WHAT IS AN INDEPENDENT FINANCIAL ADVISOR?
Independent Registered Investment Advisers are professional independent advisory firms that provide personalized financial advice to their clients, many of whom have complex financial needs. Because these advisors are independent, they are not tied to any particular family of funds or investment products. As fiduciaries, they are held to the highest standard of care, and are required to act in the best interests of their clients at all times. They are registered with either the Securities and Exchange Commission or state securities regulators.
HOW DO I TRANSFER ASSETS?
Usually, ACATS (Automated Customer Account Transfer Service) is used to transfer assets from client's old custodian to the new Interactive Brokers (IBKR) custodian account. Once the new client account is setup at IBKR, client initiates online request for electronic transfer and it typically takes 3 to 4 business days to complete. There are other offline options available, as needed. DTI will take care of setting up of the new account and transferring client’s assets, working with the client.
WHERE IS MY MONEY KEPT?
In our advisory role, we never take custody of client assets. We utilize Interactive Brokers as the custodian of client accounts and as our primary broker. Our relationship with Interactive Brokers is at an arm’s length with no exchange of funds between Interactive Brokers and Deep Think Investments. When the client’s account is established with Interactive Brokers, they provide Deep Think Investments with limited trading authorization on their account. This authority allows us to process trades directly in client accounts. We will always confirm with the client either through a phone call or email before and after a trade is exuctued.
WHAT IS A TIME HORIZON?
Time horizon is the amount of time a person has to save for a particular event. For example, the time horizon for a college savings account might be 10 years for the parents of an eight-year old child, but 15 years for the parents of a three-year old. The time horizon for a 40-year old saving for retirement might be 25 years and it could be 10 years for a 55-year old who started saving late in life.
WHY IS HAVING A FINANCIAL PLAN IMPORTANT?
Financial planning, with the help of a professional financial advisor, helps the client determine their short and long term financial goals and create a balanced plan to meet those goals. The plan includes, understanding income and cash flow, increasing capital to invest for the future, providing financial security for your family through a customized investment plan, ensuring standard of living in difficult times, financial understanding of your assets and liabilities and fostering savings mindset. The first step in developing a financial plan for a client is for the client to set up a meeting with an advisor.
DO YOU GUARANTEE ANY RATE OF RETURN ON MY INVESTMENTS?
Our clients have all ages and backgrounds and are successful, fulfilled people who either do not have the time to devote to their finances or who recognize the benefit of professional guidance in this area. They look to us as a great resource so they can achieve their financial dreams.
WHAT IS ACTIVE VERSUS PASSIVE MANAGEMENT?
Active managers invest by stock picking and timing the market. They try to anticipate the future performance of stocks through various technical and fundamental analysis approaches. They tend to be of high risk with potential high returns.
Passive managers invest by sticking to a plan designed based on the needs of the client. The focus is more on diversification and mitigating the risk and also rebalance from time to time, for the long run.
Deep Think Investments uses a passive management strategy, keeping the investment portfolio in line with the client goals.
WHAT SEPARATES US FROM OTHER FINANCIAL ADVISORS?
A combination of the aforementioned independence, comprehensive service, and client focus sets us apart. As an independent Registered Investment Advisor, we provide the best advice for each client’s specific and unique financial situation and needs without concerning ourselves with the agenda of a parent company. Our services range from financial planning to investment management to estate planning—we can meet a wide range of needs under one roof. Finally, we are oriented toward providing each client the attention and service they deserve. We treat our clients as the individuals they are and not numbers.
WHAT DOES BEING A FIDUCIARY MEAN?
A fiduciary is a professional that is entrusted to manage assets/wealth while putting the client’s best interests first at all times. Financial advisors who follow a fiduciary standard must disclose any conflict, or potential conflict, to their clients prior to and throughout the advisory engagement. Fiduciaries will also adopt a code of ethics and will fully disclose how they are compensated.
WHAT IS THE DIFFERENCE BETWEEN ASSET ALLOCATION AND DIVERSIFICATION?
Asset allocation is the method of investing your entire savings and investments across various asset classes such as stocks, bonds, money market and real estate. Diversification pertains to investments held within each of these asset classes. For instance, investing in a few stocks in one sector like industrials would not provide diversification. However, investing in stocks across various sectors like industrials, consumer staples, consumer electronics, emerging technology, communications, energy and international markets provides diversification. Investing in multiple types of assets, not just diversified stocks, is also important.
HOW OFTEN SHOULD I SEE MY FINANCIAL PLANNER ?
Typically once a year. A client may also consider making an appointment in anticipation of life-changing events such as inheritance of a large amount of money, divorce, new child born or new home purchase. If the client wishes to meet more than once per year, that can be arranged as well. We aim to serve our clients and their needs.
ANY REQUIREMENTS TO BECOME A CLIENT OF DEEP THINK INVESTMENTS ?
Many of our clients come to us on a referral basis. They typically enjoy healthy household incomes and have investment portfolios of $1,000,000 or more. However, we welcome and enjoy working with clients who do not yet meet these thresholds but are on the path to reach them in the near future.
WHAT IS YOUR INVESTMENT PHILOSOPHY?
Our philosophy is to manage your assets in a way that works best for the client. We attempt to design the client’s portfolio to achieve its targeted rate of return and minimizing the risk. In collaboration with each client, we create a customized Investment Policy Statement that clearly documents each client’s specific goals, policies and procedures.
Whether the investment goal is conservative growth, aggressive growth or preservation of capital or fixed income, the investment principles that follow are:
- Manage the long-term risk and return of a portfolio.
- Low cost investments with tax implications in focus.
- Rebalance portfolios on a regular basis to reduce risk and improve returns.
- Unbiased, objective, and advocacy role.
WHY SHOULD YOU CHOOSE REGISTERED INVESTMENT ADVISOR (RIA) OVER A BROKER ?
Financial advisors fall into two categories, Registered investment advisors and Brokers. Registered investment advisors are fiduciary, while Brokers work on “suitability” standard. Brokers earn through commissions on the products they recommend or sell. Registered investment advisors charge clients a percentage of the total assets under management or a fixed fee. Wel feel like choosing a RIA over a boker is a no brainer since brokers have conflicts of interest based on the commissions they earn for buying and selling certain equities. So they do not always act in the client’s best interest. RIA’s however, legally, are required to be a fiduciary, which means that they always put the client’s best interests first. Do you want to receive advice that’s objective and based solely on what’s best for your situation? Or do you want to receive advice that could be influenced, at least in part, by how much money the advisor will make based on the recommendations?