Ten Questions to Ask

You can read our article “Ten Questions to Ask a Financial Advisor“ for more information. Here are our answers.

1. Do you use a recognized third-party custodian to hold your clients’ assets?

We strongly recommend that clients do not allow their financial advisor to have custody of their assets in anything but the limited ability to make trades on your behalf, move money between your accounts, and take out a fee. Marotta Wealth Management does not maintain custody of the assets we manage. Instead, client assets are housed at a qualified custodian. We often recommend Charles Schwab as the qualified custodian.

We are independently owned and operated and not affiliated with Schwab or any other custodian. Although we often recommend you use Schwab as your custodian, you will decide whether to do so and will open your account with Schwab by entering into an agreement directly with them. We do not open the account for you, although we may help you do so.

2. Is there a good chance my investments will lose money?

No asset class is risk free. Even relatively stable investments can lose money. Bonds can default or have their credit rating reduced, cash can lose its purchasing power due to inflation, and even the money market can “break the dollar” and return less than you invested. The equity markets are even more inherently volatile. Investing in securities involves a risk of loss that clients should be prepared to weather.

We believe markets are relatively efficient over long periods of time and that asset allocation decisions rather than market timing or stock picking will determine most of your long-term return. As a result, most of the time we recommend diversified portfolios composed of investments with low expense ratios that follow the index of a subsector of one of the asset classes.

We also advocate periodic rebalancing, which means buying more of markets that have gone down and selling some of the markets that have gone up.

No firm, ours included, can represent, guarantee, or imply that their services or methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or crashes. No guarantees can be offered that your goals or objectives will be achieved. Furthermore, no promises or assumptions can be made that the advisory services offered by a particular firm will provide a return superior to alternative investment strategies.

3. Is the daily price of everything you invest in listed in the Wall Street Journal?

We craft individual portfolios tailored to your needs. That includes analyzing your current holdings as well as additional investment choices. Appropriate investment vehicles may include exchange-traded funds (ETFs) , mutual funds, closed-end funds, money market funds, certificates of deposit (CDs), individual stocks, individual bonds, and, on rare occasions, level 1 options (e.g., selling covered calls).

We do not normally recommend investing in hedge funds, private offerings, or nonpublic limited partnerships. Because these investments are not publicly priced and traded, valuing these assets is difficult. The value of these assets is often assumed to be their purchase price until the management company provides a new value. However, their liquidation value might be only a fraction of the investment’s presumed value.

Investments that are not publicly priced and traded causes many conflicts of interest when it comes to reporting and billing. We do not have confidence in computing a return on a portfolio of investments that are not publicly priced and traded and do not know how to value such investments for computing fees.

If new clients own such investments, we will help them determine if they should continue to hold them, but we do not normally recommend purchasing them because of their inherent difficulties.

4. Do you avoid hedging or buying options?

We do not typically recommend purchasing options or futures because these investments are hedges or bets more than they are investments. Futures and options can and do make money, but on average they are closer to a zero-sum game even before factoring in trading costs.

5. Could you teach me to implement your investment strategy and let me do it on my own?

We have no secret ingredient at Marotta Wealth Management. Instead, we openly and publicly publish our strategies as articles on our website.

We strive to provide the necessary resources for anyone to prepare their own investment plan and meet their financial objectives. We actively encourage the do-it-yourself people of financial planning to subscribe to our newsletter and provide themselves with comprehensive wealth management.

A good place to start is our article “The Complete Guide to Creating an Investment Plan.”

For people who don’t want to do it alone, we encourage you to read our articles to get a fuller understanding of how our services work to see if we are a good fit for you. If you are interested, we would be happy to help you get started as a client!

Learn More About Portfolio Management

6. After selecting your investment approach, could I change my mind at any time or are there financial hooks to keep me from dropping your approach?

To safeguard your money, you must be able to extricate yourself quickly from any bad investment. Of course, the companies that sell mistakes don’t want you to be able to do that, so they use financial hooks to hold your money captive. Any financial product with a surrender value significantly different from the net asset value has financial hooks in products such as annuities, insurance products, loaded mutual funds, hedge funds and private equity.

We do not invest in or use any such financial hooks. If at any time, you change your mind about utilizing our investment approach you will be able to extricate yourself from funds purchased through normal market exchanges.

7. Do you report a client-specific time-weighted return each quarter?

As a part of our service to clients, we provide you with quarterly reports which show information pertaining to your asset allocation, change in your portfolio, performance summary by asset class, your portfolio value versus cumulative net investment, contributions and withdrawals by year, yearly performance summary by asset class, and information on our fee for that quarter.

