FAQ

What you do?

We are Registered Investment Advisors; we give advice on managing money.

Who can access your services?

US Persons only (holder of an SSN or an EIN).

How much do you charge for a first consultation?

First meeting, where we assess if we are the right solution for the client, is always free.

What is the difference between an RIA (Registered Investment Advisor) and a CFP (Certified Financial Planner)?

While in many ways similar there are several differences between a CFP and RIA.

CFP is a private designation, which focus is Financial Planning for individuals.

A CFP works with their clients in establishing long-term goals and plans. They do mostly financial planning, and they are especially useful in setting and monitoring family goals.

A Registered Investment Advisor (RIA) is either an advisor or advisory firm that is registered with and can be regulated either at Federal level by the Securities and Exchange Commission (SEC) – if AUM (Assets Under Management) are at or above 100 Million dollars - or state securities authority (if AUM is below 100M). While they can also provide financial advice, their main task is to make investment recommendations and manage client assets “managing other people money”. RIA’s and RIA are required to conduct business under fiduciary standards of care and uphold the highest level of professional ethics in all their client relationships.

To earn the RIA designation, an advisor must hold the Series 65 license (or a 7 plus 66), Uniform Investment Advisor Law Examination administered by the Financial Industry Regulatory Authority (FINRA).

The RIA will also have to be approved and maintain a “custodial” relationship. The custodians are the financial institutions that will take custody or hold the firm’s client assets and securities for an RIA. The custodian will generally hold client assets, process securities transactions, deduct advisory fees, and compile and deliver client account statements.

What’s the difference between an RIA and a Broker?

A broker is a matchmaker, a salesperson really who matches demand (ask in technical terms) and supply (bid). So, they make money when the client buys or sells something. You could find some investment companies that have an arm that acts as a broker and another one that acts as investment advisor. Some firms and individuals could be “dual” being registered advisors and brokers (65 or 7+66 and 63, being the 63 factually a portion of 65 examination). It is crucial to understand for the investor that when interacting with a subject who is both RIA and BROKER, they cannot possibly be your fiduciary, and they are required to clearly tell the client. As a rule of thumb, every time you access institutions that have a dual position be aware that their interest can differ from yours.

We are just and purely registered investment advisors and do not want any commingling.

What do you mean by bespoke investment solutions?

We do not offer a “pre-packaged” solution to clients. Everyone is different; they have different needs, beliefs, goals and aspirations. For example, some clients do not find ethical to invest in certain industries. We need to respect that. Clients have different net worth, different age, different income. And even if any of the previous factors are similar you can rest assured, they have different risk tolerance and risk capacity. We assess all of that and more; then as a tailor we build the best investment outfit for our client, make sure it is adequate and to their like.

What do you mean by saying that you are into investing not speculating?

There is a huge difference between being an investor and a speculator. Best definition of investor was given by Benjamin Graham. “An investment operation is one which, upon thorough analysis, promises safety of the principal and adequate returns. Operations not meeting these requirements are speculative.” What does it mean? It means we are doing a strict analysis of risk and opportunities and measuring the asset we are investigating; we determine then the intrinsic value of the asset we are interested in and of whether it is so worth owning it or not.

We are not looking at the price really but the mismatch between value and price and if the value (expected) of the company is worth we are investing in it.

In facts Investing comes from Latin in-vesteo putting a vest on it, to wear something; it requires first investigating is the in vest agere using Latin the act (ating) of putting a vest on it.

Speculators live in the moment; they are short term oriented and act without the process that is required into investing. As such they do not have nor care to have all necessary information, and their approach is therefore way more risk laced. They rely on technical analysis (following trends for example) or behavioral analysis (market sentiment oriented), news; they look at what others are doing. Sure, you can make money with that, sometimes win big. But you can rest assured you will lose over time; history proves it. Speculating comes from spaeculum which is both looking at something reflected by a mirror or looking through a small door opening the peephole of modern doors.

We spend great deal of our time in IN-VESTIGATING

But practically, what’s the difference between you and other RIA?

