• Why am I being charged a separate advisory fee? Earlier in my relationship with Gaddis & Gaddis Wealth Management, or Premier Investment Advisors (or other advisors) there was no separate advisory or management fee, and I am told many other advisors do no

    Do not be deceived by a stockbroker, registered rep or insurance agent implying there is no fee or cost on “their” product.  All professionals have business expenses, and they all earn a profit to take home to pay personal bills. The financial services industry has changed over time.  Many years ago, mutual funds and professionally managed accounts had all fees, commissions and costs included in the expense ratios charged by the managers and/or mutual funds.  These fees were disclosed in the prospectus and sales literature, but not disclosed as a separate line item and not disclosed in a total dollar figure. The fees were deducted from the accounts reducing your overall performance numbers.  So your “NET” annual performance was a combination of returns of your holdings, less the built in costs and fees.  The fees charged/collected by the mutual fund or manager was distributed three ways: 1) some retained by the fund company/investment manager, 2) some shared the associated brokerage firm (ex. LPL, Kestra, M. Lynch, Edward Jones, etc.).  The brokerage firm would share a portion 3) with your advisor.   These fees are not simply profit. The majority of the fees charged are used to cover the cost of overhead and expenses, research, employees’ salaries and other costs to provide their services to their clientele/investors.  Over time, and to offer more transparency, the industry has been converting to managed/advisory accounts where the mutual fund or investment sponsor only assess “their” part of the fee and the investment firm and your advisor’s fee is billed separately.  The mutual fund or investment manager fee is typically still assessed against the account and included in the expense ratio, but it no longer includes the part they charged in the past and then shared with the investment firm and your advisor.  The investment firm and advisors part of the fee is billed separately and disclosed in actual dollars on your quarterly statements. Depending on the amount of assets under management, the ballpark industry normal/average investment firm/advisors portion of the fee is in the range of one to one and a half percent +/-.  Typically, the larger the assets under management, the lower the percentage. In an effort to control the total cost to the investor, the “advisor” typically utilizes “institutional” share classes of the mutual funds or managers they recommend.  These “institutional” shares do not assess any upfront fees, they do not assess liquidation fees, they do not typically have any holding period restrictions, and they typically assess the lowest internal management fees of all share classes.  Most of the time the cost of the internal fees of the “institutional” shares, PLUS the advisory fee that is disclosed, is very comparable to the old fees where the total was blended into the performance, but with better disclosure.  We are happy to have in depth discussions and we are proud of the full disclosure we offer on this subject.  (In contrast, many stockbrokers, registered reps and insurance agents use Class A, B or C shares which can charge upfront fees, surrender penalties, impose 1-6 year holding periods, and have higher internal expenses than the institutional shares mentioned above.)

  • Registered Investment Advisor (RIA) vs. Stockbroker:

    What Is a Registered Investment Advisor (RIA)?  (Gaddis Premier Wealth Advisors is registered as a Registered Investment Advisor with the SEC) See:  www.investopedia.com/terms/r/ria.asp

    • A registered investment advisor (RIA) is a firm that advises clients on securities investments and may manage their investment portfolios. RIAs are registered with either the U.S. Securities and Exchange Commission (SEC) or state securities administrators.  RIAs have fiduciary obligations to their clients, meaning that they have a fundamental duty to always and only provide investment advice that is in their clients’ best interests.
    • RIAs typically earn their income through management fees, calculated as a percentage of a client’s assets under management by the RIA.
    • Unlike broker-dealers, RIAs have a fiduciary duty to put the best interests of the client first.
    • RIAs must register with the SEC* if they manage more than $100 million in assets.

    *Registration with the SEC does not constitute an endorsement by the SEC nor does it indicate the attention of a particular level of skill or ability

    What is a stockbroker? (Most providers of investment products are FINRA registered stockbrokers or registered reps.) See:  www.investopedia.com/terms/s/stockbroker.asp

    • A stockbroker is a financial professional who executes orders in the market on behalf of clients. A stockbroker may also be known as a registered representative (RR) or an investment advisor.
    • Most stockbrokers work for a brokerage firm and handle transactions for a number of individual and institutional customers. Stockbrokers are often paid on a commission basis although compensation methods vary by employer.

