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Everything You Need to Know About Bonds

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

When it comes to investment news, stocks tend to dominate the headlines. Yet, bonds are just as important for investors looking to create a diversified investment portfolio. Since bonds aren’t covered as much in the news, and can be harder to understand, they can be intimidating to invest in for the first time. This guide aims to explain what you need to know about bonds as a personal investor.

What are bonds?

Government entities, public corporations and private companies issue bonds to raise money. A bond works like a loan: When an investor buys a bond, they agree to give a set amount of money to the bond issuer for a fixed amount of time. During this time period, the bond issuer pays the investor a set rate of interest, either at regular intervals or in a single installment. At the end of the bond term, the organization pays the investor back the original sum of money they lent out.

For example, you buy a $1,000 10-year bond from Google with a 5% interest rate. Every year, you will receive $50 in interest ($1,000 x 5%). At the end of 10 years, Google will give you the $1,000 back.

What’s the difference between bonds and stocks?

Companies can raise money by issuing both stocks and bonds. When you buy stock, you become a part owner of the company and get to share in their profits. When you buy a bond, you are a lender. The company agrees to pay you interest in good times and bad — it’s not based on their profits.

Stocks are riskier because your return is not guaranteed. If the company doesn’t earn a profit, you won’t receive money and your investment could lose money. With bonds, you receive the interest payments each year, plus your money back at the end of the term (unless the company runs into financial trouble). However, stocks historically have a higher long-run return than bonds. It’s a tradeoff between risk and return.

What are bond credit ratings?

Besides the interest rate, another key factor for bonds is their credit ratings. While the bond issuer promises to pay interest and your money back at the end of the term, if they run into financial trouble, they might not be able to make all the interest payments. Even worse if they go bankrupt, you might lose part or even all of your initial deposit.

That’s why as part of your research, you should check the credit rating of any organization issuing a bond. Independent agencies — Standard & Poor’s, Moody’s and Fitch are the most prominent ones— review the finances of different organizations and give them a letter score based on what they see.

If a government or company is in strong shape financially and very likely to pay the money back, they will have a high rating like AAA. Riskier bonds will have a lower rating to show they are more likely to miss payments. Bonds with a rating below BBB- on the Standard & Poor’s system lower are called junk bonds because of their extra financial risk.

Typically, a bond with a worse credit rating pays a higher interest rate — otherwise, investors wouldn’t buy them. On the other hand, safe bonds can get away with paying a lower interest rate.

How do bonds compare against CDs?

There are certain similarities between bonds and certificates of deposit (CDs). They are both I.O.U.s from an issuer, which promises to pay you interest plus your original deposit. Still, there are also some important differences between bonds and CDs.

First and foremost, CDs issued by banks are insured by the Federal Deposit Insurance Corporation (FDIC). If the issuing bank goes out of business, the FDIC will in most circumstances return your money, up to the legal limit per account. Bonds do not have this protection, so if the issuer goes bankrupt, you could lose your money.

Another difference is that you can sell bonds to other investors for a profit or loss after buying them. With bank CDs, you can take your money out early in exchange for paying a penalty fee, but generally you can’t sell the CD to another investor (unless you buy brokered CDs).

According to Steven W. Kaye, CFP and managing director of Wealth Enhancement Group, CDs are much simpler, as they only have two components, “interest rate and the term of the investment,” adding that they are “two dimensional” and “completely predictable as long as you stay within the FDIC limits.” However, he pointed out that bonds typically have better returns.

What are the different types of bonds?

