Difference Between Brokerage
and Advisory Services

Q. What is the difference between Consolidated’s brokerage and advisory services?

 

A.  Consolidated Financial Investments, Inc. is a discount broker and provides the tools for individuals who are comfortable making their own investment decisions. As a discount broker, we do not give advice or stock recommendations. Rather, our company makes available a variety of financial products and services to meet your investment needs. 

 

Our advisory services are provided by Consolidated Wealth Management, which is an independent, fee-based Registered Investment Advisor (RIA).  We assist clients with a wide variety of investment and financial planning needs. We have developed specific expertise in transition planning, especially the areas of retirement planning, inheritance, and divorce — with special emphasis on senior investors.  

 
 

1.       Q: What is your process for working with clients?

A: Our process typically begins with an introductory meeting where we learn about your current financial situation and understand your goals and aspirations, your personal values, your key relationships, and anything else that may be relevant to constructing a holistic plan for your financial future.

 

After the introductory meeting, we will draft an investment plan and Investment Policy Statement (IPS) incorporating all the information we gathered from the introductory meeting.  We will meet again to review the drafted investment plan, walk you through the details, and get your feedback to see if any changes are required or additional information is needed or discovered.

 

There is no cost to you for either of these meetings.  If, after the second meeting we have presented a compelling case for you to hire us, we can begin a formal relationship as your financial advisor.

 

Once hired, we essentially become your personal/family Chief Financial Officer and are available to help you plan through any financial event in your life — minimizing taxes, saving and investing effectively in your retirement plan, planning for children’s and/or grandchildren’s educational expenses, evaluating insurance needs compared to your current coverage, creating a retirement spending plan, Social Security and Medicare planning, creating and updating the appropriate estate planning documents, etc. 

 

The complexity of your situation, and the goals and objectives determined by our prior meetings will determine how often we meet and what we spend the most time discussing. 

2.      Q: Will you coordinate with my other professional service providers (e.g. accountant,
              estate
attorney, insurance agent)?

A: To the extent you want us to, we will coordinate with your other professional service providers.  Although we are experienced in tax, estate, and insurance issues, we are extremely collaborative and will incorporate experts whenever appropriate. 

 

We will advise on tax management strategies, but we do not prepare returns and would defer to your tax professional for final approval on tax issues.  We can raise questions, make suggestions, and discuss the pros and cons of various estate planning strategies, but we will defer to your attorney to draft legal documents.  We will analyze your current insurance policies and help you purchase (if needed) any new policies, but we do not sell insurance.

 

Our value is to uncover and identify planning opportunities, and then ensure they are addressed and implemented. 

 

3.       Q: What is your investment strategy?

A: Our core investment strategy utilizes low-cost, passively managed Exchange Traded Funds (ETFs), closed-end and no-load mutual funds, and various fixed income products.  Your portfolio will be a low-cost, globally diversified portfolio that is designed to provide the after-tax, risk-adjusted market returns needed to reach your unique goals. 

 

Market performance is unpredictable and largely out of your control.  Therefore, you should focus on those elements which you can control — keeping costs low, diversifying, and staying disciplined through both up and down markets. 

 

History shows that almost every decade has a market ‘surprise’ of some kind.  Working with Consolidated Wealth Management will help ensure that you stay focused on what matters — the long-term plan — and avoid making critical mistakes during periods of market volatility.

 

4.       Q: What if I want to buy some individual stocks on my own?

A: Part of our introductory meeting will be spent learning about your interest in financial markets.  Many clients have a long history of investing on their own, and are hesitant to give up any control of their portfolio.  If this is applicable to you, we are happy to find a solution that works for everyone. 

 

Typically, that would be for you to maintain a separate account specifically for your own stock picking activities.  Our goal would be to ensure that whatever you are doing in your separate account is not at risk of upending your overall financial success (e.g. having too much of your net worth tied up in one stock).

5.       Q: Are you going to immediately sell all my current holdings?

A: We will not indiscriminately sell your current portfolio holdings if you decide to work with us.  We find clients often have holdings that can be kept and built around.

