Wealth Management FAQs

We try to be as transparent as possible. We hope these FAQs help explain the details of our management services a little more. If you have additional questions, please contact us.

How do we begin?

1. We begin by reviewing and signing our Investment Advisory Agreement. This document lists out the details of our ongoing service and the fee schedule.
2. We then establish accounts at Charles Schwab by completing the account applications.
3. If there are account transfers, we complete account transfer forms.
4. If there are any 401(k) / 403(b) plans, we would set up view-only access to those accounts.
5. If there will be account contributions or withdrawals, we complete the forms to handle those.

The whole process, from starting the applications to receiving the transfers usually takes about 7-10 business days. We can either complete the forms in person, or we can send electronic versions via DocuSign, whichever you prefer.

Where are my accounts held?

We use Charles Schwab (formerly TD Ameritrade) as our independent custodian. We are not affiliated with them in any way except that we use their services. We have worked with TD Ameritrade / Schwab for almost 20 years and have been very pleased with their service.

Current 401(k) and other employer retirement plans stay where they are. We use account aggregation software to establish a view-only daily feed into our portfolio management software. That way we can incorporate these plans into your overall portfolio. We can view your balances, monitor progress and recommend trades as we see fit.

What authority do you have over my accounts?

When you fill out the account applications with Charles Schwab, you agree to give Blue Water a limited power of attorney (LPOA) on your accounts. You still have full control of your accounts, but we are named as the advisor. This is what an LPOA provides:

• We can see your accounts at Schwab.
• We can talk to a service team about your accounts.
• We can make trades within your accounts. Most people prefer to know what is going on in their accounts, and we prefer that as well. We provide trade recommendations and get your approval before any trades are placed.
• We can deduct our quarterly advisory fee from your accounts. Schwab monitors this and will not allow any excessive advisory fees.
• We can help facilitate contributions and withdrawals. Schwab has a “MoneyLink” form that establishes standing instructions for electronic transfers (ACH transfers). For instance, we can establish a contribution from your bank to Schwab. Based on your instructions, we can then tell Schwab to pull in from your bank a one-time contribution; or set up monthly contributions on a certain day of each month. It works the same with withdrawals. We can initiate a one-time distribution from Schwab to your bank; or establish an ongoing monthly amount on a certain day of each month. Since these are standing instructions, we can change the amount or the date without filling out new paperwork. Clients find this very convenient, especially retirees. It should be noted that we cannot change your banking information unless you complete a new MoneyLink form. And any check requests must be paid to you and go to your mailing address.
• We can also help with account maintenance like updating beneficiaries, changing title of an account, tax withholding on withdrawals and closing accounts.

An LPOA is very different than a full power of attorney or custody. You do not want to give an advisor full authority. That’s more for hedge funds and other private investments. An LPOA protects you from “Bernie Madoff” situations and Ponzi schemes, but still gives us enough capacity to perform our services.

How does the advisory fee work?

Every client is one of the following quarterly billing schedules:

1. Jan/Apr/July/Oct
2. Feb/May/Aug/Nov
3. March/June/Sept/Dec

We will bill the 1st of the one of those months for the previous quarter’s work. So, if you are on the 1st schedule, we would bill you April 1st for work from January 1st – March 31st. This is called billing “in arrears”. It just means we complete the work before we collect our payment.

The advisory fee is simply your portfolio’s account balance at the end of the quarter X the annual advisory fee / 4. Example: $1,000,000 balance X 0.80% annual fee / 4 quarters = $2,000 quarterly advisory fee. The fee is deducted from your investment accounts on a mostly pro-rata share. In the example above, if you had $1,600,000 in one account and $400,000 in another account, we would be the first account $1,600 and the second account $400.

Am I locked into a contract?

No, our Agreement is open-ended. It can end at any time. Since our advisory fees are in arrears, we would just bill for the pro-rata quarter.

How often you do provide performance figures and other reports?

We provide clients with a client portal where they can view daily performance, access reports that we’ve ran for them (year-end tax reports, etc.), and view their accounts, allocation and investments.

How often should I expect you to contact me?

We’re in touch pretty regularly. We perform frequent portfolio reviews and share our findings. We’ll reach out if you’ve had an investment mature, or we think we need to change something. We send out periodic advisory letters and updates. We can also meet in person or set up a web conference where we share our screen with you and review your portfolio or financial planning. Of course, you’re always welcome to reach out with any questions.

What do you think of the market?

Ha, nice try. We do get this question a lot. We can discuss the current environment and what’s weighing on or supporting the market, but obviously we do not have a crystal ball, and we’re not going to invest your money on a hunch. Please refer to our investment philosophy.