The bond issuer is the main differentiator among the types of bonds: is it a company, the federal government, a state? Some of the more common bond types include:

  • Corporate bonds: Corporate bonds come from private companies like Google, Ford or Exxon. Companies in good financial condition will have a higher credit rating, whereas struggling companies will have a low credit rating.
  • Treasury bonds: Bonds from the U.S. federal government are called treasuries. They have different names based on their terms: treasury Bills have a term of one year or less, treasury notes last between two and 10 years, and treasury bonds have a term of 30 years. These are some of the safest investments in the world because they are backed by the U.S. government. You can also buy bonds issued by other national governments.
  • Savings bonds: Savings bonds are also issued by the federal government, and they pay a set interest rate on your investment. You can buy these bonds for as little as $25, much lower than other categories. Another difference is that you cannot sell a savings bond to another investor. Instead, you can redeem them early with the U.S. Treasury, in exchange for forfeiting some of your interest.
  • Municipal bonds: When state and local governments raise money, they sell municipal bonds. These can be safe, but you’ll need to check the rating, as not every state or town is in good financial shape. To help state and local governments raise money, the IRS gives municipal bonds a tax advantage: You do not need to pay federal income tax on the interest from most municipal bonds. They also may be free of state and local taxes, depending on where you live.
  • Zero-coupon bonds: While most bonds pay interest, you could also find zero-coupon bonds that do not. Instead, you buy these bonds at a lower price initially and then get more money back at the end. For example, you pay $800 and get $1,000 back in five years. That larger lump sum payment at the end can be nice, but the downside is these bonds don’t pay out interest income each year.

How do you buy bonds?

One way to buy bonds is through an investment brokerage account like Fidelity or E-Trade. If you have a retirement account like a 401(k), you could also use money in that account to buy bonds.

One way to buy bonds is directly from an organization when they release them for the first time, known as a primary issue. You can also buy and sell bonds on the secondary market from other investors. For example, you buy a 3-year old Google bond that still has seven years left of payments from an investor. This can give you more options as companies aren’t issuing new bonds every day.

Finally, there are bond mutual funds and exchange traded funds (ETFs). These are professionally managed funds that build a portfolio of many different bonds for a large group of investors. By buying into the fund, you get a small piece of the entire portfolio.

Kristi Sullivan, a CFP from Denver, thinks that funds are the best option for beginner investors because they help you get more exposure with a smaller investment.

“There are different areas of the bond market (investment grade, high yield, foreign, and various maturities) and many bond funds specialize in these sub-asset classes,” said Sullivan. “You can also buy individual bonds, but they sell for about $1,000 per bond so it takes more money to create a diversified bond portfolio that way.”

What sets the price of bonds?

When organizations issue bonds, they typically set the price for each one at $1,000. However, after the initial issue you can buy and sell bonds on the open market and the price can change.

One major factor is market interest rates. When interest rates go up, the prices of old bonds go down. If you have an old bond paying 4% but now people can go out and buy a brand-new one for 5%, you need to give them a price discount for them to accept the lower interest payments. This is called selling at a discount.

On the other hand, if interest rates go down, the price of old bonds go up. You could sell your original $1,000 bond for more than that, like $1,100. This is called selling your bond at a premium. To get an approximate value of how much your bond is worth based on its interest rate versus market rates, you can use an online calculator like this one.

Investors buy and sell bonds to each other through financial markets so the actual price you’ll receive depends on what someone else is willing to pay for your bond.

Another factor is the underlying finances of the bond issuer. If the bond issuer runs into financial trouble after you sign up, investors are going to be reluctant to buy that old bond so the price will fall to make up for the extra risk.

Are bonds a safe investment?

Bonds are a moderately safe investment, especially compared to stocks. While there is a chance you might not get your money when an issuer runs into financial trouble, if you buy higher-grade bonds you are relatively secure against facing losses. In other words, you should receive the interest plus your money back. However, as Kaye pointed out, there are other types of risk as well.

“CDs and high-quality bonds are safe in terms of default risk but have inflation risk,” he said. Recently for these kinds of investments, “rates have been so low that after you subtract income taxes and inflation, you could actually have a negative return.” Stocks, on the other hand, with their higher potential return, “provide inflation protection.” This is why a diversified portfolio has a mix of different assets, so you get all their advantages.

What are strategies for investing in bonds?

