A: An exchange-traded fund (or ETF) is an investment vehicle traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day. Most ETFs track an index, such as the S&P 500 or MSCI EAFE. ETFs may be attractive as investments because of their low costs, tax efficiency, and stock-like features. (definition from wikipedia.com)
Q: What does "managing my account" really mean?
A: "Managing your account" means a person, usually an investment advisor, has permission to make trades (investments) in your account based on an agreement you have previously established with the advisor. The advisor can only make trades, he or she will not have the capability of transferring funds or making withdrawals.
Q: Can Colby manage my taxable brokerage account?
Q: Do I send Colby money from my account?
A: No. We will help you open a new account at Charles Schwab or Folio Institutional, our primary custodians. We can provide you with the correct forms to use to instruct Schwab or Folio to transfer funds from your old account to your new account.
Q: This is new to me, can I allow Colby to manage a portion of my old account, or is this an "all-or-nothing" proposition?
A: This is not an "all-or-nothing" proposition; you can transfer any amount ($10,000 minimum) into an account that Colby can then manage for you.
Q: I don't understand how you determine which investments to make... can you explain exactly what you will do in my account?
A: We invest using Exchange Traded Funds (ETFs), plus a cash or income component. Each week, Mr. Colby analyzes a list of over 140 ETFs that represent virtually every segment of the market. Mr. Colby determines the relative price strength of each ETF based on his proprietary methodology. We then purchase the 10 ETFs each week with the greatest relative price strength in your account. If an ETF falls out of the top 10, we will sell that ETF. On average, one or two investments change each week. In other words, we mathematically determine where there is strength in the market, and we invest there.
Q: Having 100% of my investments in ETFs sounds risky; is there more than one portfolio option?
A: ALL of our portfolios offer protection against prolonged downturns in the market... Even if you are invested in our 100% ETF portfolio, we reserve the right to change strategies and use our Bear Market Protection Strategy to get you completely out of the stock market if the risk is too great.
We do offer a total of 5 different portfolios for our clients; the exposure to the ETFs ranges from 100% in our very aggressive portfolio to 20% in our very conservative portfolio. The second component of our portfolios is a cash or income producing vehicle that helps to reduce risk. For a list of our portfolio offers, click here. ——————————————————————————————————————————————————————————
Q: How will I be able to see what is in my account, my current holdings, the trades that were made, etc.?
A: Your money will always be in an account that you own and have access to, so you will receive statements and will have the ability to view the account on-line, if you wish.
Q: How does Colby gain access to my account to make trades?
A: There is a form you will sign that gives Colby "Limited Power of Attorney" to act as your agent. Colby will be able to login and make trades in your account, but Colby cannot transfer any funds or perform any other account functions. This is a very common practice between investment advisors and their clients.
Q: What is Colby's fee?
A: Colby's fee is based on two factors: the amount of money in the account, and where the account is located. A larger account balance
will reduce your fee. Transferring your account to our primary custodians, Charles Schwab or Folio Institutional, will also reduce your fee.
See our fee schedule for details (click here).
Q: I understand about a lower fee if my balance is larger, by why does it matter where the account is located?
A: Financial custodians, like Charles Schwab and Folio Institutional, have created tools that help advisors automate the management of client accounts.
If you transfer account to Schwab or Folio Institutional, we can quickly make changes to all our clients' accounts in minutes; also, our fee can be
automatically deducted from your account so we save time and money on billing and collections. If your account is with a custodian that does not offer these
services, we have to manually log into your account and make changes "one-by-one..." and we will have to manually bill you for our services and track your account for payment, etc... this is very time-consuming, and thus, costs more.
Q: How is Colby paid?
A: One-fourth of Colby's annual fee is due each quarter based on the balance of your account at the end of that quarter. Our fee will be deducted from your account if you have authorized this, or we will send you a bill either in email or in U.S. mail.
Q: Can Colby help me with other financial questions or general financial planning tasks?
A: Sorry, but no. We only focus on managing your account in an effort to achieve the highest returns possible. You can search for a financial planner at the Financial Planning Association (www.fpanet.org).
Q: Can I cancel?
A: You can cancel at any time for any reason.
Q: How do I get started?