FAQs

Investment strategy
Getting started
Account operations & reports
Insurance & other matters

Am I involoved in the day-to-day management decisions?: Portfolio Solutions has discretion over all accounts and manages portfolios day-to-day so Clients' do not have to be involved. Each portfolio follows a individual asset allocation that is decided in advance and outlined in a written Investment Policy Statement. If a Client wishes to change their asset allocation because of a change in their situation, an amendment to the Investment Policy will be initiated.
How will I know a trade has occurred in my account?: Charles Schwab will notify you by mail or email each time Portfolio Solutions makes a trade in your account. All trades are conducted in accordance with your written Investment Policy Statement. You do not need to contact anyone when you see a trade has been made.
Do investments differ from Client to Client?: Many index funds and ETFs are used in all portfolios although the percentage allocated to an asset class may differ depending on the needs of each client. In addition, taxes may affect which investments are selected for taxable accounts. If a portfolio is made up of several different accounts, such as multiple trust accounts, then there will likely be different funds allocated to the different accounts. That reduces transaction costs and increases the long-term return.
How do you select one fund over another?: No two indexes are created equal and no two index funds or ETFs are managed in exactly the same way. We analize the underlying structure of each fund to find the ones that best represent each asset class in a portfolio. Costs are important, however the funds we selecte are not always the lowest cost funds. Rather, they best cover the a particular area of the market. Some funds we use are asset class funds rather than index funds, such as select DFA Funds. For more information, please read All About Index Funds.
When can I expect my account to be rebalanced?: Each week we compare all current portfolio allocations to their fixed strategic targets. Portfolios are looked at for possible rebalancing when their asset allocation is out of sync with target by a predetermined percentage. A decision to rebalance will be depend on the dollar amount to be reallocated, known expected future contributions or withdraws, and the potential tax consequence in a taxable portfolio.
Do you practice good tax management in taxable portfolios?: Taxes are an investing expense and we use several techniques to help control taxable events. First, the fixed income securities selected for a high tax bracket Client consist of tax-free bonds rather than taxable bonds. Second, there are no REIT funds in a taxable account because they distribute a large amount ordinary income each year. Third, we practice tax-loss harvesting through tax-swapping. This practice generates tax losses that can be used to offset gains and other income. See this article to learn more.
When are municipal bonds used in a taxable portfolio?: Clients that are in a high federal income tax bracket generally should substitute tax-free municipal bonds for taxable bonds in their taxable portfolio. That will result in the highest after-tax income with the least amount of risk. We use either low-cost municipal bond mutual funds or individual municipal bonds depending on the client’s state of residence and the amount to be invested. Bonds that are subject to AMT are not used.
Do you publish the past performance of your strategies?: Each Client receives a detailed quarterly report outlining their performance. However, we do not publish that past performance on our website because there are many different strategies used in Client portfolios and the high cost of an annual accounting audit on all those different strategies is prohibitively expensive. Some advisors work around this issue by publishing hypothetical performance numbers based on simulated portfolios and infer those results represent how their portfolios may have done. We consider that practice unprofessional.

How do I get an information package?: An interested party may contact us directly or work through a fee-only financial planner. For direct contact, go to the Contact page and request information, or email info@portfoliosolutions.com directly, or call our toll-free number at 800-448-3550. People who are working with fee-only financial planner should have their planner contact us. Our fee for portfolio management is the same for direct clients as it is for financial planner clients.
Can anyone get an investment proposal?: We are more than happy to write an investment proposal for qualified investors who have general knowledge of low-cost passive investing principals and are seriously considering hiring a portfolio manager. We reserve the right not to write a proposal, and to withdraw a proposal if we believe a person is either not financially qualified, not interested in a long-term relationship with our company, or not a good personality fit for our firm.
Does Portfolio Solutions charge if I receive a proposal but do not open an account?: There is no obligation to receive an investment proposal. We prefer a person think long and hard about hiring our firm because it is a long-term relationship that allows the strategy to work and keeps our management fees low.
What is the minimum size portfolio needed to get started?: We have no minimum portfolio. However, there is a $500 per quarter minimum fee per relationship. As such, $800,000 is the minimum client relationship to receive the 0.25% fee. Relationships of lesser amounts pay a $500 per quarter flat fee in lieu of the 0.25% fee.
Will you give me advice on all my assets even if you are not managing them?: We only advise and manage assets that are set aside in specific Schwab accounts and placed under our care. We do not consult on financial assets a Client holds outside the managed accounts. For example, our services do not extend to 401k and 403b plans, corporate stock purchase and stock option plans, 529 college savings plans, variable and fixed annuities, or any type of insurance.
Will you accept stocks, bonds, and mutual funds that I transfer in?: We will accept securities into an account but most will not be retained unless they are the same securities that we used in your investment proposal. Our responsibility is to manage your portfolio to the best of our ability. That includes selecting and monitoring all securities held in your account.
What do I do if I have mutual funds or other securities that I want to keep?: Any investment that you currently own and want to keep should be placed in a separate self-managed account. We can help you set up a non-managed Charles Schwab account; however we will not take responsible for that account or oversee the assets in the account.

