Brandon Frye

Our Small Account Toolbox

We hear it all the time.  It’s usually spoken in a lowered tone as if it may be found offensive: “I don’t know if their account is big enough for you.”  Clients, friends, and acquaintances are often fearful that the people they refer to us won’t have enough money to invest, and therefore won’t get enough of our attention.  Let us put this trepidation to rest: the people you refer to us are important to you, which instantly means they’re important to us.

Clients with smaller accounts face the same, or even greater challenges in planning for their financial future, and we have a number of tools to help them do this.

Say a client refers their niece to us who is just starting out in her professional career and is interested in buying a condo in the next five years.  In this case, we’d sit down with her, either in person, by phone, or on Skype, and build a basic financial road map using MoneyGuidPro, the same financial planning software we use for our multi-million dollar families.  One of the most powerful tools for a young account is to set up automatic contributions to her investment account and time it so that the money is deducted from her bank on the same day she gets paid.  That money then can be invested based on the financial road map that we constructed together.

While individual stock or bond selection is a good technique for fund management, the size of the trades relative to the clearing charges by the custodian bank would erode returns. TD Ameritrade does, however, offer 100 Exchange Traded Funds, or ETFs, that we can use commission-free. Once the money is invested, we rebalance the account every three months to make sure the percentages are back on track and in sync with her financial plan. TD Ameritrade offers a robust rebalancing tool that lets us take into consideration things such as tax consequences and future cash needs.

She’ll want to keep track of her savings progress and investment performance, and she can easily do this by logging into Orion; again, the same portfolio reporting software our multi-million dollar families use to view their accounts.  This will give her the quick snapshot she needs until we check in with her in 6 to 12 months to review the account in detail.

This process helps this young woman identify her goals, and lays out the steps to be taken to meet them, a great first step for a young account. Creating a financial plan, setting automatic contributions, rebalancing at regular intervals, and managing risk, especially when done early on, can ensure that you are well prepared to meet your financial goals, whether they include a house, a child, or retirement.