The performance sections shows the time weighted return net of fees for each of the six asset classes (Short Money, US Bonds, Foreign Bonds, US Stocks, Foreign Stocks, and Resource Stocks) as well as the portfolio as a whole for various time periods including since inception.

For more information about our reporting, read our ADV Part 2.

8. Do you live a frugal lifestyle?

Frugality is one of the marks of an effective financial advisor. Meanwhile, a fixation on appearances is a red flag. Those who would perpetrate a Ponzi schemes are usually not the demons everyone makes them out to be, but they are obsessed with appearing successful.

At Marotta Wealth Management, we love frugality and love talking about money-saving strategies. We’d rather be successful than appear it and have several Budgeting articles solely dedicated to savings tips and tricks that we have learned.

For example, we have “The Complete Guide” series with how to save money on Your Dishwasher, Your Washing Machine, and Your Clothes Dryer. Or for a more comical take on frugality, check out David Marotta’s 2004 post on purchasing new shoes, “Wealth is what you save, not what you spend.

9. Is the fee I pay you the only compensation you receive?

Yes, our only compensation is from the clients we serve. This means we are Fee-Only fiduciaries.

Our fees are based on the amount of investable assets we manage for our clients. Our fees are 1.0% of the first million and then follow a fee schedule that provide discounted rates for additional assets. Fees are deducted from client assets quarterly in advance, based on their value at the end of the previous quarter after all the transactions have been settled. For the full fee schedule, you can see the Our Fees page.

10. Do you sign a fiduciary oath?

All of our financial advisors are fee-only fiduciaries who have signed a fiduciary oath promising to exercise his/her best efforts to act in good faith and in the best interest of the client. To this end, we offer a holistic approach to your finances including retirement planning, tax planning, insurance planning, education planning, business ownership concerns, intergenerational support, and estate management solutions.

Getting Started

Do you take clients who live outside the Charlottesville area?

Yes, you might be able to learn more about us from our website than you could learn from meeting another advisor face-to-face, and with phone and electronic communications, we are able to stay in regular contact with all clients regardless of geographic location.

Furthermore, as you move, retire, or relocate, we are able to stay with you as partners through your life journey.

We have many clients who live across the state of Virginia and more scattered across the country in over 20 of the 50 states.

Can I get client references?

We do have a list of clients who have agreed to be references for prospective clients. We are more than happy to provide this list after we have had at least one meeting together.

I understand that you have a minimum account size, but what if I don’t have that? Can you still help me?

If you are willing to pay for our minimum annual fee, we would love to serve you as clients. Alternatively, we offer hourly advice for non-managed accounts or can refer you to another wealth manager who better fits your needs.

If you have a financial or economic question to which you cannot find the answer, you may enjoy submitting your question to us via our Contact Form. We often select new article topics from the emails we receive there.

If you are looking for portfolio management help, we have designed the Marotta’s Gone Fishing Portfolio, which is a portfolio of just a few stocks which should weather the ups and downs of the market fairly well while only rebalancing twice a year. We curate that list once a year and would love for you thrive on those funds.

We also regularly post all of our financial wisdom to our website here. If you enjoy that content, we have a weekly newsletter to which you are welcome to subscribe.

What will you do after I contact you?

After our initial contact, we will send you a copy of our Prospective Client Packet. The packet contains some informational documents for you to keep as well as our Preliminary Questionnaire. The questionnaire asks for some basic information about your finances and your financial goals to help us better understand what kind of services you are looking for.

Then, we will set up an in-person meeting with you at our offices where we can answer your questions, give you a free review of your current portfolio, talk about our investment philosophy and approach, and give you a detailed overview of our new client getting started process.

After the meeting, we will give you as much distance as you’d like so you can take your time deciding whether our firm is a good fit for you.

See our Getting Started process for more information.


Fees & Payment

Is there any cost for a first meeting?

There is no cost; prospective client meetings are free. We love to meet with prospective clients and do not charge for these getting starting meetings.

How do you get paid?

Our only compensation is from the clients we serve. This means we are Fee-Only fiduciaries.

Our fees are based on the amount of investable assets we manage for our clients. Our fees are 1.0% of the first million and then follow a fee schedule that provide discounted rates for additional assets. Fees are deducted from client assets quarterly in advance, based on their value at the end of the previous quarter after all the transactions have been settled. For the full fee schedule, you can see the Our Fees page.

What is the difference between Fee-Only and Fee-Based?

Fee-Only advisors receive a fee for their services directly from their clients and do not receive any other form of compensation.

Fee-Based, on the other hand, means that the firm receives compensation from their clientele (this is the “base”), but they also receive payment from the products they represent and sell to their clients. They, like a salesperson, receive either a one-time or annual a commission from the funds they represent and sell to their clients. This produces inherent conflicts of interest for these fee-and-commission advisors, making them choose between the fund which is best for a client and the fund which pays the advisor the most.

