The most important factor in working with a financial advisor is trust. At Blue Haven Capital, our clients trust us to make intelligent decisions with their investments that will help grow their assets over time. But how do we earn that trust? Our efforts start with setting ourselves apart from the competition. We do that in three main ways: through our costs, our accessibility, and our transparency.
How much do clients pay in fees?
Blue Haven Capital is a fee-only advisor. This means we earn compensation as a result of the money we are managing for a client, typically 1% or less of the assets we are managing. So a client with $100,000 under management would pay $1,000 in yearly fees. That is the only fee we charge; we do not earn any commission, referral fees, kickbacks, or any other hidden forms of compensation. That might sound like it should be common sense, but much of the finance industry is still operating on a commission basis.
Why does any of this matter? Because it means our only incentive is to do the best job possible that we can managing your money. A commission based advisor may be incentivized to put you in investments that pay them the highest commission, regardless whether they are actually suitable investments for you.
In addition, because we are independent from a big bank or broker, we have the freedom to invest in the most affordable funds for our clients. For comparison, a Merrill Lynch financial advisor may put clients in Merrill Lynch sponsored funds. A J.P. Morgan advisor may put clients in J.P. Morgan sponsored funds. A Blue Haven Capital advisor will research all of the available funds in the entire market, and choose the most cost-effective ones.
Comparing fees in fund selection
Nowadays there are hundreds, if not thousands, of investment vehicles that are designed to track the performance of the S&P 500 index. Such funds are a core component of our diversified portfolios. However, at Blue Haven Capital, we generally select the very cheapest S&P 500 fund. VOO, for instance, is an S&P 500 index ETF from Vanguard that charges investors 0.03% to own it. This means that if the S&P 500 rises by 10% this year, VOO should rise by 9.97% (10% – 0.03%).
Let’s compare that to J.P. Morgan’s S&P 500 index fund, which charges investors 0.45% to own it. This fund would only rise by 9.55% (versus 9.97% for VOO) in the same example referenced in the preceding paragraph. That 0.42% difference between J.P. Morgan’s S&P 500 index fund and the one we would choose for our clients equates to $42,000 in savings over 10 years on a $1 million account. That’s $42,000 that can be used as a down payment, a luxury vacation, college tuition, or any number of things. Fees really do matter, and at Blue Haven we have the ability and desire to be very fee conscious. We emphasize desire because as much as an advisor at a big broker or bank may want to save you money, they simply may not be able to because of the mandates they have to follow in putting client assets into their employer’s funds.
Our business hours are whenever you need us
Do you ever email a professional an important question, expecting a prompt response, only for days to pass by before you end up hearing anything? If yes, then surely you didn’t email us. We pride ourselves on being extremely responsive and accessible to our clients. All clients have our personal cell phone numbers and encouraged to call or text at their convenience. We routinely take calls later in the evening because, frankly, that’s when clients actually have time to think about their investments or discuss the market.
When a client email comes in, we respond to it. And if we can’t get to it right then we usually let our clients know that we saw their email and will give them a window with which they can expect a response by. When it comes to important discussions around client assets, we are well suited for the conversation because we are the ones managing the money. We don’t outsource any management responsibility to third parties. As of 2018, more than 50% of advisors were outsourcing client assets. We suspect that number has only risen. When you work with us, you work with us.
Full transparency into everything
We custody all client accounts at Charles Schwab. This means clients receive have their own account at Schwab, and we simply have permissions on the account which allow us to make investments on the client’s behalf. We can’t login to a client’s account and we never have their password. We can’t move money to/from their bank account unless they request it. All we can do is make investment choices in the account. This account functions in a fully transparent way, with clients able to track every investment decision we make.
Clients always maintain full access to their entire portfolios, tailored in an easy-to-use portal through Schwab’s award winning technology. In addition, clients can sign up for email alerts anytime investments are bought or sold in the account. This ensures that clients always have great insight and transparency into how their money is being invested and how their account is performing. The best feature of Schwab is how easy it is for clients to navigate the portal. We’ve heard horror stories of clients dealing with clunky systems at other brokerages when it came to move money around or try to place a trade.
When searching for a financial advisor the number one factor that impacts your decision is going to be trust. You need to trust that your advisor will do right by you with your money. At Blue Haven Capital, we earn and keep our client’s trust through our easy to understand fee structure. Clients know if they have questions or need us we are available. Not our secretary, not an “account liaison”, not an automated phone system, but actually us. And best of all, clients always have full transparency into the investment decisions we are making, enabling them to see the impacts of our decisions on their long-term financial health.