What Should I Expect When Hiring Exchange Capital?

For those interested in becoming clients of Exchange Capital Management, let me first say thank you for your consideration and trust. The process of leaving an old advisor or even engaging in your first relationship with a financial advisor never goes without critical thinking. While we attempt to review onboarding procedures in our first meetings, there will always be additional questions that come to mind right as you walk out the door. This article will attempt to answer those questions along with some that you may not have known to ask. 

What Are the Forms I'll Need to Sign?

Initial Application

For you to engage with ECM in an official client/firm relationship, we must have the ability to directly manage your portfolio assets. This means investments you have will likely be transferred to one of the two custodians we have relationships with. Today, those custodians are Charles Schwab and Fidelity Investments, but we are continuously researching if additional custodial relationships are competitive. If assets are already held within Schwab or Fidelity, it is likely we can link our authorizations directly to those accounts without altering account numbers. If new accounts are necessary, we ensure they are opened with the same tax structure as existing accounts. During this step, clients are often able to simplify the number of accounts they have. Not only is simplification a benefit, but it also presents an excellent opportunity to review your beneficiary elections and consider the use of Power of Attorney. 

Supplemental Forms

Applications to open accounts are accompanied by several additional documents that you'll have to sign. These forms allow us to optimize our portfolio management options in your accounts and manage deliverables. By default, the electronic delivery of statements and tax documents is selected, but the delivery of paper statements is also an option for you. Once our authorization is linked to an account, we will have the ability to access these documents and therefore can provide them by request. This becomes especially useful when you need us to provide accountants, estate planners, loan officers, etc with original copies. 

Transfer Forms

Now that the appropriate accounts are open and optimized, we can begin transferring assets into them. Prior to this step, our staff verifies that any current investments are eligible to be transferred to Schwab/Fidelity. In doing so, we will typically request investments be transferred in-kind meaning they are not sold first and then cash holdings are sent over. This becomes especially important when considering the tax impact of a sale which is a major focus during our implementation process. You can remain hands-off, as almost all of this work is managed by our staff, the delivering custodian, and the receiving custodian.

Exchange Capital Contract

The only document that does not come from Schwab or Fidelity is the Exchange Capital Management Investment Advisory Agreement. This document outlines the details of the agreement between the client and Exchange Capital such as our fiduciary commitment, cost, trading discretion, along with other valuable sections. This contract also gives you the ability to grant other professionals access to certain aspects of their information. For example, accountants can have daily access to taxable information allowing for closer quarterly estimates, or an estate planner could request beneficiary information to verify elections. Only the account owner can alter account preferences but giving additional professionals transparency where needed can provide a higher level of coordination and removes the need for you to be the middle-man between the professionals you employ.  

How Will I Be Billed For Your Services?

As referenced above, our contract defines how clients are billed and the cost of our services. In a majority of cases, our management fee is deducted directly from the investment account(s) we manage. This means that at the beginning of each quarter, ECM calculates the fee based on the contract and account values and pulls it from each account independently. In some cases, it may make sense to take one account management fee out of a separate account, but those cases are reviewed beforehand. Advisor fees that are withdrawn from retirement accounts such as an IRA are not considered taxable income, therefore any client will not see an increase in taxes due to IRA fees. 

Will I Still Be Able to Trade In My Accounts?

While Exchange Capital Management attempts to simplify our clients’ financial lives in as many ways possible, there are instances where individuals would like to retain a certain level of control. In these scenarios, we typically employ one of two solutions. Option 1, we carve off a portion of the portfolio to be “investor managed” while the rest of the portfolio remains under ECM discretion. Option 2, we ask that clients alert us when they would like a specific trade placed, in which case we then act on it as a “client-directed trade”.

Who Is My Main Point Of Contact?

As a self-described ensemble firm, we are dedicated to serving our clients with collaboration and teamwork. However, we want you to have a clear understanding of who you'll be working with most often. Your primary point of contact with ECM will be your lead advisor. This is typically the individual who you've had the most contact with during the initial engagement. In all cases, each client relationship will have more support than simply one lead advisor. Your lead advisor will be supported by a secondary advisor who is familiar with your circumstances and could step in as the lead if needed. Our advisory team is also supported by our financial planning team who analyze and test scenarios along with our professional administrative staff, who manage money movement requests and verify the onboarding stage progresses as promised.   

How Can I Access My Account Information?

Each account that Exchange Capital manages is owned directly by our clients. As such, you will have access to each of your accounts directly through your Schwab or Fidelity portal. However, we believe the account information in these portals is often disorganized and hard to follow. To help you better navigate your account information, we've created the ClientView portal (see below), where we aggregate critical account information and deliver it in a more organized format. Transparency and accessibility are major priorities in ClientView. You'll have quick and easy access to account values, allocations, holdings, and even our recent and year-to-date management fees. In addition, we will post important documentation and disclosures to your attached document vault, where they can be accessed and reviewed at any time. 

The Bottom Line

During the onboarding process, simplification, convenience, and transparency are three aspects we strive for. You'll probably have lots of questions. Our staff is always happy to help address concerns and answer any questions that arise during your transition to working with ECM and beyond. No matter how simple a request may seem, do not hesitate to contact us. We look forward to building a long-lasting relationship over the years to come.