How do I open an account?

You need to fill out an Investment Advisory Contract, Wrap Fee Agreement and the appropriate Charles Schwab Account Forms

How do you select the right one for me?

There are 5 key ingredients that go into a successful selection for a managed account. In no particular order:

  1. Risk tolerance
  2. Time horizon
  3. Cash flow
  4. Liquidity
  5. Taxes

By discussing your needs and evaluating your individual investment temperament, the right choice(s) become apparent.

What are the costs and fees?

No fee to establish the account.  Accounts are charged 1.5% of the account value annually, assessed quarterly in advance.

Can I change if I don’t like my selection?

Absolutely.  With no fees to enter or exit, there is no disincentive to stay in a position you are not happy with.

What are the account minimums?

No account minimums, with the execption of the Global Long/Short Fund which is $250,000.

Can my IRA or 401(k) be managed?

Sometime yes. The exception is most 401(k) plan sponsors will not allow 3rd party management of the current contributions. Some will allow self-directed options and if the platform is Schwab, most likely you can get it managed. Old 401(k) money that has been rolled forward to a current employer can be rolled out to an individually managed IRA.

Can my annuity or life insurance be managed?

In some cases yes. It depends on the provider.

What prevents another Bernie Madoff?

Great question! Here’s a great answer.  We DO NOT have custodial access to your money.  Your account is held at Charles Schwab as the custodian bank.  Our contract with you allows us to perform only three functions:

  1. Buy, hold and sell positions according to our investment strategies.
  2. Extract our quarterly fees.
  3. Send money directly to your bank account registered to your investment account.

Really… what are the risks?

All investments carry some degree of risk. Even cash in your mattress has a tiny bit of risk. The key is to try to get a better return on your money while incurring the least amount of risk. This may sound impossible, but in a successfully managed account, this is quite possible more than you might think. Evaluating the risks of any managed account and explaining the methodologies used are key to giving the investor the sufficient comfort level so they can sleep well at night. Nearly all funds or strategies have a measure of risk and volatility called “beta.” The value of “beta” for the SP500 index is assigned at 1. If an investment carries a higher beta value than 1, it’s more risky than just owning shares of the open market index. If an investment has a beta value of less than 1, it is inherently less risky than just owning shares of the open market index. When you evaluate an investment, if the performance has exceeded its index and its beta value is less than one, then by definition you have obtained better return with less risk. Many of the management companies that HK Wealth Management, Inc. engage for our clients achieve this, even in down market cycles.

Another important note! None of this means that there won’t be a down day, week, month or quarter in your account. There could even be a sideways year in the broad markets which your account could be somewhat up or down, or just seem to go nowhere. Even in a successfully managed account, this can happen.  It’s important to evaluate your account performance over an entire market cycle.