Frequently Asked Questions

Consider the uncertainties of retirement or the technical challenges of a significant financial transaction. Perhaps you’re not sure about the practicality of your plans or are in need of ongoing experienced counsel. Professional financial advisors are best used in these types of situations and can offer a wealth of experience, contribute significant technical knowledge, and add substantial value.

As fee-based financial advisors, we charge fees commensurate to your needs. We may charge a flat fee for planning, an ongoing flat fee for counsel, a per schedule fee for tax preparation, a percentage fee for investment management, and in some cases, an hourly fee. We suggest you come to your first session prepared to discuss options and combinations. Subsequently, we will create a formal proposal and negotiate a fee arrangement that meets your needs.

We do not maintain physical custody of your assets at any time. Your Source Financial can work with most asset custodians you select. We can assist with the selection of custodians, brokers or managers.

This depends on you. Investment policy is created by comprehensive financial planning techniques. Cash needs, goal time horizon, risk tolerance, performance expectations and asset class preferences are all factors.

We buy equity positions in sound companies at reasonable values relative to the companies’ long-term growth prospects. We hold equity positions in companies whose ongoing fundamentals provide continued shareholder value. We sell equity positions when fundamental and technical indicators indicate that prospective long-term value cannot be maintained.

We buy only high-quality corporate, municipal or government bonds. We believe in active fixed income management. Rather than passively holding your bonds to maturity, we continually look for opportunities to improve your return by making timely changes to the duration and credit quality of the securities in your portfolio. We often are able to take advantage of anomalies in the debt markets in order to enhance the total return of your bond portfolio.

The specific equities owned by our most conservative investor will be virtually identical to our most aggressive investor. The key difference is the asset allocation. The size of the equity position determines the volatility in the overall portfolio. The size of the equity exposure is the arbiter, not the specific stock picks.

Proper diversification is the cornerstone to successful navigation of the financial markets. A properly diversified portfolio should always have some components going up and some components going down, no matter how “good” or “bad” the market is. If you own 40 stocks and they all go in the same direction, how much diversification do you have? Diversification means blending together a mix of assets that react differently to current events affecting the market.

At different points in the stock market and economic cycles it may make sense to position the portfolio more conservatively or more aggressively. In a choppy environment for stocks we would usually want to reduce volatility and try to earn more from dividends. In periods where better returns can be expected from stocks, some increase in volatility and less weighting to dividend payers has historically made more sense.

Tying in to the last two questions, foreign stocks can help to obtain the right kind of diversification and take advantage of the current position of the stock market and economic cycles. Some foreign countries will do very well when the U.S. is at the beginning of the economic cycle and some countries will do better when the U.S. is at the end of an economic cycle. In these situations these countries are reacting to U.S. demand for goods and services. There are also some countries that have very low correlations to U.S. markets and add an excellent element of diversity.