Frequently Asked Questions

Answer: This is a great question and the answer is both/and. FTC believes the most optimal portfolio is one that combines “passive” index investing with a portion of the portfolio dedicated to active investing – typically in individual stocks and a few ETFs. (This approach forms the basis for our "Core/Satellite" investment philosophy as discussed in the Portfolio Management page.)

In other words, we are not passive “buy and hold” index investors, and we are definitely not “day traders.” The track record for active traders is woefully bad and “buy and hold” passive index investors do not bring much added value to the client.

We use this ‘blended’ approach because we want to assure our clients that their portfolio is invested in an asset allocation that fulfills the financial plan we prepared for them. But we also want to take advantage of market inefficiencies to bring added value (what the industry calls “alpha”) to the client’s portfolio because even the most well-known blue chips – think companies like Disney, Apple, Home Depot, Verizon – can become mispriced.  

The technical jargon supporting this investment approach is the so-called Treynor-Black model.  According to the Kaplan review book for CFA Level II portfolio management, “the Treynor-Black model provides a formal framework that exploits perceived security mispricing via active security analysis, yet still maintains a well-diversified portfolio for the investor’s total investment.” (p.219, 2013)

The begs the question of what percent of a client portfolio is passively-invested in a broad asset allocation and what percent is actively-invested in individual stocks & ETFs?  The answer to this key question is that it depends on each client and his/her relationship with the Advisor.  This is the ‘customized’ aspect of Fig Tree Capital’s services to its clients. For this, there is no set template. This is why we encourage you to contact us for more personalized discussion about achieving your financial goals.

A:  Fig Tree Capital’s investment process is as follows:

1. Complete a financial plan, including the Monte Carlo analysis. (see the question below) The Monte Carlo will help determine a portfolio’s optimal Asset Allocation by which a client is more likely achieve her financial goals.

2. Complete an IPS (Investment Policy Statement, see question below).  The Monte Carlo helps ascertain an optimal Asset Allocation but the IPS helps the client and advisor drill down on the specifics of the portfolio:  trading parameters, time horizon, tax constraints and more.  Each client will have their individual preferences which makes the IPS so vital to an effective Advisor/Client relationship.
3. Learn about the Client’s set of Values regarding the Environment, Ethics, Gender representation on executive boards, faith-based values and more.  This is key to creating a suitable portfolio for the clients that matches the mandates of the:    
   • Financial Plan and the Monte Carlo’s Asset Allocation
   • The IPS constraints
   • The client’s set of Values.

4. Monitor, Rebalance & Update.  Make changes to the financial plan when necessary, review the IPS once/year and make sure the portfolio stays true to the client’s Values and their financial goals.

Values-based investing is the principle by which we build an investment portfolio that (A) helps meet your financial goals for Lifestyle, Education, Retirement & Legacy and (B) fulfills your set of values.  Clients increasingly do not want their hard-earned dollars supporting companies or industries that conflict with their conscience.

Decades ago, business owners and stock investors would directly support the companies they built and/or funded.  But with the rise of mutual funds and, eventually, passive index investing, investors became 'divorced' from their investments. Owning a market-wide index of companies exposed investors to companies they did not support.  This may be one small reason why broad-based stock ownership in America - and globally - remains low.

Values-based Investing seeks to change this by allowing investors large and small to take "ownership" of their money and their financial lifestyle. 

Value Investing is an investment strategy. Investopedia defines it as “a strategy that involves picking stocks that appear to be trading for less than their intrinsic of book value.” Warren Buffett is, of course, a master of Value Investing and, as such, FTC is no critic of this strategy.

In the investment world, Value Investing is often contrasted with Growth Investing. Some years, a Growth strategy will outperform a Value strategy and vice versa.

To clarify, FTC incorporates both Growth and Value Investing as a strategy to grow your wealth. But Values-based Investing is the foundation upon which to invest with a clean conscience.

