If you have not already decided to hire Private Harbour as your investment advisor, we would love to take some time to answer any questions you might have.
Here is what you can expect from Private Harbour
An Initial Meeting
Once you have decided to retain Private Harbour as your investment manager, we ask that you bring your most recent custodial statements for all of your current investment accounts (brokerage, trust, 401(k) and IRA) and the last two years of your Federal and State tax returns.
After we have had an opportunity to review these documents, we will be in a much better position to evaluate your current investment and tax situations and make constructive recommendations.
You should be prepared to discuss and share with us your personal goals and objectives for you and your family and your risk tolerance (i.e., your willingness and ability to accept and tolerate negative volatility in your investment values). You should also be willing to characterize your history of working with other professionals, if any. In this conversation, we will begin to develop a sense of who you are and how you would like your investments managed.
From our discussions we will create an Investment Policy Statement (IPS) that characterizes the important points of our discussion, and records an asset allocation target that will guide our long-term decision-making. Your IPS will memorialize your goals and act as a guide to which we will consistently reference, even if market conditions or personal circumstance changes require us to make course-corrections along the way.
Subsequent Meetings and Contact Frequency
Meetings tend to be more frequent near the beginning of the relationship, and naturally over time as clients become more comfortable with our reporting process they transition to an as needed basis. Be it a formal meeting or an informal quick phone call or email, we always welcome the chance to interact with our client base.
Client Reporting - Quarterly Reports, Interim and Final Tax Reporting
Most questions about “what investments do you own” can be answered instantly via our online portal. If you prefer printed reports versus online reporting, we will mail them to you after each calendar quarter. These reports take you from a “30,000 foot view” of your investments progressively into more and more detail as you work your way through our report.
We also write a Quarterly Review “newsletter” that describes our thoughts on the economy, markets, politics, etc. This is not a personalized document. We feel that it gives our clients a good understanding of what we believe to be the important issues in the current investment climate as well as our take on the potential risks and rewards that the future may bring.
Cash requests may be scheduled to be automatically sent to your checking or savings account on or about the same date for every month.
Some of the other Services we provide to our Clients include...
Expense management
We largely subscribe to the philosophy that the less of your money that you pay in fees, taxes, sales loads and commissions, the higher your returns should be. That is why we generally favor individual securities over mutual funds or exchange-traded funds. As we are a fee-only investment manager, our interests are naturally aligned with yours; our job is to protect and grow your wealth, and managing expenses is a large part of potential returns.
Mutual fund management
The vast majority of our clients are invested primarily in individual stocks and bonds or low-cost bond mutual funds. Occasionally we will invest in an area where we feel clients should have investment exposure, but may not necessarily feel comfortable making investments using individual securities. These are typically cases where diversification is very important and needs to be achieved or in situations where our expertise in a certain area is limited (such as frontier market investments). We use mutual funds or exchange-traded funds in those circumstances to achieve the overarching purpose of the investment, while diversifying away the individual issue risk. We do not get paid commissions for buying funds.
Tax Efficiency
As we manage your portfolio, we are mindful that most people prefer to manage their tax bill to be as low an amount as possible. Some taxable gains are almost inevitable as we strive to manage the risk/reward of individual investments. However, since have a long-term investment mentality, we try to create long-term capital gains at lower rates than one would pay if the gains were short-term capital gains. We can and do look at our clients realized gain exposure throughout the year – even more so as we get close to year-end. To the extent our clients are willing to share their tax information with us, when we are aware of realized loss carry forwards, we are more inclined to integrate such information into our investment behavior. Here is an example:
"A woman became a client of our predecessor firm just prior to her turning 70 years old. She arrived with over $300,000 of realized loss carry-forwards in what was a new $558,000 account to us after a particularly bad prior manager had allegedly mismanaged her account. While we believe in long-term investing, the existence of those losses allowed us to be far more aggressive taking realized gains than we would normally wish to be because the losses sheltered the gains. It also colored our approach to risk-acceptance since, were she to pass away, that loss carry-forward would “go to Heaven with her”…that is, she and her heirs would lose the ability to shelter future gains from tax. Her personal situation was that she appreciated and needed a safe strategy to generate income, stay ahead of inflation and not lose much in bad markets. Her tax situation (i.e., having that sizable deferred tax asset to use to offset gains) allowed us to occasionally lean into stocks with more price-appreciation potential because we knew that any gains up to the amount of her realized loss carry-forward would be offset by her prior losses. Our knowledge of her specific tax situation led us to act somewhat differently and in a manner that allowed for better long-term tax-efficiency of her investment portfolio."
Generational planning
We are very proud of the fact that we are currently helping multiple generations of families with their various stages of life and levels of wealth management. We believe this is evidence that we continue to add value to our client’s lives. As an example of how multi-generational planning can be useful, please read the story of Virginia and her son.
Client Safeguards
We founded the company on principals of “doing the right thing”. While we have staked our reputations on being trustworthy, in order to ensure that clients have as much security as possible we have made the choice not to act as custodian for those assets. By outsourcing custody to firms that have significant resources and internal control systems necessary to safeguard your assets as well as insurance in case something goes wrong in spite of their efforts. The Securities Investor Protection Corporation (SIPC) insures your account to $500,000 (from theft or custodian collapse). For accounts that are larger than that amount, the custodians purchase extra insurance. These custodians send you monthly or quarterly investment statements, trade tickets and year-end tax information. To view more about SIPC Insurance view http://www.sipc.org/.