Our ideal client is an independent advisor who recognizes the value of building an advisory practice which is held to the highest fiduciary standards.  Partnering with us provides advisors with the opportunity to deepen client relationships and provide a comprehensive approach to wealth management.  The client benefits from more guidance and advice, as well as a full-time investment management team who is constantly evaluating, monitoring and managing the investment portfolio.

We check the asset allocations quarterly and rebalance portfolios when major asset classes have drifted outside of a 10% tolerance band, for example, a 60% equity/40% fixed income portfolio is rebalanced when it reaches 66/34.

MWP portfolios are offered directly to the advisor through a split ID set up by LPL.  This lowers the cost to the advisor, since we are able to eliminate platform fees.

Yes, these are designated as TE, or tax-efficient.

Some advisors choose three to focus on, which provides some diversification, but keeps it simple. For example, an advisor may choose separate themes for different investment thresholds, such as Select for accounts less than $100,000, Strategic for account values between $100,000 and $250,000, and Prestige for accounts above $250,000.

The minimum is $25,000.  For advisors with at least $5 million in the program, we allow some flexibility for clients who, for example, have an IRA less than $25,000.

Yes.  If, for example, you have a highly appreciated asset, we can lock that position, or have it liquidated over time.  Please provide specific instructions on the trade instruction form.

Yes.  Just email the specifics to Lanny @ liyin.bao@lpl.com or Kathy @ kathleen.latal@lpl.com .

The Select Portfolios may be appropriate for clients who do not want to pay ticket charges.

The Benchmark Portfolios may be appropriate for clients who want to pay minimal ticket charges (ETFs have a ticket charge of $9)

We gain access to institutional share class funds with lower expense ratios, that over time, including paying a ticket charges, should be more cost-effective than other options.

Many of these funds have super high minimums (in some cases $10 million).  We get access to these funds because we because of our relationship with LPL.

When you pay $26.50 for a ticket-charge mutual fund at LPL, the advisor does not get this money.  It goes to LPL so that we get access to these funds.

While it may cost a few hundred dollars to rebalance the whole portfolio, the purpose is to have lower expense ratios that should save costs greater than this over the long run.

At firms that don’t have ticket charges associated with their advisory program, their expense ratios may be higher than our actively managed portfolios.

Remember, we rebalance an entire portfolio, typically, every other year or so.

Also, keep in mind, if the client is benefitting from lower expense ratios, I believe it is fair for the client to bear the cost.

It is understood there may be times when advisors or clients desire to own investments outside of our models in the same investment account.  When that occurs, the following points define the Model Wealth Program’s policy:

  • If the position is added to the split-ID SWM account, the advisor must place trades in advance. Once the trade settles, the remaining cash balance in the account will be invested.  Adhering to this order of operations will minimize complexity and significantly lower the probability of a trade error.

 

  • If it is an existing position that the advisor wishes to maintain, this must be communicated clearly on the trade instruction form in the column designated, “Special Instructions”.

 

  • Example: Please lock or place hold on, “ABCDX”

 

  • There must be an adequate basis for owning the investment. The investment should be consistent with the investor’s risk tolerance and investment goals.

 

  • The advisor should understand that maintaining the position can impact our ability to manage the asset allocation and our ability to rebalance the account.

 

  • The advisor may not overweight or underweight an existing MWP position. This impacts our ability to rebalance.

 

  • We do not provide fiduciary support for outside positions.

 

  • All Model Wealth Program positions have undergone extensive due-diligence coupled with detailed documentation supporting all investment decisions. The documentation provides an essential record if a Cornerstone Wealth Management advisor’s fiduciary standard is ever challenged by way of litigation.
  • It is the advisor’s responsibility to maintain such documentation on positions held outside of the managed model.

 

  • The position will be excluded from our calculation of GIPs performance.
    • It is likely individual account performance will differ from the GIPs performance when outside positions are included.

For advisor use only, not for distribution to clients or the general public.

Investing involves risk including loss of principal. No strategy assures success or protects against loss. Rebalancing a portfolio may cause investors to incur tax liabilities and/or transaction costs and does not assure a profit or protect against a loss.