Our Perspective: Acting With Independence

The Wall Street Journal and many other news outlets, recently reported that Morgan Stanley would be pulling Vanguard mutual funds from its platform. As a result, advisers at the brokerage firm will no longer be able to recommend Vanguard open-end mutual funds to their clients, regardless of whether they may be the best investment option for them.

This is not uncommon. Large investment banks and brokerage firms regularly restrict certain funds from client portfolios or push others, often proprietary ones. Their decisions depend on a number of factors, not least of which are the revenue sharing arrangements between the companies involved. In many cases, the banks and brokerage firms have an arrangement to be paid by the fund company for featuring their products.

At Sage, we do not participate in any revenue sharing arrangements with any fund companies. We are an independent investment adviser. Our independence assures our clients that there is no “parent” home office telling us what we can and cannot recommend. This is one of Sage’s fundamental business principles – to provide our clients with investment advice that is objective, personal, and oriented around what is in the client’s best interest.

When evaluating investments, we are always looking for low costs, tax efficiency, and the possibility of strong performance. Independence allows us to do so without restraint.

Our Perspective

Sage’s independence is a core, important, tenet of our business. Our independence allows us to conduct rigorous, thorough due diligence when constructing our investment portfolios. And it means that our investment recommendations are driven by what we believe is in the best interests of our clients.
Independence gives us the freedom to choose from a wide variety of investment vehicles for our clients. Potential returns and risk, fees, and liquidity are among the many considerations we look to address. In some cases, this ability to consider a wide range of factors may lead us to select low-cost options such as Vanguard funds. In other cases, it may mean we recommend a manager who has a proven track record in an asset class that is not easy to track via an index, such as high yield bonds.
The big banks and brokerage firms do not always have this latitude. Many of these firms restrict client access to certain investment funds based on factors that could include the investment’s being run by a competitor, the fund company’s not sharing revenue with the firm on any assets that are invested, or the fund company not paying the firm to be listed on the firm’s platform .
Our independence also means that we do not receive commissions to buy and sell securities on your behalf, and do we not receive any compensation from any third party if we use its investment products. Unlike brokerages, which may be biased to recommend and sell investments and other products (e.g., insurance and mortgages) that generate more revenue for the firm, we only recommend investments and other solutions that best fit each client.
From our perspective, the most important relationship we have is with you, our client. To work in your best interest is of the utmost priority and will always take precedence over working with a specific fund company.

The information contained in this report has been obtained from sources we believe to be reliable but cannot be guaranteed. Any projections, market outlooks or estimates in this letter are forward-looking statements and are based upon certain assumptions. Other events which were not taken into account may occur and may significantly impact our opinion. Any projections, outlooks or assumptions should not be construed to be indicative of the actual events which will occur. These projections, market outlooks or estimates are subject to change without notice. Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product or any non-investment related content, made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. You should not assume that any discussion or information contained in this communication serves as the receipt of, or as a substitute for, personalized investment advice from Sage Financial Group. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Sage Financial Group is neither a law firm nor a certified public accounting firm and no portion of this communication should be construed as legal or accounting advice. A copy of the Sage Financial Group’s current written disclosure statement discussing our advisory services and fees is available for review upon request.