We asked financial advisors whether they had any tips for investing in bonds; here are a few they thought worth considering.

  • Stick with high-quality bonds. Kaye believes that beginners should stick with high-quality bonds, those with a high credit rating. That way you can feel confident that your interest income will come in each year and that you won’t lose your initial investment. While the higher interest rates on junk bonds may be tempting, they are more likely to lose money.
  • Avoid micromanaging: With so much research and daily news out there, beginner investors can overreact to market changes. “I am a buy-hold-annual-rebalance advisor, so I’d say don’t micromanage your bond investments,” said Sullivan. So after buying a bond, wait a year before making any buy/sell decisions.
  • Consider bond funds for lower budgets: “For those who do not have enough money to buy individual bonds, there are investments like BulletShares, which is a basket of bonds with specific maturity dates for smaller investors,” suggests Kaye.
  • Keep in mind tax breaks from municipal bonds. Marguerita Cheng, CFP and CEO of Blue Ocean Global Wealth, sometimes sees people misusing the tax breaks on municipal bonds. “It doesn’t make sense to have municipal or tax-free bonds in tax-deferred accounts, such as IRAs. The benefit to investing in municipal bonds is that they are exempt from federal & state taxes.” Since municipal bonds are already tax-free, you should keep them in a regular brokerage account while saving your retirement plan tax breaks for taxable bonds.She also says you should watch out for your state’s rules for bond taxes. “In states like Virginia, Virginia residents can purchase Virginia municipal bonds and not be subject to state or local income tax. While they can purchase bonds from another state, those would not be exempt from Virginia taxes.”
  • Consider a bond ladder. One risk with bond investments is that interest rates will change after you sign up. To get around this, you could set up a bond ladder, where you buy bonds with different maturities. For example, rather than putting all your money in 5-year bonds, you divide it up between 1-year, 3-year and 5-year bonds.If interest rates go up after you buy, you’ll be able to renew the 1-year bonds soon at a better rate. If interest rates go down after you sign up, you’ll still keep the higher rates on your longer-term bonds. By getting a mix of short and long-term bonds, you cover yourself in both scenarios.

How can someone get help investing in bonds?

If you still need some help figuring out how to trade bonds, there are ways you can prepare. First, you can see whether the broker selling the bonds can give you advice. FINRA, an investment regulatory agency, recommends that you look for a broker that specializes in bond trading so you can get this support.

Another option is to buy bond funds and ETFs. The fund prospectus will list the types of investments and fees so you can find one that’s appropriate for your situation. For more hands-on support, you could hire a financial advisor, who could recommend a suitable bond portfolio for your goals and even personally manage it for you. You would need to pay for this advice, either as an hourly fee or as a percentage of your portfolio every year.

Whichever system you use, you will be adding a valuable asset class to your portfolio that balances out your stocks. With a little research and the information in this guide, you can feel more confident about your bond investing decisions.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Review of Carson Wealth Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Carson Wealth is one of a number of business names used by the investment advisory firm registered with the SEC as CWM, LLC. The main focus of the firm is to manage investment portfolios for individuals and high net worth families, as well as some foundations, endowments and institutions. The firm also offers retirement plan services for employers, as well as some financial planning for individuals. With more than 100 affiliated offices nationwide, CWM as a whole employs more than 300 people and works with many independent contractors. It currently has more than $7.5 billion in assets under management (AUM).

All information included in this profile is accurate as of January 21st, 2020. For more information, please consult Carson Wealth Management’s website.

Assets under management: $7,502,978,872
Minimum investment: Varies based on investing program
Fee structure: A percentage of AUM; hourly fees; fixed fees
Headquarters: 13321 California Street
Omaha, NE 68154
carsonwealth.com
402-330-0808

Overview of Carson Wealth

The firm’s roots go back to 1983, when Ron Carson started the independent advisory firm Carson Wealth in Omaha, Neb. CWM, LLC was formed in 2010, and has since grown to manage more than $7.5 billion.

