Frequently Asked Questions
1. Are you a fee based advisor? Yes we are a fee-based advisor. We think it is a fair, transparent way in which to transact our advisory services. This can help mitigate the potential conflict of interest that can arise for a commission-based advisor.
2. How long have you been in business? The Prudent Speculator was launched in 1977 by the firm’s founder, Al Frank. Using the same philosophy, Mr. Frank began to manage personal assets in 1987.
3. What are your investment portfolios comprised of? Portfolios are comprised of individual equities and/or ETFs (exchange traded funds). Our equities may be small, mid or large in capitalization, and must be traded on a U.S. exchange. The ETFs in the portfolio may be domestic or international, equity, fixed income, or other asset classes, depending on the strategy. With many options available, we believe we have a strategy to fit almost any investment objective.
4. How does the firm communicate with clients? AFAM Capital prides itself on timely, communication with our clients. We publish weekly market commentaries, a monthly newsletter, plus additional white papers on various subjects throughout the year. All of our clients have direct access to our portfolio managers via phone or email. Our custodians (Fidelity and Schwab) provide monthly statements for client accounts, as well as online access.
5. Who is your typical client? In our 41 years of business, we have learned that there is no such thing as a “typical” client; we tend to attract value oriented individuals and families that are striving to meet their long-term financial goals.
6. What types of strategies do you have? We have numerous strategies which can be used as stand-alone allocations, or used in concert with other strategies to build a cohesive portfolio. Our strategies include all-equity and all fixed-income allocations, as well as many blended solutions.
7. Where are my funds held? We recommend that our clients custody their assets with either Charles Schwab or Fidelity. Both firms have historically provided excellent brokerage services, such as competitive execution rates, trading resources, back office support, electronic account data and seamless account transfers.
8. How do we get started? The first step in building a relationship with us is to be in contact with relationship development personnel, who will learn more about your investment objectives and try and explain all the options available at AFAM. Next, you’ll be given a worksheet to help determine which strategy may be the best fit for you. To get started, e-mail firstname.lastname@example.org or call 512-600-1818.
9. Is there a minimum on the managed accounts? Yes, the minimum is $500,000 of investable assets.
10. What is the difference between an asset manager and a financial planner? Great question. While the term “financial planner” tends to encompass many different roles, they typically provide hourly planning advice, or may be involved with the sale of financial products. An asset manager, on the other hand, is strictly a discretionary portfolio manager.
11. What is an RIA? An RIA is a registered investment advisor. RIAs may be registered with either the state or federally registered with the Securities and Exchange Commission (SEC). Note that registration of an investment advisor does not imply any certain level of skill or training.
12. What is your investment philosophy? Our investment philosophy is built around our three core tenets: Patience, Selection and Diversification. Click here for more detailed information.
13. Can I use an existing 401K or IRA for my portfolio? In many instances, yes. Many of our clients fund their account this way. We have an operations team that would be glad to handle most of the “heavy lifting” in getting the accounts rolled over for you. Please consult with your plan administrator for details.
14. What sets you apart from other asset managers? Thanks to The Prudent Speculator newsletter, our history has been chronicled for over 41 years, and we allow our private clients direct and timely access to our investment decision makers.
15. Why would someone select a managed account over a mutual fund? While mutual funds allow access, especially for smaller investors, to a more diversified portfolio than they could otherwise achieve, a managed account has some unique features:
- Potential tax efficiency. Mutual fund investors receive capital gains treatment for sales, based on the funds experience with a certain holding, whether or not the investor received any benefit from the sale. A managed account client only is taxed on what they actually experience in realized gains/losses + dividends and interest.
- Access to portfolio managers. While this does not hold true for all portfolio managers, at AFAM Capital our private clients are able to speak directly to the decision makers. Mutual fund shareholders typically do not have access easy access to a firm’s investment decision makers/strategy portfolio managers.
- Our managed account clients receive timely relevant communications via weekly market commentary, a monthly newsletter, quarterly statements, and investment reports.