Rarely Asked Questions
Individuals and Families
What’s different with Chesme?
Access to information continues to advance the investment advisory business. As a result, many of the resources that were previously difficult to access – including asset allocation modeling and fund selection – are now readily available to consumers and advisors alike. If anything, there may be too much information available. We offer the expertise and experience to cut through information overload. We focus on actionable planning, we coordinate the services of asset allocation, and enhance it with tax-managed investing. Recognizing that investment advice is ubiquitous today, Chesme is wealth planning and tax focused.
What are the most important things to look for in a financial advisor?
We believe that knowledge and objectivity are the core ingredients for a successful advisory relationship. Too often conflicts of interest (typically found in the form of outside economic compensation) color the advice that consumers receive. At Chesme, we don't have proprietary funds and our investment strategies are fee-only. We only sell commissioned products such as insurance or long-term-care, where non-commissioned competitive offerings are not available. As a result, you can rest assured that we always put your interests first. We are fiduciaries, plain and simple.
How is Chesme different than a traditional Registered Investment Advisor (RIA)?
While the vast majority of our peers are focused on selling investment advice, we know you can find that service just about anywhere and, once you've narrowed the field to a group of competent advisors, pre-tax investment results shouldn't vary much over time. That's where our similarities end. At Chesme we are focused on establishing your wealth plan; including asset allocation, income and estate tax minimization, insurance planning, and general financial oversight. We will coordinate the execution of virtually all facets of your financial life, including the execution of your investment plan. And, unlike many of our peers, we don't utilize the giant loophole in the industry of "avoid or disclose". We're setting out to do things differently than our peers, raising the bar for the entire industry — just like we’ve done in the past.
What does “planning” mean?
A great investment manager (mutual fund, hedge fund, or stock/bond picker) can add considerable value to a portfolio. We read about these folks every day in the news (ever heard of Warren Buffett?). Over the long-term, however, a diversified portfolio of outstanding managers may add 1% (100 basis points) per annum when compared to their index counterparts. Unfortunately, this excess return (alpha) is pre-tax and often before fees. Yet, this is the hope that most investors hold on to —often to their own detriment. In contrast, by mapping out and continually adapting an appropriate wealth plan based on changes in your life rather than changes in the market; focusing on taxes and fee efficiency, and enforcing investor discipline we believe we can deliver significant value when compared to an offering of only investment management.
How do you represent clients’ interest first?
By minimizing economic conflicts of interests, we strive to eliminate biases when it comes to the approach you employ with your portfolio. Our compensation structure is designed on a fee-only basis, not on commissions, soft dollars, or 12b-1 fees, so our clients know that our recommendations are based only on what we believe is best for them.
How do you align fees and value?
For clients with liquid portfolios of less than $10M, we charge a percentage of the account value per year, as clients at this wealth threshold tend to have less complexity and don't require significant estate planning. For clients with assets greater than $10M, we frequently charge a flat annual fee that covers all of our services. This fee is determined based on complexity and our ability to add value – value that you should see from the onset of the relationship.
Who is an ideal client for Chesme?
Our ideal client is a taxable investor with a desire to pursue tangible wealth objectives through planning. Often our clients look to us to help them remain disciplined when markets rapidly rise and fall, but they are typically not focused solely on investments. Many of our clients lead a "digital life" and enjoy the efficiency that online reporting, impromptu virtual meetings, and evolving technology offer. Nevertheless, we can still provide more traditional paper reporting and regularly scheduled reviews.
What does Chesme need to know about me?
When we get started, we look to build a blueprint of your existing financial picture. Next, we propose a roadmap for your wealth. Simply put, we would like to know as much as we can about you and your financial goals. We want to see how and where you are invested, review your tax and estate planning, understand your insurance coverage, and become familiar with your cash flow planning. Once we have this information, we can develop a plan to meet your needs. Then we can determine if the math – the minimum required return and your capacity to take risk – meets your emotional tolerance for portfolio volatility. Schedule an appointment to get started as soon as possible.
How will we work together?
We work for you. More importantly, we work with you. At Chesme, you will have the resources of the entire company at your disposal. Find out more about our services and client experience here.
Can I do this myself or do I need to hire an advisor?
You sure can do this yourself. If you're an "investment-only" consumer, disciplined at saving and staying calm in volatile markets, then there are numerous online investment solutions that offer the commodity services of asset allocation and low-cost mutual fund and or ETF selection. If you value the advice and experience of a professional, we can develop a plan that saves you time, stress, and money in the long term.
Retirement Plan Participants
Do you manage other investment accounts?
Our agreement with your employer includes providing investment and savings advice on your retirement account. These services do not cover accounts outside of your retirement plan. We do offer wealth management services to individuals interested in a separate agreement. This would be an agreement between Chesme and you.