Today, CWM, LLC has about 20 offices nationwide under the Carson Wealth branding, as well as a network of nearly 100 additional partner offices that do business under their own branding and ownership but tap the company’s resources for research, technology, marketing, operations and compliance, among other areas. The Carson Group, another division of the company, offers coaching to other financial advisors.

CWM has more than 300 employees, about 200 of whom perform investment advisory functions including research. Their specialties include proprietary model portfolios; insurance and annuities; and employer-sponsored retirement plans.

Ron Carson, who is the CEO of CWM, LLC, is the majority shareholder of the firm’s parent company, Carson Group Holdings. He has written many books on financial planning and wealth, including “Tested in the Trenches,” “Avalanche” and “The Sustainable Edge,” and also frequently contributes to CNBC.

What types of clients does Carson Wealth serve?

The firm’s clients include mostly individuals and high net worth families, though it also serves pension and profit-sharing plans; insurance companies and other corporations; trusts and estates; 401(k) sponsors; and others.

The minimum amount of assets needed to work with the firm varies depending on the type of investing program selected. For instance, the minimum investment for a managed account with the firm typically starts at $10,000, though exceptions exist. The specific strategy portfolios have their own minimum investments, ranging from $1,000 to $5,000 on the low end, up to $250,000 on the high end. For example, the Advance & Protect Strategy, which aims for capital preservation over appreciation, requires a $100,000 investment for a minimum of three years. On the other hand, the Diversified Growth strategy, which consists mostly of no-transaction fee mutual funds, can be opened with an investment of just $1,000.

Services offered by Carson Wealth

The main focus of Carson Wealth is to manage its clients’ investment portfolios on a discretionary basis, meaning the firm makes all decisions to buy, sell or hold securities without needing to first consult the client. There’s the option to add on more robust financial planning services and an analysis of your financial situation through the True Wealth Plan, which also advises on retirement, education, long-term care, estate and insurance needs. Tax services are offered separately by a team of certified public accountants in the Carson Wealth Tax Planning division.

About half of the company’s employees are also licensed to sell life and disability insurance, so be prepared to be pitched variable life and annuity products. The firm also advises employers on employer-sponsored retirement plans.

Here is a list of services offered at CWM, LLC:

  • Investment advisory services and portfolio management (separately managed or wrap fee accounts)
  • Financial planning
    • Retirement planning
    • Trust and estate planning
    • Education planning
    • Tax planning and management
    • Cash flow forecasting
    • Long-term care planning
    • IRA and 401(k) rollovers
  • Insurance/risk management
  • Employee benefit plan fiduciary services and 401(k) consulting
  • Workshops and seminars
  • Newsletters and publications

How Carson Wealth invests your money

The firm allocates client money across more than 70 model portfolios, which typically include a diverse mix of securities. Each portfolio has a specific goal, such as minimizing losses, generating income, achieving growth or diversifying through alternatives. The firm also offers sustainable funds for investors focused on environmental, social and governance factors. Based on your objectives, risk tolerance and time horizon, your investment advisor representative, who could be a Carson employee or an independent contractor, will create your recommended asset allocation across these strategies.

To create and manage model portfolios, the investment committee uses a combination of three methods of analysis: fundamental analysis, technical analysis and charting. Fundamental analysis attempts to determine a security’s intrinsic value by studying everything that can affect its value, while technical analysis looks at statistics, such as prices and volume, and uses charts and tools to identify patterns that may suggest future activity. Charting is used to plot key factors, such as price movements and volume, to anticipate future movement. The firm may trade frequently and buy options contracts granting the right to buy or sell a security, such as a stock, at a fixed price in the future.

For unique investment strategies, the investment committee taps the knowledge of outside advisors. A few model portfolios are managed by unaffiliated groups. Alternatively, advisors may directly manage client assets in separately managed accounts outside of these model portfolios when it’s deemed to be in the best interest of the client.

