+ WHAT SERVICES DOES PARAGON OFFER?
Our client relationship typically begins with fee-only investment management (we earn no commissions on any financial products of any sort). However, most client relationships include financial planning, retirement planning, retirement income/withdrawal planning, forward-looking tax planning, risk management, and legacy planning (also known as estate planning). Realistically, it is not possible to perform proper financial planning without addressing all of the other areas of wealth management mentioned above. Correspondingly, we do NOT charge extra for these services.
+ HOW DOES PARAGON CHARGE FOR SERVICES?
Most of the time our clients request that we bill our fees directly out of the investment accounts that we manage for them at Fidelity or TD Ameritrade. We bill our fees quarterly, in advance, according to an agreed-upon fee schedule.
We do have other options – such as an annual retainer or a monthly subscription option that may be appropriate in some situations. For further information on other options, as well as our published fee schedule, please visit our Fees and Service Models page.
+ CAN I PAY YOU BY THE HOUR?
No. While the idea of an hourly financial advisor may initially seem like a good idea, and certain radio personalities or internet journalists like to recommend it, it is in fact an inferior business model that we have abandoned. Our clients enjoy knowing that we are keeping an eye on economic developments, changes in laws, and their assets ALL the time, not just when we are “on the clock” for them individually, or running around doing hourly work for other people.
For a more in-depth discussion of our logic behind our fee structure please visit our Fees and Service Models page.
+ WHAT DO YOU CHARGE FOR A FINANCIAL OR RETIREMENT PLAN
We do not charge for planning services; those are included in the PARAGON client relationship. We do not do “one-off” financial plans for individuals who are not PARAGON clients, as this takes our attention away from providing the highest level of service to our clientele.
+ HOW DOES PARAGON MANAGE MONEY?
PARAGON’s investment strategy can be best described as follows:
Strategic Allocation + Tactical Overweight + Risk Overlay+ Recession Protocol
Using data provided from multiple analysts, our custodians, proprietary subscription models and market data sources, PARAGON uses proprietary “model” portfolios that are then customized for each client’s personal situation, goals, and risk tolerance.
In general, the building blocks of our portfolios are low-cost, tax efficient exchange traded funds (ETFs), institutional mutual funds, or individual fixed income securities (bonds). Typically we are not stock-pickers, and will gravitate toward strategies that lower the cost of portfolios versus trying to chase returns at the cost of higher expenses.
Strategic Allocation means the “weights” we assign to various asset classes such as large company US stocks, small company stocks, international stocks, growth versus value stocks, and various types and maturity dates of bonds within the portfolio. The ideal weighting of these asset classes will vary depending upon where we are in the current economic cycle and the movement of interest rates. We adjust our strategic allocation occasionally.
Tactical Overweight. Studies have shown approximately 80% of a portfolio’s return comes from its asset allocation – or what “types” of asset classes are in a portfolio. At any given time during an economic cycle, or perhaps when new technologies take hold, certain sectors tend to outperform the broad market. Examples might be real estate stocks, biotechnology, homebuilder stocks, etc. It is generally PARAGON’s intent to have one or two tactical sectors we hope will outperform the market within the portfolio at any given time.
Risk Overlay means how much “risk” is inherently in the portfolio. Since our portfolios are fully diversified – PARAGON’s portfolio risk is primarily known as “market risk.” We can manage market risk by varying the percent of “risky” assets (i.e., stocks) within the portfolio versus safer assets such as investment grade bonds. For example, if a portfolio consists of 60% stocks and 40% bonds, and the market drops by 20%, it is reasonable to expect that portfolio to drop by approximately 12%. Since, stocks tend to generate more return than bonds, we would expect a portfolio with a higher percentage of stocks to outperform a portfolio with fewer stocks over a long period of time. Each PARAGON client fully understands – and we will mutually agree upon – their personal risk overlay prior to investing any money.
Over the last 100 years, the largest market drops (and investor losses) have been caused by recessions. The most memorable recent examples are the Great Recession in 2008, the Tech Bubble Recession in 2000, the Oil Embargo/Hyperinflation Recession that occurred in 1974. Stock market crashes during recessions have been the destroyer of retirement dreams for many who retired “at the wrong time.” Most advisors just tell clients, “hold on, it will come back,” "invest for the long term," and “this is a buying opportunity.” This works well if you are a young investor with plenty of time to recover and money to invest. It does NOT work if you are a retiree who is taking money from your portfolio to sustain your standard of living. Instead, we seek to avoid those losses from ever happening in the first place.
We are one of the few firms who take a proactive approach to avoid losing money during recessions. Recessions are not random events – they are a normal part of every economic cycle. Essentially all economic cycles eventually come to an end, and the “reset button” is the economic contraction that we know as recessions. Recessions come with markers, such as an inverted yield curve, accelerating unemployment, a slowdown in home construction, a decline in durable goods orders, and more.
PARAGON uses multiple data sources and algorithms designed to predict recessions. When a recession is indicated it is PARAGON’s policy to trade all client accounts entirely out of stocks and into safer assets that tend to do well during economic downturns – such as Treasury bonds. This is known as PARAGON’s “Recession Protocol.”
We have the advanced technology to effectively execute this action, and we train on it routinely. We can execute Recession Protocol within one day across all client accounts if necessary. When Recession Protocol would cause a taxable event for a client – we discuss it in advance and act according to client wishes. We will not sell a “favorite stock” or a highly appreciated position and give you an unexpected tax bill without talking to you first.
