Willingdon Wealth FAQs

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Frequently Asked Questions

  • How does Willingdon handle the emotional roller coaster ride that seems to be such a big part of the investment markets?

    Through our time-tested, disciplined process we help our clients avoid emotional decisions, which most often destroy portfolio value. We rely upon our vast experience not to get too fearful when things look bleak, and not to get overly optimistic when the economy and markets are rolling. By doing this effectively, our clients have an excellent probability of reaching their long-term investment goals.

  • You mention on the Willingdon Difference page that your fees are lower than most of your competitors. Are you doing something different that gives you a competitive edge?

    Willingdon primarily uses individual stocks and bonds in our well-diversified portfolios. Many of our competitors primarily use mutual funds, which creates an extra layer of fees. Mutual funds have internal expense ratios that vary depending on the fund, typically averaging about 1% annually, although expenses can be significantly higher. This fee is often in addition to the fee firms charge to select funds and manage asset allocation. Bottom line - The fees for managed mutual fund portfolios are typically about twice as much as Willingdon's fees and are far less transparent.

    Most of our competitors use mutual funds as opposed to individual stocks and bonds because the principals of the firms lack the experience and expertise to manage assets in-house. Their expertise is typically in financial planning, not money management, which is why the asset management function is outsourced through mutual funds, creating an extra layer of fees.

    At Willingdon, we have a significant competitive advantage in that we have the expertise (credentials, experience & track record) to manage assets internally, while providing high level financial planning advice. Moreover, our clients build a relationship with the professionals who are actually managing their money.

  • I see that the associates at Willingdon have several different designations (CFA, CFP®, CTFA, CPA). What do these designations mean and why are they important?

    At Willingdon, we have a significant competitive advantage in that we have the expertise (credentials, experience & track record) to build well-diversified portfolios using a more cost effective approach while also providing high level financial planning advice. Many of our competitors provide one of these functions at the highest level, but not both. For example, the CFP® designation is very important in financial planning, but it is not a designation that indicates an ability to manage money. Many of our competitors have this designation and their firms are built around determining the appropriate asset allocation for a client based on individual risk tolerance and investment objectives, but they then hire outside managers (mutual funds) to pick the individual securities. This adds an extra layer of fees for the client. To be qualified to build investment portfolios without using mutual funds the CFA designation is critical. Having both designations is a big advantage for Willingdon clients from both an expertise and cost perspective.

    Here are more details about each designation:

    CFA, Chartered Financial Analyst - A professional designation given by the CFA Institute that measures the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis. The CFA charter is one of the most respected designations in finance, considered by many to be the gold standard in the field of investment analysis.

    CFP®, CERTIFIED FINANCIAL PLANNER™ are certification marks owned by Certified Financial Planner Board of Standards Inc. (CFP Board), which can help you identify financial planners who are committed to competent and ethical behavior when providing financial planning. Individuals certified by CFP Board have taken the extra step to demonstrate their professionalism by voluntarily submitting to the rigorous CFP® certification process that includes demanding education, examination, experience and ethical requirements. These standards are called "the four Es," and they are four important reasons why the financial planning practitioner you select should display the CFP® certification marks. Those wanting to become a CFP professional must take extensive exams in the areas of financial planning, taxes, insurance, estate planning and retirement. Attaining the CFP designation takes experience and a substantial amount of work. CFP professionals must also complete continuing education programs each year to maintain their certification status.

    CTFA, The Certified Trust and Financial Advisor certification is the undisputed professional credential for financial services professionals whose primary function and expertise focus on the provision of fiduciary services related to trusts, estates, guardianships and individual asset management accounts. The CTFA designation signifies that an individual working in this field has attained comprehensive training in the following professional knowledge areas: Fiduciary & and Trust Activities, Financial Planning, Tax Law & Planning, Investment Management, Ethics.

    CPA, Certified Public Accountant is the highest level of certification in the field of accounting. Candidates must pass four sections of a rigorous exam including auditing, business environment, financial accounting, and regulation. Please note that Tom Searson earned his CPA while working for Ernst & Young in Chicago. He does not currently practice as a CPA.

  • What is the most significant difference between a broker and a Registered Investment Advisor (RIA)?

