE – In many cases we can.  For a 403(b) – teachers, hospital workers, state employees etc. – we are affiliated with Fidelity.  If you designate us as your money manager on a form we provide we can change your account from a static few choices to an actively managed, rebalanced, allocated investment.  For a 401(k) plan, we can manage the entire company plan but we cannot manage an individual’s account.  For existing clients, we do however offer a free review of your choices to help you build a model portfolio.

 

Q – What’s the catch?  How much do you charge?  Are there hidden fees?

BE – We are here to make a living and provide high value to clients. We have a low minimum – $200,000 per household. We charge our annual management fee based on managed “Family Assets”, so everyone in the family (kids, parents, brothers, sisters) gets combined pricing – 1% from $200k to $1 million, .8% from $1-5 million and discounts for larger accounts. We charge no front or back end sales loads (commissions), we work to buy the lowest internal fee funds, and we use no-load and load-waived mutual funds. We don’t mark-up stock trades either, so you only pay the $9.95 -$19.95 trading fee the custodians charge if you have stocks or exchange traded funds (ETF) in your portfolio.