DISCIPLINE = FREEDOM
Q. Is Schwab Institutional the only custodian available to clients ?
Yes. Schwab Institutional is the institutional investment arm of Charles Schwab & Co. They custody our clients' assets, which means they hold securities and cash and facilitate trading activities. Financial Services Advisory, Inc. has selected Schwab Institutional because of their commitment to client service, low trading cost, and a dedication to operational efficiency. Our management fees are kept low because of the operation efficiency created by having only one custodian.
Q. Is Financial Services Advisory, Inc. (FSA) affiliated with Charles Schwab Institutional?
No. FSA is not affiliated with Charles Schwab Institutional or their parent company, nor are we compensated by that company in any way through fees, commission, or incentives. In the spirit of full disclosure, our firm is supplied necessary software that allows our in-house portfolio management system to work efficiently with Schwab's back-office operations and trading desks. The same software is available to all investment advisors that custody at Schwab.
Q. Do I have to go to a Schwab office to open an account?
No. There is no reason to visit a Schwab office or to open Schwab accounts yourself. You will be signing Schwab Institutional paperwork that we will send to you. If there is a Schwab office nearby, you may go there to deposit checks rather than mailing money to Schwab or FSA that would reduce the time it takes to put checks into your account.
Q. Will I have Internet access to my account?
Yes. Internet access is available to clients through a special Schwab website 24 hours per day, 7 days per week. The website also is the source for immediate information on account activity and provides you with many reports including year-end tax information.
Q. How often do I receive statements and reports?
Charles Schwab sends monthly statements to all clients for all accounts. These statements show account balances, trades, and cash flows. Statements are available in paper as well as through email. In addition, FSA will send a detailed performance report annually that compares your portfolio's performance to a series of relevant market indices. We will also send a quarterly appraisal report that shows your current holdings and current account value as compared to the prior quarter.
Q. Will I receive reports that will help with tax preparation?
At the end of each year, Charles Schwab will send 1099s to each client that has a taxable account. Schwab will be providing cost basis for positions sold during the current tax year.
Q. Does anyone at Financial Services Advisory, Inc. have access to my money?
No one at Financial Services Advisory, Inc. has access to the money in your account. We have limited power of attorney to do three things in a client account: 1) trade securities with discretion, 2) request that Schwab send a check to a client directly or to a client's bank, and 3) deduct a management fee based on the client contract. We have no other access or authority.
Q. How is my privacy protected?
Financial Services Advisory, Inc. complies with all privacy laws affecting financial institutions. Each year our clients receive a Privacy Statement that outlines this responsibility in detail. Those standards are reviewed regularly to ensure they cover all forms of communication. Briefly, we will not release any information to any person who is not directly named on your account unless we have your permission to do so, with the exception of legal and regulatory authorities.
Q. What does it mean to be a Registered Investment Advisor (RIA)?
FSA is an SEC-registered advisory firm. All professional investment management companies are required to register with the U.S. Securities and Exchange Commission (SEC) and/or the state(s) in which the firm conducts business activities. They are also required to provide clients and prospective clients basic information about their advisory services and fees, as contained in our Disclosure Brochure.
Q. How does an RIA differ from a brokerage firm?
RIAs are in the investment management business and we are regulated by the Investment Advisors Act of 1940. In contrast, brokerage firms are primarily in the financial product sales and distribution business and they are regulated by the Securities Act of 1933 as well as other laws. As a RIA under the 1940 Act, we have a higher level of fiduciary responsibility than brokerage firms. We are required by law to work in our clients' best interest. Our fee is based on assets under management (AUM) rather than the brokerage model that is tied to the sale and distribution of financial products.
Q. What ethical standards does Financial Services Advisory, Inc. adhere to?
All personnel are required to sign an Annual Ethics Statement that outlines our ethical standards. Everyone at FSA adheres to that strict ethical code as part of our daily operations.