    Willingdon Wealth Management is a Registered Investment Advisor (RIA) and is not a broker. The most significant difference comes down to "fiduciary duty." Click on the link below to read an article in the Wall Street Journal about this important difference between brokers and RIAs, and then read our response to the article.

    http://online.wsj.com/article/SB123819596242261401.html?mod=relevancy

    Willingdon's thoughts on the subject from a June 2009 edition of Willingdon Views:

    faq_views
    An Industry development, and long over due

    Let me first say for the record that some of the nicest people I have known over my 25+ year career in the money management business have been brokers. Many of them are solid people, wonderful parents, and active members in their churches and communities.

    With that being said, there is an integral part of the "broker business model" that I have always found to be unsettling. Specifically, it is the lack of fiduciary duty. A fiduciary, is required, by law, to place clients' best interests ahead of their own. Brokers are not held to this high standard. Conversely, Registered Investment Advisory Firms (RIAs) are held to this standard. That, in my mind, has always been the defining difference between brokers and RIAs. I have always been a bit hesitant to write about this being fearful of sounding self-serving (Willingdon Wealth Management is an RIA). Thankfully, the Obama Administration and several recent articles in the Wall Street Journal have brought this issue out in the open. One component of regulatory reform that President Obama is proposing is to create an agency, called the Consumer Financial Protection Agency, whose purpose would include establishing this higher level fiduciary duty for brokers to which RIAs are currently held.

    Why is this important?... Basically, each investor has a choice to hire someone who is required by law to put their best interests first (an RIA) or hire someone who is not required to do so (a broker). Why would someone ever hire someone who is not required by law to put their interests first? I have no idea. In a similar vein, any individual who wants to work in the money management business can decide to work as an RIA or as a broker. I'm sure you see what the implications of this are and why it makes me uncomfortable to write about it. Most people detest self-righteousness, and rightly so. Nevertheless, the Obama Administration has made this a critical part of its proposed financial regulatory reform. I do believe it is legitimate and prudent to ask anyone you are considering hiring to manage your assets whether they are a fiduciary. But don't stop there. If they are, ask why. If they are not, ask why not. Through this dialogue you might find out something invaluable to your decision process.

  • There have been a number of high profile fraud cases with Investment Firms recently. Willingdon seems like a good group of people that comes highly recommended, but victims of investor fraud often felt the same way about the people they were working with. How can I be confident in trusting Willingdon will be a good steward of my assets?

    Trust is the most important part of the client-advisor relationship. Our primary focus is on establishing and strengthening our clients' trust in Willingdon. In light of some recent headlines, we understand why some investors' confidence is shaken when it comes to selecting a firm to manage their life savings. There are some important safeguards we have established to give our clients even more confidence that their assets are being handled with the utmost integrity. Fidelity is the custodian for our clients' accounts. Willingdon has the authority to make discretionary trades in these accounts, however we do not have the authority to transfer assets from our clients' accounts to outside parties. Fidelity holds the assets and generates monthly statements detailing the holdings. Willingdon makes the investment decisions. This checks and balances system is established of for our clients' protection.

  • Does Willingdon earn any commission based fees? What conflicts of interest exist?

    Willingdon cannot accept commission-based fees. We have no incentive to sell any financial "products", rather we focus solely on selecting securities that provide the best risk-adjusted return. We are not compensated for trading in any way, and therefore strive to keep execution costs to a minimum. Our interests and our clients' interests are perfectly aligned without any conflicts of interest inherent in selling financial "products".

  • I do not live in North Carolina. Can Willingdon manage my investment portfolios?

    Willingdon Wealth Management is a Registered Investment Advisor with the U.S. Securities and Exchange Commission. We are not limited by any state boundaries and have clients throughout the country.

  • What is the minimum account size to become a Willingdon client?

    While our average client has between $750,000 and $1,000,000 in investable assets, we do not have a strict account minimum. We strive to build such strong relationships with our clients in a consistent way, that each client, regardless of size, truly believes they are our most important client. Because in reality, each one is.

  • Is our core equity portfolio, which uses individual stocks, as diversified as portfolios using mutual funds?

    Our core equity portfolio holds between 30 - 35 individual stocks. We maintain exposure to all of the largest sectors in the S&P 500 to maintain prudent diversification and to manage overall portfolio risk. Portfolios comprised of multiple mutual funds do not enhance the overall diversification compared to our core portfolio. In fact, there may be unknown overlap within the various mutual funds in a portfolio that actually creates a higher risk, less diversified profile.