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Frequently Asked Questions
What is the difference between a fee-only registered investment advisor and a broker? What is the difference between having a managed account and owning Mutual Funds? How often will I get account updates? Is Beam Capital Management a Hedge Fund?
What should I do if I want to hire Beam Capital Management as my investment adviser?
What is the difference between a fee-only registered investment advisor and a broker? There are two main differences between registered investment advisors and brokers: Relationship to clients: By law (the Investment Advisers Act of 1940) Registered Investment Advisers (RIAs) have a fiduciary duty to their clients. They have to put the interests of clients ahead of their own and they have to recommend the best investments for the clients, not just suitable ones. Brokers, some of whom call themselves Financial Advisers, are regulated under a different law and they simply have to recommend suitable investments to their clients. In many instances, brokers are salespeople who help their clients trade stocks. They are not held to the same fiduciary responsibility as Registered Investment Advisors and it’s perfectly legal that the interests of the brokerage firm come ahead of that of the clients’. Compensation: Fee-only Registered Investment Advisers are paid a percentage of assets under management. Hence, their objective is the same as that of the clients’ which is to maximize the value of the account. Since they are not paid in commissions, they only recommend trades that they believe would satisfy the stated objectives of the account. Most brokers are compensated on a transaction-based system through commissions. Although many brokerage firms have recently introduced asset-based fee accounts, many brokers still have a financial interest in client transactions through sharing Mutual Fund sales loads for example. What is the difference between having a managed account and owning Mutual Funds? Managed accounts have 3 main advantages over Mutual Funds: Customization, tax efficiency, and liquidity. Managed accounts offer you and your advisor the flexibility to tailor your portfolio according to your preferences no matter how unique they might be. Mutual Funds consist of pooled assets invested using one investment approach. Furthermore, when purchasing shares in Mutual Funds, investors immediately owe capital gains taxes on any subsequent distribution even if those gains occurred before your purchase. With managed accounts, you and your advisor decide when to take capital gains and your taxes are based on your capital gains only. Additionally, if an investor decides to buy or sell his/her Mutual Fund shares in reaction to a severe market move, the investor can only do so with end of day prices and not current prices when the order is entered. Managed accounts are advantageous to investors who wish to invest a lump sum. Mutual Funds are ideal for investors who are just starting a retirement or savings plan and wish to make small periodic contributions. Beam Capital Management (BCM) is an investment advisor and does not have custody of client's funds. BCM only has management authority over client's accounts. When clients decide to hire BCM as their investment advisor, they are instructed to open an account in their own name with a brokerage firm for custody and trade execution services. Since BCM will be providing investment management and advice, we recommend that clients use a discount brokerage firm to minimize transaction costs. BCM does not receive any compensation from the custodian for commissions charged for trade execution. How often will I get account updates? Beam Capital Management will send you quarterly account reports. This is in addition to the monthly account statements that you should be receiving from your brokerage firm. BCM will send more frequent updates based on a client's preference. Furthermore, your dedicated portfolio manager is always available to answer any of your questions. Is Beam Capital Management a Hedge Fund?
No. We are a Registered Investment Advisor who manages clients’ portfolios through separate accounts. Each investor opens an account at a custodian in their own name and Beam Capital Management has management authority to choose the appropriate investments in each account. Hedge Funds usually are organized as Partnerships between investors (limited partners) and the Hedge Fund Advisor (the general partner). Since each account has a customized investment objective, we may follow various investment strategies often employed by hedge funds in certain accounts where it may be appropriate.
What should I do if I want to hire Beam Capital Management as my investment adviser?
You would need to request and fill out a new account application form. After we receive your application we will contact you in order to customize a portfolio according to your specific needs and objectives. You can request a new account application by clicking here.
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