PRIVATE TRUST MANAGEMENT GROUP
Private Trustees & Investment Counsel
Investment Management
“Fiduciary duty is the first principle of the investment adviser.”
—Lori A. Richards, Director Compliance Inspections and
Examinations, Securities & Exchange Commission
“We work very hard to earn our clients’ trust and confidence. We never forget that it’s their money and they have a right to know how we’re managing it and why. Formal, systematic and effective communication is the cornerstone of the Fiduciary Investment Process.”
—Patricia A. Alexander, Investment Advisor
“Our firm uses the same structured, institutional investment approach to all portfolios, regardless of size. In the case of successor trusts and pension plans, this approach is mandated by law, especially the Uniform Prudent Investor Act and ERISA. With few exceptions, our experience has shown that this approach is the simply the best way to manage almost any portfolio.”
—Michael T. Alexander, Director of Client Relations
—Lori A. Richards, Director Compliance Inspections and
Examinations, Securities & Exchange Commission
“We work very hard to earn our clients’ trust and confidence. We never forget that it’s their money and they have a right to know how we’re managing it and why. Formal, systematic and effective communication is the cornerstone of the Fiduciary Investment Process.”
—Patricia A. Alexander, Investment Advisor
“Our firm uses the same structured, institutional investment approach to all portfolios, regardless of size. In the case of successor trusts and pension plans, this approach is mandated by law, especially the Uniform Prudent Investor Act and ERISA. With few exceptions, our experience has shown that this approach is the simply the best way to manage almost any portfolio.”
—Michael T. Alexander, Director of Client Relations
THE FIDUCIARY TEAMTM
Patricia Alexander is an Investment Advisor Representative of G.E. Pia & Company, a Registered Investment Advisor. She understands that effective wealth management is a multi-disciplinary task requiring close cooperation among the client’s advisors. Those advisors include your attorney and CPA. Where our client is incapacitated this group may also include the successor trustee or conservator. Together, they have a common client and, therefore, a common fiduciary duty to act in their client’s best interests. We call this group The Fiduciary TeamTM .
Long experience has shown that the best results are achieved when the client’s advisors are not only competent in their own right, but have a deep knowledge of the overall legal, accounting, financial, medical and personal context in which they will be managing a client’s affairs. This cannot occur without a plan for systematic cooperation and communication. This is why, unless otherwise instructed, our firm, as part of its fiduciary investment process, communicates regularly with the attorneys, accountants and caregivers both to inform — and be informed — of material changes in your circumstances. It is vital that the members of this team are in fact fiduciaries with undivided loyalty to the client.
THE FIDUCIARY DIFFERENCETM
A Registered Investment Advisor (RIA) is a fiduciary. This is a subtle but important distinction from those who are unregistered financial advisors. At law, a fiduciary is a person who, because of a unique relationship with another, is required to place the other’s interests equal to or ahead of the fiduciary’s in their dealings. This fiduciary status imposes the additional obligations of undivided loyalty, competent management, disclosure and accounting. In plain language, a fiduciary must put the client first.
Under the law, Registered Investment Advisors are held to the highest standard of care. It is the same kind of relationship that attorneys, CPAs and corporate trustees have with their clients. As with these professionals, The Fiduciary DifferenceTM is not merely theoretical, but practical as well. Our relationship with our clients is personal, long-term, and fee-based rather than transactional, short-term and commission oriented. In short, our investment process is different because our core legal relationship with the client is fundamentally different.
The Fiduciary DifferenceTM has profound implications to the client. Adherence to this high standard is exactly what most investors expect, but seldom get, from their investment advisor. That is why they are usually surprised to learn that unregistered investment advisers, such as stockbrokers, insurance agents and various other “financial consultants,” are not considered fiduciaries and do not have to adhere to the same standards. They are governed instead by an entirely different, and far less stringent standard, called ‘suitability’. This permits them to sell investors any investment product, so long as it meets the minimum requirements established by law. They do not have, and will not accept, a duty to develop an appropriate investment plan, optimize their client’s portfolio or even sell the best available investments.
Our purpose is not to question the ethics of others. To the contrary, these firms, to their credit, very candidly and forthrightly tell customers what they will and will not do. In fact, their own account agreements specifically and emphatically state that they are not fiduciaries and that clients are entirely responsible for making their own investment decisions. Investors should, however, know the difference and understand the implications.
THE FIDUCIARY INVESTMENT PROCESS
We are acutely aware that when clients retain us to manage their investments, they place their futures in our hands. It is vital, therefore, that this special fiduciary relationship rests upon a firm foundation of knowledge, understanding, trust and confidence.
The Fiduciary DifferenceTM shapes and drives our entire investment process. Because our relationship is personal rather than merely transactional, we spend significant time with prospective clients getting to know them. Each of us needs to know that we will be able to work well together and that there is a “good fit.” We cannot possibly act in a client’s best intere
sts if we don’t know what those interests are. This takes time and effort.
This process discovers the client’s goals, concerns and investment objectives, which permits us to develop an individually tailored, written Investment Policy Statement. This document reflects our shared understanding about the portfolio, its objectives and requirements, and serves as a blueprint for the investment process. The statement defines the asset allocation strategy that will be used on the client’s behalf and provides a framework for evaluation and selection of complementary investments. This arrangement avoids conflicts of interest, ensures full fee disclosure and emphasizes the RIA’s ultimate accountability to the client.
