How are my assets protected?
Your assets are held in a brokerage account registered in your name at our primary custodians; Betterment, TD Ameritrade Institutional, Schwab Institutional, or Fidelity Institutional Wealth Services. ONE Retirement Advisors (ONE) may only provide trading instructions for this account. We may not access your cash or securities. The Securities and Exchange Commission (SEC) requires all broker-dealers to deposit client funds in a segregated, separate account, distinct from that firm’s own money. In the event that a custodian goes bankrupt or no longer has sufficient funds to continue operating, your cash balance and positions will remain intact and can be transferred to another custodian or broker/dealer.
After the Bernie Madoff debacle, many clients have questioned whether their accounts are safely segregated. While we fully understand this concern, rest assured that our custodians do not conduct that sort of proprietary trading, which was behind the commingling of client assets. Our custodians are highly regulated by several government agencies both nationally and internationally, and subject to routine audit from their various regulators. All employees at ONE hold their personal assets at our primary custodians. We place a professional, as well as a personal, vote of confidence in our custodians.
Your account is covered by SIPC in the extremely unlikely event that a custodian becomes insolvent.
What is SIPC Insurance?
Your account(s) is insured by the Securities Investor Protection Corporation (SIPC) up to $500,000 in total value per entity, but limits insurance on cash to $250,000 per entity. As with all securities firms, this coverage provides protection against failure of a broker/dealer, not against loss of market value of securities. Money market funds are considered a security. Cash is defined as funds not invested in a money market fund.
Please visit sipc.org for more information.
How much does ONE Retirement Advisors charge for its services?
ONE charges an advisory fee of 0.95% annually for its private wealth advisory and workplace retirement planning services. The annual fee is set as a percentage of your account value and is charged quarterly in arrears. See our ADV Part 2 for more details.
How does your fee compare to other financial advisors?
ONE’s private wealth advisory fee is 0.95% annually based on the assets we directly manage for you. The fee you pay to us is our only form of compensation. We do not accept payments or commissions from any of the securities we purchase on your behalf. This structure typically puts us on the lower end of fee structures compared to traditional advisors. For more information on our complete fee schedule, see our ADV Part 2.
What kind of trading commissions will I incur?
You will pay no trading commissions or transaction fees for the vast majority of the exchange-traded funds (ETFs) we utilize. Very occasionally, we may purchase a fund or ETF that may have a transaction charge or brokerage commission associated with it. However, it is in both of our interests to keep transaction costs as low as possible. The last thing we want to do is pay a broker.
Are there custodial fees associated with accounts?
You will pay no custodial fees on accounts held at our primary custodians, TD Ameritrade Institutional, Fidelity Institutional Wealth Services, and Schwab Institutional. Betterment Institutional charges a platform fee of 0.25% to access their cutting-edge tax loss harvesting and tax coordinated portfolios strategies. Keep in mind, we would not recommend you pay a fee for something unless we believe the benefits outweigh the costs.
Are there exit fees due if I choose to close my account?
No, ONE does not charge exit fees. However, the custodian used may charge a small fee. We can give you the details.
How do you determine my retirement funding status?
ONE uses an actuarial-style funding status calculation to determine how well your retirement is currently funded. Simply, we calculate the present value of your accumulated retirement assets as well as the present value of the future retirement income desired. If the two values match, your retirement is considered to be 100% funded. To build in a safety factor for unexpected expenses and events, we generally suggest a funding status of at least 110% before entering retirement.
Keep in mind that managing your assets during retirement is an ongoing process. The goal is to manage your assets to maintain your funding status throughout your retirement years.
Does ONE take my outside holdings (such as my 401(k) and existing large equity positions) into consideration when calculating my funding status?
Yes, all assets—including guaranteed income streams—are taken into account when calculating your funding status.
Can I add securities or replace any of the investments ONE recommends?
ONE acts as a discretionary investment advisor for all engagements. Our portfolios are carefully designed and managed to maintain your personal retirement funding status. Any securities you wish to own that are not part of our program should be held in a separate account managed by you.
Does ONE invest my funds all at once or do dollar cost averaging?
ONE invests your money immediately upon funding. The benefit of investing in a portfolio of relatively uncorrelated asset classes is that when one asset class is up, it’s likely others are down. Therefore, the timing of when you invest is relatively unimportant. Vanguard published a white paper on dollar cost averaging for a diversified portfolio and came to the same conclusion.
Will ONE hold individual stocks in addition to my managed portfolio?
No, we offer proprietary management of a client’s portfolio based on their funding status. We implement an optimized portfolio of carefully selected ETFs spanning more than ten asset classes, then monitor and periodically rebalance the investment mix to maintain a client’s retirement funding status. Individual securities add another layer of risk known as company-specific risk.
How often do you rebalance or adjust my portfolio?
Research has shown that rebalancing a portfolio’s holdings makes more sense when each asset class has drifted from its target allocation by a certain percentage (i.e., threshold based) rather than on a set time basis (e.g., quarterly or semiannually). Therefore, we continuously monitor your portfolio and periodically rebalance it back to our proprietary target mix, carefully taking the volatility of each asset class and your tax situation into consideration. We are not able to predict when we are likely to rebalance because it depends on the performance of each of the asset classes. We also use deposits, withdrawals, and reinvestment of dividends as opportunities for interim rebalancing to minimize the taxable gains that can arise from threshold-based rebalancing. We consider our disciplined rebalancing policy to be critical to our program’s success.
What is tax-loss harvesting?
Tax-loss harvesting is a technique used to lower your taxes while maintaining the expected risk and return profile of your portfolio. It harvests previously unrecognized investment losses to offset taxes due on your other gains and income. You can reinvest these tax savings to significantly grow the value of your portfolio.
How does ONE send me monthly income?
ONE Retirement will transmit monthly income based on your plan via a direct ACH link between your brokerage account and your bank checking or savings account. The transfers are generally made monthly on a specific day that you select.
Does ONE help clients report taxes?
Your tax documents (Form 1099) are provided by ONE’s custodial partners.
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