HOW WE OPERATE
The P&A Investment Committee’s seven members meet every month to review a third of our client accounts. Accounts over $100,000 receive four formal reviews per year, while those under $100,000 get two formal reviews every year. In addition to formal portfolio reviews, accounts are reviewed when there are significant inflows or outflows from an account and when other circumstances warrant a review. Most of our client accounts are reviewed 6-8 times per year as a result.
As part of the review process, the Investment Committee will review account performance, asset allocation, as well as industry and asset class weightings and individual holdings within the portfolio. Each member of the Committee brings to the table a unique perspective and often times there is a healthy discussion about account holdings. It’s our habit to contact the client after their account has been reviewed to go over the results.
We take discretion on all our client accounts. This means we generally do not discuss with our clients ahead of time the changes we are going to make in their account. You have hired us to manage your investments and this allows us to buy and sell securities for your account without your consent. Keep in mind that we are managing your account to an agreed upon asset allocation, which is a function of your risk tolerance and financial goals.
We report your account performance on a quarterly basis and compare it to an appropriate benchmark. If your account is 100% stocks, we’ll compare to the S&P 500 and the Dow Jones Industrial Average. If your account is balanced with fixed income, we’ll compare to a balanced index. Our goal is to show you how your account performed after fees have been taken out. This is your actual performance. If we have trailed the benchmark, we’ll tell you what we’re doing to improve your account’s performance. If we beat the index, we’ll continue working hard to replicate that outcome.
Mutual Fund Rebalancing
For our clients who have a mutual fund account with us, we will rebalance their account twice per year. The process of rebalancing includes adding money to the funds that have underperformed relatively to the other holdings and trimming the funds that have outperformed (i.e. buying low and selling high). This is a mechanism for managing risk by ensuring a portfolio doesn’t stray too far from its target asset allocation. Since we use mutual funds with no transaction fees, these small changes can be made without any friction costs to the client. The P&A Investment Committee reviews all holdings in our mutual fund portfolios at least annually.
Third Party Custodian
Charles Schwab is recommended to all clients as Pittenger & Anderson’s custodian of choice. A custodian is tasked with holding and safekeeping the stocks, bonds, and cash in each of our client accounts. In addition, they execute trades, offer margin lending, and send our clients monthly statements. P&A has chosen Charles Schwab based on their competitive pricing, back office expertise, state-of-the-art technology, reputation and integrity. In addition, P&A clients enjoy access to a large universe of institutional-only investment products and money managers. Our relationship with Schwab does not cause us to receive any type of mutual fund or brokerage fee revenue. Having an independent, third party custodian watch over our clients’ assets is a feature which gives them an added level of protection of their monies.