Frequently Asked Questions
I do not live in San Diego. Can you work with me?
Sure. While most of our clients live around the San Diego area, we have a number of clients who live elsewhere. We currently have clients in northern California, Hawaii, Colorado, Ohio, New Hampshire, and even Saudi Arabia. It all comes down to trust and keeping the lines of communication open.
Technology is allowing our society to be more mobile. Most of our capabilities (financial planning software, investment management and reporting tools, and web conferences) are internet-based allowing both you and us to access your information from anywhere, any time. Blue Water uses this technology to accommodate not only our distant clients but also our San Diego clients. We realize the time demands that people face these days (job, exercise, parenting, etc.), and many times a phone call or web meeting is more practical. That said, we still welcome and encourage face-to-face meetings.
Can you help me with my taxes or my estate planning?
We do assist with tax planning and estate planning. However, we are not CPAs or attorneys licensed to give tax advice. Oftentimes, we work with an attorney or CPA to develop the strategies our clients use. We will be more than happy to work with your existing professionals, or we can refer you to competent professionals in your geographic area.
If your firm recommends insurance for me, can I buy it from you too?
A conflict of interest occurs when someone recommends the purchase of insurance, and then sells it. Therefore, we provide guidance and recommendations on insurance, but we do not sell it ourselves. If you work with an insurance person you're comfortable with, feel free to use them. If not, we would be happy to refer you to a trusted insurance professional.
How often will I need to update my financial plan?
Financial planning is not a one-time event. As life unfolds, updates may be required. Most of our clients update their plans every 9-15 months.
Do you have a minimum account size?
There is no minimum account size to open an account with us. However, there is a minimum advisory fee of $1,000/quarter for our investment management service.
Can you help me with my 401(k) or 403(b) plan at work?
Yes, we can integrate these assets into our portfolio allocation decisions and recommend specific holdings and contribution amounts. We do not provide formal ongoing monitoring of these assets so they do not count in the calculation of our management fees.
Are there financial incentives for you to recommend certain financial products?
Absolutely not. We only recommend financial products that are suitable for you and that meet your financial needs.
Do you take custody of, or have access to my investments?
No. A custodian (TD Ameritrade, etc.) holds your investments. You still maintain control of your assets and retain the ability to withdraw any assets from your account. You will simply sign a Limited Power of Attorney on your account(s) to name us as the advisor. This provides us with the ability to interact with the custodian about your account(s), have trading authority, and deduct our quarterly management fees.
Does your firm take taxes into account when managing investment portfolios?
Absolutely. Remember, there are only three things you can control in investing: Your asset allocation, costs, and taxes. We try to reduce your tax exposure by designing your portfolio to be as tax efficient as possible. We use tax-managed funds and emphasize low turnover and correct asset placement. We are very familiar with all of our clients' tax situations before placing any trades. When necessary, we also use tax-loss harvesting and other strategies to reduce tax exposure.
How often do you review my investments?
Accounts are reviewed every business day. We make sure your accounts are in good order, and account transfers, contributions, and distributions are handled correctly. We have established systems that regularly monitors and manages your portfolio in various categories:
Triple Layer Rebalancing
- Stock-to-bond % vs. target
- Asset class % vs. target
- Monitor capital gain and income exposure
- Recognize opportunities to harvest tax losses
Contribution / Distribution Management
- Efficiently allocate new contributions to help rebalancing efforts
- Maintain adequate cash reserves (for those taking regular distributions)
We also provide regular advisory letters and performance reporting in addition to ongoing education, advice, and meetings.
Can I get money out of my account quickly in case of an emergency?
Yes, your account is very liquid. If there is enough money in the money market to handle your request, we can usually transfer money into your bank account within 24 hours. If we would need to liquidate investments to meet your cash requirements, money would be available within 4-5 days. We recommend that all clients maintain a separate emergency fund, so you don't have to liquidate long-term investments prematurely.
Do you contact me before you make trades in my investments?
As long as we are acting within the terms of the agreed-upon asset allocation, and using agreed-upon funds, then no, we do not need to contact you. This includes all rebalancing, buying new positions due to contributions, selling positions to free up cash, and possibly tax-loss harvesting. Most clients prefer this arrangement. However, if you want to be more involved, please convey that to us at the beginning of the relationship.
One of my needs is for monthly income. Can you wire money to my bank account every month?
Yes. We can set up your account for regular withdrawals on a monthly, quarterly, or annual basis. In most cases there is no cost to you for this service.
How often will I receive statements on my account?
You will receive monthly statements from the custodian showing your balances, positions, and any activity in the account. Periodically, you will receive performance, tax, and/or rebalancing reports from us.
Can I see my account balance and transactions on the Internet?
Yes. Once your accounts have been set up, you can access them via our website.
Is my account guaranteed?
No. The value of your investments will fluctuate, and there is no way to insure against investment losses. TD Ameritrade, the primary custodian we use, has insurance totaling $50 million per client to protect against the possible loss of securities by TD Ameritrade. Blue Water Capital Management, LLC is also covered by errors and omissions (liability) insurance.
It should be noted that we will never have possession of your money. Except for our planning or consulting fees, you will never write a check made payable to us. When you open an account, you will always make the check payable to the custodian for your benefit. If you mistakenly write a check to us, we will not cash it. It will be sent back to you.
What if I want to close my account? Will I have to pay a penalty?
Our investment management contract is open-ended, meaning you may discontinue our services at any time. There is no penalty, however, since we bill quarterly in arrears (we bill after the work has been completed), you may be subject to a pro-rata management fee.
A termination notice needs to be in writing. Once we are removed as advisor, you are responsible for your portfolio. If you later sell shares, you could be subject to taxes and redemption fees imposed by the mutual fund companies or the custodian.
How do I pay you for your services?
Financial planning fees are paid in full at the time of engagement (unless agreed upon otherwise). At this point we do not accept credit cards.
Investment management fees are collected at the end of every calendar quarter for the previous quarter. This is called "billing in arrears". Our management fees are billed directly to the accounts so there is no need to write us a check every time.
Can I buy your advice on an hourly basis?
We specifically offer three financial planning services to try to meet most people’s needs. While most clients use one of our financial planning services, we do offer a Portfolio Review for people just looking for advice on their investment portfolio. This service is on an hourly basis. Our hourly rate is $200 (1-hour minimum).
Other hourly engagements are usually reserved for existing clients looking to update their financial plan. However, if you feel your situation is more of an hourly project, please contact us to discuss.
Are the fees I pay your firm deductible on my tax return?
Depending upon the scope of our engagement, all or part of our fees may be deductible. Please consult your tax advisor.