It is impossible to eliminate all conflicts of interest in the investment world, but at Alan B. Lancz & Associates, Inc. we have established the framework as a fiduciary for our clients, rather than the suitability rules that govern the brokerage industry. Our fiduciary and fee based standard is more inline with a CPA and/or private attorney relationship. In addition, we avoid many of the lesser known conflicts that are prevalent in most brokerages and even so many registered investment advisory firms throughout the country. All investors should know their total costs, including a sundry of potential charges listed below on a quarterly basis. In addition, wouldn’t it be great to know what your advisor/broker is invested in and how they handled sell-offs like 1987, 2000, and 2008? Alan B. Lancz & Associates, Inc has a transparent record of media interviews that illustrate exactly what we were recommending during both good and bad markets. To us, it is the record of preserving capital in times of market sell-offs that are the most salient. For over two decades, Alan B. Lancz & Associates, Inc. also fully disclosed both the retirement and personal portfolios of President, Alan B. Lancz. This full and complete disclosure has been emulated by several other firms, but is still far away from the industry standard it should be. We believe knowing exactly how your advisor is invested is a critical component in selecting an advisory firm.
This is hard to accomplish in today’s environment filled with conflicts of interest. At Alan B. Lancz & Associates, Inc. we are proud to work directly for our clients and have avoided all of the above conflicts. It was not easy, and this is why we use multiple custodians, to make sure we keep them on their toes looking out for their clients best interest, rather than their own. One solid custodian we would have worked with refused to drop their soft dollar and revenue sharing arrangements in regards to our clients, another took over a year to coordinate such (because it was built into their platform) before we started working with them. It pays to be independent and act as an actual fiduciary rather than just talk about it.Barrons-The Fees Mutual Fund Compaines
Years ago when a firm was a Registered Investment Advisor, you could rest assured that the firm’s compensation was advisory fee based and not subject to markups, sales charges or surrender charges. Unfortunately those times have changed, as now as long as it is disclosed one can become an investment advisor or investment advice representative and still be conflicted with markups and sales charges with their investment advice.
Markups – That is the term used when a brokerage firm – strictly speaking, a “broker- dealer” – sells you securities that it is holding in inventory and charges you a price higher than the market price.
This can be costly from a conflict of interest standpoint as well as adding up to 2-4% in additional internal expense, many times not fully disclosed. Sometimes this cost can be referred to as “the spread” in brokerage terms.
Sales Load – These are charged by some mutual funds, and they come in many varieties. Front-end loads are assessed when you make an investment; back-end loads are charged when you sell it.
These charges are paid to brokerage firms or investment advisor representatives and are not included in an investments annual expense ratio.
Surrender Charges– These are imposed when you withdraw early from an investment in a variable annuity, which is another big subject in itself. The S.E.C. put out a separate bulletin on variable annuities recently, highlighting the complexity and the multilayered fee structures that are common for them.
These charges can be particularly harmful when combined with high annual expenses because investors are essentially captive in the annuity until the surrender period has expired.
Investment Advisory Fees– These are often charges by advisors and may be based on the amount of assets in a portfolio.
If you are paying an investment advisory fee to lessen the conflicts of interest, make sure you are not paying additional markups, sales loads and surrender charges. Please confirm this is the case in writing before entering any type of advisory or brokerage relationship.
Tax Costs – This is one of the most overlooked, yet substantial, costs to investors. At Alan B. Lancz & Associates, Inc. we attempt to lessen tax cost by placing tax efficient investments in taxable accounts while concentrating on tax inefficient investments in retirement or qualified accounts. While we have been utilizing tax efficiencies for over 3 decades, we are surprised at how many still have similar portfolios for retirement as well as taxable accounts. After all, isn’t it what your net performance are after all costs and taxes that matter?
One final area where we are still seeing high and not fully disclosed expenses is in the popular 401(k) arena. Please keep in mind there are additional expenses for operating and administering retirement plans, and they may be passed on to employees, on top of mutual fund and ETF fees.
Many times these fees are not fully understood by the employee, or even the decision making group of the employer.
An accomplished team of experts have been assembled to provide the best independent research and advice for investors. The average years of experience is over 20 years for the top four associates, including the following important industry designations: Alan B. Lancz, Accredited Investment Fiduciary (AIF®).
Alan B. Lancz & Associates, Inc. (ABL, Inc.) adheres to the Accredited Investment Fiduciary and Certified Financial Planner designations code of conduct seeking to provide the most comprehensive fiduciary advice in the industry. Fiduciaries look at analysis and planning toward avoiding conflicts of interest and provide the most valuable advice pertaining to “What is best for the client” rather than broker’s “what is suitable” to sell to the client.
In 1999, Alan B. Lancz & Associates, Inc. became one of the first financial firms to fully disclose the founder’s holdings in an attempt to an industry standard. While others have followed, not to the degree we had hoped. Having assets and costs fully disclosed up front is a critical component in selecting an advisor.
Our fees are based on assets or our hourly advice not predicated on commissions or what you invest in. This full disclosure and fee structure is just another part of the foundation of our fiduciary standard.
A fee based approach that analyses your entire financial picture in terms of risk, reward generated for current risk levels tax and estate implications combined with the most relevant investment strategies from one of the most reported strategist in the country. The independent nature of our advice is a critical component to our overall client - centric analysis and research.
For over 30 years Alan B. Lancz & Associates, Inc. has been managing money on the most tax efficient basis available to match each clients specified goals, objectives and risk tolerance. High income or higher tax investments are coordinated into qualified or retirement accounts while taxable accounts are focused to take advantage of long term capital gains and the stepped up basis for multi-generational situations.
Alan B. Lancz & Associates, INC. offers retirement plan analysis offering cost analysis and strategies to lower overall costs and improve performance. An analysis with the third party administrator and custodian is also available to assure fiduciary, DOL and ERISA compliance.