FTC holds no client assets nor cash. All checks and wires are delivered to TD Ameritrade in the name of the Client on Title. Please also read the following disclosure:
“We use the TD Ameritrade Institutional Group to custody all client assets, giving us cutting edge technology and research. TD Ameritrade and “FIG TREE CAPITAL” are separate and unaffiliated firms, and are not responsible for each other’s services or policies. TD Ameritrade does not endorse or recommend any advisor and the use of the TD Ameritrade logo does not represent the endorsement or recommendation of any advisor. Brokerage services provided by TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank. Used with permission.”

FTC has a subscription with Morningstar Workstation for thorough analysis on Stocks, Mutual Funds, ETFs, the Capital Markets and much more. FTC also utilizes subscriptions to Barron’s, CNBC pro, the Wall Street Journal and other sources available to the public. Joseph Lora also does the occasional deep dive – Fundamental Analysis - into company Financial Statements (Balance Sheets, Income Statements, Cash Flow) to check the merits of an investment into an individual company.

An IPS stands for: Investment Policy Statement. This document is a great way for an Advisor and Client to be “on the same page” when it comes to Portfolio Management. With an IPS, clients can articulate their Values and the kinds of companies they wish to include or specifically exclude from their Portfolios. Clients can also list their preferred tax strategy – for a taxable account - and have a clear sense of asset allocation, rebalancing, trading frequency and, of course, the FEES they are paying both for Portfolio Management as well as any internal mutual fund/ETF fees. The IPS is all about transparency.

The IPS is a good document to review at least once a year. Any major changes to an account: to asset allocation, to amount of trading, to tax harvesting, etc., can be updated on an IPS. In conjunction with a Financial Plan – which is typically much more thorough – the IPS is an excellent way to build wealth and achieve goals for the future. However, an IPS is something you will rarely hear about on financial news stations or from some Wall Street firms.

As the 2015 CFA Level III textbook states on pg. 172, “the process of writing a thorough Investment policy statement ultimately gives the individual investor greater control over her financial destiny.”  This is why FTC created its own proprietary IPS to utilize with clients and we aim to utilize this document with you.

Below is our fee schedule.  Portfolio management fees includes our planning fees.  It is an all-inclusive and we charge ZERO commissions for equity trades.  To be sure, for options trades only, we do charge .65 cents for options contracts, but this is ONLY for clients who choose to trade in options, which is another level of service - and another discussion altogether as to the risks and rewards.

Our investment management fees are negotiable.

Fig Tree Capital primarily works on a Fee-based platform, charging an annual WRAP fee for Assets Under Management. Under this structure, a financial plan is typically included in the fee. (Clients can elect to pay for a plan separately or to bring in a 3rd party plan.)
FTC typically doesn’t work on a Fee-only basis, however, a fixed fee can be arranged, depending on the client. In this situation, a financial plan is also charged separately at approximately $200/hour.
FTC does not work on a commission basis at All. Furthermore, all Equity, ETF and most Mutual Fund trades are $0, 100% Commission-Free. (Options trades do charge $.65/contract but only a few clients engage in options trading.)

For the first question: No. Clients do not have to complete a financial plan with FTC, however it is strongly recommended and included in the Fee-Based cost of management. Fee-only arrangements carry a different fee structure. Financial plans help ascertain the Optimal Portfolio for a client to achieve their financial goals. Yes, to the second question, a client can bring in an outside plan.

Yes, the hourly rate for financial planning only is typically $200/hour but that is negotiable on a case by case basis. However, FTC prefers to work with clients for both planning and investing in order to bring the best value to the client.

Completing a plan typically takes a month. However, much depends on how thoroughly a client completes the Questionnaire of personal financial data.

It’s hard to understate just how powerful a Monte Carlo simulation is as a planning tool.  The 2015 CFA Level III edition states on page 239, “Using Monte-Carlo simulation, an investment manager can effectively grapple with a range of practical issues that are difficult or impossible to formulate analytically.”

