Information Guide for Investment Advisor Representatives

Transcription

1 WealthPoint Investments LLC A Registered Investment Advisor DBA Duncan McHugh Investments Information Guide for Investment Advisor Representatives 4458 Legendary Dr., Suite 140 Destin, Florida Swingley Ridge Rd, Suite 210 Chesterfield, MO

2 A Letter from our President and Chief Investment Officer, John G. McHugh First, I want to thank you for your interest in Duncan McHugh Investments to serve as your Registered Investment Advisor. Duncan McHugh Investments provides a turn-key Total Asset Management Program (TAMP) for advisors, acting as Investment Advisor Representatives (IARs) with our firm, which includes front, middle and back office services. As for Custodians, we currently have contracts with Charles Schwab and TD Ameritrade but could work with the custodian of your choice as their requirements allow. Our current contracts include both the client and/or the advisor absorbing client transaction costs. We offer the freedom for you to set up your practice and provide you with the support and open architecture you may be looking for. As an IAR with our firm, you are able to help manage your client s assets with their best interest as your focus; you are not limited to specific products or managers. You are your own boss, acting within compliance guidelines set by the SEC. Through our company s asset management division, WealthTrust Asset Management, we offer nine DBS investment strategies, or sleeves, which can be blended to best meet your client s specific needs. Utilizing the DBS strategies is up to you; there is no obligation from our advisors to incorporate the DBS strategies into their practices. Although, our advisors have found that we have helped grow their business through our joint DBS marketing efforts and preferred pricing. If you are a current advisor looking for a place to call home, please feel free to call or me and I will answer any questions that you might have. Independence simplified. Isn t it time you set sail and chart your own course? I look forward to hearing from you. John G. McHugh President Chief Investment Officer Duncan McHugh Investments WealthTrust Asset Management John@duncanmchugh.investments 2

3 About Our Company WealthPoint Investments LLC (the Company) is a SEC Registered Investment Advisory firm (RIA). Partners, John G. McHugh and Darlene S. Duncan brought to the firm over seventy years combined investment industry experience, and, most importantly, John McHugh brought nearly twenty years of private investment management experience for his clients, and clients of other advisors. Our company is based in Destin, Florida and St. Louis, MO. Investment Advisor Representatives (IARs) with our company may have office locations outside of the Company s offices. The Company operates under the names of its two divisions, Duncan McHugh Investments, and WealthTrust Asset Management. Duncan McHugh Investments (DMI): Our Investment Advisory division, Duncan McHugh Investments, is the side of the house that focuses on our advisors and their clients. Investment Advisor Representatives for our firm work under Duncan McHugh Investments. DMI offers open architecture to its investment advisors. We trust that you understand your clients needs, preferences, goals, and risk tolerance. We provide compliance oversight and seek only the highest caliber advisors to work with us as investment advisor representatives of our firm. At Duncan McHugh Investments, we offer one of the highest payout schedules on the street, allowing you to be highly competitive in your fee based pricing. WealthTrust Asset Management: Our Asset Management division, WealthTrust Asset Management, is the home of our DBS (Diversified, Balanced, Strategic) Portfolios. The DBS Portfolios were created and are managed by our President, Chief Investment Officer, John G. McHugh. WealthTrust Asset Management s primary focus is to operate as a third party asset manager to the Company s advisors and to the advisors of other firms. The DBS portfolios have a long history, dating back to the early 2000 s. Back then, although John was already a seasoned advisor, he realized that to be an effective portfolio manager, he must have access to timely reporting of earnings estimates in order to best evaluate companies. With this in mind, John subscribed to an extensive database which offers daily updates to earnings and earnings revisions, in addition to other reported financial data, on over 4,000 publicly traded companies. John then put his own set of quantitative screens in place to help separate the wheat from the chaff and bring the companies meeting his investment criteria to the forefront. This daily disciplined approach enables WealthTrust Asset Management to have a defined buy/sell discipline and helps take the emotion out of investment management. Times have changed since the early 2000 s, but positive earnings surprises have never gone out of style. Earnings estimates and a company s ability to meet those estimates provide the greatest impact to stock prices. John G. McHugh 3

