Starting an Account
Our goal is to match the investment strategy with the objectives and personality of our client.
Robinswood Financial requires a minimum of $250,000 per household account (or combination of accounts) in cash or marketable securities. At our discretion, this requirement may be waived.
The Initial Consultation
Robinswood Financial makes it easy to establish your account. The first and most important step is the initial consultation with one of our registered investment advisors. In this meeting, we get to know you, your resources, your dreams, and your needs.
You’ll provide us with more information as we identify your goals, time horizon, investment constraints, and your preferred level of risk. As an active participant in the development of your investment plan, you are our primary source of information. Together we decide on the best mix of investments for your unique situation.
Calculating Your Needs for Retirement
Most investors see the market as representing the average rate of return. The historic research shown in past by S&P Dow Jones Indices, illustrates the recurring underperformance of the majority (80 percent on average) of the mutual funds a majority of the time. The conclusion is that the market is not the average, but rather represents the to 20% of market performance.
To be part of that top 20 percent, you can invest in index funds. An index fund is a type of mutual fund; that follows one of the stock market indexes, for example, the Dow Jones Industrial Average or S&P 500. Essentially, an index fund that follows the S&P 500 actually contains all the stocks that are members of the S&P 500 index.
The concept behind investing in index funds is that you can’t really beat the market, so you might as well join it. This is the basis of an investing theory called the efficient market hypothesis.
The market is not the average; the market is the top 20 percent.
Crafting Your Investment Strategy
We believe that investing in index funds is advantageous because they:
- Reduce your expenses because you’re not constantly buying and selling.
- Closely match the risks and returns of the investment category they represent.
- Often result in higher returns than the majority of other funds in similar categories.
- Allow you to remain always fully invested because there isn’t the internal buying and selling.
- Result in lower tax consequences because of minimal internal buying and selling.
The use of index funds in your portfolio puts into practice the concept of passive investing. Because an index fund contains the same securities as the market it’s based on (for example, the S&P 500) there is no need for a fund manager to continually buy and sell securities within the fund.
Passive investing is contrasted with active investing, in which a fund manager buys and sells what are hoped to be the “right” stocks at what is hoped to be the “right” time.
Keep in mind, however, that “passive investing” does not mean passive financial advisors. Your financial advisor reviews your portfolio carefully each month, makes adjustments to take advantage of a continually changing investment landscape, and periodically rebalances your portfolio to correct the inevitable drifts in your asset allocation. Read more about how your portfolio evolves over time.
Index funds often result in higher returns than most other funds in similar categories.
Deciding on Investments for You
There are two ways in which index funds reduce your cost of investing. First, index funds have much lower operating expenses, with typical expense ratios around 0.2 to 0.5 percent. Compare this with the 1.3 to 2.5 percent expense ratios typically charged for actively managed funds.
Secondly, the index funds used by Robinswood Financial are no-load or load-waived mutual funds, meaning you do not pay sales, marketing, and research costs that otherwise eat away at your earnings.
Over the short term, some mutual funds can outperform the market. But picking such funds out of the thousands that exist is extremely difficult. In addition, the costs in most mutual funds make it difficult to outperform an index fund over the long term. When you look at mutual fund performance over the long term, you see a trend of actively managed funds consistently underperforming the S&P 500 index.
Working with Independent Custodians
Robinswood Financial often uses institutional asset class mutual funds to further diversify your portfolio within each asset class. Institutional asset class mutual funds have lower overall operating costs because of the volume purchased by the fund manager of the investing institution. We believe that institutional asset class funds are advantageous to most clients because they:
- Reduce your risks, expenses, and taxes.
- Improve your diversification.
- Place fewer restrictions on transfers.
- Have more predictable risks and returns.
- Keep you in control of your own asset mix, reducing asset class “drift.”
Limited Trading Authorization
A mutual fund and ETF is an investment vehicle in which multiple investors pool their money so that they can all participate in a portfolio of multiple securities. The investor does not own the individual securities but rather owns shares of the ETF fund. In this way, an ETF fund allows you to have diversified and professionally managed investments without investing a great deal of money. The right ETF funds can provide risk reduction, good performance, ease of purchase and redemption, and simple recordkeeping.
Because of these advantages, ETF funds are one of the best investment vehicles available. By owning shares of multiple companies, the fund’s share value is not devastated by the poor performance of an individual company. Of course, the impact on fund share value due to the success of an individual company is also cushioned, but the bottom line is that the built-in diversification helps to reduce risk.
Each ETF fund is managed by the fund manager or management team. These individuals select which securities to include in the fund and they determine the allocation of cash and securities. In addition, they decide on the timing of purchases and sales. The fund manager has the resources, time, and training to make well-informed investment decisions according to their individual style, skill, and experience.
ETF funds are one of the best investment vehicles available.
New Account FAQ
Can you manage my IRA, which is now managed by another company?
Yes, we manage many individual retirement accounts (IRAs). We can prepare the paperwork for your signature to order a direct transfer of assets from your present custodian to your new one.
Will I have to liquidate my current investment portfolio to work with you?
To create the asset allocation and investment mix that’s most appropriate for your financial goals, together we might decide to make changes to your current investment portfolio. Such changes can be implemented over time or can be adapted to incorporate some of your current investments.
We take into consideration the fact that you might have significant unrealized gains in one or more existing holdings that, if sold, would trigger a large tax bill. We also know that you might have specific investments you want to keep.
In every case, we use our best judgment in recommending an appropriate portfolio that serves your goals, takes advantage of our investment philosophy, and minimizes any tax impact.
I want to manage some of my investments on my own. Can I still work with you?
Yes. We can set up a separate account (or accounts) that will hold the assets you would like us to manage, and charge a fee only on those assets. We do require that the assets under our management meet our standard account minimum.
I live thousands of miles away from your office in Washington State. Can I still do business with you?
Certainly. Many of our clients live outside of Washington state, and many of them have never visited our offices. Through the use of technology, you can get all the benefits of our services by communicating with us and maintaining your account via telephone, regular mail, e-mail, and the Internet.
In this meeting, we get to know you and your dreams.