DeYoe Wealth Management

FAQ

Since you Asked . . .

How long have you been personal financial advisors?

Collectively, the team at DeYoe Wealth Management has over 50 years of experience providing comprehensive financial services to a broad range of clients. LPL Financial Planners and Wealth Advisors Jonathan K. DeYoe and John Madden both began working as financial advisors in the 1990’s. Our Team Leader, Nancy Wright Cooper, has worked in the industry for over 21 years. Naomi Evans, our Operations Associate, worked with eTrade for 4 years before joining DeYoe Wealth Management and now spearheads our customer service efforts. One common thread we all share is that we’ve spent the majority of our careers navigating difficult economic and market environments, such as the Long Term Capital Management collapse and the dot.com and real estate bubbles. During these often challenging times our business has grown almost exclusively through client referrals and word of mouth.

How many clients do you have?

At the beginning of 2011, we had just 130 advisory client relationships. As a small firm dedicated to providing customized asset management and financial planning services, we are very selective about who we choose to represent and add only a limited number of new clients per year. This commitment to slow, sustainable growth enables us to maintain our focus on providing exemplary customer service to both new and existing DeYoe Wealth Management clients.

Do you have a “minimum” account size?

We do not have a minimum account size, but new clients are expected to meet our asset management minimum of $500,000 unless they are referred to us by one of our professional partners. While many of our current accounts fall well below these minimums, the high level of service and attention to detail that we provide all DeYoe Wealth Management clients requires that we set realistic limits as we grow our practice. Our minimums are reviewed and increased annually, but we will always remain committed to serving any clients who joined us under a prior year’s minimum.

Why do you call yourself “Behavioral Advisors?”

Contrary to what popular media and many advisors will tell you, the critical differential between personal financial success and personal financial ruin is not what your investments do; it is what you do. Through careful holistic planningconsistent communication, and ongoing client education, we attempt to influence the only thing we are truly able to affect: client behavior. This is why we refer to ourselves as “Behavioral Advisors”.

No financial advisor or media pundit can consistently predict or control investment outcomes, but unless you are in a financial position to actively save every dollar you will need in retirement, you’ll have to receive a return on your after-tax savings that is better than the rate of inflation just to keep up. In other words, in order to maintain your lifestyle, you’ll have to accept some risk in your portfolio. How much risk to take, what kind of risk to take, how to manage that risk, how much to save, how to invest those savings, how long to work, how much to spend in retirement, how to take distributions, how much cash to keep on the sidelines, and how much return is needed are all key factors of your own personal financial plan. These factors are in your control, even if investment outcomes aren’t.

Once you finalize and adopt your financial plan, other critical behaviors for achieving your long-term goals include disciplined implementation, patient stewardship of your investments over time, and keeping your emotional equilibrium in the midst of market volatility. During periods of economic uncertainty and market unrest, DeYoe Wealth Management’s brand of behavioral financial advice will help you maintain a sane, measured, long-term approach to investing, even when the media and the markets spiral out of control.

How does your team work?

We are a tight-knit, fun-loving, happy team who work together to take care of every client that is served by DeYoe Wealth Management. Each team member brings certain expertise and abilities to the table, and we believe clients are well served by our carefully coordinated efforts on their behalf.

Jonathan K. DeYoe has primary responsibility for all things investment related. He designs and manages every aspect of our asset management process and makes the final decisions for all client investment recommendations at DeYoe Wealth Management. Both John Madden and Nancy Wright Cooper support Jonathan in committee.

John Madden spearheads DeYoe Wealth Management’s financial planning and retirement program efforts. He gathers client’s financial and personal data, enters it into our planning software, and runs multiple scenarios to discover the best potential solutions for the client’s individual needs. Once the initial reports are complete, John and Jonathan K. DeYoe work closely together to fine tune the plan before presenting it to clients.

Nancy Wright Cooper is our Team Leader, Operations Manager, and Business Manager. She manages DeYoe Wealth Management, Inc. so that Jonathan K. DeYoe and John Madden can focus their efforts on research, asset management, and holistic planning. Nancy serves as our air traffic controller, tracking the status of every plan, transaction, portfolio transfer, review, event, meeting, and pending follow-up in the office. Clients meet with her to implement their financial plans, and she handles trading for customer accounts.

Naomi Evans is our Operations Associate and Administrative Office Manager, and directs our personalized customer service efforts. She initiates most of the paperwork in the office, follows up on assets transitioning to our management, and coordinates our client education and annual review calendar. Naomi is the first cheerful voice clients hear when they call DeYoe Wealth Management and the first smiling face they meet when they walk through our doors. She works closely with Nancy to keep every aspect of our business running smoothly.

Clients will meet with either Jonathan K. DeYoe or John Madden for their annual reviews and educational sessions every year. Working in concert and supporting each other allows each of us to get a lot more done, but the buck always stops with Mr. DeYoe. Have a tough question? Want to register a complaint about a Team Member? Have we failed to meet our stated high standards of customer service? Please contact Jonathan and let him know.

Do you ever make transactions without your client’s prior knowledge or consent?

