Table of Contents
- Why is Summit fee-only?
- How long has Summit been in business?
- What types of investment strategies do you offer?
- What are your fees for these investment strategies?
- How does Summit select Mutual Funds and/or outside (private) portfolio managers?
- Does Summit select stocks for its clients’ portfolios?
- Does Summit utilize separate account managers?
- Can I keep my assets where they are and make the changes myself?
- How often is my account traded?
- How often will you review my account?
- Why do you review investment accounts so often?
- If I am one of your investment management clients, how often will you meet with me?
- How often will I be updated on my portfolio?
- Will you consult me when making trades?
- What does “Discretion” mean?
- Do I have to stay with your service for any length of time?
- With regard to tax reporting, what do you provide me with at year-end to prepare my taxes?
- How often will you meet with me for your financial planning services?
- How do you charge for your financial planning services?
- Will you provide me with a fee estimate and a written proposal for your Financial Planning services?
- Is there a fee for the second year for Financial Planning services?
- If I sign up for Summit’s Financial Planning services what will occur?
- What if I have a large position in one stock? How will Summit assist me in this situation?
- What makes Summit Capital Advisors different from other financial advisory or brokerage firms?
Why is Summit fee-only?
We want our clients to be assured that our recommendations are always made in their best interest. We believe that if we accept commissions, our clients could view us as having a bias.
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How long has Summit been in business?
Summit Capital Advisors began as a small sole proprietorship in 1992 and transitioned to a Limited Liability Company (parent company: Summit Financial Services LLC) in January, 1996.
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What types of investment strategies do you offer?
We offer several types of investment strategies. New strategies are being added as client needs develop. For further information, please contact Jim Suits, CFP®, AAMS®, CDFA™ at Summit Capital Advisors.
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What are your fees for these investment strategies?
The fees are dependent upon the amount of assets that are allocated to each strategy, as well as the amount of assets that you are asking Summit to manage. Generally, depending upon the fee schedule, annual fees range from one-half percent for large amounts of monies up to one and three-quarter percent for smaller accounts. However, to get a better idea of what your actual costs will be, it is best to discuss this in a meeting with one of the firm’s Advisors.
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How does Summit select Mutual Funds and/or outside (private) portfolio managers?
We look for portfolio managers with consistent, long-term, excellent track records in a particular investment style.
We believe that we are investing with a manager. In other words, we are selecting managers, not the actual mutual fund or management company. Therefore, if a manager leaves a fund or management company, it is not unusual for us to follow that manager. Summit stands out from its competitors, when it comes to the selection of portfolio managers.
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Does Summit select stocks for its clients’ portfolios?
Summit is a financial planning and investment management firm. As such we focus on sophisticated financial planning and estate strategies and picking world-class stock pickers (managers) to insure clients receive the absolute best in every area of their financial affairs. However, on occasion we will select stocks for portfolios.
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Does Summit utilize separate account managers?
Yes. Summit has access to some of the premier investment management firms in the world. Our separate account managers design and manage individual equity or fixed income portfolios in a tax-efficient manner to meet the specific goals of each client.
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Can I keep my assets where they are and make the changes myself?
No. Typically, clients do not facilitate changes to the portfolio quickly enough. Furthermore, it is impossible for us to report on your portfolio without direct downloads from each custodian. Instead, we currently house all of our securities accounts at TD Ameritrade.
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How often is my account traded?
Typically, for accounts that are managed utilizing mutual funds, we rebalance all accounts at least twice a year, usually in January or at the end of December (mostly because dividend and capital gain payouts occur in December) and in June/July. During the rest of the year, we may change the portfolios because of market circumstances. For example, if there are large declines in certain funds and even in various share lots, we may sell part or all of a fund to take a tax loss and invest the proceeds in a similar fund. This helps us better tax-manage your portfolio. We may also adjust to a changing investment environment; however, over time the asset allocation tends to take care of this problem itself. In addition, periodically, we will add a new fund to a portfolio if we believe it will benefit the client. The other major reason we would make changes is because a portfolio manager leaves a fund.
With regard to stocks, there are changes throughout the year. Upon other things, these changes are predicated upon company specific news, such as earnings reports, general market conditions, and industry trends, to name a few.
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How often will you review my account?
Generally, we review each account on a monthly basis at a minimum. If circumstances warrant, such as market irregularities or a specific client need surfaces, we will review accounts immediately. All accounts are “scanned” during the month to ensure everything is in order such as trades posting, incoming cash and securities received, address changes, etc.
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Why do you review investment accounts so often?
Simply because that is what our system is designed to do – and it is what you engaged Summit to do. For example, we are always watching for news on our mutual funds and/or stocks and ones we would like to invest in. If there are major events such as economic (interest rate changes) or political changes (wars), we will review your portfolio. When we are rebalancing accounts, we are always looking at the portfolio as well.
