FAQ

What is a fee-only advisor?

A fee-only advisor is one who is paid solely by his clients. A fee-only advisor does not receive commissions for any products or special compensation from any related party. PIG’s income is derived solely from the fees paid by our clients. We believe this removes all conflicts of interest between us and our clients.

What is the difference between a Registered Investment Advisor (RIA) and a brokerage firm?

An RIA provides advice for a fee and operates under the Investment Company Act of 1940. RIAs are legally required to act as a fiduciary to their clients. That means they must put their client’s interest first. A fee-only advisor is compensated only by its clients, so it is free from conflicts of interest that brokers may face.

A brokerage firm sells products and services and operates under the Securities Act of 1933 and other laws. Brokers are only required to show that the investment products they sell are suitable for their clients, which is a lesser standard than putting their client’s interest ahead of their own. A broker’s first duty is to his firm, not the client.

Many advisors claim to be independent, but are still affiliated with a broker dealer. These hybrid advisors can change hats between being an advisor and a broker. Many advisors choose this model so they can sell you lucrative products such as variable annuities and variable life insurance contracts. This can be confusing because you have to ask yourself if they are putting your interests first or if they are selling you something so they can make a commission. If your advisor is affiliated with a broker dealer, then they are not truly independent.

What is the difference between a Broker, an Independent Advisor and an Independent Fee-Only Advisor?

Investment professionals typically fall into three main categories.

    1. Broker – Brokers are employees of a major brokerage firm or wire house such as Merrill Lynch, Smith Barney, UBS, and the like. They are actual employees of the brokerage firm and their primary function is to sell and distribute financial products to clients of the firm. They operate under the Securities Act of 1933 and other laws. Brokers are only required to show that the investment products they sell are suitable for their clients, which is a lesser standard than putting their client’s interest ahead of their own. A broker’s first duty is to his firm, not the client.

    2. Independent Advisor – These advisors claim to be independent since they are not direct employees of a major brokerage firm or wire house. However, they are affiliated with one of numerous Broker-Dealers. In a sense, they are only “kind” of independent. Sometimes they act as an Advisor and their actions fall under the Investment Company Act of 1940 where they are required to put their client’s interests first. Other times they act as a broker and their actions fall under the Securities Act of 1933 where they only need to show that the products they sell to their clients are suitable. Professionals often choose this business model because they want to appear independent, but want to reserve the right to sell lucrative products such as variable annuities and variable life insurance contracts (both products are typically not good deals for clients). Clients of these types of advisors will still need to discern whether their advisor is acting objectively or perhaps being influenced by the prospect of earning a commission.

    3. Fee-only Independent Advisor – These advisors provide advice for a fee and operate under the Investment Company Act of 1940. They are legally required to act as a fiduciary to their clients. That means they must put their client’s interest first. A fee-only advisor is compensated solely by its clients, so it is free from the conflicts of interest that brokers and broker-dealer affiliated advisors may face. They are often self employed and do not work for a major bank or brokerage firm, nor are they affiliated with a broker dealer.

How do I become a client?

You need to be familiar with the merits of passive and index investing. We recommend you read thru the entire investments section of our website. Our clients understand how we invest and why. Once we decide to work with one another, we will send you all the required paperwork to establish your accounts.

Regardless of the mounds of data that exist to discredit active management, we respect that many people still want to try to beat the various markets. If you are an innate gambler or active investor, we recommend you seek a different firm and we sincerely wish you the best of luck. We also suggest you re-read the entire investments section of this website.

Can you send me a brochure or an information packet?

Most of the information you need can be found on this website. If you have further questions, please contact us.

Can I pay a one-time fee to access DFA funds thru your firm?

No.

Once I am a client, do I have to be involved in the day to day operations of my portfolio?

No. That is what you pay us for.

How often do you rebalance portfolios?

We rebalance annually. Click here to read the rebalancing section of our website.

Do we need to meet in person?

No. Everything can be handled via email, telephone, or video conference. If you are in the Houston area, we are happy to meet with you in person. The majority of our clients live outside of Houston.

What custodians does PIG use?

All of our client’s accounts are held at TD Ameritrade. Working with a single custodian allows us to operate more efficiently.

I have certain stocks, bonds or mutual funds I want to keep. Can they be incorporated into my portfolio?

We recommend you hold those types of investments in a separate account so they are not subject to our investment management fee. We are happy to open a separate account for you at TD Ameritrade Institutional.

Will I be able to access my account(s) online?

Yes. You can access your account(s) online thru this website or directly thru TD Ameritrade. You can also access the reporting for your account(s) directly thru this website.

What reporting will I receive and how often will I receive it?

You will receive a statement each month from TD Ameritrade since they custody your assets. You will also receive a report from PIG each quarter that outlines your account’s performance.

Will I receive reporting that will help me with tax preparation?

Yes. We have designed our quarterly reports to do just that. Each report has everything your CPA will need to prepare your taxes with regard to all accounts you have at PIG.

Does anyone at PIG have access to my money?

No. Only you have access to your money. We have a limited power of attorney that allows us to do three things:

    1. Place trades in your account(s).

    2. Request that TD Ameritrade send money directly to you or to another account in your name (with the same registration). We can not request money be sent from your account to anyone but you.

    3. Debit investment management fees.

How safe are my accounts? Are my accounts insured from theft, fraud, errors, omissions and insolvency?

All accounts are insured on multiple levels. TD Ameritrade Institutional’s insurance coverage is explained here. PIG also carries errors and omissions insurance. Accounts are not insured against loss due to market fluctuations.

Do you have errors and omissions insurance?

Yes.

Do you offer any financial planning other than investment management?

Yes, click here for our fees page.

What are your fees?

Click here for our fees page

What is your minimum?

Our minimum is $1 million.

How are the fees paid?

Investment management fees are debited directly from your account each quarter. Planning fees are paid by check.

How does PIG protect my privacy?

We work with some high profile clients. We do not share any information about any of our clients unless it is required for business we conduct for them. For instance, we share certain personal information with TD Ameritrade because it is required to open an account for you. Other than information that is integral to business we conduct for you, we do not share any information with anyone – period.

What are PIG’s ethical standards?

Our mission is simple. Be honest and do the right thing – without exception. We are not sales people. We are here to help you. You cannot ask too many questions. Please ask questions until you are comfortable.