+ WHO IS PARAGON’S IDEAL CLIENT?
PARAGON Wealth Strategies was designed to specifically serve clients who are approaching retirement or who are already in retirement. Typically our client has a minimum of $500,000 in investable assets that would be managed by PARAGON either now, or in the near future, and desires a comprehensive wealth management approach that includes retirement income planning, tax planning, risk management, and estate planning.
Generally our clients tend to be delegators; many of them have the skills and knowledge to manage their finances but choose to spend their time and energy on other areas of their lives that provide them a more meaningful life existence. As such, they want to be coached, kept informed, and generally trust us to do the job they are paying us to do instead of calling them and asking for permission for every portfolio trade or rebalance.
+ I ALREADY HAVE TAX AND OTHER ADVISORS. WHAT KIND OF VALUE CAN PARAGON ADD?
Full Service Wealth Management requires a team of highly specialized advisors and other professionals working in a coordinated fashion to achieve your goals. No single advisor can perform the task of Full Service Wealth Management. By training, the CERTIFIED FINANCIAL PLANNER™ professional is ideally suited to coordinate all other specialists' actions on behalf of the client. Commonly, this function is known as the "Chief Financial Officer," "Financial General Contractor," "Financial Quarterback," or "Chief of Staff." Whatever the term - if your financial advisor is not performing this function... perhaps you should upgrade. Likely, you are paying too much for too little.
For all wealth management clients, we encourage the use of other professionals such as CPAs, attorneys, insurance professionals, and others. Our job is to work with them closely to make sure their individual efforts support your overarching financial plan.
+ ARE YOU A FIDUCIARY OBLIGATED TO PUT MY INTERESTS FIRST?
Yes. This is a much higher standard than the “suitability” standard generally required of registered representatives of Broker/Dealers, insurance agents and bankers. For years the investment community has mostly operated under a “suitability” standard whereby non-fiduciary financial advisor’s recommendations must only be “suitable” for your situation. They are not required to make you aware of other opportunities that may be better for you if they cannot sell it to you.
Here is an example. Suppose you were looking for a pickup truck to work on a farm and you went to a car dealer to shop for one. The car salesman typically will only offer you vehicles from the brand that he represents. In the event that a better vehicle or one that better suits your particular needs exists in a competitor’s line, he will not be likely to recommend you go explore that vehicle. On the other hand, an independent buyer’s agent WOULD make you aware of other choices. Similarly, a financial advisor acting as a fiduciary is legally obligated to make the best possible recommendation for your circumstances – even if it means losing business. We do this frequently as we realize that not all clients are a fit for us, and not all solutions point to PARAGON’s management of a client’s money.
PARAGON operates in a high-trust environment, and we will quickly disclose any conflicts of interest. We often refer business to other financial advisors whose offerings or business models better suit a client or potential client’s needs.
+ WHERE ARE MY ACCOUNTS HELD?
All client assets are invested – in their own names (not ours) - with qualified custodians. A "custodian" is a national firm that provides trading, custody, and brokerage services to individuals, registered investment advisors, trust institutions, and third party administrators. They typically create the statements for your account, and often provide online access so you can see what is in your account. Common custodians include Schwab, Fidelity, Pershing, TD Ameritrade, ScotTrade, and many more.
PARAGON offers our client institutional-level accounts with both Fidelity, and TD Ameritrade Institutional. Both custodians meet strict regulatory guidelines, have acceptable trading policies, have maximum investor protections under the Securities Investor Protection Corporation (SIPC), and offer our PARAGON clients significant trading fee discounts that individuals are unable to negotiate on their own. PARAGON never accepts custody (control or ownership) of client money or securities. Clients receive monthly statements directly from Fidelity or TD Ameritrade, are able to view their accounts and the securities that they contain 24 hours per day, 7 days per week, by logging in to their respective custodian's secure websites.
+ HOW DO I OPEN INVESTMENT ACCOUNTS WITH PARAGON?
PARAGON is authorized to open accounts at both Fidelity and TD Ameritrade. Typically, if after a brief discovery process, it appears that PARAGON can add value to your situation, we will help you open accounts and transfer assets. We make the process easy and painless.
+ WILL YOU PROVIDE REFERENCES I CAN CHECK?
Not directly. We will not disclose a client’s identity nor inconvenience a client in order to ask them to provide a reference for us. We realize that certain “financial advisor interview guides” suggest this, and some financial advisors solicit their clients to provide references for them. However, as fiduciaries, we see this as an invasion of our clients’ privacy.
Instead, prospective clients who seem to be a fit for our practice are encouraged to attend one of our quarterly Client Information Seminars that we typically hold at the University of North Florida’s University Center. There, you can meet an entire roomful of clients and ask them whatever questions you choose to ask. Our clients who attend these updates do so voluntarily and are aware that other clients and potential clients are in attendance. Whatever they say is up to them, with no coaching from us. We are confident our exemplary service will stand on its own.
Additionally, we encourage you to examine our Public Disclosures on the SEC’s website created specifically so you can check out the backgrounds, education, and disciplinary history of financial advisory firms. Here is the link: SEC Investment Advisor Disclosure.
+ DO YOU REPORT PERFORMANCE?
Yes. We provide detailed, live performance reporting through the Black Diamond Performance Reporting system. It is available to you 24 hours per day, 7 days per week, and is interactive and detailed. We also upload quarterly performance reports into your private, secure digital vault on the second or third week of every new quarter.