FEE-BASED COMPENSATION
Our fiduciary obligations to the client also govern our compensation, which is a fee usually expressed as a percentage of assets under management. Because we have a duty of undivided loyalty to the client, it is essential that we be paid directly by our client rather than receive unknown, undisclosed commissions from third parties.
This not only avoids conflicts of interest and ensures full fee disclosure, but it also emphasizes the RIA’s ultimate accountability to the client. Another unique aspect of the RIA’s duty of full disclosure is the legal requirement that the client receive a copy of the RIAs registration document, Form ADV. Form ADV details the advisor’s education, employment history, disciplinary history, fee structure and investment process. Stockbrokers and insurance agents have no such duty.
Patricia Alexander is an Investment Advisor Representative of G.E. Pia & Company, a Registered Investment Advisor. She understands that effective wealth management is a multi-disciplinary task requiring close cooperation among the client’s advisors. Those advisors include your attorney and CPA. Where our client is incapacitated this group may also include the successor trustee or conservator. Together, they have a common client and, therefore, a common fiduciary duty to act in their client’s best interests. We call this group The Fiduciary TeamTM .
Long experience has shown that the best results are achieved when the client’s advisors are not only competent in their own right, but have a deep knowledge of the overall legal, accounting, financial, medical and personal context in which they will be managing a client’s affairs. This cannot occur without a plan for systematic cooperation and communication. This is why, unless otherwise instructed, our firm, as part of its fiduciary investment process, communicates regularly with the attorneys, accountants and caregivers both to inform — and be informed — of material changes in your circumstances. It is vital that the members of this team are in fact fiduciaries with undivided loyalty to the client.
THE FIDUCIARY DIFFERENCETM
A Registered Investment Advisor (RIA) is a fiduciary. This is a subtle but important distinction from those who are unregistered financial advisors. At law, a fiduciary is a person who, because of a unique relationship with another, is required to place the other’s interests equal to or ahead of the fiduciary’s in their dealings. This fiduciary status imposes the additional obligations of undivided loyalty, competent management, disclosure and accounting. In plain language, a fiduciary must put the client first.
Under the law, Registered Investment Advisors are held to the highest standard of care. It is the same kind of relationship that attorneys, CPAs and corporate trustees have with their clients. As with these professionals, The Fiduciary DifferenceTM is not merely theoretical, but practical as well. Our relationship with our clients is personal, long-term, and fee-based rather than transactional, short-term and commission oriented. In short, our investment process is different because our core legal relationship with the client is fundamentally different.
The Fiduciary DifferenceTM has profound implications to the client. Adherence to this high standard is exactly what most investors expect, but seldom get, from their investment advisor. That is why they are usually surprised to learn that unregistered investment advisers, such as stockbrokers, insurance agents and various other “financial consultants,” are not considered fiduciaries and do not have to adhere to the same standards. They are governed instead by an entirely different, and far less stringent standard, called ‘suitability’. This permits them to sell investors any investment product, so long as it meets the minimum requirements established by law. They do not have, and will not accept, a duty to develop an appropriate investment plan, optimize their client’s portfolio or even sell the best available investments.
Our purpose is not to question the ethics of others. To the contrary, these firms, to their credit, very candidly and forthrightly tell customers what they will and will not do. In fact, their own account agreements specifically and emphatically state that they are not fiduciaries and that clients are entirely responsible for making their own investment decisions. Investors should, however, know the difference and understand the implications.
THE FIDUCIARY INVESTMENT PROCESS
We are acutely aware that when clients retain us to manage their investments, they place their futures in our hands. It is vital, therefore, that this special fiduciary relationship rests upon a firm foundation of knowledge, understanding, trust and confidence.
The Fiduciary DifferenceTM shapes and drives our entire investment process. Because our relationship is personal rather than merely transactional, we spend significant time with prospective clients getting to know them. Each of us needs to know that we will be able to work well together and that there is a “good fit.” We cannot possibly act in a client’s best intere
sts if we don’t know what those interests are. This takes time and effort.
This process discovers the client’s goals, concerns and investment objectives, which permits us to develop an individually tailored, written Investment Policy Statement. This document reflects our shared understanding about the portfolio, its objectives and requirements, and serves as a blueprint for the investment process. The statement defines the asset allocation strategy that will be used on the client’s behalf and provides a framework for evaluation and selection of complementary investments. This arrangement avoids conflicts of interest, ensures full fee disclosure and emphasizes the RIA’s ultimate accountability to the client.
FEE-BASED COMPENSATION
Our fiduciary obligations to the client also govern our compensation, which is a fee usually expressed as a percentage of assets under management. Because we have a duty of undivided loyalty to the client, it is essential that we be paid directly by our client rather than receive unknown, undisclosed commissions from third parties.
This not only avoids conflicts of interest and ensures full fee disclosure, but it also emphasizes the RIA’s ultimate accountability to the client. Another unique aspect of the RIA’s duty of full disclosure is the legal requirement that the client receive a copy of the RIAs registration document, Form ADV. Form ADV details the advisor’s education, employment history, disciplinary history, fee structure and investment process. Stockbrokers and insurance agents have no such duty.