  • What is a fiduciary?

    Information found at:     www.nerdwallet.com/article/investing/fiduciary

    A fiduciary is an individual or organization that acts in the best interest of a particular individual. Fiduciaries have a bond of trust with clients and must avoid conflicts of interest. Financialfiduciary advisors must only buy and sell investments that are the best fit for their clients.

  • How are fees and commissions applied to my holdings:

    Information found at:   https://www.investopedia.com/articles/basics/04/022704.asp

    • A fee-based advisor charged with actively managing a portfolio would likely charge a percentage of the assets under management.
    • In contrast, a commission-based advisor’s income is most based on a commission from the products they sell or a recurring payment, called a trail, the investment pays to them. Products for commission-based advisors include financial instruments (such as insurance packages and mutual funds) or stocks, bonds, or ETFs they earn commission on. 
    • The Bottom Line: There’s no one simple answer. Fee-Only investment advisors will be better for some investors, while commissioned-based products and services may be better for others. This should be determined based on goals, time-horizon, and possibly even account size. The key is to understand the differences of each beforehand and to understand WHY an advisor is recommending a certain investment to ensure that you’re best interests are being represented.

  • Who is Charles Schwab & Co.?

    Charles Schwab & Co. is the firm Gaddis Premier Wealth Advisors chose to assist us with back office paperwork and to be custodian of our clients “advisory” accounts.  Charles Schwab & Co. will be replacing the majority of the work and duties previously performed by Kestra Financial (including National Financial Services, NFS) and LPL Financial. Gaddis Premier Wealth Advisors had a choice in selection of provider/custodian and after significant due-diligence we selected Schwab and believe they bring the highest level of service and attention that will allow us to provide top-shelf solutions and service to GPWA clients.  More information can be found at:  https://en.wikipedia.org/wiki/Charles_Schwab_Corporation

  • Who is Private Client Services (PCS)?

    PCS is an independently owned, full-service Broker/Dealer (B/D) that offers B/D services and that assists Registered Investment Advisors (RIA’s) in processing, custodianship of non-advisory products, as well as collecting information and values on existing non-advisory positions for inclusion on a clients consolidated statement of holdings (in the case of GPWA is Orion).  More information can be found at:   https://brokercheck.finra.org/firm/summary/120222

  • Where are my fixed and variable annuities held?

    All fixed and variable annuities have “always" been held with the Insurance Company (or vender) who issued the policy.  The account values were provided to LPL Financial or Kestra Financial (including NFS) and were included on your periodic investment portfolio statements, as well as being included in the information available electronically (online).   The annuities will continue to be held with the vendor, and the account information provided to Private Client Services (PCS) and will be included on your consolidated statement (Orion statement).

  • Who/what is Orion?

    Orion is a commercially developed software that GPWA chose to assist with client account consolidation to provide clients a one-stop location to review their entire portfolio.  As client assets and accounts get settled into place our service team will reach out to provide instructions, guidance and assistance to get you set up for access to your portfolio.

  • Can I speak with any advisor?

    All clients and prospective clients can chose whom they want to be their “primary” advisor, and work with that advisors primary assistant(s).  Gaddis Premier Wealth Advisors is a true team. We share knowledge, information, work load, and ideas to better serve ALL GPWA clients.  We work together to create the processes and portfolios we use to move all GPWA clients toward their personal goals. We encourage clients to get to know our entire team of advisors and service team members so anytime you need assistance, if your primary contact is not available, our team can work to meet your needs in a timely fashion.

  • Who is “MY” service assistant?

    All clients and prospective clients can chose whom they want to be their “primary” service assistant(s).  Gaddis Premier Wealth Advisors is a true team. We share knowledge, information, work load, and ideas to better serve ALL GPWA clients.  We all pull on the rope together to help move all GPWA clients toward their personal goals. We encourage clients to get to know our entire team of service associates so anytime you need assistance, if your primary contact is not available, one of our team step in and assist to meet your needs.