Frequently Asked Questions
Who is the author of the articles on the RAA site?
How can I contact you?
Are my investment accounts safe?
What are your investment strategies?
Do you offer estate or tax planning, real estate advice, or insurance advice in addition to financial planning?
Do you use off-the-rack portfolios with set asset allocations?
Can I invest some (but not all) of my assets with you?
Will I have to take a survey assessing my “risk tolerance”?
Does RAA receive commissions from brokerages or mutual fund providers?
Is there an account minimum?
What are RAA’s fees?
Are there limits on the time you will spend helping me with my accounts?
What brokerage firms do you use at RAA?
Can we meet in person prior to my becoming a client?
Does RAA request trading discretion
Do you supply references?
Can you manage assets that are in a company 401K plan?
How does one become a client of RAA? What is the process?
Once a client, what comes next?
Can RAA incorporate existing positions in stocks, mutual funds, and bonds?
How will I enter the markets? I don’t want to buy just before the market declines.
What reporting will I receive on my assets?
Do you do tax-loss harvesting?
How often do you rebalance portfolios?
Do you employ market timing or sector asset allocation?
Do designations such as CFP, CFA, and AIF demonstrate or confer special knowledge about index or passive investing?
Do other academic degrees provide special skills in index or passive investing?
Will I work with Brendan Ross?
Who is the author of the articles on the RAA site?
All articles on the Ross Asset Advisors website were written by, and are copyrighted by, Brendan Ross. As the owner of RAA, Brendan is involved in the financial planning process for all clients, including assessment of financial goals, development of a suitable portfolio, and transition to the portfolio. Brendan is responsible for ongoing client portfolio management, decisions on rebalancing, and client communications.
How can I contact you?
We’re available at 818-864-6200. If you’d prefer to send an email, please use our Contact Us form.
Are my investment accounts safe?
RAA does not take custody of client accounts, so your assets are in your name and under your control at all times. Brokerage and retirement accounts are generally insured by the SIPC and by private insurance. You’d have to read the fine print on the Fidelity websites if you really want to dig into this. When you fill out the brokerage application to place your account under our master license, we will guide you through the process, and there are specific places where you can choose the level of control that RAA has over your assets. Of course, your investments are subject to market exposure, and they can fluctuate in value in proportion to the volatility of the underlying asset class. You will understand this risk in more detail as a result of our consultations.
What are your investment strategies?
RAA specializes in passive and index investing. Although there is no one, standard portfolio, we generally use Dimensional and Vanguard funds and sometimes Barclays iShares ETFs for equities and real estate. For fixed income, we use Dimensional and Vanguard funds, and maturity-laddered bond portfolios for larger clients. We also use some Mark funds for currency-hedging, and laddered CD for cash. Although we don’t personally include any level of active investing in our personal portfolios, we understand that some clients may have personal reasons for setting aside a small portion of their capital for active, speculative investing. While we don’t encourage this, we do recognize and support our clients who choose to play the market with a small fraction of their portfolios.
Do you offer estate or tax planning, real estate advice, or insurance advice in addition to financial planning?
We do incorporate these subjects into our financial planning process, however we do not consider ourselves expert in these diverse areas. Our clients fall along a wealth spectrum, and those whose assets are more substantial are best served by hiring experts in each field, including especially attorneys for estate planning, and accountants for tax planning. RAA is not affiliated with any particular professionals in these other areas. In some cases, working effectively with a client requires conversations with these other professionals, and we are happy to do so.
Do you use off-the-rack portfolios with set asset allocations?
No, we do not. Each client’s circumstances are unique, and we treat them as such. The portfolio we develop is an outgrowth of your short, medium, and long term financial goals. Families can be very complicated, especially when decisions can affect multiple generations. There is no simple, canned way to match investment horizon and ‘risk tolerance’ with a basic allocation.
Can I invest some (but not all) of my assets with you?
Absolutely. Many of those who are fortunate enough to have substantial resources have an existing relationship with an active manger, probably one who charges a percent of assets under management. This is probably a known and trusted family advisor. Moving $1 million or more into passive management will start you down the path of generating greater returns. Whether you increase this amount at some future point is up to you.
Will I have to take a survey assessing my “risk tolerance”?
No, you won’t. Surveys can be an amusing diversion, but are not a part of a proper financial planning process. Take a typical survey question: ‘How many years will it be until you need to withdraw money from your investments. ‘ We have yet to consult with a client that has a simple answer to this question. We have found that it is better to simply discuss all aspects of your financial situation, and then work with you to construct an appropriate strategy. Because you will get the full benefit of conversation with Brendan, there is no need for us to develop standards designed to create uniformity across multiple, less-experienced advisors.
