Social Security Jitters? Better Prepare Now If you are worried about the future of Social Security, [more] For Savers, It Was Hardly a Lost Decade By RON LIEBER Published: January 1, 2010 It was the age [more] New Rules Ease Roth Conversions, but Benefits Vary Don’t be surprised if your broker calls in the next [more] ...more news»
Sign up below to receive our email notifications!

Protections Afforded Our Clients

By: Thomas Lewry, CFP®

PROTECTIONS AFFORDED OUR CLIENTS

When we established our asset management system, a great deal of thought was given to the protections afforded our clients. Abuse of clients at the hands of trustees, brokers, and judges are not uncommon in the news, and for this reason we have established safeguards in our management system to provide the ultimate level of protection and comfort to our clientele, as follows:


CUSTODIAL PROTECTION

We hold no client assets in our company accounts. We pool no client assets and we do not commingle client accounts.

All client-managed accounts are held by an independent custodian in the legal name of the account only. Our clients execute a limited power of attorney, which allows the manager to execute trades on behalf of the account and allows for the payment of management fees only to the investment manager.

The client of record must authorize any withdrawal from the account. If the withdrawal is going by wire or check to the account of record, it can be authorized by telephone. If the withdrawal payee is to be other than the account of record, the withdrawal must be authorized, in writing, from the authorized individual of the account of record, before the withdrawal is made.

The custodian is an independent entity, which reports independently to the account of record, providing an audit trail of all transactions to the client. This audit report can then be utilized to confirm entries on the investment manager’s report.

If there were ever a reason to terminate the investment manager, there would be no need to terminate the custodian. The client would merely need to inform the custodian that the relationship with the manager had been terminated, and that the custodian should await further instructions.

The custodian also performs independent tax reporting, separate from the analysis provided by the investment manager.


FEE PROTECTION

Clients are protected against excessive charges as a result of client-oriented fees and custodial relationships.

We also pool all related accounts for fee purposes. This gives the client with several more modest accounts the ability to pools the accounts for fee purposes only, giving them the fee advantage afforded only larger accounts.


INVESTMENT MANAGER PROTECTION

The investment manager operates under a client-executed Limited Power of Attorney, which authorizes the manager only to buy or sell securities on behalf of the account, and to receive management fees per the management agreement. The investment manager has no authority from the client or the custodian to withdraw funds from the account for any other purpose. Specifically, the client must authorize any other withdrawals beyond the payment of fees.

Our managers make decisions relative to your account based upon the strict guidelines they have been provided by you. Your asset allocation will be carefully monitored to be responsive to your investment experience, your time horizon, your individual tolerance for risk, and your need for income distributions. Individual tax considerations are also monitored on your behalf.

Curbstone Financial Management is governed by the Investment Adviser’s Act and is periodically audited by the SEC. In addition, advisers are governed by the CFA or CFP (Certified Financial Planner) Code of Ethics. Any questionable behavior on the part of an adviser could result in sanctions against the adviser and could result in the loss of the CFA (Certified Financial Analyst) and CFP designations.


ASSET ALLOCATION PROTECTION

We practice dynamic asset allocation, defined as a series of asset allocation decisions based upon current market dynamics, client time horizon, and income needs. Although no discipline guarantees investment success, a disciplined approach to asset allocation tends to increase predictability of return and decrease volatility of return. This is a valuable approach for the client who desires to smooth the peaks and troughs of investment experience over time.