An Investment Adviser is an independent firm that provides professional and objective advice to clients for a fee. Most Investment Advisers are regulated by the U.S. Securities and Exchange Commission and are subject to its audits.
Mostly individuals and their families, profit sharing plans, 401(k) plans, foundations and nonprofit organizations.
The assets in your account – such as securities and cash – are held at an independent third-party brokerage firm or a bank. We can recommend a custodian or work with your current brokerage firm. It is important to note that your assets are always held in your name. McRae Capital Management never takes physical possession of a client’s assets.
Most of our clients have more than one account, including personal accounts, traditional IRAs, Roth IRAs, 403b’s, family trusts, 401(k)s and charitable foundations to name a few. Different accounts have different tax and estate planning ramifications. We take all of these factors into consideration and will manage all of your accounts on a combined basis to help you achieve your goals.
We determine the asset allocation based on numerous conversations with you, the client. Allocation is based on age, investment time horizon, income requirements, risk tolerance and what you foresee happening in your life. It is also very common to see a client’s asset allocation change over time as his or her life changes. We have accounts that are all stock, some that are all bonds and many that have a balance of stocks and bonds.
Our strategy is based on long-term investing in equities of high quality companies, U.S. government bonds, high grade corporate bonds and tax-free municipal bonds. We believe in investing in liquid assets and work to minimize taxes.
We generally charge 1 percent annually on assets up to $3 million, 0.75% on assets between $3 million and $5 million, and 0.5% on assets above that. There are no setup fees, termination fees or other hidden costs.
The client also pays brokerage commissions when we buy and sell securities for the client’s portfolio. We have relationships with brokers with whom we have negotiated favorable commission rates. We can also work with your existing broker, but commissions will depend on the custodian you choose.
We track our results against the goals we set with each client. After many client consultations, we develop a portfolio that we believe best suits client needs. Based on the portfolio’s makeup, we discuss with the client what a reasonable rate of return would be. We then compare our results to that expectation.
We believe the best way to participate in international markets is to invest in large multinational corporations that conduct business globally. This mitigates the political and foreign exchange risk associated with international developed or emerging market investing. (For more information, please read Investing Abroad by Staying at Home.)
Many of our clients live off their accounts. A client can have money electronically transferred from his or her brokerage account to their bank account on a periodic or one-time basis. They can also receive a paper check if they prefer. (For more information, please read Having Your Cake and Eating It, Too.)
We believe very strongly that your tax, legal and investment advisers should be independent of each other. We think there can be serious conflicts of interest if someone is being paid to give legal or accounting advice while also being paid a commission to sell products such as insurance or mutual funds. At the same time, we also believe that investment decisions should be made within the context of our clients’ overall financial situation and lifetime goals. Thus, we are qualified to provide planning services and we work closely with our clients’ accountants and lawyers to develop an investment plan that is the most tax effective for them.
McRae does not pool clients’ assets, so your investments are not affected by the needs of other people. We tailor each portfolio to meet our clients’ individual needs, especially as it pertains to risk tolerance and individual tax situations. (For more information, please read Are Mutual Funds A Good Investment Strategy?)
Each new client signs a contract with us. However, a client can cancel this contract at any time and will be refunded any fees due the client at the time of termination. Since the client’s account is held at an independent third-party broker, the client has immediate access to his or her account. Moreover, there are no termination fees or deferred charges.
McRae sends quarterly statements to clients, and your custodian will send reports monthly or quarterly. Unlike many brokerage statements, our package includes performance reports. Performance reports will track the account since its inception at McRae. This allows the client to track the account versus the personal account goals discussed with the client and McRae.
Yes, for the most part our investment managers own the same stocks as our clients. At McRae, we feel it is important that we share in the risk and reward of our investment decisions. However, we have developed strict guidelines on how an employee at McRae can trade in certain stocks; these guidelines are meant to ensure that clients’ interests always come before ours.
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