Some follow-up thoughts and clarifications from the webinar last week:
1 – The VA (virtual assistant) firm I use is www.MyAspirant.com. $10 an hour, can handle all sorts of things including HTML edits, highly recommended.
2 – Below is a video from my accountant, also highly recommended, who does everything remotely for me. That includes all entries in Quickbooks (I use Quickbooks Online) and all invoicing/receipts at the end of every month/quarter. You can reach Terry Santore directly at www.quicksilverbusinesssolutions.com or (910) 202 -3955.
Cannot tell you how nice it is to have someone responsive, competent and tech-savvy handling the books. I just email Terry quick notes whenever I move money into my business checking accounts from FOLIO, send her PDF copies of the billing reports that FOLIO creates for my clients so we can track who has paid what fees in QB, and then otherwise let her update it all. Also ping her on one-off things every so often. It all works real well.
Worked pretty closely with Terry for the first month or so, just getting her up to speed on my processes and all the nuance of things, but otherwise, now I just sit back. More importantly, I do not spend any time at all worrying about updating QBks. Which, again, is very nice. And if you get the old surprise compliance audit, you can bet your arse they’re gonna want to see your books. So, peace of mind there, too.
3 – The “GTD” I referred to on the webinar was “Getting Things Done” – a personal productivity philosophy of sorts that a friend in Silicon Valley recommended to me a few years back. Here is the book that started it all on Amazon, though there is a ton more online about GTD via Google. And here is the site. The good news is that while GTD can take a while to master (and I certainly have not), you can pick up the basics pretty quick, and even those can have an immediate impact on your business – and sanity, too.
4 – FOLIO charges my investors and I 30 bips, but has a $100 a year minimum fee, too…so the way the math shakes out is that for every account I have that is under $33,333, FOLIO charges them $100 a year, and anything over, they take the 30 bips. There are breakpoints at FOLIO, too, at $250k and $1M, so fees go down to 20 bips and then 10 bips. And using the windows at 11am and 2pm, all trades are free.
5 – That point in #4 also leads to the issue of subsidizing accounts. FOLIO is going to get paid no matter what. So if I bring on an investor with a $5,000 account, then as per the above, FOLIO will charge them $100 per year…which equates to annual fees of 2.0% – and I haven’t even gotten paid yet. On a $2,500 account, the investor is paying 4.0% to FOLIO right out of the gate, and so on.
So you may need to actually reimburse or subsidize a small client’s account with x dollars per quarter so the effective expense ratio they are paying is fair and/or reflects the terms of your Investment Advisory Contract with that investor. To be clear, everything and anything when it comes to fees is disclosed to the investor upfront – and subsequently every month in their statements from FOLIO – but just disclosing a 4.0% fee (to stay with the above example) is not enough to me. You’re a fiduciary, man. It’s your job to make sure your investors aren’t getting charged a single penny in excessive fees, regardless of whether or not it has been “properly disclosed.”
My point on the webinar was that it can sometimes make sense to take on a very small account because assets attract assets. For instance, if the world’s best tarpon fishing guide here in town wants to invest a little with me, and I know that he routinely guides for several billionaires, and that he likes to talk a lot, then I am going to subsidize that account every quarter with a smile on my face. That sort of thing.
And originally, I had a plan to service even those smaller accounts profitably, with no subsidy involved, which entailed lumping all of those smaller investors into an investment club I created just to invest in my Spoke Fund. (FOLIO can service accounts for investment clubs). Then I would become a member of that investment club, too. If I seeded that club with $33,333, then every other investor no matter how small I brought on would be profitable to me and require no subsidy…because all fees were assessed on the pool, not the individual club members.
But, I never went anywhere with that idea. It was going to cost me more to make sure I could do all that from a compliance perspective than I thought I’d make in fees from rolling all that out.
Better in my mind to know upfront just how much money you’re willing to put towards subsidizing small accounts, and having defined criteria for the investors you would do that for…and then sticking to that after you launch. I happen to have six accounts I subsidize, but each one has since referred other bigger investors that more than make up for that subsidy. My hunch is that others have similar experiences, too.
6 – And lastly, alas, I’ve got bupkus saved from that webinar. Not even any audio.
If there is interest, though, I’m happy to do a quick conference call to go over any pending Q&A from that slideshow.
Next week will be tough, but let me know and we can do something on a call the week after, eh?