Fees Carson Wealth charges for its services

Portfolio management fees

To manage your portfolio, the firm charges an annual fee based on a percentage of the value of your portfolio. The rate you’ll pay is negotiable and depends on a number of factors, including your advisor, the value of your portfolio, your investments, the complexity of your portfolio, your financial situation, the level of trading activity in your portfolio, anticipated future assets and additional services requested. Note that your rate may vary from advisor to advisor even if the services provided are the same. The maximum rate you’ll pay is 2.50%.

In addition to an asset-based fee, you’ll also pay certain transaction charges for trades if you open a traditional brokerage account. Alternatively, you can elect to open a wrap account that bundles your management and transaction costs under one fee. The wrap account fee is typically higher than a traditional brokerage account since it covers transaction fees, but when trading in your account is very heavy your total cost can be less.

Financial planning fees

For financial planning, you’ll pay an hourly fee that ranges up to a maximum of $500 per hour. CWM will provide you an estimate of how many hours it expects to spend on your planning services. Alternatively, you can pay a fixed fee, which typically ranges from $500 to $25,000 or more depending on the complexity of the engagement.

Another option is to buy a True Wealth Plan, which charges a one-time fee of 0.20% of the financial plan’s total assets, with a minimum fee of $3,500. This plan analyzes retirement, education, long-term care needs, estates, life and disability and planning for major purchases. The fee can be reduced if you transfer assets to CWM for advisory services within six months of the plan.

Variable and annuity life contract fees

For variable annuity and variable life contracts under the management of CWM, you’ll also pay an annual investment advisory fee which will not exceed 2%. The insurance companies issuing your variable annuity and variable life contracts will charge management expenses in addition to the CWM investment advisory fee.

Before you pay any fees, you’ll receive an Investment Advisory Agreement to sign that will list the specific fees you’ll owe. Your fees will be directly debited from your account.

Carson Wealth’s highlights

  • National recognition for long track record: Founder Ron Carson was inducted into the Barron’s Hall of Fame in 2014 for appearing on their list of top 100 advisors for 10 consecutive years. More recently, the larger Carson Group firm ranked ninth on Barrons 2019 list of Best Registered Investment Advisors based on assets, revenue and quality of practice.
  • A low account minimum: No need for a six-figure portfolio to start working with a CWM advisor, which can be the case at many financial advisory firms. Though the exact account minimum required will depend on the investing program, the firm’s strategy programs have minimums as low as $1,000 to $5,000 and the minimum investment required for a managed account is typically $10,000.
  • Broad choice of strategies and portfolios: The firm offers more than 70 model portfolios managed directly by CWM, providing a diverse group of strategies and interests, including sustainable funds for investors focused on environmental, social and governance characteristics. To round out its offerings, the firm also offers portfolios and alternative investments managed by others.
  • Nationwide presence: The firm has been working to grow its affiliate offices around the country, and today it has a network of nearly 100 partner offices nationwide, plus about 20 offices branded under Carson Wealth. Keep in mind that each partner office typically has its own name and founders.

Carson Wealth’s downsides

  • No standardized fee schedule: Your investment management fees can vary depending on what office or advisor representative you choose, even when requesting the exact same service. Thus, there is no published fee schedule you can reference beforehand to determine if the firm is a good fit for you and compare rates with other firms. Carson Wealth’s maximum rate of 2.50% is high in comparison to the national average rate of 1.17%, but your fee could be much lower, though you won’t know for sure until you start working with the firm.
  • Advisors may sell other products or services: Many advisor representatives are also registered representatives of other firms, so they can earn commissions from selling you products and services outside of investment advice, such as variable annuities, disability or other insurance products. CWM also receives referral compensation from certain firms, such as broker-dealers, when you move your money to those firms. These outside financial interests could incentivize advisors to make decisions that are in their best financial interests, rather than those of the client.
  • Allows investors to borrow against their account: CWM has entered into an agreement with a company called Supernova that allows you to put up some or all of your portfolio as collateral to obtain a line of credit. While it may sound enticing, you’ll pay interest on the credit line, plus getting into the habit of raiding your investments and savings will prevent you from reaching your long-term financial goals. Additionally, CWM is indirectly compensated through its relationship with Supernova, which could create a conflict of interest as the company has a financial incentive for clients to get a line of credit.
  • May share your information for marketing purposes: Your investment advisor collects personal information about you in order to service your account. That information isn’t sold, but may be shared with affiliates of the company to market other products or services to you. However, you can fill out a form the company provides to limit your advisor from disclosing your information if they leave the firm.