Does RAA receive commissions from brokerages or mutual fund providers?
No, we certainly do not do this. RAA receives compensation in exactly one way: from the fees we charge to clients. This is the only approach that we believe preserves total objectivity throughout the financial planning process.
Is there an account minimum?
Our typical minimum is $200,000. We will make exceptions for attorneys, doctors, new MBSs, and others with a strong trajectory. We do recognize that early stage investors often have a long earning career ahead of them, and most of these investors anticipate adding substantially to their portfolio each year. If you are ambitious and are serious about being in the market for 40+ years, we will work with you.
What are RAA’s fees?
RAA charges clients a single, quarterly fee for all accounts under one family. This fee is based on account size, and is typically 1% per year. Larger accounts, including those over $1 million, will receive some discounts to this rate based on account and fixed-income complexity.
Are there limits on the time you will spend helping me with my accounts?
No, not at all. We recognize that some years may require more of our time than others. The first two years, in particular, will be more time consuming for us given the newness of our relationship and the importance of good communication and knowledge-sharing as we lay the foundation for decades of successful investing.
What brokerage firms do you use at RAA?
We have chosen Fidelity to custodian funds that are managed by RAA. Their trading fees are lower than Schwab, but slightly higher than other discount brokerages, but their customer service is the best. We find that customer service is a high priority for our clients, and getting someone on the phone is worth a few dollars a year. Given that passive and index investing does not require extensive trading, we feel this is an excellent tradeoff. The process of migrating assets is very simple, and we take care of all of the paperwork for you.
Prospective clients should remember that they needn’t place all of their funds under RAA management to get the benefit of our advice.
Can we meet in person prior to my becoming a client?
Yes we can. We’d be happy to meet you anywhere in the Los Angeles area. Our success has garnered us clients from all parts of the United States, and even from overseas. As our clients can attest, we believe very much in the importance of strong relationships and excellent communication, and we typically rely on telephone and email to support this philosophy. That said, if you are in Los Angeles either before or after we begin our relationship, then we would welcome the chance to meet in person.
Does RAA request trading discretion
Yes, however all trades are discussed with you in advance, both within the context of your larger financial plan, as well as with respect to the details of the particular trade. The entire process of becoming and remaining a passive, index investor is one of careful planning. We will not be reacting to sudden market changes, but instead to the life changes that you move through over many years and decades.
Do you supply references?
Yes, we are happy to provide references, as well as our ADV-II substitute disclosure document. Our clients are busy, successful people, and we share our references after you are reasonably certain that you want to work with us.
Can you manage assets that are in a company 401K plan?
Yes, we can advise you on how to deploy those assets. Any 401K plan that includes company-matching is an excellent investment, providing only that the 401K provider have some basic index funds available. Your 401K investments can be incorporated into your portfolio despite being out of bounds for RAA to personally manage. We will help you to choose asset classes that are suitable given the 401K’s tax advantage. This will typically include real estate, value, small-cap, and taxable fixed income.
How does one become a client of RAA? What is the process?
You must first become comfortable with the principles of passive and index investing. The ideas you come across on this website should be appealing to you, and should generally make sense. This is true whether you plan to put all or only a fraction of your assets under RAA management. Next, please reach out to us via email or phone, and we’ll answer your questions and determine if there is a good fit between us. If we decide to work together, we’ll send you our contract, and you’ll fill out a client profile which we will use to populate the many forms required by Fidelity. Once you’re comfortable with and have signed the contract, our financial planning process will begin in earnest. You will find this an excellent opportunity to pull up and reflect on your short, medium, and long term goals.
Once a client, what comes next?
We’ll being by discussing your goals and by reviewing your current assets. Out of this process will come a written financial plan that will incorporate your short, medium, and long term needs. Multi-generational issues will be discussed and resolved if these are relevant. For those adding to their savings with income, we’ll discuss how you expect that to happen over time. For those drawing down funds, we’ll get into the details of when and how much you expect to tap your portfolio. All of these discussions, cemented in your financial plan, will become the driver for the portfolio we’ll construct from your current assets. We’ll then implement this plan, which may involve a transition over time, with some assets residing temporarily in cash equivalents as we average our market entry over time. We’ll be available during and after this process to answer your questions, which we know you will have. We expect that the first year or two will be more time-intensive as we get to know one another.
Can RAA incorporate existing positions in stocks, mutual funds, and bonds?
We can incorporate existing holdings. This is mostly recommended where you have good reasons to retain them, such as a low cost basis and a desire not to trigger a taxable event. Holding individual stocks typically adds risk without adding return, so it’s not ideal, but we recognize that you may have excellent personal reasons for doing so, and this is not a problem. These assets can simply count towards the appropriate asset class allocation in your portfolio.
