Frequently Asked
Questions
WHAT IS A REGISTERED INVESTMENT ADVISER (RIA)?
As a Registered Investment Advisor (RIA), Private Group Wealth Management, LLC, acts in a fiduciary capacity when engaged for wealth management and comprehensive financial planning. Under the Investment Advisers Act of 1940, any firm that is engaged in the business of providing financial advice for a fee is considered to be an “investment advisor.” However, unlike stockbrokers and broker-dealers, RIAs are held to the higher standard of a legal fiduciary; they have no conflicts of interest and are legally bound to put the interests of our clients ahead of our own interests. RIAs are required to be registered with the appropriate federal or state agencies. As such, Private Group Wealth Management is registered with the State of Texas.
WHAT IS A FEE ONLY ADVISER?
A fee-only advisor is someone who, in all circumstances, is compensated solely by the client, with neither the advisor nor any related party receiving compensation that is contingent on the purchase or sale of a financial product. Unlike fee-based advisors, fee-only advisors do not receive commissions, rebates, awards, finder’s fees, bonuses, or any form of compensation from others as a result of a client’s implementation of his or her planning recommendations.
WHY IS FEE - ONLY COMPENSATION OF CRITICAL IMPORTANCE?
A financial advisor who earns a commission from selling investment products has a financial stake in the course of action that he or she recommends to a client and faces an inherent conflict of interest. His opinion or recommendation cannot, therefore, be considered objective and unbiased. This is true even if the advisor truly believes that he or she has only the best interests of the client at heart. Unfortunately, the vast majority of financial advisors in the United States are sellers of financial products. Some or all of their income may be dependent upon their ability to steer clients to a limited slice of the thousands of financial products available today. (Putting aside the conflict of interest factor, this limiting of choices in and of itself is often enough to impact the quality of the investment advice.) These advisors include stockbrokers, broker-dealers, analysts, insurance agents, accountants, and attorneys, as well as financial planners. Many of their clients are not aware of their advisors’ dependence on selling products, or else they do not recognize its significance.
WHAT IS A FIDUCIARY?
As defined by the Employee Retirement Income Security Act (ERISA) and the Investment Advisers Act of 1940, a fiduciary is any person, company, or association that renders investment advice for a fee or other compensation with respect to the funds or property of a plan, or that has the authority to do so. A fiduciary exercises discretionary authority or control over the management of a plan or the management of the disposition of its assets, or has the discretionary authority or responsibility in administering a plan. Importantly, a fiduciary is bound legally to act always in the best interest of the client.
WHAT IS YOUR FEE STRUCTURE?
Our asset management compensation is 100% transparent, so our clients know exactly what we make and the value we provide. We charge a competitive asset under management (AUM) annual fee that is computed on the value of the assets we manage. In certain circumstances, a financial planning fee may be charged.
DO YOU HAVE A MINIMUM ACCOUNT SIZE?
While we do not have a minimum account size, our services are best suited for clients with investable assets in excess of $250,000.
HOW DO I KNOW MY MONEY IS SAFE?**
Our firm works directly with an independent third-party custodian, Charles Schwab Institutional, and all of our client assets are held in protected Schwab accounts. We provide 24/7 access and visibility to each client’s accounts through Schwab’s online, password-protected client portal. Your funds never will be comingled with any other investments.
I CONSIDER MYSELF FINANCIALLY SAVVY. DO I NEED A FINANCIAL ADVISER?
It’s a fact that even investors with the knowledge and experience to manage their own assets often will procrastinate when it’s time to make a decision. Often the individual’s own investment needs take a back seat to career or family. We add value by helping each client develop and implement an investment plan. Equally as important, we help provide the discipline that allows our clients to adhere to their investment course during volatile markets. Our knowledge and commitment as our clients’ financial counselors help us provide strong, usable financial advice.
** SIPC protects against the loss of cash and securities – such as stocks and bonds – held by a customer at a financially-troubled SIPC-member brokerage firm. The limit of SIPC protection is $500,000, which includes a $250,000 limit for cash.
SIPC does not protect against the decline in the value of your securities. SIPC does not protect individuals who are sold worthless stocks and other securities. SIPC does not protect claims against a broker for bad investment advice, or for recommending inappropriate investments.