Private Wealth Management


Services We Provide

  • Institutional Portfolio Management
  • Individual Portfolio Management
  • Private Wealth Management
  • Financial Planning
  • Retirement Planning

We welcome you to contact us with your questions using the Quick Message form, email, or phone call. We are available to meet anytime to discuss your financial future.

To continue reading about our approach and the service we provide, click on any of the headers below.

Financial Planning & Asset Allocation

Performance & Accountability

Fees

Our Fees

After-Tax Wealth

Or you may visit our Articles page for information we feel is relevant for everyone to know.

Financial Planning & Asset Allocation

The process of developing a financial plan and asset allocation starts with us listening to you. It is only after we understand your goals and attitude towards risk that we can tailor a suitable investment portfolio for you. This is accomplished through in-depth, honest conversations.

During our analysis we will construct several different portfolios for you, and then run simulations using sophisticated financial planning software. This software uses the same mathematical technique that landed a man on the moon, Dynamic Programming. To our knowledge, this commercial software is the only one that uses this advanced technique. These simulations give you a good idea of what can happen in a whole variety of various economic scenarios.

We like this approach because we believe it is important for you to understand that taking on too much or too little risk may lead to a dramatic reduction in your standard of living. We examine and discuss with you each simulation until you are comfortable with a financial plan that provides you the returns and security you require.

Once implemented, we make sure to stick to the plan. We will rebalance your assets periodically, while considering tax implications, to ensure that it is consistent with your prescribed asset allocation. Should changes in your life warrant changes to your plan, we will meet with you to discuss what adjustments should be incorporated.

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Performance & Accountability

When it comes to portfolio management we do not attempt to time the markets. There has been a lot of research and articles written about why market timing does not work in the long run. There will be times when it works, which investors typically remember, but there will be many more times when it does not work. Over time the negative results will impact the total value of your portfolio. Along with market timing, additional volatility can reduce overall performance. That is why we choose a disciplined approach and invest for long-term results.

From the start, Dr. Bidwell used a value based measure to select stocks for client portfolios. Today, whether in individual stock management or private wealth management, we continue to use value based measures in our approach. Value simply means that a stock is priced lower than what it should be worth compared to other similar stocks. Over time, value based approaches tend to outperform the market.

Along with a value approach, history suggests that investing in smaller market capitalization stocks tends to provide returns greater than the market. These returns may not be extraordinary over a short period of time, but are likely to be significant over longer periods, while still maintaining an appropriate level of risk.

At C.M. Bidwell & Associates, we develop a suitable benchmark through discussions with you so that you have a way to evaluate our performance and service.  A benchmark should reflect the proper asset allocation of your financial plan so that you may accurately compare your portfolio’s performance against the market’s performance.  The following table provides an example of a typical 60% stock/ 40% bond portfolio. The portfolio benchmark would be a weighted average of these asset class benchmarks.

ASSET CLASS WEIGHT (%) BENCHMARK
US Stocks 35% Russell 3000 Index
International Stocks 20% MSCI World Ex-USA Dev Mkt Index
Emerging Market Stocks 5% MSCI Emerging Market Index
Real Estate 10% DJ REIT Index
Bonds 30% BarClays Cap US Aggregate Bond Index

Regardless of the method your advisor employs to manage your money, they should have a benchmark similar to the one above that reflects your asset allocation.

For example, you might receive a statement from your broker showing your account has gone up 5% without a benchmark for comparison. You might think the increase in your funds is acceptable, that your broker is doing an adequate job.  However, what if you learned that all the stock and bond markets were up more than 10% in this same period?  Would you feel the same way?  If the comparison is not made clear in your statements, how would you know?  Benchmarking is valuable information that should not be kept hidden from you.

Every quarter we provide an appraisal report that shows the return on your portfolio after fees as well as the return to the benchmark so that you may evaluate our performance. Along with this report clients receive a quarterly market review that discusses what happened in the markets and how they fared.

In some periods your account may underperform the benchmark because certain variables in our approach did not work for that particular period. It is important to keep in mind that this should be expected. However, the goal is to beat the benchmark over the long term. Focusing on the short term will likely be to the detriment of your long term financial goals.

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Fees

Studies suggest that many investors place a low priority on the fees they pay to investment advisors and mutual funds. This is a grave mistake. When you make a purchase (home, car, etc.) you consider the price you pay and the fees involved. The same thought process should be used for selecting financial planners. Consider the following scenario.

A common fee structure for investors is to pay the investment advisor or financial consultant 1% of the assets under management, and then another 1 % in expenses for the funds that are purchased for the investor. We dub this model “The Wall Street 2% Solution”. This 2% pays for the advisor/consultant, the assistants, the office managers, the research analysts, the fancy offices, the commercials, and of course, the return to shareholders and owners of the various companies. Consider how significant an additional 1 % in fees can make in ending wealth.

PWM Graph.png

As you can see from the graph, an extra 1% in fees makes a substantial impact on performance over the years. It is important to note that this example assumes the returns of the portfolio to be equal. Some might argue that if you pay more in fees to get “better” funds for your portfolio you will be better off. However, higher fees do not correlate with better returns. A study performed by Morningstar showed an inverse relationship between fund fees and fund performance. The best performing funds were the funds that charged the lowest fees.

Because we are a small firm with a select group of clients and no shareholders we can offer lower fees and competitive returns with low cost, low expense mutual funds that have stood the test of time.

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Our Fees

The per annum rates for management of fixed income and mutual fund accounts are as follows:

  • 0.500% of assets on first $5 million
  • 0.425% of assets on next $5 million
  • 0.375% of assets thereafter

For actively managed individual stock portfolios:

  • 1.00% of assets on first $5 million
  • 0.85% of assets on next $5 million
  • 0.75% of assets thereafter

Notwithstanding the above fee schedules, all fees are negotiable.

It is important to note that there may be other fees that a client pays such as the mutual fund fees, brokerage fees, and custody fees.

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After-Tax Wealth

Most wealth mangers focus on increasing the total assets that they manage for you. At C.M. Bidwell & Associates we focus on increasing your after-tax wealth.  These are two very different things, as the following example shows.

What would you rather have, assuming that you and your children are in, and will always be in, the 25% marginal tax bracket?

Portfolio 1: $1 million in an IRA and $250,000 in a taxable account
Portfolio 2: $1 million in a Roth IRA

Many wealth managers prefer that you have Portfolio 1 as they collect fees on the total $1.25 million versus the $1 million in Portfolio 2.  There are a rare few advisors that are willing to give advice that reduces their pay by 20%. We want to put you in Portfolio 2.

The reason is that if you are always in the 25% tax bracket, then you only own $750,000 of the $1 million IRA while the government owns the other $250,000 that they will eventually collect in taxes. Moreover, you are being taxed on the growth, dividends, and interest in the taxable account. Therefore, Portfolio 2 will dominate Portfolio 1 in terms of after-tax wealth.

We believe that efficient Roth conversion strategies demonstrate both financial intelligence and the care that clients deserve.

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