Yes. Clients who work with DeYoe Wealth Management give us formal written discretion to make investment decisions and execute transactions on their behalf. When clients hire us and agree to pay us a fee for providing them with investment advice, they authorize us to make the daily investment decisions for them. Before any trades are placed, we always undertake to have a deep understanding of the client’s financial life and review the parameters of the portfolio that we and the client established together.

Does DeYoe Wealth Management receive commission for recommending specific investments to their advisory clients or receive any other incentives or benefits for effecting specific investment transactions on their behalf?

No! As fee based financial advisors, we are paid a fee to provide investment advice to our advisory clients, not a commission for recommending specific investments or transactions. The only reason we have for initiating a transaction for an advisory client is because we believe it will benefit that client.

How much of the portfolio will typically turn over each year?

This depends entirely on the year, and we will always consider a client’s long-term goals and the specific components of her investment portfolio before making any changes to her accounts. In consistent and stable markets, there will generally be very low turnover in a portfolio - with changes often limited to a quarterly rebalance. In more volatile markets, like the ones we experienced in 2008 & 2009, most clients can expect that turnover will be higher. We are neither active investment managers or buy and hold investors: we are adaptable portfolio strategists. Economic climate, the current market environment, and a client’s individual needs dictate the turnover in our portfolios.

What kinds of investments will you recommend?

We utilize a wide variety of investments when constructing our portfolios, depending on what we believe is most suitable for a particular client. We are tool neutral at DeYoe Wealth Management. A lot of ink gets absurdly spilled on the discussion between active and passive management, but we practice responsive management. Just like a carpenter uses a hammer with a nail or a screwdriver with a screw, we use the investment tools that we think will best meet the client’s short-term needs and long-term goals.

Do you receive benefits of any kind for directing your advisory clients to a particular investment?

No.

What are your fees?

For financial planning clients, we charge a one time, project-based fee that ranges from $2500-$15,000 depending on the complexity of the plan. This fee is negotiated and agreed upon before we begin work on your personalized financial plan. Our average fee for holistic financial planning ranges from $3500 - $4500.

All advisory clients also pay an industry standard fee for our customized asset management services. The asset management fee is calculated as an annual percentage of a client’s assets under our management and is deducted from a client’s portfolio quarterly. The fee a client pays will fluctuate quarterly depending on any gain, loss, additions, or subtractions from the portfolio. The fixed percentage ranges from 1.25% per annum for clients who meet our asset minimum of $500,000 to .7% per annum for clients whose total portfolio assets under our management exceed $5,000,000. A typical DeYoe Wealth Management advisory client has $1 - $2 million under our management and pays about 1% annually.

Private placements have their own unique standards of compensation, as do any Life, Disability, or Long Term Care insurance policies indicated by the plan. If we recommend one of these products for your portfolio, we will carefully explain the differences between the available options and offer you complete transparency about our compensation for each product. Our only goal in recommending insurance products and advisory services is to always and everywhere do what is right for our clients.

I currently have assets scattered between many different accounts and brokerage firms. Will I keep those accounts in place or will my assets be transferred to DeYoe Wealth Management?

Clients who work with DeYoe Wealth Management agree to bring all of their investment accounts under our management. We take a coordinated approach to portfolio design and will make our recommendations based on your total picture, not just a few pieces of your unique financial puzzle. Consolidating your accounts in one place saves you valuable time, paperwork, and trouble in the short-term, and we believe you’ll be pleased with the long-term benefits of keeping your assets under the same roof. Once you complete our holistic planning process, your existing accounts will be transferred from their current custodian to one of the custodians that DeYoe Wealth Management uses - usually LPL Financial or Genworth Financial Trust Company.

Are there costs associated with transferring my assets to your management?

We will never charge you to transfer assets to one of our custodians. However, your old custodian may charge account closure or transfer fees. Certain investments may also be subject to a contingent deferred sales charge or withdrawal penalty if you have not held the investment for a specified time period. Before moving you assets under our management, we will evaluate the potential for charges and penalties and do our utmost to time the transfers to minimize their impact on your portfolio.

If I decide that I no longer wish to be a DeYoe Wealth Management client, what difficulties and costs will I incur in transferring management to a different advisor or taking it over myself?

Our custodians may charge minimal fees for closing your accounts, but DeYoe Wealth Management will never penalize you for choosing to take your business elsewhere. In fact, we will prorate and return any fees you have paid in advance. If you should ever feel that you are not getting what you want out of our relationship and we are unable to resolve your issues, we will wish you well and do our best to make your transition to another advisor, custodian, or brokerage firm run as smoothly as possible.

Are your services expensive?

In study after study, the number one reason uniquely successful families are disappointed in their financial advisor is poor customer service. When Mr. DeYoe founded DeYoe Wealth Management in 2001, he decided that having the staff and systems necessary to provide superior customer service was more important to clients than offering reduced services for rock bottom fees.

We believe our fees are quite reasonable for the seamless, proactive customer service our clients demand and deserve. Our team always clearly and completely explains our fees early during our very first discussion with potential clients. Because of this disclosure, individuals and families who are extremely sensitive to fees generally do not become clients of our firm.

