Power of three
Each of the three components above are necessary to build a high-quality, low-cost, properly-diversified and risk-appropriate investment portfolio – but they are not sufficient on their own. Bringing all three together, in the right way, maximizes any investor’s probability of success – be that an individual, a corporate retirement plan or a foreign central bank.
The facts that are the foundations for what we do for our clients are clear and powerful, and are backed by indisputable data from objective and independent studies by world-class academics, mathematicians, statisticians and economists – many of whom are Nobel Laureates.
Given that all investors get to make the choice, the question is, who will you choose to believe? Globally-experienced investment advisors armed with data from unbiased, independent sources with no conflicts of interest? Or the brokerage firms, banks, insurance companies and mutual funds that are replete with hidden costs and conflicts of interest?
Choose wisely. There is much riding on it.
Fee-only Fidcuiary Advisor
Seabridge Wealth Management, LLC is a fee-only investment advisory firm. Not fee-based, but fee-only.
The term “fee-based” was a catchy term created by Wall Street to give the impression the broker is only charging a fee but, in reality, means the broker can charge an advisory fee and commissions. It is a subtle but incredibly powerful, and costly, difference for investors.
Our only fee is one we charge based solely on the amount of our client assets under management. There are no commissions, no distribution fees, no sales charges, or any other forms of compensation.
By law, as a fiduciary, we have the obligation to always put our clients’ interests first and foremost. This fully aligns the objectives of our firm with our clients and removes any conflicts in the pursuit of client goals, the formulation of investment strategies, or the selection of investment products.
When investors use non-fiduciary advisors, such as commissioned brokers or advisors at the typical brokerage firms, that advice is usually “self-interested“ and centered on the excess fees and commissions they generate by placing clients in specific products – which is what they are told to do, and paid to do, by their firms.
Risk-appropriate, properly diversified portfolios
Asset allocation accounts for over 90% of the risk and volatility of any investment portfolio. Put another way, It’s not which fund investors choose for their portfolio that matters, it’s what they choose in relation to their other mutual funds that is important.
Randomly constructed portfolios – constructed without the proper diversification tools, discipline and experience – has been shown to detract approximately 3.00% from the typical investor portfolio. As importantly, typical investors tend to make poor investment decisions in regard to their portfolios. Specifically, trying to time the market as well as allowing the resulting emotions of the inevitable ebbs and flows of the markets to influence their decisions.
Our globally-experienced investment team selects and monitors the investments within investment portfolios and retirement plans to provide investors, plan sponsors and plan participants the choice of one of five portfolios based on their individual tolerance for risk.
Minimizing investment-related expenses is a critical and controllable part of any investment plan. While future asset class returns are uncertain, the impact of every dollar paid in trading costs, management fees, and sales commissions & expense is crystal clear – its one dollar less you have working towards your financial goals and lowers your portfolio value.
Put another way, the more one pays to invest, the lower their returns will be.
Paying higher investment management fees – typically for the pursuit of superior managers – has not been a winning strategy. A 2010 Morningstar study found for every asset class analyzed over every time period, funds with the lowest expenses produced higher total returns than funds with the highest expenses.6
At Seabridge Wealth Management, we use low-cost, indexed strategies as core investment vehicles, which very effectively reduces our client’s overall investment-related expenses. Our extensive use of diversified-beta managed indexed strategies does not mean we believe all markets perfectly efficient. We believe markets are Mostly Efficient.7
The observed results for superior performing managers has been erratic over time. Very few managers have consistently exceeded the return of benchmark indices after the deduction of fees. However, some markets are inherently less efficient and are characterized by less readily available information, poorer information quality, plus less scrutiny by analysts – such as non-US small cap stocks.
We will focus our evaluation of actively managed strategies in those market segments we believe to be less informationally efficient coupled with those individual managers with a proven record of consistently superior results in that space.
6 Kinnel, Russel. 2010. “How Expense Ratios and Star Ratings Predict Success.” (August). Morningstar, Inc.
7 Jones, Robert C., and Russ Wermers. 2011. “Active Management in Mostly Efficient Markets.” Financial Analyst Journal, vol. 67, no. 6 (November/December): 29-45.