Ask your advisor to include advisory fees, mutual fund operating expenses, sales loads, 12b-1 fees, and other expenses. If the total is over 1%, be sure to ask why. Our Answer: PCM clients pay fees on a sliding scale starting at 80 basis points (bps) or 0.80%. Product costs are generally around 20bps, bringing all-in client fees to roughly 1% annually.
Ask if the advisor is the custodian or if there is an independent, third-party custodian. You should have online access to view your account 24 hours a day. If you don’t, ask why. Our Answer: PCM client accounts are held by our custodian, Charles Schwab. Clients can view their accounts online anytime on the Charles Schwab website AND with their personal PCM portal access.
You and your advisor should have a clear, long-term plan in place. Our Answer: PCM works with our clients to develop and implement their investment strategy. PCM advisors take the time to get to know each of our client’s unique goals, concerns, and risk tolerance to devise a strategy for their investments. We also understand that as life happens, we can and should reevaluate and monitor clients’ investments to make sure their current strategy is still the most suitable and efficient way for them to achieve their investment goals.
Ask if the advisor is a broker who gets paid commissions to place trades or an investment advisor who charges only a fixed percentage based on the value of the assets. If your advisor or broker gets commissions or other compensation for choosing a particular mutual fund, they might be overlooking better choices for you. Our Answer: PCM receives no commissions from investment products we may use in client accounts. PCM only gets paid by our Investment Advisory fee from our clients.
If your advisor compares your account to a benchmark like the S&P 500, ask whether all stocks or funds in the account are comparable (i.e., whether they hold only S&P 500 large-cap US stocks). Our Answer: PCM clients have 24/7 access to their investment accounts’ performance. Client statements also show how an account has performed vs. various benchmarks that measure the performance of the asset class investments we use on behalf of our clients.
Your portfolio should be highly diversified across and within asset classes. Our Answer: PCM clients generally have exposure to more than 11,000 stocks worldwide. If your portfolio holds individual stocks or highly concentrated mutual funds, ask why.
If this number is much higher than 25%, ask why. This could be a source of tax inefficiency. Our answer: Clients can expect to see low turnover rates in their PCM managed accounts. We use low turnover, globally-diversified ETFs and mutual funds in our client portfolios to maximize tax efficiency in our clients’ portfolios.
If the answer is “no,” ask what value the products used add to your portfolio. Are they more or less expensive than a comparable index or asset class fund? Our Answer: PCM clients are educated on how risk and return are related. We discuss with our clients upfront how much risk they can tolerate and if that aligns with their return goals. PCM then builds portfolios for our clients using asset class funds according to our client’s risk tolerance levels.
If your entire account is not liquid within one to three days, ask why. Our Answer: PCM’s client portfolios are built to be liquid and transparent. Clients have access to their money within 1-3 days.
A fiduciary must put the client’s needs first. Why would you want it any other way? Our Answer: At PCM, we are bound by a fiduciary responsibility to all our clients. Putting our clients first isn’t a choice, it’s our standard.
Since we are a fee-only advisor, we do not accept commissions or other types of compensation from any of our investment product companies. The only fees we earn are paid directly by our clients.