Carson Wealth disciplinary disclosures

All registered investment advisors are required to disclose any legal, regulatory or criminal event that is material to how a client evaluates the business or the integrity of the management team in their Form ADV, paperwork filed with the SEC. Carson Wealth Management has disclosed no such events over the past 10 years.

Carson Wealth onboarding process

If you’d like a local office in your area for face to face meetings, use the firm’s search tool to see if there is an affiliated office in your area. You can also connect with the firm by filling out the contact form provided on its website, which requests your name, email address, phone number and a brief message.

If you decide to sign on with Carson Wealth, you will work with an investment advisor representative, who may be an employee of Carson Wealth or an independent contractor working under their own branding. During your initial meeting, you’ll be asked to fill out a client profile with information about your risk tolerance and financial goals to help your advisor craft your specific asset allocation strategy. You should update your information regularly, at least every two years.

You will meet with your advisor by phone or in person at least annually to review your account and make any changes to your financial profile.

Is Carson Wealth right for you?

CWM targets mostly individuals and high net worth families, providing portfolio management using its diverse group of strategies. A much smaller number of clients pay for robust financial planning advice. The firm’s large nationwide network of partner offices and low account minimums make it accessible for a wide range of investors.

Be aware that advisors, many of whom are affiliated with CMW as well as other firms, can sell products and services — particularly insurance and variable annuities — in exchange for commissions and referral fees. Always ask your advisor how they earn money outside of the fees that you pay. As with all financial relationships, it’s your job to make sure you end up with an advisor relationship that’s in your best interest.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

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Investing

Review of Geneos Wealth Management

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone and is not intended to be a source of investment advice. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Geneos Wealth Management is a private wealth management firm based in Centennial, Colo. The firm offers financial planning and portfolio creation and management, primarily to individuals, without requiring a minimum account balance. It currently has about $3.3 billion in assets under management (AUM), overseen by a staff of 230 investment managers, nearly all of whom are registered broker-dealers and insurance agents.

All information included in this profile is accurate as of January 21st, 2020. For more information, please consult Geneos Wealth Management’s website.

Assets under management: $3,294,334,641
Minimum investment: None required
Fee structure: A percentage of AUM, hourly charges, fixed fees
Headquarters: 9055 East Mineral Circle
Suite 200
Centennial, CO 80112
www.geneoswealth.com
888-812-5043

Overview of Geneos Wealth Management

Geneos Wealth Management is a privately held wealth management firm that offers financial planning and wealth management services. The firm has 230 investment advisors, the vast majority of whom are registered representatives of broker-dealers and licensed insurance agents.

Geneos Wealth Management currently has nearly $3.3 billion in assets under management. CEO Russell Diachok founded the firm with his father in 2002, after selling their previous firm to ING. Diachok’s nephew, Ryan Diachok, is the president of Geneos Wealth Management.

What types of clients does Geneos Wealth Management serve?

The vast majority (more than 97%) of Generos Wealth Management’s clients are individual investors, although the firm has some clients who are high net worth individuals. The SEC defines high net worth individuals as those with at least $750,000 in assets under management, or a net worth believed to be above $1.5 million. In addition, Geneos works with some charitable organizations and businesses.

There is no minimum account size required to open a VIP or Ultra VIP managed account at Geneos, though their Axiom managed accounts have a $10,000 account minimum. However, the firm notes that it may allow exceptions to these requirements at its discretion.