4 Your RIA Business: Licensing Requirements: Series 65 or 66 The majority of your accounts will be a part of your RIA business, will have a wrap client agreement on file, and will be billed on a percentage of assets under management or on a flat fee basis. The accounts can be discretionary or non-discretionary. Investment Options: IARs with our firm have open architecture for investing their clients accounts. We offer our inhouse DBS portfolios with preferred pricing to our advisors, but you are not obligated to include the DBS portfolios in your practice. Most annuity contracts and 529 accounts are not eligible to be part of your RIA business and are set up under a broker/dealer relationship. If annuities and 529 s are an important part of your business, you will want to hold dual registration with both DMI and a Broker/Dealer firm. Duncan McHugh Investments is not a broker/dealer, but we can help you apply for registration and analyze costs. Your security licenses: Only your Series 65 and/or 66 will be associated with your RIA business with DMI. Your other security licenses (Series 6, 7, 9, 10, 24, etc.) would be associated with a broker/dealer relationship you would establish. Your Broker/Dealer Business: Licensing Requirements: Series 7, 63 or 66, Insurance For those advisors who meet their qualifications and want to continue with transaction based business, we suggest dual registration as a Registered Representative with the Broker Dealer (BD) firm Purshe Kaplan Sterling Investments (PKS) based in Albany, NY. PKS uses Fidelity as their Custodian and allows you to hold your registration with an independent RIA as well as utilizing their broker dealer services. In most cases, you will work with PKS for your traditional transaction based accounts, your annuities, 529 accounts and other insurance products. As is true for all BDs, PKS is governed by FINRA. Your Income: We think that you will find your overall payout to be quite attractive, in fact, we believe it to be one of the highest on the street. We will help you estimate your payout ratio for both your RIA and BD business. Following is an illustration of a $5 million RIA practice with varying fee schedules. From gross fees, we have deducted a hypothetical DMI charge to illustrate a payout ratio. From this you will have additional charges/expenses to set up and run your practice, some of which are shown on pages

5 Investment Advisor Representative (IAR) Estimates Hypothetical Book of Business AUM Sample Annual Fee Hypothetical Gross to Payout Fee Amount to Client DMI Fee FA Ratio Account 3 $ 150, % $ 2,250 (300) $ 1, % Account 4 $ 350, % $ 4,375 (700) $ 3, % Account 5 $ 500, % $ 5,500 (1,000) $ 4, % Account 6 $ 1,000, % $ 10,000 (2,000) $ 8, % Account 7 $ 3,000, % $ 25,500 (6,000) $ 19, % $ 5,000,000 $ 47,625 (10,000) $ 37, % Please keep in mind that these figures are for informational purposes only for your RIA business. Your actual payout may differ. If you have both RIA and BD business, those payments will be made to you separately. As an IAR with our Company, following is a list of the most common covered and non-covered expenses Included Transition assistance with your custodian Administrative assistance (standard) Creation and filing of your ADV2B Fee billing accounting services In house bookkeeping/payroll In house trading backup Client reporting through AssetBook for your RIA accounts (minimums apply) Compliance oversight E&O insurance for your RIA business (limits apply) 1099 reporting Microsoft Office 365 Enterprise E3 account Standard Postage for advisors within our Destin & St Louis offices Proprietary pricing of the DBS Portfolios for you and your clients Joint meetings, at your discretion, with your clients and John McHugh to discuss the DBS portfolios Additional Expenses NOT Included A suitable office space of your choosing or a rental of an available office within our DMI locations Computer system, additional desired software & cell phone Furnishings and desired office equipment Additional administrative support (if desired) State licensing fees required for your RIA book of business beyond our current registrations Marketing costs Additional postage/shipping charges for special mailings or overnight/special delivery services 5

6 FAQ: Additional Expenses NOT Included (continued) 3rd Party or DBS Management Charges Personal business stationery (cards, notepads, etc.) Trade Errors that you or your personal assistant make Custodian and transaction costs billed to you vs. your client (varies by account type and custodian) Travel and advertising expenses Any charges initiated by you but billed on a corporate account If applicable, requirements of your BD for non-ria business (registration, E&O policy, compliance, Morningstar, etc.) What are the first steps I need to take? 1) Obtain a copy of any employment contract or non-solicitation agreement you may have with your current employer 2) Discuss with us your current practice, its size and fee schedules How does my practice fit into Duncan McHugh Investments? WealthPoint Investments LLC DBA Duncan McHugh Investments is the RIA. You, as a financial advisor, register under DMI as an Investment Advisor Representative (IAR). What would my practice look like under DMI? Most standard brokerage accounts will transfer to a wrap arrangement under our RIA. We have seen retention rates as high as 90% when advisors transition their business. What security licenses do I need? You will need to hold a Series 65 or 66 to be an IAR with DMI. What is the minimum practice size in which DMI would be interested? We have helped advisors with a book of 5 million to 100 million. Will my clients pay a wrap fee and/or transaction costs? That depends upon the custodian you choose and type of account established. Can I brand my practice under a name other than Duncan McHugh Investments? IARs who are located within our Destin and St Louis offices operate under Duncan McHugh Investments. IARs who have their own office locations can use a separate company name. As an IAR, would I be an employee of DMI? No. You would not be an employee of DMI, but rather an independent contractor under our RIA. Does DMI act as a custodian? No, Duncan McHugh Investments is not a custodian of your clients assets. We utilize Charles Schwab and TD Ameritrade for preferred pricing. Other custodians may be available, depending upon the size of your practice. 6