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If I am one of your investment management clients, how often will you meet with me?
During the first year for investment management clients, we will probably want to meet with you at least quarterly to explain and to review your first one or two of your account statement reports. After that we will generally give you the option to meet with us as you desire. In addition, we will request that you come in for a comprehensive review periodically as we jointly decide, but not less than annually.
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How often will I be updated on my portfolio?
In addition to our quarterly meetings you will also receive from TD Ameritrade a monthly statement, which will list your securities, their current values, gains and losses in both percentage and dollars as of month-end.
Furthermore, as securities trades are executed, you will receive a confirmation statement with full details of each buy or sell.
You may also view all of your accounts through the client area of Summit’s secure website. The client area provides you with information regarding your investment positions, stock and mutual fund quotes, and account balances to name a few.
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Will you consult me when making trades?
Our practice is to consult the client prior to any initial investments being made. We discuss our different investment strategies and what our client can expect from those strategies. This is also provided in writing to the client in their investment management contract. How we plan to invest from a strategic standpoint will be discussed with you as we report to you throughout the year. However, we will not discuss each and every trade with you. All of our accounts are discretionary. You may, of course, call us to discuss any moves we are anticipating or have made.
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What does “Discretion” mean?
Discretion means having the ability to trade on your account without your permission. This does not mean that Summit has custody of your money. Custody means having possession of your funds. TD Ameritrade maintains custody. Discretion simply means that we are able to make trades on your behalf.
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Do I have to stay with your service for any length of time?
Obviously, we would like you to stay with our service forever. However, there is no obligation to do that. We disclose, in our contracts that clients are allowed to terminate service with us at any time. Many advisors will make you wait until the end of the month, quarter, or even the end of the year. However, in our case, you can terminate your contract at the end of any day. Of course, we will require payment of any fees owed through the date of termination.
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With regard to tax reporting, what do you provide me with at year-end to prepare my taxes?
TD Ameritrade will mail to every client, generally not later than the end of January, information with regard to all securities trades that have been made during the calendar year. This is contingent on the client, providing us with the cost basis information, if they transferred a fund and/or stock that Summit did not purchase for them. With regard to any distribution from mutual funds, TD Ameritrade provides this information via a comprehensive form 1099 at year-end. This is generally provided to the clients on January 31st of each year.
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How often will you meet with me for your financial planning services?
For financial planning during the first year, we generally meet with a new client four to eight times depending on their needs. The reason that we meet so many times is because during this first year, there is usually a great deal of work that needs to be completed, and discussion that needs to go back and forth about various issues. We must have an excellent handle on your financial situation in order to provide you with the best advice possible. After the first year, we generally meet a minimum of once or twice a year. Between meetings, wherever possible, we try to discuss specific changes over the phone so that we can respond to your needs more quickly. We will also provide comprehensive updates on your financial situation. These updates could include a balance sheet, tax projections, cash flow analysis, and reviews of anything else that needs to be addressed.
A good example of this would be if you were near retirement or in retirement, a minimum of once each year, we would want to create a comprehensive retirement projection to make sure that you are on track. Also, if you are already retired we will be discussing with you any minimum distributions from IRAs or retirement plans that you need to be taking on an annual basis.
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How do you charge for your financial planning services?
Again, we are fee-only. We do not receive any commissions whatsoever. The financial planning fee that we charge is for 365 days of service. The fee is based on the complexity of your situation and dependent upon the amount of investment assets you have with Summit. In all cases, the fee is fully disclosed before the client incurs any charges.
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Will you provide me with a fee estimate and a written proposal for your Financial Planning services?
Yes. After meeting with one or more of our Advisors, you will be provided with a proposal that details exactly what we will be doing for you step by step with a comprehensive fee calculation for the first year fee.
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Is there a fee for the second year for Financial Planning services?
Generally, no. Each client has their own needs and desires. Normally, financial planning services are included as part of the asset management fee. That is, only 1 fee is charged for all financial planning and investment management services. When Summit manages less than $300,000 for a client, special arrangements can be negotiated.
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If I sign up for Summit’s Financial Planning services what will occur?