Services offered by Geneos Wealth Management

Geneos Wealth Management provides financial planning and asset management services to clients and also refers clients to third-party money managers. Most advisors are also insurance agents who may make insurance product recommendations and sales.

The firm’s financial planning services range from holistic planning covering all aspects of a client’s financial situation to modular plans that focus on a specific area, such as retirement planning or asset allocation.

For asset management services, Geneos Wealth Management has three programs available:

  • VIP Program: This is the firm’s traditional portfolio management program. The client invests their money with a referred custodian and makes investments based on recommendations by their Geneos Wealth Management representative. Clients are charged separately for advisory services and transactions.
  • VIP Ultra: This is one of the firm’s two wrap fee programs, which is when a firm bundles services under a single fee. Clients in the VIP Ultra program invest with a Geneos-approved custodian, and their Geneos Wealth Management representative will make trades within the portfolio on their behalf. Rather than paying per transaction, the client pays a wrap fee that covers both advisory services and transaction costs.
  • Axiom: The Axiom program, the firm’s second wrap fee program, has a minimum investment requirement of $10,000. Clients in this program work with their advisors to select an investment model or models that makes sense for their financial situation and invest their money with custodians with whom the firm has a relationship. Their Geneos Wealth Management representative will then manage that portfolio on their behalf. Like with VIP Ultra, clients pay a single wrap fee that bundles advisory services and transaction costs.

Here is a full list of services offered by Geneos Wealth Management:

  • Investment advisory services/ portfolio management (separately managed/wrap fee accounts; discretionary/non-discretionary)
  • Financial planning
    • Tax planning
    • Retirement planning
    • Asset allocation
    • Risk management
    • College planning
    • Estate planning
  • Pension consulting
  • Educational seminars and workshops
  • Brokerage services
  • Selection of other advisors

How Geneos Wealth Management invests your money

Geneos Wealth Management uses a variety of securities analysis approaches to create portfolios for clients. Among them: charting (looking at historical patterns), cyclical analysis (looking at recurring periods), fundamental analysis (looking at company characteristics) and technical analysis (looking at market data for price trends and movements).

The firm uses several different investment strategies, including short-term and long-term purchases, trading, making short sales and margin transactions, option writing, market timing and strategic asset allocation. Geneos Wealth Management may refer clients to third-party managers who have different investment philosophies.

The approach that Geneos Wealth Management takes to program design differs depending on which program the client enrolls in, but is generally based on the client’s individual goals and objectives. In the VIP program, representatives work with clients to design a portfolio based on a third-party custodian’s platform. In the VIP Ultra program, they design either a customized portfolio or one based on the representative’s model. Clients in the Axiom program invest in one or more models created by third-party portfolio strategists.

The portfolios may include a variety of investments, including mutual funds, stocks, bonds, options and cash, as well as alternative investments such as real estate investment trusts and limited partnerships.

Fees Geneos Wealth Management charges for its services

Fees for investment advisory services at Geneos Wealth Management are negotiated directly between the client and their representative, and rates are based on a percentage of assets under management. Rates can range from 0.5% to 2.5% and can be flat or tiered. The VIP Ultra and Axiom programs use wrap fees, meaning that there are no additional fees for individual transactions, which are bundled with the advisory fee into a single charge. The firm also offers a VIP program, in which the client pays for individual transactions and a separate management fee. Depending on the volume of trades in the account, this fee arrangement can be more or less expensive for clients.

Clients may have to pay additional fees to outside firms for fund management, sales charges, annuity fees or other charges, depending on the investments used in their account. VIP clients may also have to pay separate fees to third-party managers to which they are referred by Geneos Wealth Management.

Financial planning rates at Geneos Wealth Management are negotiated directly between clients and their representatives as a one-time charge, an hourly rate or a retainer, according to the following limits set by Geneos Wealth Management.

