Fabian Wealth Strategies

COMMONLY ASKED QUESTIONS

What is an Exchange Traded Fund (ETF)?

In its simplest form, an ETF is a mutual fund that trades like a stock. An ETF is a diversified basket of stocks designed to mirror the movement of a stated index. For example, the SPY is an ETF designed to mirror the movement of the S&P 500.

There are two benefits ETFs have over mutual funds. First, is the ability to trade them and get executed throughout the day. Open end mutual funds offer just an end of day price even if the trade is placed early in the morning. ETFs are priced throughout the trading day. Second, the expense ratio (the internal management fee charged to run either the ETF or mutual fund) typically is much lower for ETFs than with mutual funds. The average expense ratio for a mutual funds is around 1.07% while the average expense ratio for an ETF is approximately 0.5%.

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What do you mean by a Stop Loss?

Fabian Wealth Strategies implements a sell discipline on every position in your portfolio. Whether it is an individual stock that has been in your portfolio for decades or a newly purchased ETF, if your goal is to avoid catastrophic Bear market losses, we believe it is imperative to have a clearly defined sell discipline on every position.

There are several types of sell disciplines that could be used. First, if a security's price moves below a moving average like the 50-day or 200-day moving average, this could be a reason to sell. Second, a trailing stop-loss between 5-10% off the security's high price could be used as well.

Keep in mind, the sell discipline will never get you out of a position at its peak. However, if used properly, it should increase the likelihood of avoiding catastrophic losses.

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Why doesn't Fabian recommend individual stocks?

We believe there is a simple path to building wealth and a difficult path. Both are doable, however, when it comes to sticking with an investment plan over the long-term, we believe following a simple path increases the likelihood of not only remaining true to the plan when it goes through challenging times, it also can enable you to put a greater amount of your serious money to work.

In our opinion, investing in stocks is the difficult path. When picking stocks, you have to be right twice: pick the right sector...and then pick the right stock. It also takes a lot more time researching and monitoring these positions.

We believe the simple path is with Exchange Traded Funds (ETFs). Instant diversification. Easy access to both sectors and international markets. With ETFs there is the ability, just like stocks, to be able to get out of the positions very easily.

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Where is your clients' money domiciled?

We recommend Fidelity Investments as the custodian of your account assets. They provide our clients with low transaction costs, access to all the Exchange Traded Funds and over 5,000 no-load mutual funds.

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Can I watch what Fabian is doing with my money?

When your accounts are at Fidelity, they are in your name with direct access to your account at all times. The accounts can be monitored daily at their web site. Our limited power of attorney allows us the ability to place buy and sell orders on your behalf. Fabian Wealth Strategies provides notification via email about any trades that occur in your account. It is your money...in your name...at all times.

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What type of communication do we receive as a client?

Fabian Wealth Strategies clients receive our monthly newsletter specifically designed for our managed clients. Any time there is an allocation change with your portfolio, we send an e-mail detailing the change. In addition we produce a monthly video exclusively for our clients stating our outlook and investment positions. You always have access to upper management when you have a question regarding your portfolio...no lower level advisor is assigned your account.

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When it comes to your management agreement...

What is "Limited Power of Attorney?"

This allows us the ability to implement our investment plan on your behalf. We have the "power" to place buy and sell orders on your behalf. In essence we have an additional window on your account at Fidelity.

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Am I locked into a set period of time as a managed client?

There is no set period of time. Our investment advisory agreement requires 30 day written notice upon cancellation...and there is never any cost to cancel.

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What is the minimum account size you accept, and the management fees?

$250,000 is the minimum account size we manage in aggregate. In order to reach the minimum, multiple accounts can be opened on you and your family's behalf. They can be comprised of personal and retirement accounts.

Our management fee ranges between 1.00% to 2.00%, depending on asset size and other guidelines. Our fees can be negotiable. Click here to view our fee schedule.

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Are there any other fees we will have to pay?

Whether we use Exchange Traded Funds or mutual funds, they have their own internal management fees which are a part of the expense ratio. These come directly out of the ETFs/mutual funds and are paid by you. Please consult the funds prsospectus for additional information on fees. In addition, Fidelity charges transaction fees when we trade on your behalf. These are also paid by you.

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What is the first step in becoming a Fabian Wealth Strategies client?

Give our office a call toll free at (800) 391-1118 or click here to contact us and say you would like to get the process started to become a client. We will send you the necessary information to have us manage your money.

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QUESTIONS THAT YOU SHOULD BE ASKING YOUR ADVISOR

What is the advisor's sell discipline?

Our Answer: You should receive a specific sell strategy with every position in your portfolio. It could be a stop-loss, moving average, some other technical indicators. The key is to understand exactly what the discipline is.

Other Advisor Answer: We are in it for the long term and we follow a diversified portfolio using buy and hold. These diversification tools can reduce your losses overall during Bear markets.

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What are all the fees charged on my portfolio?

Our Answer: Stated management fee, low transaction fees, and low expense ratios (with no 12b-1 fees).

Warning signs: Avoid conflict of interests like 12b-1 fees (fees the mutual fund families compensate advisors for using their funds), surrender penalties on variable annuities, high transaction fees.

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Am I locked into a certain amount of time...and are there any cancellation penalties?

Our Answer: The contract can be terminated at any time with 30 days written notice, and no cancellation fees are charged.

Warning signs: If there are any fees to terminate, there is a high likelihood you will feel locked into staying in the bad advice just to avoid additional fees. There should never be any fees to cancel a management contract.

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