 

A key step in developing your individual investment plan is to analyze your current holdings to ensure we understand what (if any) tax consequences would result from selling any positions. Conversely, we also want to make sure you understand the risk/reward for every one of your remaining positions, and that they are appropriate for your long-term goals. 

 

We would only sell a position (and often do it over a multi-year period for tax purposes) after thoroughly explaining our reasoning and receiving your approval. 

 

6.       Q: Will you ever buy or sell something without my permission?

A: At Consolidated Wealth Management, we do not take ‘discretion’ of your account(s).  Therefore, we will never buy or sell anything without your express consent.

 

7.       Q: How much does your service cost?

A: We are a fee-only Registered Investment Advisor (RIA).  Our fee is a flat fee and is not a percentage of assets. Our fee will not continuously increase as your account increases in value, as many of our competitor’s fees do. 

 

After our introductory meeting, we will assess the complexity of your planning needs and quote you an annual fee, which is paid quarterly. This is a rolling annual agreement and cannot be changed without your consent.

 

In addition to the advisory fee, there are two separate third party fees:  transaction fees from the brokerage firm, and ‘expense ratios’ of the investment products. 

 

The transaction fee is charged by the brokerage firm whenever we buy or sell a position. The fee schedule for these charges can be found HERE. However, our core investment strategy is low turnover and is designed to minimize the number of transactions incurred, and remember—we will never make a buy or sell without your consent. 

 

The ‘expense ratio’ is charged directly by the managers of the investment products we use. Each of the low-cost Exchange Traded Funds (ETFs) or mutual funds we utilize have a built-in expense ratio which is deducted directly from the investment and is paid to the fund creators (e.g. iShares, Vanguard, etc.).  The overall expense ratios for our portfolios are typically less than 50 basis points (one half of one percent; or $5 per $1,000 invested).  The expense ratio for any investment in your portfolio can be found on the fund issuers website or prospectus.

 

8. Q: Where are my accounts held, and will I have access to them?

A: Our primary custodian is RBC Clearing & Custody (RBC C&C).  You maintain full authority over your accounts at all time, as well as 24/7 online access for real-time data, as well as free check-writing and debit card, if desired.

 

Accounts that aren’t transferrable (e.g. your current company 401(k) account) will stay with their current custodian and we will link to them via third party software and/or get duplicate quarterly statements provided to us so that we can maintain accurate account balances.

9. Q: How do I get started?

A: Simply call or email us to get a meeting scheduled at your convenience.

 

 

 
 
 
 
 
 
 
 
 
 

1.        Q: How do I open an account?

A: You can call 314-727-1177 or 800-292-6637 and request the forms to open an account.

2.       Q: After I set up my account, can I send orders via email or fax?

A: “NO.”  We neither accept orders via email nor fax. You will need to call us to place your order. Our  email address is to be used for questions or information requests only.

 

3.       Q: What is the minimum amount required to open an account?

A: There is no minimum to open a cash account.

 

4.       Q: Where do I send my deposits, payments and certificates?

A: For deposits and payments, you can mail your check, made payable to RBC C&C, to our office at:

 

Consolidated Financial Investments, Inc.

222 North Meramec Ave

Clayton, MO 63105-3702

 

If you are mailing certificates to us make sure you sign the back and mail them to the address above.

 

5.       Q: How should I sign my stock certificate(s)?

A: Please sign the back of the certificate exactly how it is titled on the front.  Whoever is registered on the front of the certificate must sign on the back.  If a certificate is received by us with incorrect or no signatures, a stock power will be mailed for you to sign and return.

 

6.       Q: Do you give any advice or recommendations?

A: As a discount broker, we do not give advice or stock recommendations.

 

7.       Q: Will I be able to write checks from my account?

A: Yes, our accounts have unlimited check writing privileges with no minimum per check.

 

8.       Q:  Can I trade Mutual Funds?

A: Yes, we offer 313 fund families on our platform.  Of this total 271 fund families, offer institutional and/or no load share class funds.  Please call us for more information on which funds we carry.

 

9.       Q:  What is the settlement day for my stock trades?

A:  Once you have bought or sold a stock, the settlement will be on T+2 (trade date + 2 business days). One-day settlement for options, treasuries and mutual funds.

