Frequently Asked Questions
A. Point View began business as an independent Registered Investment Advisory (RIA) firm in January, 1993.
- A. “Independent” means we don’t work for any of the big banks or brokerage companies. Our only clients are the individuals, families, and institutions for whom we manage money. Most brokerage firms, for instance, also work with corporations and other entities that issue securities. Thus, they are trying to sell them to their clients who buy securities, which puts pressure on them to push certain securities, or at least not to say negative things about them.
- At Point View, our only concern is what is in your best interest. If we don’t like a particular stock, we’re free to tell you so. Nor do we have a special, hidden incentive to push any particular investment product.
- “RIA” means we don’t have actual custody of the money we manage for you. All of our clients custody their assets with Fidelity Investments and have individual accounts there. This gives you confidence that your money is secure. It gives you access to some of the best technology in the investment world. It also means we are registered with the Securities and Exchange Commission to provide investment advice.
- A. We like to look at all of a client’s investments—those we’ll manage, and those we won’t (such as current 401(k)s), so we can help coordinate all of it. We begin by breaking down everything a client currently holds and how they’re held—equities, fixed income, cash, taxable versus tax-deferred accounts. As investors and planners, we work with the client to determine what asset allocation will help her best reach her financial goals without excess volatility.
- Then we build a proposed portfolio. Here, we specify which assets should be held in which accounts, giving names and dollar amounts. We can project income and expected returns. We set all this out, in both narrative form and a spreadsheet, and work with the client until we have reached agreement. Then we execute, usually over time.
- As part of this process, we determine what planning issues are involved and dig into those. We also gather information on the original cost of the various investments, so we can do tax projections.
- We communicate with our clients monthly, in whatever manner works best for the client—in person, by phone, by email. We discuss investment results, discuss whether changes are warranted, and try to determine how else we can be helpful. Different clients choose to have different levels of involvement, and we can cater to all of them.
- A. Point View is fee only. We charge one percent of assets under management, paid quarterly. We believe that this aligns our interests with yours. We only make more money if you do. This contrasts with the traditional, commission method of doing business. When a stock broker suggests a trade to you, how do you know if it’s really in your best interest, or if he is just trying to generate revenue? At Point View, we have no reason to suggest you make a change unless we truly believe it will benefit you. Often we suggest that no trades be made. We believe that charging a fee, rather than a commission, reflects our belief that we are building relationships with our clients, not merely suggesting transactions. Our minimum fee is $1,250 per quarter, which corresponds to $500,000 under management. A client’s accounts are aggregated to help reach that $500,000.
- For clients interested only in financial planning, we can provide a comprehensive plan, covering everything including specific investment suggestions, for $7,000. If a financial planning client subsequently chooses to use us for ongoing investment management, we apply that fee dollar for dollar against investment management.
A. Every client is unique, but if we had to choose a pattern, it would be a pre-retirement couple with $1-$5 million of investable assets, looking to secure their retirement. Of course, we work with people at all stages of life.
- A. First off, investing and planning are our passions, and we spend far more time at it than you probably do. In more than 20 years, we’ve seen just about everything. So right off the bat, you are paying for expertise.
- You are also paying for discipline and impartial judgment. When the markets crashed in late 2008, what did you do? To whom did you turn? Because of our disciplined, diversified investment approach, we were able to keep our clients on track and fully invested; they are grateful we did.
- A. David Dietze has been an investor since high school. His grandfather, a Bell Labs scientist, died very young; David saw his grandmother live comfortably off the dividends for decades. That taught him the power of having your money work for you. When his grandmother gave him a few shares of AT&T, David promptly signed up for dividend reinvestment and bought more shares with his own money. He’s been investing—first for himself, then for family and friends, now for a broad client base—ever since. At the same time, David started two businesses in high school; he was able to buy himself a new car and put aside a nice part of his college costs.
- Although he chose law school over business school, David kept on investing. Eventually he chose to follow his passion full time, founding Point View as an independent operation. Over the years, he tested for and received both the Chartered Financial Analyst and the Certified Financial Planner designations.
- Claire Toth fell in love with tax law early on, and her career took her to the office of IRS Chief Counsel before she moved to New Jersey. Claire has always worked with privately-held businesses and the people who own them, giving her in-depth access to and knowledge of every issue ranging from executive compensation to complex estate planning. Once Point View’s clients began asking for financial planning, it was an obvious transition from the law firm where Claire worked. As she sees it, she gets to do all the fun planning work, without drafting documents or collecting fees. During her career, Claire has earned a Masters of Law in Taxation and received the Certified Financial Planner designation.
- A. Great question as far as it goes. Also ask what has to be done to get any of those designations, and what has to be done to keep them. That gives you a better sense of what value to place on them. Here’s more on what we have:
- JD—we’re both lawyers and attended the University of Chicago law school. Claire is licensed to practice in New Jersey; David’s license is inactive. New Jersey requires 24 hours of continuing education every two years.
- CFA®—David holds the Chartered Financial Analyst designation. This is the gold standard among financial professionals and is held by most portfolio managers and stock analysts. To earn the designation, David had to have four years of relevant work experience and pass three different levels of exams over the course of three years. Those exams test eleven different topics, from corporate finance to wealth planning to alternative investments. David passed each level the first time. He describes the process as the equivalent of earning an MBA® in finance. There is no mandatory continuing education, but it is encouraged.
