Financial Times Top 300

Parsec is excited to have been named one of the nation’s Top 300 Registered Investment Advisers by Financial Times Magazine.  The candidate pool started with more than 2,000 qualifying RIA firms.  This list was then narrowed down to the top 300 in the nation after a lengthy decision making-process. Each firm was required to fill out a survey where the FT scored RIAs based on 6 broad factors. These areas included adviser assets under management, asset growth, the firm’s years in existence, industry certifications of key employees at the firms, SEC compliance record and online accessibility.  We are excited to have been included in this inaugural list. Check out their site to read more about FTs Top 300! http://www.ft.com/intl/reports/registered-investment-advisers

 

Ashley Woodring, CFP®

Financial Advisor

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Where is My Money?

It seems there are always stories in the news about the latest scheme that has defrauded many people. Seeking a big return, people give their hard-earned dollars to criminals. The big return is never realized. All the money is lost.

With all the bad guys in our industry, I can understand how someone would look at Parsec with a skeptical eye. I am not going to discuss our performance returns or market strategies in this post. I want to discuss something a little more basic that everyone should consider when interviewing a potential investment advisor: “Where is my money?”

In some cases, the victim gives the criminal money to buy investments. In turn, the fraudsters provide the victim with a statement showing assets purchased with that money. It may contain the names of easily recognizable companies. Without an actual stock certificate behind that piece of paper, the statement is worthless.

At Parsec, we do not take custody of your assets. The assets are held at an independent broker, in your name. We recommend Charles Schwab, Fidelity, and T.D. Ameritrade, all brokers whose names you probably recognize. You will receive a quarterly statement from us that contains performance statistics and other information. You also receive a monthly statement from the independent broker so you know exactly what you own in each investment account.

Furthermore, we do not have the authority to move those assets to an unlike-registered account without your consent. You must sign a letter or form to authorize the movement of securities to unlike-registered accounts, which adds another layer of security.

When assets are held at a broker and registered to you, an independent source tells you what you own. There are no “phantom” assets. Also, giving someone the ability to move assets to accounts not registered in your name can be dangerous if in the wrong hands.

When you select an investment advisor, I hope you will ask this very basic question. You worked hard to accumulate what you have. Don’t let an unscrupulous person take it away from you.

Cristy Freeman, AAMS
Senior Operations Associate

And Now For Something Completely Different

Are you as fatigued as I am with the constant barrage of bad news?  Every time you turn on the TV, someone is yelling about the stock market.  You see images of devastation, famine, and war on every channel.  We need some positive news! 

Well, I have something positive to share.  Parsec is sponsoring its first Parsec Prize 5K race on October 15, 2011.  We believe in promoting wellness.  What better way to do that than to have a race?  

We also believe in supporting local charities.  As you have probably read many times, we are committed to donating up to 2 percent of gross revenues each year.  We have a Parsec Prize through which we make large donations to four select charities.  This year’s recipients are: 

  • Appalachian Sustainable Agriculture Project (ASAP),
  • Asheville Symphony,
  • the Salvation Army Boys and Girls Club of Buncombe County, and
  • Industries for the Blind

Each recipient has an opportunity to raise even more money through the Parsec Prize 5K.  All of the $25 race entry fee will be given to one of the four charities; the runner selects the charity.  Runners and their sponsors can also donate more money if they choose.

It is not too late to register for the race.  For more information, please visit our special Parsec Prize 5K page at http://www.parsecfinancial.com/parsecprize5k.html

Sure, the race is not going to cause the markets to soar (upward).  It just gives us all an opportunity to enjoy a nice fall day and forget about our problems for a few minutes.  Believe me, when you see the last hill of the race, you will not be thinking about the stock market!  We hope to see you on Saturday, October 15.

Cristy Freeman, AAMS
Senior Operations Associate

Looks Like We Made It

As I read over our recent blog posts, I thought it was high time for an entry that’s full of positive, upbeat, exciting news. So I’m obviously not going to talk about the stock market, politics, or the weather. I’m going to talk about myself…again (and Harli Palme, and Travis Boyer, so it’s not ALL about me).

You’ve heard me bellyache about studying for CFA exams for as long as this blog has existed, and I am ever so pleased to tell you that it’s all over – we passed the third and final exam! You’ll never have to hear my complaints again, and I’ll finally be able to live life to its fullest. Yes, that’s right – I can watch American Idol! Take naps! File my nails!

In all seriousness, though, Parsec has added two more CFA charterholders to its highly credentialed staff, which further underscores our commitment to high ethical and professional standards. I just hope that all the TV I plan to watch doesn’t leach that valuable information from my brain. Most importantly, I will never have to dread the first Saturday in June ever again, and I can finally enjoy Memorial Day weekend guilt-free.