The process for financial planning involves extensive data gathering of all your financial information. First, we will request that you complete one or more of our comprehensive data gathering questionnaires as well as provide us with all of your financial information. We may send out individual questionnaires to insurance companies for current statements for all of your insurance policies and annuities. We will prepare authorization letters from you to each of your other professional advisors prior to us contacting them to allow them to provide information we need. We may talk to your employer’s human resources personnel, your accountant, attorney, insurance agents, bankers, and stock brokers, if necessary. Once we have all of this information we will begin preparing financial statements. The financial statements include a balance sheet, an income tax projection, as well as a cash flow analysis. We will also provide you with support pages to determine how we made up the balance sheet and other statements. We will then have a data verification meeting to make sure that we have all relative information. From there we will develop other projections, such as college funding, estate death tax, and retirement calculations, IRA distribution analysis, and survivor projections. When this is complete, we will then begin reviewing your overall situation as well as what issues that you need to have to addressed in each area. The areas that we will cover will include basic finance issues such as refinancing your mortgage or other debt, analyzing your liquidity, and discussing any cash flow and or savings issues that you may have. We will spend time discussing how to reduce your income taxes, and funding your children’s education in a tax efficient manner if applicable. We will review all your existing estate documents, as well as suggest alternative ways to plan your estate. We will also analyze exactly how much life insurance, if any, is needed and review all your different insurance coverage in-depth. We will also discuss with you an overall investment strategy to meet your goals. If you are near or in retirement, we will spend a great deal of time discussing those issues including distribution strategies from your retirement plans.
Once we provide you with your financial recommendations, and at your request, we will then assist you with the implementation of those recommendations.
In the implementation process, some of the value-added services that Summit provides, which most firms do not, is that we will talk with your employer’s human resources personnel, your accountants, actuaries, attorneys, bankers and insurance agents to ensure that everyone is on the same page. For example, we often see clients who have complicated will and trust documents, but the titling of their assets and beneficiary designations are incorrect so that their estate would not flow properly. Therefore, if major changes are needed we will discuss this with the client’s attorney, and if necessary meet with the client and their attorney to review these strategies. The same applies for income taxes, in that we will provide any information that we are aware of in advance of tax preparation time to the client’s accountant so that they will have all the necessary information to prepare clients’ taxes. We will also coordinate with the clients’ various insurance agents to ensure that the client has the proper coverage. When it concerns banking, we will provide the bank with updated financial statements to facilitate any lending and/or refinancing on behalf of the client. Also, if a client is missing an advisor, we will suggest one that has been pre-screened by us. In short, Summit will assist in implementation of its recommendations wherever possible.
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What if I have a large position in one stock? How will Summit assist me in this situation?
This is not an unusual occurrence since a number of our clients have large stock option awards from their employer.
There are different strategies that we can utilize to defer your taxes and diversify your investments. Some of these strategies include:
Utilizing what are called “Equity Collars” which would allow you to protect your position in terms of the existing gain, and sometimes could be done without any direct cost to you. You would then be able to obtain money from the portfolio to diversify.
Utilizing what are called “Exchange Funds,” also known as “Completion Funds.” This is a partnership when you, together with a number of other individuals in a similar situation, combine your large ownership positions of a single stock into a mixed portfolio so that each partner would own a portion of that portfolio without having to liquidate their existing stock position. Obviously, this strategy substantially reduces the risk compared to owning a single stock.
Utilizing what is called “Tax Loss Selling.” This strategy can, over time, nip away at a large stock position if you have some losses at present and in the future.
Utilizing “Charitable Trusts” to avoid any large capital gains taxes. This involves contributing highly appreciated stock to a Charitable Trust and taking an annual income from the trust for the rest of your life.
Depending upon which of these suit your situation best, we will assist you in every aspect.
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What makes Summit Capital Advisors different from other financial advisory or brokerage firms?
Summit is different from other financial advisory and brokerage firms in a number of ways. First, Summit provides advice on all aspects of a client’s finances while at the same time, assisting them with the implementation of their recommendations. Summit’s service initiatives are designed to be unparalleled. No detail of a client’s finances is overlooked. Reviews of employment contracts, real estate leases, wills, trust agreements, stock option agreements, auto insurance, non-qualified deferred compensation agreements, private investments, hedge funds, buy-sell agreements, retirement plan documents, business tax returns, U.S. savings bonds are routine at Summit. Interaction with the clients other advisors, such as actuaries, accountants, attorneys, bankers, insurance agents, and employee benefits specialists to ensure that everyone is working on behalf of the client is an everyday occurrence. Brokerage firms don’t supply this type of service while other financial advisory firms only offer a few generic services, such as college funding, retirement, retirement calculations, insurance reviews, estate tax calculations, and perhaps income tax planning. Summit offers these services in a very detailed manner in addition to all of the services mentioned above.
From an investment standpoint, most advisory firms offer one service: asset allocation with mutual funds. Some of these advisory firms are compensated by commissions in addition to fees. Other firms sell clients “Class C” shares and receive a constant 1.0% of assets regardless of asset size. This is a very expensive option for clients with more than $500,000 in assets. Summit, by contract, offers a number of investment strategies in addition to asset allocation including a number of stock management programs, and private equity investments.
Brokerage firms offer many of the same investment offerings as Summit. However, the investments trading costs are frequently at twice the price and without any understanding of their client’s overall objectives.
The bottom line is Summit’s staff pulls together the client’s entire financial situation, assists their clients in achieving their goals, attempts to provide unequalled service, and does it without a bias on a fee-only basis.
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