Margaret R. McDowell, ChFC®, AIF®, Firm Founder and Principal of the “Fee-Only” Registered Investment Advisory Firm at Arbor Wealth Management, has been interviewed recently by The Wall Street Journal, Dow Jones NewsWire, Investment Advisor Magazine and Jane Bryant Quinn of AARP. We caught up with her for a discussion about Arbor Wealth’s recent and rapid rise in popularity among South Walton residents. Here is that interchange:
Question: What kind of growth did Arbor Wealth experience in 2012?
Arbor Wealth: We met so many pleasant new clients and our assets under management grew by just under 40%.
Question: Was that a big leap for your firm? To what do you attribute this growth?
Arbor Wealth: It was easily our biggest year of growth, and this year is off to an even faster start. Truthfully, savvy investors are looking for what we provide: custom-created portfolio strategies heavy with dividend-payers and capable of producing predictable income. People are also hungry for a “Fee-Only” Firm that doesn’t sell products and serves as a fiduciary to its clients.
Question: How has your growth changed your operation?
Arbor Wealth: We still attempt to provide exceptional service. We answer every call personally and attend to client requests as quickly as possible. This kind of client-centric service is greatly appreciated, especially nowadays.
Question: Do most people know what a fiduciary is? Do they know what a “Fee-Only” firm is versus, say, a “Fee-Based” firm?
Arbor Wealth: Many do. Being a fiduciary means that we are required to maintain a legal, ethical and moral obligation to act only in the client’s best interests and in doing so, are held to the highest standard of client care. A Fee-Based firm can charge you a management fee and accept a commission on the sale of a financial product aswell, so often you get charged twice. Ours is a pretty sophisticated clientele, be they long-time locals or new residents, so they know they want a “Fee-Only” firm to manage their assets.
“Fee-Only” means that we do not sell any products, nor do we accept commissions of any kind from any source. We are compensated solely by our clients. We have no proprietary interest in any fund. Every dime of our firm’s revenue comes directly from our clients. People want some personal attention, they don’t want their assets thrown in a pot and they don’t want to reach voicemail when they call about their money.
Question: What’s important about no product sales and no commissions?
Arbor Wealth: It eliminates a potential conflict of interest between the advisor and the client. If an advisor sells you a product and receives a commission for doing so, you may wonder if the sale was in your best interest or the advisor’s.
Question: Why does the compensation model matter?
Arbor Wealth: If an advisor is paid additionally for putting a client’s assets into a parent company mutual fund, for instance, the possible conflict of interest should be discussed with the client. Or if an advisor receives a commission for selling the client an annuity, which are notoriously high commission products, one may wonder if that annuity sale is more beneficial to the advisor or the client.
Question: So how do you get paid?
Arbor Wealth: We are paid a mutually agreed upon, fully disclosed annual management fee. If the client’s account balance increases, our payday grows. If the account balance dwindles, we are paid less. So we have an inherent financial incentive to make our client’s assets grow, based on their risk tolerance and goals. In our view, the way we are paid places us on the same side of the desk as our clients. If they prosper, we prosper; if they suffer, we suffer, too. In our opinion it’s by far the most transparent compensation model in the industry. There are no hidden fees. Each month you know to the penny what the management fee was and how it was calculated.
Question: What do you see ahead for Arbor Wealth?
Arbor Wealth: We feel strongly that as long as we do good work and remain a client-centric firm, that the rest will take of itself.