Majority of RIAs either manage their own fund (or several), if they are big enough, or they will park client money in one (or several) funds they do not manage. Both approaches present hindrances to clients. Let’s start with the second case, which is the most common. Particularly these days, you see RIAs putting clients’ money in Exchange Traded Funds (ETFs). The selling point is that they are cheaper than Mutual Funds (MF), easy to get in and out, and that they are inherently tax efficient. And yes, an ETF can be cheaper than a MF, but not always, they are tradable during market hours, but that does mean that they are also liquid (enough supply and demand going), and they can be tax efficient, to certain extent. But the main point is to deliver appropriate results to clients. In our view, those RIAs are like a chef in a restaurant that serves patron pre-made packaged food. And an expensive one! Clients pay fees to the RIA AND pay fees to the ETFs and or MFs. And that is before brokerage fees and banking fees. etc. So even if these ETFs were delivering results, they will be worse off. Let’s do some simple math. An average RIA costs 1.25% per year AUM. Add the cost of those funds; best case scenario clients are facing 2.5% per year in fees. Think it does not matter? Consider investing $10,000 knowing that the return will be 8% per year; if client does it thru PBA will get charged at most 0.95% per year, versus other RIA with a 1.25% AUM plus 1.25% ETF/MF fee; after 5 years client account would be above $15,000 with PBA, versus just shy of $13,700 with the other RIA; that is a 9.5% difference! Put it differently, with PBA client will double the money in 9 years; with the other one it will take almost 14.

If instead we look at the RIAs that run a fund. Well, that’s their main task! Client can decide whether to work with them or not. RIA will decide everything in the investment process. So really what they are looking for is to have more money to invest in their own way. And several of them at they won’t take a client unless you have a minimum amount to invest etc.

Of course, if you think they will be your best solution, go with them. But in the best case you are buying a from the rack solution to your needs, tailor wise speaking.

That is why, we like to work in a non-discretionary way versus discretionary.

What do you mean by non-discretionary?

As non-discretionary, you, the client must be informed and approve transactions.

We suggest and motivate the reasoning to you of the transaction but you the client decides and approve the 3 As:

- Asset

- Amount

- Action

in any investment.

Your account is segregated from the master account (the RIA account as it is called) in the sense that it is completely your position.

That forces us to pay more attention to the individual client not to the ticker / stock / bond.

We don’t buy 2000 shares of Company A and allocate to the clients’ accounts; we need to go to each and every account and see if adding that very position is appropriate and in what measure and then contact the client and tell them, “hey look we ran our numbers and we believe that this company is a buy and appropriate to you for x y z reasons. We suggest buying 100 shares. And client must approve before we proceed. That happens in writing; we have specific way of communications and clients to us.

About your fees, How do you get paid?

We charge a fee based on the Asset Under Management (AUM). We invoice the client and client pays us. Our maximum annual fee for Investment Advising is 0.95% of the Asset Under Management and it goes down when the size of the account increases. That is lower than the average RIA, which is 1.25% and our intentions is with increase in the investments to make it even lower. We pay attention not to overcharge the client as that would be detrimental to the growth of the portfolio.

For example. The fee by calculating the AUM at the end of a quarter for the client and invoicing the client who will pay us for the work to perform next quarter. For example, if a client has 100,000 in AUM at the end of the first quarter, we will charge ¼ of 0.95% (0.0024) =. $237.50

The more our business expands the more we will be able to contain fees.

Some clients are fee based only. These are clients we do not serve on continuous basis and approach us in order to analyze a portfolio of assets or understanding how to approach critical investing and financial decisions. For those we bill by the hour. We are more expensive when someone approaches us that way.

If someone then decides to work with us on continuous basis, we will discount them by the hour from the AUM fees due.

The reason is we already provide those services on continuous basis to our clients and would be unfair to bill them twice.

We also do some pro bono. Nothing gives us more happiness than seeing a client start working toward their goals.

What if a client doesn’t pay you?

We will let know client that there is an unpaid invoice. After one month we will fire the client; we are not going to supervise the account anymore and client will be removed from PBA AUM and responsibility.

Can I stop working with you any time?

Yes, just a written note via dedicated channel will be sufficient. We will send you back the dailies fees not yet earned, and you will be removed.

We can also terminate a client if the client acts in a way that is detrimental to our business practice.

I noticed you don’t trade often on the account what exactly you do?

Well. First, we abhor churning, doing transactions for the sake of it (that will benefit only the broker) and short-term approaches. Selecting and analyzing investments is the core of what P B Advisor does. First because it is the core of our business. Find the best way to invest money. Second because admittedly is what we enjoy doing the most. It is the most challenging and the most rewarding side of the activity personally speaking. It requires spending a considerable amount of time reading reports and calculating all possible scenarios. Only when we see an interesting opportunity with enough spread, margin of safety, do we act.

Nothing gives us more joy than putting a smile on our clients. We have so far been successful in delivering results that are superior to year-to-date market indexes. Past performance is not indication of the future, and we will have our down days too. But if we work with passion and we follow common sense rules paying attention to details as we have so far, we are quite sure that we will continue to deliver satisfactory results to our clients.

Last update 11 02 2024