Fees

How much does STUDIO charge for its services?
STUDIO is a fee-only investment advisor. We are compensated solely by fees from our clients, and do not accept commissions or compensation from any other sources. We charge a monthly advisory fee based on a tiered fee schedule that we apply to the total value of your assets. Our fee schedule is outlined below.

Account Value Tier Annual Fee Rate
$0 to $1,000,000 1.25%
$1,000,001 to $3,000,000 1.00%
$3,000,001 to $10,000,000 0.75%
$10,000,001+ 0.50%

The only other fees you may incur are the very low expense ratios of the funds you will own. We continually strive to choose the best investments with the lowest costs for your portfolio. We tend to shy away from mutual funds that incur higher expense ratios and other fees, and prefer Exchange Traded Funds (ETFs). Within the ETF category, we are continually moving towards ETFs that trade commission-free at Charles Schwab.

How are fees calculated?
At the end of the month, we take the total value of all your assets with STUDIO and apply our standard fee schedule to calculate an annual fee for your account(s). This fee is then divided by 12 to determine a monthly rate. We combine all accounts within a household to achieve the best possible rate for you.

As an example, let's assume at the end of September, the assets held across your various accounts were $1,200,000. On an annual basis, our fee is 1.25% on the first $1 million plus 1% on the next $2 million.

As a result, our annualized fee for the month of September would be $12,500 on the first $1 million (.0125 times $1,000,000) plus $2,000 on the next $200,000 (.01 times $200,000). That totals $14,500 on an annual basis. We then divide the $14,500 by 12 to calculate the monthly rate, which would be $1,208 for September.

How am I notified of my fees?
Every month, you will receive an invoice from us containing your advisory fee, and the period for which it applies. Advisory fees are also reported on your monthly Charles Schwab account statement.

What kind of trading commissions will I incur with STUDIO?
Our clients are eligible for a trading commission of $8.95 per trade at Charles Schwab. Schwab also offers our clients over 120 ETFs that receive commission-free trades anytime.

Are there custodial fees associated with my accounts?
You pay no custodial fees on accounts held with Charles Schwab.

Are there exit fees due if I choose to close my account?
There are no exit fees associated with STUDIO or Charles Schwab.

When does STUDIO charge its advisory fee?
Advisory fees for a particular calendar month are typically charged within 10 days of the following month. For example, the advisory fee for investing during the month of May 2013 would be charged before June 10, 2013.




General Questions

How much should I invest with STUDIO?
We believe it's prudent to set aside an emergency fund in liquid, easily accessible cash. It should typically be sufficient to cover six months of expenses in the event of any unforeseen life circumstances.

The rest of your money should be invested for the long term in a responsible, diversified manner like that offered by STUDIO.

Why don't you display reviews or testimonials?
As a registered investment advisor, we are prohibited from creating any marketing materials that include a statement by a former or present client endorsing our services, or refer to their favorable experience with us.

How are my assets protected?
Your assets are held in a brokerage account in your name at Charles Schwab. You can learn more about Charles Schwab's history, values, and commitment to financial strength at their website.

The Securities and Exchange Commission (SEC) has strict regulations in place for firms like Schwab to ensure they maintain sufficient liquid capital to protect the assets of their customers. As of June 30, 2013, Schwab has $1.3 billion in net capital, $1.1 billion in excess of the required minimum.

In addition to the capital on hand, there are additional safeguards in place to protect investors from financial problems that may arise. In the very unlikely event Schwab were to file for bankruptcy, or if fraud or theft occurred, firms like Schwab must be fully insured to comply with the Securities Investor Protection Act of 1970. Schwab is in compliance and has mandatory insurance through the Securities Investor Protection Corporation (SIPC).

Your Schwab account(s) is insured by SIPC up to $500,000 in total value, and $250,000 for cash balances per entity. This insurance coverage only protects against custodial risk (the failure of a broker-dealer), not against investment risk (the loss of market value of your securities). Money market funds are considered a security, and cash is defined as funds not invested in a money market fund.

Please visit the SIPC website to learn more.

Schwab customers receive an extra level of coverage from Lloyd's of London, a well-respected name in the insurance industry. Lloyd's underwrites additional brokerage insurance for Schwab customers. The protection (in excess of SIPC protection of securities and cash) provides up to an aggregate of $600 million of coverage. This is limited to a combined return to any customer from SIPC, a trustee, Lloyd's and other London insurers of $150 million, including $1 million in cash. This extra protection becomes available if SIPC limits are exhausted and there are no additional funds available from the estate of the failed firm.

STUDIO may only provide trading instructions for your account. It may not access your cash or securities, except to transfer them to accounts pre-authorized by you, and only at your written request.

What would happen to my account if you are acquired, go public, or cease doing business?
If STUDIO is acquired or goes public, your brokerage account would remain in your own name at Charles Schwab, and you are free to add or withdraw money at any time.

If STUDIO were to cease doing business, your account would remain in your own name at Charles Schwab. Thereafter, your account would not be managed by Schwab. Under this scenario, STUDIO would make every effort to ensure a smooth transition for all our clients. Regardless of STUDIO's status, you are free to transfer your account anytime.

Can I export my portfolio data to another personal finance tool?
You can export your account data to any tool that will accept data from Schwab, including Quicken and Microsoft Money. You can also import your data into Mint.




