Fiduciary Duty – Why And How We Advocate For Our Investor Clients
Shares of the first “mutual fund” went on sale on March 21, 1924. The fund was called the Massachusetts Investor Trust. The fund grew from $50,000 to $392,000 the first year! The popularity of mutual funds has waned in recent years and for good reason. The introduction of the more competitive Exchange Traded funds, (ETF’s) along with increased investor awareness have been big competitive factors, of course. I have sought lower-cost alternatives for several decades.
Even before our marriage, my late wife Josephine and I invested in real estate and witnessed fine results. After a few years, however, we sought a more “liquid” solution. For that reason, I elected a career in the finance sales space in 1971 and served several years as Division Manager at Northern Associates in Cleveland, Ohio. The real estate securities underwriting firm provided investors with the liquidity that real estate securities afford real estate stock investors. I became licensed to solicit clients as well.
I then spent nine years as an Account Executive, (stockbroker), at Merrill Lynch in Toledo, Ohio, and during that time, introduced the largest retail account the Toledo office had experienced up until 1982. Sadly, the firm transferred the five-million-dollar account to their “institutional department” in New York without prior notification. I departed my nine-year service at Merrill Lynch shortly thereafter, joining Paine Webber.
While there, I introduced the “Unit Investment Trust” concept, (The American Patriot Partnership concept), which the firm adopted and improved as a “unit investment trust”. Such trusts represent a multi-billion-dollar industry today. We founded the Indicator Advisory Corporation to foster more cost-effective investment alternatives. (I mention these innovations because they support our corporate goal which is the establishment of innovations to better serve all investors.)
The Direct Management Strategy®
I seek a Provisional Patent for the Direct Management Strategy®. The strategy carries the trademark registration in order to improve investment strategies at a lower cost for investors worldwide. Cost, after all, is the one thing we in the money management space can control.
The concept makes very real the quote: “Know what you own!” We feel that the transparency of securities ownership and the tax efficiency our concept provides are critical to investor understanding, portfolio retention and tax efficiency. Mutual funds are a very costly alternative to our Directly Managed Strategy® due to their high cost of ownership. The benefits of our strategy are very important to investors as well as those in the financial planning and money management professions. We can license other firms to use the registered mark.
Two Books To Aid Investors
In 1988, I completed the manuscript for my book entitled “THE INDICATOR!”. It is a tome that represents a socio-economic study of the stock market, inflation rates, industrial activity, the stock market and interest rates. The year-by-year study went all the way back to the Banking Act of 1913.
In 2008, I created a book entitled “The Wall Street Casino” with the help of the late, great Mr. John Bogle, founder of the Vanguard Funds Group currently valued at over $5 trillion. Mr. Bogle kindly provided his private research department at my disposal for most of the statistics throughout the book, which details the inefficiency of mutual funds and the hidden costs therein. The book was heralded as “The first entertaining investment textbook”.
Mr. Bogle had a pet phrase which was, “Give Investors a Fair Shake”. That is our team goal at the Indicator Advisory Corporation. It has always been our professional desire as well.
The Investment Strategy We Promote
The Direct Management Strategy® prohibits investment in all mutual funds in order to avoid the layers of high costs outlined in the prospectus…as well as those costs that are not disclosed. The savings in doing so fall to the investor’s “bottom line” in the form of increased performance. Lower cost equals added investor profit!
“The Wall Street Casino” text reveals mutual fund costs as high as 6% annually and Dr. Kenneth A. Kim’s more recent book entitled “Mutual Funds Exposed” estimates total costs as high as eight percent yearly!
Our Indicator Advisory Corporation is a Registered Investment Advisory licensed in the state of Ohio that has a fiduciary duty to advocate the client’s interests first. The firm has proven the merit of the Direct Management Strategy® by investing in only stocks, bonds, cash and select, low cost, exchange-traded funds, (ETF’s).
The Benefits of The Direct Management Strategy®
The strategy can enhance:
- Separately Managed Accounts (SMA’s)
- Uniform Managed Accounts (UMA)
- Traditional and Roth IRA accounts
- Health Savings Accounts
- Flexible Spending Accounts
- I.R.S. Section 529 accounts in support of college funding. The strategy can also support Unit Investment Trusts, all types of brokerage accounts, Direct Indexing accounts, Uniform Gift to Minors, (UGMA) and Uniform Transfers to Minors, (UTMA), accounts.
The worldwide benefit of cost savings to investors of all types is endless. The more efficient tax savings the Direct Management Strategy® offers over that of mutual funds represent another very important advantage that enhances investor returns on all taxable investment accounts.