Rate structure Minimum fee Maximum fee
One-time charge $125 $25,000
Hourly fee $35/hour $300/hour
Retainer (monthly, quarterly or semi-annual basis) $50 per period $25,000 per period

Geneos Wealth Management’s highlights

  • No account minimums: For those who want help with financial planning or have a small amount of money that they want to invest, there’s no account minimum required to become a Geneos Wealth Management Client. This makes the firm accessible to all levels of investors.
  • Industry recognition: Investment Advisor has named the firm broker-dealer of the year (among brokers with 200-499 representatives) six times, based on advisor votes.
  • Customized guidance: If you work with a Geneos Wealth Management advisor, they’ll take your specific goals and risk tolerance into account when advising on your portfolio and creating a financial plan. Then, you can decide whether to implement the plan, and whether to purchase investments through the firm or elsewhere.

Geneos Wealth Management’s downsides

  • Potential conflicts of interest: Most Geneos Wealth Management advisors are also registered insurance agents and/or broker-dealers, which means they can earn commissions for selling specific insurance or investment products. The firm also earns commissions for referring clients to other investment advisors’ management programs, and it generates fees from client money that is awaiting reinvestment. These financial arrangements could pose potential conflicts of interest as an advisor may be incentivized to make certain recommendations or referrals.
  • Lack of fee transparency: Since each advisor sets their own fees, it can be difficult to predict the cost of working with the firm before having a meeting. Additionally, Geneos Wealth Management caps fees at 2.50% of assets under management, which is more than double the 1.17% national average for RIAs, according to RIA in a Box.
  • Recent disciplinary disclosures: Geneos Wealth Management recently had to pay a nearly $2 million fine due to an alleged breach of fiduciary duty. (More details below.)

Geneos Wealth Management disciplinary disclosures

Geneos Wealth Management has disciplinary disclosures on its record. All SEC-registered firms are required to note any disclosures, which include any past criminal, regulatory or civil penalties, in their Form ADV, paperwork that they must file with the SEC.

In 2018, the Securities and Exchange Commission (SEC) ordered Geneos Wealth Management to pay a fine of more than $1.8 million following charges that the firm had breached its fiduciary duty to clients. The settlement stemmed from allegations that from 2012 to 2017 the firm had profited by putting some advisory clients’ assets into higher-fee share classes of mutual funds even though the clients were eligible for shares with lower fees. The SEC also alleged that Geneos Wealth Management had not properly disclosed the compensation it received for referring clients to some third-party broker-dealers.

Geneos Wealth Management has since revised its policies to prevent such issues in the future.

Geneos Wealth Management onboarding process

To get started with Geneos Wealth Management, you can call the firm at 888-812-5043 or fill out the contact form provided on its website. The form requests your name, contact information and a brief message.

An advisor at Geneos will then work with you to create a financial plan, either holistically looking at your entire financial picture, or focusing on a specific issue like saving for retirement or your child’s college education. While Geneos Wealth Management creates the plans with the intention that you’ll implement them, there is no requirement to do so.

If you opt to use Geneos Wealth Management’s asset management services, you’ll choose the appropriate program (VIP, VIP Ultra or Axiom). Your representatives will work with you to implement the portfolio you’ve designed and manage it on your behalf.

Clients who pay for ongoing consultation will receive an annual review to determine their progress toward their goals. Representatives will also review managed accounts on an ongoing basis and advisory accounts on request to make sure they continue to meet the client’s needs.

The bottom line: Is Geneos Wealth Management firm right for you?

Geneos Wealth Management may be a good choice for clients looking for financial planning and help with their investments. The firm primarily works with individual investors and has no minimum account balance, making it a viable option for many investors who may be shut out of other firms that focus on wealthier investors.

However, the firm has multiple potential conflicts of interest and an unclear fee schedule, so it’s important to understand the cost of services and why advisors are making a specific recommendation. As is the case before making any financial decision, it’s important to do your research and compare multiple options to find the best fit for you.

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