We understand that paying a fee for financial advice isn’t for everyone. Folks who do decide to work with DeYoe Wealth Management usually believe that an independent, objective firm like ours can be their best advocate in the world of finance. Our services prove most valuable to clients who believe that hiring a trusted advisor can:

1. Pay for itself in terms of long-term financial performance

2. Help them maintain the critical tie between their investments and their planning goals

3. Prevent them from making big financial mistakes

4. Quell their fears during market downturns and check their impulsiveness during overheated markets

5. Relieve them of the burden of having to do it themselves, much like relying on a plumber when your drain is clogged or an auto mechanic when your car breaks down

Most clients choose to work with us for a combination of the above reasons, as well as specific concerns of their own.

Will your fee pay for itself with additional returns?

We do not know if the fee a client pays us will translate directly into higher returns. It is impossible to know. The promise of higher returns is not a part of the value proposition we offer clients, because there is no way to prove that our actions (or theirs) resulted in superior investment returns.

What we will say is that we believe our clients have done very well through the ups and downs of the last 15 years. Every time we do a review, clients thank us for the work we do. Perhaps more telling is the fact that 95% of our new clients come from introductions by our current clients, or CPAs and Attorneys who know us well through our work on behalf of mutual clients.

However, as the disclosure at the bottom of every prospectus reads: "Past Performance is No Guarantee of Future Results." You cannot step into the same river twice: every moment that passes brings changes in our economy and the markets. These unpredictable changes affect the outcomes of every kind of investment. We simply cannot project how we will do from how we have done. Study after study after study proves this out.

Because no one can reliably predict or control performance, our commitment to our clients has little to do with investment returns.  Instead, the value proposition we offer is twofold:

1. Our goal is to provide clients with a portfolio that meets the financial objectives spelled out in the carefully crafted plan we create together. We will seek the returns that your plan calls for while employing strategies designed to limit the risk exposure in your portfolio. We strive to capture some percentage of the S&P 500’s upside return while at the same time participating in a lower percentage of the S&P 500’s volatility.  For a simple example, we would consider our investment strategy a success if we generated 70% of the S&P 500’s return while at the same time delivering only 40% of the volatility.

2. Our job is to implement your financial plan and manage your investments so that you will be free to enjoy your family and pursue your passions. What price would you put on your time, effort, energy, and concern? How much would it be worth to you if you could live your life without being tied to making daily financial decisions? Would you spend fewer hours worrying about your financial future and more time planting a garden or travelling the world if you had a team of financial advisors focused on your financial health? If you see the benefits of paying a professional to manage the financial portion of your life, then you (like our best clients) recognize the real value of our services.

Will you work with a portion of our portfolio?

No. We’re convinced that dividing your financial planning and implementation between multiple advisors (or between yourself and an advisor) is the same as not having a plan at all. With no master financial plan, a client often ends up either over-exposed or under-exposed to a particular investment or asset class. M important and any kind of comprehensive risk-management approach will be unattainable.

Even more insidious is the deeply subconscious competition that is set up by setting advisors in opposition to each other. If an advisor knows that her investment performance is constantly being compared to another advisor’s, she may take on incrementally more risk in an effort to increase returns and “earn the rest of your business.” Even if the advisor doesn’t know you are working with another advisor, you do. Short-term investment gains may encourage you to favor one advisor’s approach over another’s, to the detriment of your long-term financial health. Every advisor will have his day in the sun. But the moment one advisor outperforms another, the tendency of many investors will be to emphasize the advisor who is outperforming. This is the same performance-chasing tendency that moved investors to buy dot.com stocks in 1999, gobble-up real estate in 2005, or hide out in cash in March of 2009. We believe the best way to avoid this tendency to chase the bright, elusive butterfly of performance is to have both a comprehensive financial plan and a single guide for its implementation.

Clients who choose DeYoe Wealth Management for their holistic financial planning and customized asset management must be willing to work with our team on an exclusive basis.

Do you consider the tax implications of your investment strategies?

We absolutely consider the tax implications of all of our investment strategies. In fact, we subscribe to the tenant that it is possible to add nearly 1% (after fees and taxes) to a client’s long term returns simply by managing taxes appropriately.

To this end, we utilize a few standard practices. We consider the “after-tax” yield on our fixed income investments. We minimize the capital gain ramifications of portfolio turnover by pairing gains and losses and harvesting losses when appropriate. We try to avoid short-term capital gains. We also track client holdings by tax-lot, which allows us to sell the most tax-advantaged shares when we do sell shares.

What if I have very low basis stock?

If a client inherits low cost basis stock or has a concentrated position in either restricted stock or stock options, we will employ all the tools necessary to minimize taxes. However, we are also not afraid of taxes. When a stock is extremely volatile or makes up a dangerously large portion of a client’s net worth, we may recommend selling the stock either immediately or in increments over multiple years in order to reduce the client’s overall risk.

Taxes are an important consideration, but in our view risk management is even more important. Taxes are the direct cost of doing well. And, we hope each and every one of our clients does well. Every client we advised to sell their concentrated position dot.com era stock before it imploded has thanked us for our insistence on risk management over tax management.

 



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