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

Parsec Expands Social Media Presence

We are happy to announce that you can now find us on Facebook and follow our Twitter feed.  We still have our website and blog.  The new additions give us another means of communicating with our clients and others who might be interested in Parsec.

You may be wondering why it took us so long.  We have lots of regulations with which we must comply.  We wanted to understand what we could and could not say.  We also wanted to create something that might be meaningful to our readers.  It was rather difficult finding the right balance.

We began posting to Facebook and Twitter this month.  We hope you enjoy the new offering.

Cristy Freeman, AAMS
Senior Operations Associate

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

What Does “Fee Only” Mean?

Recently, I experienced the joy of shopping for a car.  I visited a dealership from whom I purchased my last vehicle.  It was an “enlightening” experience. 

By the time the third sales associate walked into the office, I was more than ready to leave.  He attempted to counsel this ignorant girl about the virtues of a lease.  Surely, I could see how fabulous a lease was, how practical it was?  Then, he made a big mistake.  He admitted that the dealership received better incentives for leasing vehicles than selling them outright.  So, whose best interests did he really have at heart? 

When looking at financial advisors, people sometimes ask the same question.  Parsec is a “fee-only” advisor.  That term can be a bit confusing.  Any phrase with the word “fee” in it has negative connotations. 

Our firm’s income is derived from the investment counsel fees we charge.  We do not receive commissions from the trades we place.  We derive no income from recommending a particular fund or other investment.  We do not receive bonuses for referring clients to a particular custodian. 

As a result, a fee-only advisor has the ability to provide impartial advice.  This is reassuring as we learn more every day about unscrupulous brokers pushing bad investments, solely for the big commissions received.

If you are not currently a Parsec client, we encourage you to take a closer look at fee-only investment advisors.  And, if you are a client, thank you for your continued faith in us!

Cristy Freeman, AAMS
Senior Operations Associate

An Unexpected Windfall

At the start of every new year people make resolutions to lose weight, alter bad habits, or save more money.  While I cannot help you with some of those issues, I can offer a little advice on saving money.

For 2011, the IRS has reduced the employee-paid portion of the Social Security tax from 6.2 to 4.2 percent.  While that may not seem like a large amount of money on a per-paycheck basis, it can add up to a nice sum for the year.  If you earn the maximum Social Security wage limit of $106,800, 2 percent represents $2,136.

Before you grow accustomed to having a few extra dollars in your paycheck, I recommend you implement a plan now.  Here are a few suggestions:

  • Deposit the funds into your emergency savings account.  Everyone needs an emergency savings account.  Opinions vary about the amount.  Some suggest 3 months’ worth of routine expenses.  Other say 6 to 9 months are needed.  
  • If your emergency savings account is well funded, apply the dollars to debt.  You could apply the extra money toward the smallest debt, if you want to experience the rush of the early payoff.  However, you will be financially better off if you to apply it to the account with the highest interest rate.  Reducing debt levels is always a great idea.
  • Fund a Roth IRA if you qualify.  If not, apply the savings to another retirement vehicle, such as your company’s 401(k) or a traditional IRA account.

I recommend that you use automatic bank drafts for any of the above options.  It is a simple way to transfer the funds from your account before you can spend them.  Parsec can assist you with setting up an automatic transfer into your brokerage accounts.

I hope you have a safe, healthy new year and wish you the best of luck in accomplishing your goals!

Cristy Freeman, AAMS
Senior Operations Associate

Thirty Years of Progress

Parsec is celebrating its 30th anniversary this year!  It is a remarkable achievement – and we have you, our clients, to thank for it.

It is hard to believe that all this began in 1980.  I doubt many of you would pick that year as the time to start a business.  Interest rates were around 16 percent.  Unemployment was high.  The country was in the midst of a recession.

It was in this environment that Bart Boyer decided to move from Minnesota to Asheville and start an investment management firm.  Parsec’s first office was in the lower level of his home.  Now, we have expanded to every floor in the building we occupy in downtown Asheville.  We have an office in Charlotte.

I am fortunate enough to have been here for almost 18 of those years.  I have witnessed the remarkable changes and growth our firm has experienced.  In the upcoming newsletter, I will share some stories with you about our journey.  Please stay tuned!

Cristy Freeman, AAMS
Senior Operations Associate