Is Schwab Institutional the only custodian available to Clients?: Yes. Schwab Institutional is the institutional investment arms of Charles Schwab & Co. They act as a custodian of all our Clients' assets, which means they hold securities and cash and facilitate trading activities. Portfolio Solutions has selected Schwab Institutional as custodian because of their commitment to client service, low trading cost, and a dedication to operational efficiency. Our management fees are kept low because of the operational efficiency created by having only one custodian.
Is Portfolio Solutions affiliated with Charles Schwab Institutional?: No. Portfolio Solutions is not affiliated with Charles Schwab Institutional or their parent company, nor are we compensated by that company in any way through fees, commission, or incentives. In the spirit of full disclosure, our firm is supplied necessary software that allows our in-house portfolio management system to work efficiently and cleanly with Schwab’s back-office operations and trading desks. The same software is available to all investment advisors that custody at Schwab.
Do I have to go to a Schwab office to open an account?: No. There is no reason to visit a Schwab office or to open Schwab accounts yourself. You will be signing Schwab Institutional paperwork that we will send to you. If there is a Schwab office nearby, you may go there to deposit checks rather than mailing money to Schwab. That would reduce the time it takes to put checks into your account.
Will I have Internet access to my account?: Yes. Free Internet access is available to Clients through a special Schwab website 24 hours per day, 7 days per week. The website also is the source for immediate information on account activity and provides you with many reports including year-end tax information.
How often do I receive statements and reports?: Charles Schwab sends monthly statements to all clients for all accounts. These statements show account balances, trades, cash flows, and unrealized gains. Statements are available in paper as well as through email. In addition, Portfolio Solutions will send a detailed performance report each quarter that compare your portfolio’s performance to a series of relevant market indexes.
Will I receive reports that will help with tax preparation?: At the end of each year, Charles Schwab will send 1099’s to each client that has a taxable account. In addition, an realized gain/loss statement is available on-line from Schwab, as well as Portfolio Solutions. We suggest that Client's use our realized gain and loss reports because we report sales by tax-lot, which is the most tax efficient accounting method.
Is there a cost to terminate the agreement if I am not satisfied with your services?: No, either party can terminate the Agreement at any time and for any reason. There are no termination charges. A final invoice will be crated based on the number of days during the current quarter that the account was under management.

Does anyone at Portfolio Solutions have access to my money?: No one at Portfolio Solutions has access to the money in your account. We have limited power of attorney to do three things in a Client account; 1) trade securities with discretion, 2) request that Schwab send a check to a Client directly or to a Client's bank, and 3) to be paid a quarterly management fee based the Client contract. We have no other access or authority.
Are my accounts insured from theft, fraud, errors, omissions and insolvency?: All accounts are insured on multiple levels. Charles Schwab Institutional coverage is extensive and is explained in a public brochure that is available to all investors. Portfolio Solutions also carries Errors and Omissions insurance and a separate Fidelity Bond for retirement accounts and pension funds.
How is my privacy protected?: Portfolio Solutions complies with all privacy laws affecting financial institutions. Each year our clients receive a Privacy Statement that outlines this responsibility in detail. Those standards are reviewed regularly to ensure they cover all forms of communication. Briefly, we will not release any information to any person who is not directly named on your account unless we have your permission to do so, with the exception of legal and regulartory authorities.
What does it mean to be a Registered Investment Advisor (RIA)?: Portfolio Solutions, LLC is a SEC registered advisory firm. All professional investment management companies are required to register with the U.S. Securities and Exchange Commission (SEC) and/or the State(s) in which the firm conducts business activities. That registration is called an ADV, and it is available in two parts. ADV Part I is basic information about the advisory business and ADV Part II explains our services and fees.
How does an RIA differ from a brokerage firm?: RIAs are in the investment management business and we are regulated by the Investment Advisors Act of 1940. In contrast, brokerage firms are primarily in the financial product sales and distribution business and they are regulated by the Securities Act of 1933 as well as other laws. As an RIA under the 1940s Act, we have a higher level of fiduciary responsibility than brokerage firms. We are required by law to work in our client’s best interest. Our fee is based on assets under management (AUM) rather than the brokerage model that is tied to the sale and distribution of financial products.
What ethical standards does Portfolio Solutions adhere too?: All personal including management personal are required to sign an Annual Ethics Statement that outlines our ethical standards. Everyone at Portfolio Solutions adheres to that strict ethical code as part of our daily operations.

FAQs

Investment strategy

Getting started

Account operations & reports

Insurance & other matters

Disclaimer