Cheers!

Sarah DerGarabedian, Director of Research

No More Excuses

At my recent annual check-up (which I never actually get annually – in fact, this was my first real “physical” in about, oh, 10 years) my doctor asked me all the usual questions: do I smoke (no), drink (a little), eat well (mostly), exercise (umm, yeah…but not lately). He really gave me a hard time about that last response. I tried to tell him that I fully planned to get back into the groove as soon as I stopped studying in early June. I think he thought I was just making up excuses, but I swear it’s the truth. Well, then there was vacation…the only exercise I got there was adjusting my beach chair and lifting fried shrimp with a fork.

OK, so now it’s time. As it happens, Parsec is sponsoring our first ever 5k this fall. There it is – the perfect motivator! It’s been at least 5 years since I ran a 5k, and I’ve been exercising only sporadically since then (I have lots of good reasons for that, thank you very much). I volunteered to be on the 5k planning committee, and before I could stop the words coming out of my mouth, I mentioned that I’d be happy to post a beginner’s training schedule, follow it, and blog my progress. So I guess there’s no getting out of it now!

I plan to start my 9-week training regimen in mid-August, which should get me ready by race day. In the spirit of full disclosure, I’m not exactly starting from zero – I’ve been walking on the treadmill while watching Lost (I’m starting Season 2 now – do NOT tell me what happens), which is also a great motivator. I practically throw my son into bed after dinner so I can jump on the treadmill and find out what happens. But walking on a treadmill isn’t the same as running outside, so it will still be an uphill battle (especially since the race course ends with us going up Flint Street – thanks a lot for that!).

I thought I’d give everyone ample notice, so that 1) I’m locked in and I can’t back out, and 2) you can join in and share my pain! Doesn’t that sound fun? Stay tuned for more details on the race, which we’ll be releasing in early August. Happy trails!

Sarah DerGarabedian, Director of Research

Pardon the Dust

If you visit our Asheville office this summer, please pardon the dust.  It is with GREAT pleasure that I announce we are refurbishing our building. 

It was built in 1892.  Like most old structures, it requires a little extra TLC from time to time.  We began with the exterior. 

Here is the “before” picture:

And here is the “after:”

Rather than replace it, we refinished our conference room table.  We will replace the chairs soon, opting for something a little more comfortable and modern.  We also plan to remove the wallpaper and replace the carpeting on the main floor.  We will replace a few pieces of furniture too. 

When the dust settles, we hope you like our “new-to-us” space.  In the meantime, thank you for your patience!

Cristy Freeman, AAMS
Senior Operations Associate

Trading Strategies

Well, the CFA Level 3 exam is 2 weeks away, it’s my turn to write a blog article, and I am at a loss. I’m functioning at a fairly low level these days, with my main priorities being 1) attempt to maintain a semblance of normalcy, while 2) keeping a virtual encyclopedia of facts and formulas from seeping out of my brain. I’m not so sure I’m doing a good job of #1; as for #2, I could swear I lost at least 5 formulas when I sneezed this morning. Looks like I picked the wrong year to develop allergies.

Now that I’ve established the fact that my bandwidth is low, and lowered any expectations you may have regarding this article, I thought I would talk a bit about trading. The execution of a trade is a fairly simple matter – we have software that enables advisors to enter the desired trades in a client’s account, which are then transmitted to a trade blotter. Throughout the day, Mark Lewis and I (the designated traders) group all the trades together and send them out to get filled. For a typical trade, which might be a market order of a few hundred shares of a very liquid security, the trade is filled within seconds. Sometimes, though, we have block trades, when we sell the same security for many accounts. These trades can consist of several hundred thousand shares; depending on the average daily trading volume for a particular security, a trade that size could have considerable market impact which could negatively affect the fill price.

So what do we do? We work with the trade desks at the custodian (Schwab, Fidelity, etc.) to break the trade down into smaller pieces so that it is more easily absorbed into the market, to decrease price impact. There are several ways they can do this, but most of the time they use trading algorithms, which are automated based on quantitative rules. The ones we use most frequently are called simple logical participation strategies, such as VWAP and percentage-of-volume. VWAP (which stands for volume-weighted average price) strategies attempt to complete the order in a specified time period (anywhere from a few hours to the entire day), either at or better than the day’s VWAP for that security. Percentage-of-volume strategies break the block into smaller pieces equal to a certain percent of the trading volume (usually 5 to 20%) and feed those to the market until the trade is completed. Both strategies attempt to go along with market order flow, breaking a large order into smaller pieces to avoid detrimental price impact.

Sarah DerGarabedian, Research and Trading Associate