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How is Blue Ocean Strategic Capital, LLC different from a broker?Blue Ocean Strategic Capital, LLC is a Registered Investment Advisor (RIA) that looks to build long-term working relationships with clients as opposed to selling a product or providing investment advice on a transaction basis. We work on a fee-only basis that places us on the same side of the desk as the client. If our clients’ portfolios go up, we do well. If our clients’ portfolios don’t do well, we don’t either. Our ultimate goal is to serve as a “financial quarterback” for our clients with regard to their investment and acuumulation goals, protection planning (insurance), estate planning and overall financial well-being.We are truly an exception in this business in that we are solely compensated by the fees paid by our clients and do not receive commissions or compensation from any other source. Again, we are not product salespeople, we are relationship builders looking out for your best interests. And since we are independent from all financial services companies and proprietary products, we are able to offer many more investment opportunities to fit your specific goals and objectives.How long has the company been in existence?Blue Ocean Strategic Capital, LLC has been in existence since 1997. It was originally a subsidiary of the accounting firm of Dermody, Burke and Brown, LLC which is the largest locally owned CPA firm in Central New York and has been in business since 1956. After enjoying tremendous success, the company was purchased from the accounting firm and is now privately owned by employees of BOSC.Do you have a minimum relationship size?In order to be fair to our existing clients and serve them properly, we typically look for new relationships above $300,000.Where are my assets held?BOSC uses Fidelity Investments to custody its assets. Fidelity is privately owned and has been in the financial services industry for over 60 years.Today, it is one of the world’s largest providers of financial services, with custodied assets of $3.8 trillion, including managed assets of $1.9 trillion as of December 31, 2009.Do your clients have online access to their accounts?Absolutely! Clients have online access for viewing their accounts through both our website and through Fidelity’s main website. Unfortunately, trading is not permitted through either of these venues.Are you going to call me before making a trade for my portfolio?Since we are Registered Investment Advisors with the SEC and we have discretion over our client’s accounts, we do not call before making a trade. In today’s volatile market, it is often necessary to take advantage of short term opportunities to purchase or sell a security at a moment’s notice. This opportunity could be gone before we were able to contact all of our clients and receive permission for the trade.What are your investment management fees?Our management fees are 1.00% of total assets under management for the first $2 million, 0.80% for the next $3 million, 0.60% for the next $5 million and 0.40% for assets over $10 million.How often do you meet with clients?The simple answer is that we will meet with clients as often as they would like. Some prefer quarterly meetings at the beginning of a relationship, move to semi-annual and then annual meetings. Due to our constant communications with our clients (letters, phone calls, seminars, emails, etc), we find that many clients only want to meet once or twice a year.What questions should I ask when looking for an advisor?
Searching for a financial planner and investment advisor is one of the most important things you will do in your entire life. The normal questions regarding credentials and experience are important, but you need to know if the person, or people, you are about to hire possess the right qualities to help you in your pursuit of your financial security.1. Tell me about your ideal client. Any good financial advisor will have an area of expertise. You want someone who has expertise working with someone like you. If you’re about to retire, and they tell you they work with young families, maybe this isn’t the person for you. Find a financial advisor whose ideal client sounds very similar to your situation in terms of age, stage of life, and asset level.2. How long have you been practicing as a financial advisor? Experience is invaluable in this business. It is very important to hire someone who has experience and knowledge in several fields. After all, you’re talking about your life savings and one of the most important decisions in your life. A potential advisor may have years of experience as a CPA, or in the mortgage or banking industry, but that doesn’t mean they have expertise as a financial advisor. Many professional industries require internships or apprenticeships before you can be recognized as a professional, but as of yet the financial services industry does not have such a requirement, so to protect yourself, you need to set your own standard. (For an advisor to receive the CFP® designation, they now must have three years of practical experience). Along with years of experience, you may wish to ask the advisor what subjects they are most interested in pursuing. Their answers should reflect subjects that are pertinent to you and your situation. If they say they work with retirees, but they are most interested in actively trading currencies, that should cause you concern. An advisor’s continuing education and professional interests should be aligned with the type of client they work with.3. Ask the potential advisor to explain a concept to you. What you are looking for here is, can you understand their explanation? If they speak over your head, or their answer makes no sense, then move on. You want to work with someone who can explain financial concepts to you in language you can understand. Below are five concept oriented questions to consider asking:
- What is passive vs. active investing?
- How do you determine how much of my money should be in stocks vs. bonds?
- What is a laddered bond portfolio? What is a barbell portfolio?
- How do you determine how much money I can safely withdraw each year without running out?
- What do you think of annuities?
4. What assumptions do you use when running retirement planning projections? A retirement planning projection helps you see how much money you will have available to spend each year, from now through life expectancy. The projection is based on assumptions about the rate of return at which your assets grow, the pace of inflation, and your personal spending habits. You want someone who uses a conservative set of assumptions; after all, you’d rather end up with more than what they have projected, not less. A conservative set of assumptions would be growing financial assets at 7% a year, using an inflation rate of 4% (meaning personal expenses go up by 4% a year), and increasing the value of real estate assets on paper by 2% a year. We have seen financial plans run using 12% rates of return on financial assets, while assuming a 2% inflation rate. While this set of assumptions makes the future look rosy, it’s make believe. You need realistic projections to make appropriate decisions.
5. How are you compensated? The key here is to listen for an honest answer. A financial advisor should be willing to clearly explain all fees you will pay to them, and all expenses you will pay associated with any investment they recommend. Answers such as “My company pays me,” or “You won’t pay anything out of your pocket” are not acceptable. Common sense tells you that a person’s primary loyalty will be to the hand that feeds them. If they are paid directly by fees from you, as in the case of a fee-only financial advisor, then they will have an incentive to provide advice and service that is in line with your goals. If they are paid by commissions, or fees that are filtered through a broker dealer, then they are first and foremost bound to the products their broker dealer prefers them to use.