What is your relationship with our plan provider and investment companies?
Chesme is independent and has no allegiance to any of the mutual funds in your plan or the retirement plan provider. We work for your organization and you. We are independent and have years of experience working with a variety of investment companies and retirement plan service providers.
How is Chesme different than a traditional Registered Investment Advisor (RIA)?
Chesme is a Registered Investment Advisor (RIA), supervised by the SEC. While the vast majority of our peers are focused on selling investment advice, we are focused on providing investment advice. We’ve been providing fiduciary advice to retirement plan participants for almost 20 years and understand the complexities associated with saving for retirement
Do you provide advice I have with other investment companies?
We would like to know as much as we can about you and all your investment accounts. We consider these accounts in formulating the advice we provide you; however, we do not provide advice on these accounts.
Can my spouse participate and do you provide advice on their retirement accounts?
We understand that your spouse may have more experience, interest, or knowledge and would like to participate in your “one on one” meeting. We encourage their participation. We would like to know as much as we can about their retirement and investment accounts. We will consider these accounts in developing our advice for you, but we cannot provide advice on these accounts.
Will you help me establish retirement income goals?
Because we advise investors of varied size, risk tolerance, complexity, and time horizons, we understand the difficulties of establishing retirement income goals. Moreover, as these goals are often in the distant future, they can be difficult to imagine in full. We help you understand the factors you control, and evaluate the elements that are out of your control.
Retirement Plan Sponsors
Do You Provide Managed Account Services To Participants?
No. When participants engage a “managed” account solution they give up control over the management of their account. They provide all the same information associated with the advice service. They just don’t have to implement the advice; it’s done for them. This means a participant’s investment usage and asset allocation will change over time without their consent for every transaction. The investment manager has discretion over their account. In addition, without input from the participant, many managed account strategies are primarily based on a participant’s age. If the participant is not engaged and not providing additional information such as outside assets, personal risk tolerance, and goals, the recommended asset allocation and savings rate will be incorrect. That means participants are likely getting an inaccurate assessment from the managed account provider while paying an additional fee for that assessment.
How Often Do You Meet With Our Investment Committee?
We meet with your retirement plan committee on an annual, semi-annual or quarterly frequency and use a variety of communication mediums (e.g. video conferencing).
Do You Provide An Investment Policy Statement Customized To Our Retirement Plan?
Yes.
What Is Your Approach To Financial Wellness?
We work with an award-winning financial wellness provider that integrates with a variety of retirement plan providers. We strongly encourage the inclusion of financial wellness and have a bias towards using providers that do not manufacture investment, insurance, or wealth products.
How Is Chesme Different?
Not all ERISA fiduciary advisors work with participants directly as a fiduciary advisor. Often “Plan level” advisors will outsource participant services or use technology to fill the gap. Technology cannot address one of the most important factors in any investor experience, which is investor behavior.
We have decades of experience working with a variety of plan sizes and designs. We believe significant value exists with having a single point of contact for participants and plan sponsors. We have knowledge in all aspects of maintaining a retirement plan.
What Are The Most Important Things To Look For In A Retirement Plan Advisor?
We believe that knowledge and objectivity are the core ingredients for a successful advisory relationship. Too often conflicts of interest, typically found in the form of economic compensation, color the advice that consumers receive. At Chesme, we don't have proprietary funds, we don't sell insurance, and we aren't compensated by anyone other than you. As a result, you can rest assured that we always put your interests first. We are fiduciaries (insert hyperlink), plain and simple.
How Is Chesme Different Than A Traditional Registered Investment Advisor (RIA)?
Chesme is a Registered Investment Advisor (RIA), supervised by the SEC. While the vast majority of our peers are focused on selling investment advice, we are focused on providing investment advice. We’ve been providing fiduciary advice to retirement plan sponsors for almost 20 years and understand the complexities associated with saving for retirement.
What Does “Fiduciary” Mean?
A fiduciary is defined as a person who has the legal and/or implied moral responsibility to manage the assets of another person. A fiduciary must act solely in the best interests of that person.
How Do You Represent Clients’ Interests First?
Our compensation structure is designed on a fee-only basis, so our clients know that our recommendations are based only on what we believe is best for them.
Can I Do This Myself? Do I Need To Hire A Retirement Plan Advisor?
You can do this yourself — however, when it comes to making investment-related decisions, plan fiduciaries are deemed to be experts and not merely “reasonable” persons:
"A fiduciary shall discharge his duties with respect to a plan solely in the interest of the participants and beneficiaries and with the care, skill, prudence, and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims." ERISA Title I §404(a).