|FREQUENTLY ASKED QUESTIONS|
Expenses can have a significant impact on returns for investors. ETFs, in general, have significantly lower annual expense ratios than other investment products. The ETFs that Servant Financial utilizes also generally have lower costs than traditional mutual funds. As a frame of reference, according to Morningstar, the expense ratio of the average domestic equity ETF is about 0.36% compared to 0.99% for the average equity index fund and 1.52% for the average actively managed equity mutual fund.
Lower cost - tax efficiency
ETFs, like index funds in general, tend to offer greater tax benefits because they generate fewer capital gains due to low turnover of the securities that comprise the portfolio. Generally, an ETF only sells securities to reflect changes in its underlying index. Exchange trading of ETFs further enhances their tax efficiency. Investors who want to liquidate shares in an ETF simply sell them to other investors through exchange trading. Because of this unique structure, ETFs are not required to sell securities to meet investor cash redemptions as can often be the case in a traditional mutual fund, potentially generating capital gains tax liability for remaining investors. Keep in mind that the sale of an ETF will generate capital gains/losses for the investor liquidating shares.
ETFs address the problem of benchmark underperformance by active managers. Numerous studies have shown that the majority of active managers have underperformed their benchmark indexes. The high rate of underperformance relative to indexes principally results from the expenses associated with active management. Furthermore, there are very few active managers who consistently outperform their benchmark indexes. So while it is possible to identify outperforming managers in hindsight, the difficulty lies in identifying such managers that will consistently outperform in the future. For a more detailed analysis of active manager performance against indexes, please go to Investment Process. < Back to top >
What are my total estimated investment costs, including advisor fees, fund expenses, etc.?
Servant Financial's asset-based management fees are based on a percentage of your assets under management at the beginning of the calendar quarter. The advisory fees are separate and distinct from fees and expenses charged by exchange traded funds (ETFs) and mutual funds which may be recommended to clients. We are happy to review all fees so that you are fully aware of the total amount of investment expenses incurred. For a more detailed description of our fee structure, please go to About Our Fees. < Back to top >
Which custodian will be used to hold my accounts?
Fidelity Investments will provide custody and brokerage services for your account. Fidelity is our custodian of choice because of its excellent reputation, its competitive trading costs and its high levels of customer service. < Back to top >
What are Fidelity's commission charges?
Fidelity charges $17.95 for equity trades, which includes ETFs. Accounts with $1 million and above in assets are eligible for $8.00 per trade pricing. The number of trades per year in our portfolios will vary based upon market conditions, but clients should expect approximately 10-12 transactions (buys and sells) in a typical year. < Back to top >
Does Servant Financial charge for an initial consultation?
There is no charge for an initial consultation. We recognize the importance of earning your trust, and offer our insight and expertise without obligation. < Back to top >
Who has access to my money?
The only person or persons who have access to your money are those individuals listed as the owner(s) of the account. Servant Financial has limited power of attorney to buy and sell securities, but does not have direct access to funds in investor accounts. < Back to top >
What type of reporting will I receive?
In addition to regular monthly custodial statements from Fidelity, clients will also have access to the monthly portfolio reporting available on Servant Financial's website, www.servantfinancial.com. The portfolio reports include analyses of performance, investment holdings and valuations, asset allocations and investment earnings and cash flow. < Back to top >