- CFP®—we each hold the Certified Financial Planner designation. This requires a single, two-day test. In order to sit for the exam, candidates must either take a series of courses (usually over the course of two years) or already hold at least one of a list of certain degrees and credentials. Because we were already lawyers, we were able to take the exam without taking the coursework. The exam covers six topics, from financial planning to taxation to insurance. We each passed the exam the first time we took it. Holding the CFP® designation requires 30 hours of continuing education every two years.
- MLT—this stands for Masters of Law in Taxation and is the same degree as the better-known LLM. Claire obtained hers from Georgetown University.
- Finally, note that there are no licensing—or even educational—requirements to do what we do. It isn’t enough to rely on any of this in choosing the financial professionals with whom you work.
A. Financial planning can cover everything from setting a budget; to determining how much to save/invest—and in what sorts of investment vehicle—for retirement, for children’s education, for a major purchase; to estate and philanthropic planning. Your financial planning arises from your own particular situation and needs. We encourage our clients to call us first whenever a financial question arises.
A. At its most basic, financial planning seeks to ensure that your money lasts longer than you do. It’s more than that, of course. It is working with you to determine your financial goals and priorities and then developing workable action steps and investment choices to help you reach those goals—while still allowing you to sleep at night. A financial game plan you cannot live with—because you don’t understand it, because it requires you to make sacrifices you deem unacceptable, or because it involves investing in ways you find nerve-wracking—will not work.
A. Absolutely not. As discussed below, we are fee only. We don’t sell product, and we aren’t paid by commission. If we agree that you need additional insurance—whether it’s life insurance, disability insurance, or umbrella insurance—we have select professionals to whom we can refer you. The same goes if we agree you need an accountant, an attorney, or some other professional. We do not have financial arrangements with any of these third parties, so we have no incentive to suggest you use a particular individual.
A. Not at all. We prepare a form for your signature to transfer the assets over. We submit that form, plus a recent copy of an account statement, and the back offices of the two firms do the rest. The process typically takes a week or so.
A. Money can move in or out of your account in a number of ways. Because this is a brokerage account, not a bank account, some of it requires advance paperwork to establish the process. You can always mail in a check (or bring it to us to send it for you). You can apply for checking privileges on your account and/or for a debit card. You can wire money in or out of your account. We can help you set up a feature to make regular electronic deposits or withdrawals. If you make a large withdrawal, we request some advance notice so we can be certain cash is available.
- A. Bonds are loans, made by a government (Treasury bonds and municipal bonds) or a corporation (corporate bonds). Bonds are sometimes referred to as debt or fixed income. A bond is a promise to pay a fixed amount at a set time, with interest along the way. Bonds provide predictable income with a known amount at the end of the term. Until a bond matures, its value is based on its interest rate and the perceived safety of its issuer.
- Stock is an ownership interest in a company. Stocks are sometimes referred to as equity. As a company prospers, the value of its stock rises, and vice versa. Stocks are considered riskier than bonds—your payoff on stock only comes after bonds and all other obligations are satisfied, so you can lose your entire purchase price if the company goes bankrupt—but they also have unlimited potential upside. Many companies pay dividends on their stock, a way of sharing profits with investors, typically quarterly.
- A. Congress has created certain types of investment accounts with special tax breaks. Most retirement accounts—401(k) plans and traditional IRAs, for example, allow you to deduct contributions from your taxes, defer paying tax on any gains, and only pay taxes when you withdraw the funds in retirement. Roth IRAs promise no tax forever, in exchange for no deduction now.
- In college funding, 529 plans allow you to set aside dollars now for your children’s college education and never pay tax on the earnings.
- All of these tax-favored accounts come with restrictions, either on investment choices, on use of the funds, or both. In the financial planning process, we can help you determine which, if any, best suit your own goals and how to integrate them with the rest of your investments.
- A. Mutual funds (including Exchange Trade Funds or ETFs) are simply collections of stocks, bonds, or of a mixture of the two. A traditional mutual fund is considered open-ended. You buy and sell shares directly from and to the mutual fund company. On any day, the fund’s share price reflects the underlying value of all the investments it owns. Open-ended funds are priced once a day, at 4:00 pm.
- An ETF is simply a variant on the traditional mutual fund. An ETF’s shares trade on the stock market and thus are bought and sold among investors. Their share price is also supposed to reflect the collective value of their underlying assets.
- All mutual funds have ongoing, internal fees, which can range up to 2.25 percent annually. Some of these fees are stated; some are not obvious to investors. Many mutual funds own hundreds of different stocks and/or bonds. They are a good way for smaller I investors to gain exposure to a wide range of investment assets.
- A. There are many types of risk, and a well-balanced investment portfolio can protect against all of them. As noted above, it is possible a company whose stock you buy could go bankrupt, causing you to lose your investment. You can guard against this risk by investing in a broad range of stocks, across the economic spectrum, by not investing too much of your portfolio in any one stock, by rebalancing periodically, and by choosing your stock investments wisely at the outset.
- Another major risk is inflation—that your assets will not grow faster than prices rise. Bonds and cash carry this risk, and having adequate stock in your portfolio mitigates it. In sum, a broadly diversified portfolio is your best insurance against the various financial risks out there.
- A. There may be parts of the country where it’s possible to live on Social Security. The northeast isn’t one of them. In the New York metropolitan area, Social Security can support you for about one week a month. Most people prefer to live the other three and a half.
- Cash cannot keep up with inflation, let alone grow fast enough to support you in retirement. If prices rise an average of three percent a year (slightly less than the historic inflation rate), prices double every 24 years. This means that if you retire with only cash, you can expect to lose half your purchasing power in your lifetime.
- This is how financial planning and investing work together, to build you a diversified nest egg that will see you through.