Sensible Perspectives

Making the Transition

Posted by on August 25, 2015

Making the Transition

Sensible Financial usually recommends that you establish accounts with a custodian with whom we have a “master account.” This keeps our trading and reporting costs low – we can transact in multiple accounts simultaneously, and access transaction and position data electronically. We offer our clients a choice among several efficient investment custodians. We began in 2002 with Ameritrade (now TD Ameritrade). In 2004, we established a link with TIAA-CREF (TIAA-CREF does not support the most efficient trading arrangements, so we do not encourage transferring assets into new accounts there). In 2006, we retained Fidelity to provide custodial services as well.

We prepare all necessary paperwork for your signature, and track account setup and asset movements through to completion.

To the extent that your percentage of assets in each asset class differs from our recommended percentage, we may recommend that you sell some of your current holdings in order to establish the recommended balance.

If you have large unrealized capital gains in your current portfolio, it may be sensible to make a phased transition to the recommended funds even if the portfolio is not in perfect balance immediately. If your current holdings align closely to Sensible Financial’s recommendations in both asset allocation and expense, it may not be worthwhile to trade.

 

Custodians

A custodian is a firm that holds (takes custody of) your assets, and provides regular statements about your holdings and transactions. Sensible Financial provides asset management services for assets held at many different custodians.

If Sensible Financial has a master account with a custodian, we have simultaneous electronic access to all of our clients’ accounts there. In addition, we receive direct daily downloads of transaction, position and price information from every one of those accounts. This affords us the greatest possible efficiency in monitoring, reporting and rebalancing. In these situations, we can offer our full asset management service at our lowest fee. We currently have master accounts with:

Because of these efficiencies, we strongly recommend that you establish accounts at either TD Ameritrade or Fidelity (and 529 accounts at iShares Arkansas).

We recognize that clients may have no choice but to maintain certain accounts (especially 401(k)s) with other custodians, and we believe that including the assets from these accounts in the allocation is important. If your custodian does not offer electronic downloads of transaction, position, and price information, we cannot report performance efficiently.

We use the ByAllAccounts aggregation service to track transaction and balance information for most 401(k) and 403(b) accounts to include them in our Portfolio Management and Integrated Financial Advisory services. We will help you make the necessary arrangements with ByAllAccounts. Then we will be able to include these accounts in reporting and rebalancing. We will also tell you which trades to make in these accounts.

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