What's the difference between working with a stockbroker and working with a registered investment advisor? 

Stockbrokers ("Financial consultants", "financial advisors",  or "Vice Presidents") are salespeople and are not required to register as investment advisors. The brokerage firm and its stockbrokers do not have to inform you of all payment incentives related to your account and is not required to always act in your best interest.  Investment advisors, on the other hand,  must disclose any conflicts-of-interest and are held to a higher fiduciary standard of always working in your best interest.  Bridge Investment Advisory Service, LLC, a Colorado registered investment advisor, goes one step further by being "fee-only". I don't accept compensation from any third-party provider of products.  I only accept compensation from the client.  Compensation from sources other than the client, no matter how well disclosed, is a big conflict-of-interest that I avoid.

Don't the well-known large brokerage firms offer more in the way of research and products?

I don't believe that they do.  All the scandals in the news in recent years show the conflicts-of-interest present at these firms.  They have a vested interest in the reports that they issue and a sales culture that may not be in their customer's best interest.  Even after all the regulatory sanctions and restructuring, their investment research remains biased against issuing sell recommendations, according to former Merrill Lynch analyst Harry Blodget.  Fred subscribes to independent research and devotes considerable time researching economic issues and investment opportunities.

Do you receive commissions or fees from the sale of investments or mutual funds?

No.  Fred's investment supervisory fee is a percentage of assets managed, not from fund loads charged to your account.  This removes a major conflict-of-interest and a dangerous incentive to push high commission products and frequent trading found at stock brokerage firms and financial planning firms that receive commissions from the sale of insurance and investments. You can rest assured that his recommendations have only your financial success in mind.

What is your investment philosophy?

For retirees with portfolios in withdrawal mode that want to avoid outliving their income, it is critical to reduce the probability of large draw downs of your portfolio in declining markets.  I don't believe it is necessary to beat the S&P 500 in strong bull markets, but it is important to beat the index in declining markets.  Most of our client's money is in IRA accounts or earmarked for retirement.  Our clients need consistent positive returns to provide the cash flow they depend on in retirement.  

Fred recommends a core position of income securities for retirement and near retirement portfolios.  Though not a recommended allocation, it's important to keep in mind, that historically, a portfolio equally weighted between stocks and fixed income (50%/50%) has earned roughly 80% of a 100% stock portfolio, but with half the risk.

Age and your comfort with volatility will determine your allocation between growth and income.   Then, using distinct asset classes such as domestic (US Treasuries) and foreign income, equities, gold, energy, and bear market funds, that have low correlations to each other, can reduce risk and improve returns.  Studies conducted by Craig L. Israelsen, PHD at Brigham Young University, indicate that increasing the number of low correlated asset classes not only lowers risk, but produces fewer and smaller losses, and increases investment returns over the long-term. *(see link below)  This strategy of low correlation investing uses distinct asset classes, not just the Morningstar style boxes (large cap, small cap, growth or value, etc.).        

In Fred's 28 years of experience, he has participated in many market cycles.  When one market is declining, very often another market is making solid gains and is in a bull market phase.  Since 1999, the overall stock market represented by the S&P500 Index has not earned the risk free treasury bill rate.  However, some asset classes have earned strong double digit returns, despite the recent downturn.  Even in long-term bear markets for general equities there are usually some sectors or asset classes that are in a bull market.  There are times, however, when the wise thing to do is hold cash, and patiently wait for a buying opportunity.

"Never adopt permanently any type of asset or selection method.  Try to stay flexible, open minded and skeptical.  Long-term top results are achieved only by changing from popular to unpopular the types of securities you favor and your methods of selection."---March 1994, Sir John Templeton, founder of Templeton Funds.

Do you ever recommend hedge funds?

I do not recommend hedge funds.  Besides very high fees, hedge funds usually borrow money to leverage the portfolio.  While this may enhance returns when volatility is low this can produce disastrous results when volatility is high.  Fred believes it is unwise to borrow to invest.  

Do you ever recommend low cost index funds?

Yes.  For those that prefer indexing for its low expenses, there are many passive index mutual funds and exchange traded funds (ETFs)  from which to build strong risk adjusted portfolios. 

*Stay Low: Maintaining a low correlation among a portfolio's assets in the distribution phase can help avoid potentially devastating losses.

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