7 FAQ (continued): What standard administrative support can I expect from DMI? We will help you with your transition, including all of the ACAT and new account documents. In addition, administrative help is only a phone call away (St Louis and/or Destin) for check requests, RMD calculations, performance reporting, marketing mailings, etc. The amount of assistance available will depend upon the size of your practice. Why do I need dual registration with DMI and a broker/dealer? You are not required to hold dual registration. DMI will work with you on your RIA business. A broker/dealer relationship may be valuable if you have annuity, 529, and other commission based business, and you would like to maintain your additional security registrations. There is a separate approval process for the broker dealer, additional costs, and FINRA compliance. We will help you analyze these costs to see if dual registration makes sense. How long does it take to ACAT my book and I receive my first paycheck? We like to estimate days, 30 days to ACAT the majority of your book, and another days before fees will begin to be assessed to your clients and begin to be paid out to you. This is all dependent upon the quality of your transfer paperwork and turnaround time from your clients. How can DMI accommodate high value and low transaction accounts? These accounts are typically held at the custodian as a courtesy, without an assets under management wrap charge to the client. In this case, transaction charges are assessed to the IAR. Are separately managed accounts available? Yes, many third party managers are available. We will obtain a list of those managers you currently use to determine their availability and charges with the new custodian. What are the in-house DBS portfolios? Our Asset Management division, WealthTrust Asset Management, is the home of our DBS (Diversified, Balanced, Strategic) Portfolios. The nine DBS Portfolios currently available were created and are managed by our President, Chief Investment Officer, John G. McHugh. The DBS portfolios are available to you and your clients, and we are here to help you with your marketing efforts, should you choose to utilize them in your practice. We are happy to discuss the portfolios in detail and have available a separate booklet on the portfolios and our methodology for your review. What lead time do I need to set to gather data for my conversion? We recommend you allow at least 2 months to prepare for your conversion. This will allow you time to gather the appropriate account data and speak to representatives regarding registrations including your ADV 2B. Does DMI follow broker protocol? Yes. Only specific account data will be allowed to be collected for your existing clients. NO account numbers, dates of birth, Social Security numbers or other non-protocol client information can be taken from your existing firm. 7

8 Once You Are Ready: For those advisors not covered under a non-solicitation agreement with their current RIA/BD, we have found the following information gathering guidelines to be effective. If you are an advisor who is covered under a non-solicitation agreement, please contact us directly to discuss your situation, as these information gathering guidelines may not apply to you. While we cannot give you legal advice, we are happy to refer you to a qualified attorney. Remember, you are bound by the rules of our industry (protocol) as to the type of data that you are able to bring with you from your current firm. It is important to note that NO account numbers, date of birth, Social Security numbers or other non-protocol client information can be taken from your existing firm. The custodians will require you to complete a comprehensive spreadsheet with account data such as: Account Title, Registration Type, Associated Persons, Address, Phone Numbers. This information will be used to prepare the ACAT transfer paperwork for your clients. A complete list of the data fields will be provided to you at a later date. It is also our recommendation that you recall which of your clients is set for systematic withdrawals, their distribution and tax withholding preferences, as well as RMDs. And, it is helpful to remember which of your accounts are fee based, and their fee schedule. This type of information will be based on your recollection, not from information taken from your firm, as it is not part of protocol data. The Good News: We are here to help you! Draw on our expertise, and while we may not be able to provide all of the administrative manpower you will need, we can help you assess your needs so you can plan appropriately and lend an extra hand as we are able. If you like, we will talk with your Custodian on your behalf to see if a representative is available to aid with your ACAT transfers and if your client accounts would be eligible for a transfer fee rebate. We will work with any administrative person you employ to ensure the data they collect is in good order; and, we will help you get organized and ready to make a successful move. Changing firms is like studying for an exam. The more prep time you spend, the easier your big day will be. We want to make your transition as seamless as possible so you can hit the ground running with as little down time as possible. Are you ready experience more independence? #YourPracticeYourWay Please note that we have made our best effort in compiling the data in this guide. The guide is intended for informational purposes only and is not guaranteed as there may be exceptions/additions/deletions to the information contained herein. IARInfo