How will I enter the markets? I don’t want to buy just before the market declines.
We rarely advice a client to immediately enter with 100% of their assets. Entering (and leaving) the market involves both risk and transaction costs, and we will help you minimize both. If you invest with RAA, you are by definition a long term investor. It will not do to rush your initial entry into the markets. Our exact strategy will depend on the current size of your assets and your current financial goals. Generally, our strategy will be to enter the market over a period many months, with your cash being put to work immediately in laddered CDs, timed so that their maturity corresponds with new equity purchases. Although academic research is mixed on the value of dollar-cost averaging, we believe it it because we place more weight on benefits of principal preservation than on the possible small cost of giving up a fraction of a percent of returns during the entry period.
What reporting will I receive on my assets?
You can get on-demand reporting from Fidelity, and you’ll get quarterly reporting from RAA which will include rate of return by allocation based on cost basis, asset class drift if any, and commentary. You will get more than enough data to feel comfortable that you are doing far better than the vast majority of your actively invested peers.
Do you do tax-loss harvesting?
Tax-loss harvesting is the selling of securities, usually at year-end, to realize portfolio losses which an investor can use to offset capital gains and therefore lower personal tax liability. We will help clients to do this, but we require a signed disclaimer. The general guidance is that to avoid the wash-sale rules you have to switch to a fund based on another index for 30 days. This type of transaction hopping is not part of a correctly executed long term passive portfolio strategy, but it can be executed at the request of the client. Those interested or experienced in this area should keep in mind that this is a loophole, and that the IRS often closes loopholes in a way that is painful for those exploiting them.
How often do you rebalance portfolios?
Rebalancing is the process of realigning the weightings of one’s portfolio of assets. For example, if your portfolio’s proportion of stock has grown too large for your intended assets weightings and risk tolerance, you might rebalance by selling some stock and putting it into cash or bonds. As rebalancing is one of a small handful of things you do to a well-constructed passive portfolio, this question has received considerable research attention, and the correct strategy cannot be reduced to a simple formula. Individuals who continue to work can income rebalance, meaning that they can top off their underweighted asset classes by putting new money into them. This is easy to do, requires no selling, and makes perfect sense. For employees (versus business owners) this often happens once a year, when they receive an annual bonus. This also happens in a de facto way any time you move funds into your longer term investment portfolio. For those who are drawing from their investments, we watch the equity/fixed ratio closely, and rebalance when needed so as not to increase transaction costs unnecessarily. Rebalancing across equity classes has been demonstrated to be productive only rarely, when the asset classes seem genuinely out of whack.
Do you employ market timing or sector asset allocation?
No, we do not. Articles elsewhere in this site address the conclusively proven futility of trying to predict when the market will go up or down, or which stocks will benefit from tomorrow’s news. As you will learn from your reading on this site, it is markets not managers that generate returns. Our responsibility to you is to help you meet your financial goals. To the extent that this involves investments in equities, there will be risk, and it is our further responsibility to help you mitigate that risk as best as is mathematically and practically feasible.
Do designations such as CFP, CFA, and AIF demonstrate or confer special knowledge about index or passive investing?
No, these are industry designations, not academic degrees, and their curricula and examinations are generally focused on active trading, not passive and index investing. This is not to suggest that those who carry these designations did not work hard for them, just that they don’t generally map to the knowledge and skills required to construct and manage passive portfolios.
Do other academic degrees provide special skills in index or passive investing?
Yes and No. Active trading has a very complex and arcane language designed - in my opinion - to be deliberately confusing to laypeople. Fortunately for laypeople, active trading doesn’t work, and the knowledge required to ‘get’ the major concepts of index investing are within almost anyone’s grasp. This is as it should be: the best ideas can all be easily understood, at least in their general principles. On the other hand, to really understand the details of Modern Portfolio Theory does require some math, but no more than what anyone graduating from Brown University with a degree in economics would be required to grasp. Passive investing continues to evolve, especially in the areas around tax management and rebalancing, and Brendan’s job is to understand these nuances in detail, and then to translate them into simple, actionable concepts for his clients.
Will I work with Brendan Ross?
Yes, Brendan Ross works directly with all clients that come aboard RAA. Brendan believes that this is a necessary part of the vote of confidence that you are placing in our firm. Financial Planning is much more than just Brendan’s profession, and you will find that he responds quickly to questions and requests. Although most clients prefer to be relatively hands off, those few who want to dig deeper into the quantitative side of passive and index investing will find Brendan to be a thorough and capable teacher.
