Thursday, December 3, 2009

Responding to commonly-asked questions

"Our communication approach is different because our relationship with clients is structurally different."

Founder Dan Danford Responds to Common Thoughts and Questions

Family Investment Center is pretty well known beyond St. Joseph and Missouri.

That's very true. We've been in a lot of industry journals and several national magazines and newspapers. The day I was quoted in the Wall Street Journal was a big one for me! Recently, Jason White talked about retirement investing in Business Week. The past two years, Medical Economics magazine named us as one of the nation's 150 top advisors for physicians - the only Missouri advisory firm west of St. Louis.

What's the main challenge facing Family Investment Center today?

Our firm plays on a national stage, yet we're pretty quiet in the local market. We manage almost $60 million for our clients, and we're very active in the community. But our corporate visibility remains relatively low and a lot of people don't know enough about us.

Why is that?

One reason is that we tend to work with people who already have some money. If you mainly work with people who have sizable portfolios, how many people is that in St. Joseph? Our client base tends to be deep and narrow.

Why talk about marketing, then?

There are a lot of people here who will need our services at one point or another in their lives. They will retire and cash out their 401(k), or they will inherit money from a relative. Where will they turn for quality help? And, of course, there are others in our neighborhood that might be frustrated with their existing broker or bank.

Obviously, St. Joseph has a number of investment firms.

We have a different idea about investing, that's all. There are really just two structural approaches to managing portfolios. The traditional method is that you manage it yourself with the aid of a broker. The broker provides ideas and information, and helps you buy or sell securities. Some larger investors use multiple brokers to gather more ideas.

The other approach - our approach - is to hire experts to manage the portfolio for you. This has been around for a very long time, too, but was limited to wealthy individuals and institutions. Through first-rate technology, Family Investment Center brings that approach to all our clients.

How unique is that business structure?

Well, we're kind of unique in this marketplace, but similar firms are very successful throughout the nation. In fact, SEC-registered investment advisors are one of the fastest growing segments in the investment world. Registered investment advisors have been around since the 1940s, but their original focus on large foundations and wealthy individuals kept them out of the public eye. Until recently, that is.

Why is that better?

Well, it depends on the investor, of course, but I've found that most people aren't well suited to evaluate a broker's recommendation. There are a lot of moving parts, with numerous variables. It's uncomfortable to decide on things you don't really watch on a daily basis, or completely understand. When someone shows a better way, people take it.

Our investment approach is academically sound. We build diversified portfolios and monitor them on an ongoing basis. We use institutional research and top-notch managers from around the world. It's a proven system and it really works.

What do you do best? What separates you from others?

Two main things, I think. Our attention to proven investment strategies and vehicles keep our clients in the mainstream of investing. We don't get cute and we stick to solid investment basics. We do things that have worked in the past and trust that they will work in the future, too. So far, that's been the case.
Our communication approach is different because our relationship with clients is structurally different. We don't sell anything except our expertise. We educate and explain, and we're pretty good at it. We are knowledgeable consultants, and clients appreciate our objective judgment and insight.

Any investors who don't fit your model?

If what you want is someone to hold your hand or stroke your ego, we're probably not the right firm for you. If you want a proven process with high odds for success, we're your guys.

How is Family Investment Center regulated?

We used to get that question a lot, but now that we've been around since 1998, it's less of an issue. We are registered with the United States Securities and Exchange Commission (look up our SEC file number #801-63744) and all client portfolios are held at a non-related investment firm. Clients get monthly statements directly from their custodian to verify portfolio holdings, prices, and balances. It's a very good system.

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