|
|
Frequently Asked Questions
Who is Financia Capital?
Financia Capital, LLC is a discretionary, fee-based investment advisor providing asset management services for high net worth individuals, family trusts, small business retirement plans, and institutional investors. Based in San Francisco and registered in California, the company manages private accounts for individual investors and serves as the general partner of the Financia Global Focus Fund L.P., a global macro hedge fund.
What is a private account?
Private accounts (often referred to as "separately managed accounts" or SMAs) are individual investment portfolios established at a broker and managed by a professional investment advisor. Types of accounts currently managed by Financia Capital include standard non-retirement brokerage accounts as well as traditional IRAs, Roth IRAs, SEP-IRAs, and small-business profit sharing plans.
How is a private account different from a mutual fund?
Mutual funds pool the assets of many investors and manage those assets based on the charter of the fund rather than the individual objectives of investors within the fund. A private account is a brokerage account owned by you that we manage on your behalf. Although Financia Capital builds each private account around one of our master portfolios, the separate account structure permits us to address the individual needs of each client, including conservative risk tolerance levels, income-generation requirements, and concerns associated with large taxable accounts.
What is the Financia Global Focus Fund L.P.?
The Financia Global Focus Fund L.P. is a type of private investment partnership commonly referred to as a "hedge fund." Hedge funds can pursue a wide range of investment strategies to enhance returns and hedge risk that are generally unavailable to mutual funds, including leverage, short selling, program trading, swaps, arbitrage, and derivatives. Participation in the Financia Global Focus Fund L.P. is restricted to individuals and entities who meet the accredited investor requirement in accordance with Rule 501(a) of Regulation D under the Securities Act of 1933. Please contact Ian Fraley at Financia Capital to determine if you are qualified to receive information and risk disclosure documents for the Fund.
What is the minimum investment to open a private account and what is the fee schedule?
Financia's minimum private account size is $250,000. Clients are charged an annual fee of 1.5% for accounts up to $500,000, 1.25% for accounts between $500,000 to $1,000,000, and 1.00% for accounts between $1,000,000 and $10,000,000, and 0.75% for accounts above $10,000,000. Fees are billed at the start of each quarter and are based on the liquidation value of the account reported by the broker as of the last business day of the previous quarter. Additions made to an account mid-quarter are billed on a pro-rata basis. For non-qualified (i.e. - non-retirement accounts), we prefer to deduct management fees directly from the account, but we are more than happy to send invoices to clients who prefer to pay by check. For qualified accounts (such as IRAs), we recommend that fees not be deducted directly, as this reduces tax-free capital and is therefore not in your best interest.
Can Financia Capital help me if I have less than $250,000 to invest?
Yes. We will accept accounts below our investment minimum subject to a minimum annual fee of $3750. Alternatively, we encourage you to subscribe to the semimonthly equity-focused global macro newsletter Inside Global Markets, authored by Financia's CEO Ian Fraley. For more information, please visit www.insideglobalmarkets.com. We are also available to meet with you on a consulting basis to review your current investments and make recommendations. Please contact us for current hourly rates.
Does Financia Capital make money from buying and selling securities in my account?
Financia Capital is not a broker and does not receive any income from commissions. Financia Capital has no financial incentive to generate turnover in client portfolios or to use any particular investment product. Our sole incentive is to increase the value of your account by performing well in meeting your investment objectives.
Will my portfolio be the same as others managed by Financia Capital?
Not necessarily. Although some accounts are very similar, others have important differences. Financia Capital structures most accounts around one of two "master portfolios" - the Core Strategy Portfolio and the Balanced Portfolio. Most of our clients choose to allocate all of their assets to the Core Strategy, which reflects our best ideas for maximizing returns in the current market climate. However, we always discuss investment objectives, risk tolerance, and other circumstances with prospective clients before reaching a mutually agreed to asset allocation decision. More conservative clients (including those already in retirement) often choose our Balanced Portfolio, which combines the Core Portfolio with fixed-income investments designed to reduce volatility and increase income. The amount of money dedicated fixed-income investments in the Balanced Portfolio will depend on the individual risk profile of each client, but we do require that at least 50% of the assets be allocated to the Core Portfolio - it simply does not make sense to hire us to put the majority of your money somewhere other than in our best ideas. In addition, we are happy to discuss with you other strategies we can use to reflect your specific investment time horizon, requirement for income, tax situation, and risk profile.
Who makes the investment decisions for my portfolio?
All portfolio management decisions are made by Ian Fraley, co-founder and chief executive officer, and Stephen Brennan, co-founder and chief investment officer. Unlike most mutual funds and many large private money managers, we encourage our clients to communicate directly with the portfolio decision makers to address any questions and concerns they might have about their accounts.
Can I buy and sell securities in my Financia Capital managed account?
Financia Capital is not a broker or sales company and we do not make money by buying and selling securities for our clients. You hire us to make all the trades on your behalf pursuant to the strategy that we mutually decide best reflects your investment goals. In the event that your personal risk tolerance or investment objectives change, we will be happy to discuss a new strategy.
Will you notify me before making trades in my account?
It is simply not practical for us to initiate trades only after reviewing them with each client, and such an approach would inevitably favor some clients over others due to the different timing of executions. When you enter into an investment advisory agreement with us, you hire us to manage your investment portfolio and relieve you of the responsibility of making tactical investment decisions. Although we strive to minimize portfolio turnover, we will act immediately when we deem it necessary to make a trade consistent with your investment objectives and/or changing market conditions. In most cases, we will e-mail our clients after making a major portfolio change to explain the reasons underlying our decision, and you will always receive trade confirmations from the broker a few days after each transaction occurs.