Investing

What is an ETF?
An exchange-traded fund (ETF) is similar to a mutual fund. Unlike mutual funds, ETFs are traded on stock exchanges throughout the day. Mutual funds are purchased from the fund company only at the end of the day.

Like mutual funds, many ETFs hold assets like stocks and bonds. Most track an index, like the S&P 500, and trade close to the weighted value of the underlying stocks or bonds in the index.

How do you pick ETFs?
We look for ETFs with low cost that are easily bought and sold and closely follow their underlying indices. Beyond these basic criteria, we look for ETFs that best represent the investment opportunities we believe will provide good rewards for the risks taken.

What is equity and what is fixed income?
An equity is a stock. The terms are used interchangeably. You may hear reference to an "equity ETF" or "fixed-income ETF". These are simply ETFs comprised of stocks or bonds, respectively.

Fixed income refers to bonds. These terms are used interchangeably as well. The term "fixed income" is used since bonds (usually) pay a fixed amount of interest on a regular basis.

Does STUDIO take my outside holdings, such as my 401(k), into consideration when creating my plan?
We prefer to understand everything that may affect your ability and willingness to take risk. We consider all assets not currently held at Charles Schwab: your 401k, your pension, your Social Security, your real estate, and even your "human capital" (the value of your future employment earnings). We factor all these items into your investment plan. Of course, since we won't have direct access to the information outside of Charles Schwab, we need your help with this on an ongoing basis.

Can I co-manage my money with STUDIO?
We certainly need to know you, and we will need much input and direction along the way. But we may not be the best fit for investors who like to directly manage their own accounts.

Does STUDIO invest my funds all at once?
Usually, we don't. Retirement accounts are usually invested gradually, to avoid the risk of buying everything at a market high. In addition to that factor, regular brokerage accounts that are transferred to us often hold securities that would trigger capital gains taxes if sold. This potential tax consequence causes us to invest and make changes more slowly as well.

Will STUDIO invest in individual stocks in my portfolio?
You probably will own individual stocks, but it does depend on the size of your portfolio. But we believe it is cost-prohibitive to own individual stocks in some small portfolios. In these cases, we typically recommend a portfolio of ETFs. In either case, we monitor and periodically rebalance your portfolio for you.

How often do you rebalance my portfolio?
We periodically rebalance your portfolio back to your target asset allocation -- a predefined mix of stocks, bonds, cash, and other securities. We do not rebalance with specific frequency, because it depends on a number of factors: additions and withdrawals to your portfolio, market movements, market outlook, tax implications, and other factors.




Accounts

What types of accounts does STUDIO currently support?
STUDIO currently supports all account types available at Charles Schwab. This includes individual, joint, and trust accounts; traditional and Roth IRAs, Simplified Employee Pension (SEP) IRAs, individual 401(k)s, company retirement accounts (pensions), UTMA/UGMAs, and organizational accounts for incorporated and non-incorporated businesses. We also accept 401(k) rollovers from your previous employers and transfers of existing accounts.

Who may open an account with STUDIO?
We accept accounts from any individual 18 or older, who is a U.S. citizen or legal U.S. resident.

I live outside the US. Can I work with STUDIO?
We work with U.S. citizens living abroad. However, we do not provide international tax advice, and rely solely on your international CPA for any guidance on tax-related matters.

What is the minimum amount required to invest with STUDIO?
Our relationship minimum is $1,000,000, which can be met by summing multiple accounts (e.g., an IRA account of $400,000 and a brokerage account of $600,000). which allows us to provide you with an optimal investment strategy and level of service. However, if you do not currently meet the minimum but still believe we are a good fit for you, please contact us.

Can I transfer my existing IRA to STUDIO?
Yes. Please contact us to open an IRA account at Schwab. We'll send you the appropriate paperwork and your IRA will automatically transfer in 5-10 business days.

Please note that we may sell positions in your existing IRA account upon transfer to Schwab and reinvest the proceeds per your STUDIO investment plan.

Can I transfer a portion of an existing brokerage account to STUDIO?
Yes, we can complete a partial account transfer for you. Please contact us for more information.

Can I roll over a 401(k) into an IRA?
Yes. To roll over a 401(k) into an IRA, contact us to open an IRA account at Schwab.

Once your IRA account is open, you should contact your 401(k) provider to instruct them to complete a "direct rollover". They will send a check for the entire value of your account, made payable directly to our custodian, Charles Schwab.

Although the rollover is not a taxable event, your 401(k) provider will issue you a 1099.

Can I open multiple accounts?
You are welcome to open as many accounts as you would like. You may need to open multiple accounts if you currently have an IRA and substantial outside savings. You many not own the same securities in each individual account, but your overall asset allocation should reflect the investment plan we create with you.

Does STUDIO offer 529 plans?
529 plans are sponsored by individual states, so we are not able offer our own proprietary 529 plan. However, if we manage other assets for you, we will provide guidance on 529 plans and other educational savings options. Contact us for more information on saving for your child's education.

Where is my money held?
Your assets are held in a brokerage account in your name at Charles Schwab (Schwab). As of June 30, 2013, Schwab serviced over nine million brokerage accounts, over one million retirement plan participants, and nearly 1 million banking accounts with client assets totaling over $2 trillion.