Put simply:  a Monte-Carlo simulation helps a Client understand the PROBABILITY of being able to retire comfortably.  The Monte-Carlo can consider a range of scenarios:  taxes, a wide variety of client financial “needs” and “wants,’ and various portfolio asset allocations as well as contributions/distributions from the portfolio.

When used effectively in a financial plan, a Monte Carlo simulation can help ascertain a range of optimal asset allocations for an investment portfolio, given the cost of funding the client’s various short, intermediate and long-term goals.  Investing is incomplete without planning out a Monte Carlo. 

With clients, FTC encourages a Wrap Fee structure in which financial planning and portfolio management – as well as account servicing – are all combined within one fee.  FTC’s fee schedule is the following and the fees quoted here are the maximum we are allowed to charge:

This Annual wrap fee includes a Life Insurance and/or Annuity Review, which will help a client or prospect better understand the policy they may have purchased with a 3rd party.

This fee also includes assistance with setting up 529 plans via TD Ameritrade at no extra cost.  (We are not able to set up 529s on another platform.)

All Fee-Only portfolio management structures are negotiable.  However, FTC rarely utilizes Fee-only structures.

Finally, FTC’s financial planning fee is a customary – and competitive – rate of $200/hour if a client only wants planning.

No. Fig Tree Capital does not provide any tax nor estate planning nor any kind of legal advice. We are not licensed to give such advice.  We only conduct year-end tax harvesting of capital gains or losses and we always consider a client’s tax constraints when buying or selling an investment for a particular account, including accounts titled in Trust.

We do consider tax expenses on our projected Cash Flow analysis and we always consider taxes and estate planning issues – such as Trust Accounts – when conducting a comprehensive Financial Plan.

We also refer to trusted professionals in tax preparation and Estate Planning.

A:  No, Fig Tree Capital does not give advice on Real Estate nor on the type of mortgage to utilize. However, we provide factual statistics about the economy and Interest Rates.  For example, we will happily provide current 10-year Treasury Rates and listed Prime Rates as well as their historical trend, but we would never predict a future trend in order to influence a decision on buying or selling a piece of property.

And, as always, we consider mortgage balances & Interest Rates as well as Real Estate Assets in our Financial Plans, including Cash Flow Analysis and Monte-Carlo Analysis. And we conduct “Scenario Analysis” in which we estimate the feasibility of a client being able to purchase a piece of Real Estate, such as a Dream Home.  A thorough Financial Plan is one that considers all aspects of a client’s Financial Situation – assets, liabilities, cash flow - as well as their goals.  Mortgages and Real Estate are a key part of the equation.

We also refer our clients to professionals in mortgages and real estate who have a consistent track record.  

To conclude, we only advise on Investment Portfolios within a Fee-Based or Fee-only structure and that includes tradable securities such as REITs.  But we will never advise on whether or not to purchase a piece of physical Real Estate.

Joseph earned the right to use the Chartered Financial Analyst designation in October 2015. Joseph earned this right by completing the CFA program – including all three CFA examinations - and by attaining the required years of acceptable work experience.  As a CFA charterholder, Joseph is committed to the highest ethical standards.

The CFA designation is globally recognized and attests to the charterholder’s success in a rigorous and comprehensive study program in the field of investment management and research analysis.  

Yes. Joseph has appeared on several financial panels at the University of Southern California, Pepperdine University and several Universities and Business Schools in China, including the prestigious School of Business at Nanjing University. Joseph has also conducted Retirement & Investment seminars for professional groups including Real Estate groups, teachers’ unions and business employees.

There are 2 sure things in life: death and taxes. No, actually there are 3 sure things: death, taxes and client confusion regarding their Life Insurance/Annuity policies. During over 15 years of experience in Financial Services, Joseph came to realize this unfortunate fact, that clients need help deciphering the policies that were sold to them years ago. Thus, for client and prospective clients, Joseph is willing to offer these services free of charge because understanding is a key step to creating a solid financial foundation for your future.