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Fee-based Advisory programs allow a representative to offer clients professional portfolio management using either stocks, bonds, mutual funds, variable
annuities or some combination thereof. The portfolios may be managed by the representative and the client using a pre-developed platform, or
may be given to a third-party firm to manage.
One of the may advantages of fee-based advisory programs is that they allow you to fully utilize the concept of asset allocation. Most fee-based advisory programs offer a variety of asset allocation models from which to choose. By definition, asset allocation is the apportioning of investable funds among a variety of asset classes with each class in the portfolio reacting differently to similar economic events. The strategy's objective is to offer more opportunities for potential growth in some portion of the portfolio in changing investment environments. Studies have shown that the asset allocation policy accounts for 91.5 percent of a portfolio's performance as opposed to security selection, which accounts for only 4.6 percent, with market timing and other factors making up the difference.* In addition to asset allocation, there are many other advantages to using fee-based advisory programs. These include: |
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Consolidated Client Statemnets-
A proper asset allocation strategy may require investing in a wide variety of financial products, each producing its own statemnts. With fee-based programs,
you receive one consolidated statemnt providing you with the current values of all you holdings. You, therefore, enjoy less correspondence, but a
higher level of quality information.
Objectivity- Some fee-based programs offer clients a wide variety of investment choices, including certain no-load mutual funds which are generally not available through financial professionals. Because of the wide universe of investment options available through fee-based programs, financial professionals can exercise greater objectivity in investment selection based on your specific goals and objectives. Higher Quality Service- With the financial professional's compensation directly related to the performance of your account, you share the same goal-namely, achieving your long-term investment objectives. This in turn leads to a higher level of personal service. |
You might find that the fee-based approach to managing your personal investment portfolio offers you a more palatable alternative to the traditional commission-based method.
*Gary P. Brinson, Brian D. Singer, and Gilbert L. Beebower
"Determinants of Portfolio Performance II: An Update (1994)"
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©2004 Northern Financial Management
*Investments and advisory services are offered to residents of the states of CA CO CT FL MI MN OH & TX
through Representatives of Jefferson Pilot Securities Corporation, (JPSC) Member SIPC.