Can I speak with the portfolio decision makers?
Yes. We pride ourselves on offering personalized service to high net worth investors and encourage all of our clients to contact Ian Fraley or Stephen Brennan by e-mail or by telephone with any questions or concerns they might have. Many of our clients ask to have regular face-to-face meetings with us (usually on a quarterly or annual basis), and we always do everything we can to accommodate such requests.
Do you offer comprehensive tax advice, estate plans, and other financial planning services?
We are investment managers, not financial planners. Our focus is delivering the best returns possible given your risk tolerance, investment objectives, and market conditions. That said, we understand the importance of financial planning and are especially sensitive to the tax implications of turnover in non-qualified (i.e. - non-retirement) accounts. We are always happy to discuss with you or your financial planner any financial planning issues you may be facing, but we will recommend that you consult with a licensed professional to address complex tax and financial planning issues.
If I have an existing portfolio what happens to it when I open an account with Financia Capital?
We will sit down with you to examine your current positions and discuss which securities fit within the investment strategy upon which we have mutually agreed. For the most part, we encourage our clients to liquidate their existing holdings and allocate all funds to one of our portfolios so we can implement a cohesive strategy that best reflects their investment objectives and risk tolerance. However, we understand that some clients own securities that they wish to keep for tax reasons or other circumstances. Please let us know if this is the case and we will do everything possible to accommodate your unique requirements.
When I transfer an existing account to Financia Capital, do I need to liquidate all holdings first?
That depends. In most cases, we prefer to transfer your existing positions to your new account with Financia Capital so we can minimize the time between the liquidation of these holdings and the construction of your new portfolio. However, some securities and mutual funds are "proprietary" and are not transferable between custodians; we will ask you to contact your custodian to liquidate these prior to initiating the transfer.
How long does it take to transfer an existing brokerage account to my new Financia Capital account?
Unfortunately, many brokerage firms and investment companies are much better at taking in money than they are at transferring it to another company, and unanticipated delays are not uncommon. We usually recommend using the Automated Customer Account Transfer Service ("ACATS") system, operated by the National Securities Clearing Corporation, for account transfers (as opposed to liquidating the account and sending a check or doing a wire transfer to fund the new account). One advantage of the ACATS system is that income events occurring in your old account after the transfer (such as receipt of a dividend) will be automatically swept into your new account and will therefore ensure that the old account is completely closed with no additional work. The downside of the ACATS system is that transfers can sometimes require several weeks to complete (though in most cases we see transfers go though within six business days). Unfortunately, there is little we can do to expedite the process once an ACATS transfer has been initiated, but we always work closely with the brokerage firms to minimize any errors that might delay processing.
Who has custody of my assets and what protection does my account have?
Financia Capital manages your account, but the custodian is Fidelity Investments, one of the premier providers of custody and brokerage services to registered investment advisers. After careful analysis, we determined that the breadth and completeness of products and services, advanced portfolio management and trading technology, and – most importantly – outstanding service personnel, makes Fidelity the best partner for Financia Capital and our clients. As the custodian of your portfolio, Fidelity keeps your assets in a separate account which you own. Financia Capital has limited power of attorney as your investment advisor, which permits us to make trades, deduct management fees pursuant to our agreement with you, and order distributions on your behalf made payable only to you and sent to the address of record on the account (or wired to a bank account with the same title as your Fidelity account). At no time do we ever have possession or custody of your assets. Fidelity is a member of the Security Investors Protection Corporation (SIPC), an important part of the overall system of investor protection in the United States. While a number of federal, self-regulatory and state securities agencies deal with cases of investment fraud, SIPC's focus is restoring funds to investors with assets in the hands of bankrupt and otherwise financially troubled brokerage firms. SIPC provides protection up to $500,000 per customer, including a maximum of $100,000 on claims for cash. Additional securities protection is also provided through arrangements made by Fidelity with third-party insurance companies - please contact us for more information on this coverage. As with all investments, your account may lose value as a result of investment activities.
Can I use a different broker?
No. We are very pleased with the level of service we received from Fidelity, including fast executions of our trades, very low commissions, and accurate reporting. Fidelity's platform permits us to make "bunched trades" on behalf of all our clients, which ensures that when we make a change in one of our master portfolios, all clients affected receive the same price. Finally, our internal portfolio management and accounting software interfaces directly with Fidelity, ensuring accurate and timely reporting and billing for our clients.
Can I look at my account on a regular basis?
Yes. After your account at Fidelity is funded, we will provide you with online access instructions, including your account number, a temporary password, and directions for changing your password. Once you log in to your account, you will be able to view account balances, current portfolio holdings, recent transactions, monthly statements and trade confirmations.
Will Financia Capital keep me informed about the performance of my account on a regular basis?
Yes. In addition to account statements from Fidelity, Financia Capital will send you our own proprietary quarterly reports detailing quarter-end portfolio holdings (grouped by country, style, and sector) and quarterly performance. We will also include a short letter to explain the performance of our strategies and update you on recent and/or pending changes to your portfolio. Please contact us for a sample of the quarterly reporting package.
If I need to withdraw funds from my account or close my account, is there a cancellation fee?
No. The assets in your account are yours, not ours, and there is never a redemption fee to access your funds. Although we ask that a 30-day notice be given prior to withdrawing funds and/or closing your account, the reason for this is to permit us the time to liquidate portfolio positions at the best levels possible. We will always do everything we can to help you get your money out of your account more quickly in the event you are faced with a pressing need. Should you have to close your account with us for any reason, we hope that you will consider coming back to us when your circumstances have changed.
|