 

10.     Q:  Can I transfer other securities and cash balances to my account at CFII?

A:  Yes, you will need to request a “Transfer” form (ACAT). This form needs to be signed and sent back to our office with a copy of your most recent statement from the firm you are transferring from. The transfer normally takes three weeks from the time we receive your paperwork.

 

11.     Q:  What are your firm’s disclosure documents when I open a new account?

A:  At the time you open your account, you will be given a copy of our disclosure documents.  The documents can be provided in paper format, sent to you via regular mail, fax or email.  They may also be accessed here.

 

12.     Q:  Does your firm carry account protection?

A:  Yes, Securities in customer accounts carried by CFII are well protected.  Account assets will be protected by the Securities Investors Protection Corporation, herein termed SIPC, and an additional policy purchased from Lloyd’s of London.  The policy provides an additional $99.5 million per client of coverage for securities above that provided by SIPC, subject to a $400 million aggregate limit.  This includes protection for cash of up to $900,000 over the $250,000 provided by SIPC.  A document made available by RBC C&C that discusses their protection of client assets is available here.  If the SIPC Fund proves insufficient to satisfy customers' claims, SIPC can draw upon a $1 billion line of credit that it has with the SEC, which, in turn borrows from the US Treasury.  Neither SIPC protection, nor the protection in excess of that provided by SIPC, covers a decline in the value of a customer’s assets due to market loss.  For further information about SIPC, please view the organizations website: www.sipc.org.

 

RBC Insured Deposits (RBC ID) sweeps cash in client accounts into interest-bearing accounts at multiple Federal Deposit Insurance Corporation (FDIC)-insured banks offering an aggregated total of $2,500,000 in FDIC-insurance coverage ($5 million for accounts held jointly by two or more persons).

 

13.     Q:  How do I wire funds to my account at CFI?

A:  In order for us to accept funds, you must have the EXACT instructions or the wire will be rejected.

 

The instructions are:

 

U.S. Bank

800 Nicollet Ave

Minneapolis, MN 55402

ABA#: 091000022

Account#: 160230097208

Account: RBC Capital Markets

For Further Credit (FFC): Client’s Account Name & 8-digit RBC Account Number

 

14.     Q:  Can I trade Options in my regular account?

A:  Yes, however you must be aware that trading options is not suitable for all investors and that investing in options carries substantial risk including loss of your total principal. To trade options you must read and understand the risk disclosure booklet entitled “Characteristics and Risks of Standardized options” and sign our Options Agreement form.

 

15.     Q:  Can I trade options in my IRA?

A:  Yes, but only three types of options are allowed to be traded in your IRA, covered calls, protective puts and naked puts, where full cash collateral is on deposit ($25,000.00 minimum).  As with any option account, we must have a signed Option Agreement on file before any trades may be made.

 

16.     Q:  Who is CFI’s clearing firm?

A:  CFI utilizes RBC Clearing & Custody, herein termed RBC C&C, a division of RBC Capital Markets, LLC, as our clearing firm.

 

17.     Q:  On my sale confirmations, what does “Other Fees” mean?

A:  For every sale of a security there is a SEC Section 31 fee charged to the seller.  Effective 2/26/2021, the SEC Section 31 fee decreased to a factor of 0.0000051%, or $5.10 per $1 million.

 

18.     Q:  How do I get online access to my account?

A:  The first thing you need to do is click on the Client Login on the upper right of our Homepage.  Please click here to read the instructions.  The online access allows you to view your positions, money balance and activity.  You can also download your confirmations, monthly statements and 1099’s.

 

19.     Q:  Are there risks with Extended Hours Trading?

A:  While extended hours trading may provide clients with greater opportunities to trade securities and manage their accounts, it also involves material risks that are specific to extended hours trading.  Per FINRA Rule 2265, here is the disclosure statement that highlights such risks to clients.

 

20.     Q:  How should I make checks payable for deposit or securities transactions into my
                 account?

A:  Checks for deposits or securities transactions should be made payable to RBC C&C.