Marotta Wealth Management is opposed to taking commissions and is a Fee-Only advisory firm. We believe this policy helps mitigate the conflict of interests inherent when a firm receives compensation based on the sale of specific securities or investment products.

For more information on this important distinction, we recommend our article “Fee-Only Financial Planner: What’s the Difference?

Can you look at my portfolio and just let me pay you an hourly rate?

Yes, we have an hourly rate listed on Our Fees page. However, we best serve clients who are seeking ongoing wealth management.


Services

Who will I work with on your team? Will I be assigned one financial advisor?

We provide each client with one primary advisor who works with them personally to help achieve their financial goals. This advisor serves as a primary point of contact and companion on your journey towards your goals.

That being said, clients do interact with the rest of our team at various points throughout the management process. As you can see on the Our Team page, we have an ensemble team of specialists who use their specific expertise to help bring each aspect of your financial life in line with your goals.

What happens to my account if something happens to you?

We are an ensemble team at Marotta Wealth Management, not a one-man firm. We have a large team of wealth managers, an Investment Committee supporting our Investment Head, and every specialist has a back-up trained.

We regularly meet to develop disaster recovery plans so that you can have the peace of mind to know that Marotta Wealth Management is ready to support you and your goals even if something happens to your advisor or to one of our team members.

How often will you meet with me?

We have an open-door policy for our clients and are happy to talk or meet with you at any time.

For how long will you help me?

Many clients have shared how their previous transaction-based advisors became inaccessible when the trading dropped off or when they were unable to buy more products. We are committed to helping our clients build their net worth and manage their financial affairs wisely for the rest of their life.

What financial planning services do you offer?

We have an extensive list of services we offer our clients. You can see a few of them below or you can go to Our Services to see more.

Can I view my account online?

Marotta Wealth Management does not maintain custody of the assets we manage. Instead, client assets are housed at a qualified custodian. We often recommend Charles Schwab as the qualified custodian.

If you choose to go with Schwab, they do provide the ability to view accounts online as well as make electronic deposits, transfers, and withdrawals as a part of their services.

That being said, although we often recommend Schwab as the custodian, you will decide whether you want to open your account with them or not.

Do I lose any control when you manage my assets?

You remain in total control of your assets with the flexibility to terminate our agreement at any time.

When you sign up as our client, Marotta Wealth Management adds a Limited Power of Attorney that only authorizes us to make trades on your behalf and to withdraw our quarterly fee. Marotta Wealth Management does not maintain custody of the assets we manage.

Are you willing to work with other financial advisors such as my estate planning attorney or tax preparer?

Yes, financial planning is often the work of a team of professionals combining their respective expertise to help you achieve your financial goals. We are more than happy to coordinate with any financial advisors with whom you wish for us to collaborate.


Portfolio Management

What is your investment philosophy?

You can read about the different aspects of our investment policy on the following pages:

Who decides your investment philosophy?

Our investment philosophy is formed by our Investment Committee.

Our Investment Committee is responsible for developing and reviewing our Asset Allocation design methodology, selecting and defining our asset classes, selecting and defining our sectors, determining the correct weight and dynamic tilt for each sector, selecting which specific securities are on our Buy List, and reviewing overall performance of client accounts on a quarterly basis to assess for any strategic changes.

What credentials do your investment managers have?

We require each Investment Committee member to have, at a minimum, the Certified Financial Planner™ (CFP®) or Chartered Financial Analyst ® (CFA) designation.

The CFP® certification is the recognized standard of excellence for competent and ethical personal financial planning. The designation requires a higher education degree, at least three years of professional experience in the field, submission to the CFP Board’s Standards of Professional Conduct, passing a 6-hour examination on a comprehensive list of financial topics, and 30 hours of continuing education every two years. For more information about this designation, see the CFP Board website.

The CFA designation is the most respected and recognized investment management designation in the world. The designation requires passing in succession three levels of 6-hour exams covering economics, financial reporting, portfolio management, and wealth planning. For more information about this designation, see the CFA Institute website.

Investment Committee Head

David John Marotta

President, CFP®, AIF®, AAMS®

David Marotta, President of Marotta Wealth Management, develops the strategy for the organization, leads the management team, and spearheads the unique investment philosophy of the firm. David founded Marotta Asset Management in Charlottesville, Virginia, in 2000. He has been a … Read More

See Our Investment Committee Members

Do you personally own the same investment products you’ll be recommending to me?

Yes, the securities selected by our Investment Committee for our Buy List are utilized by our staff as well as for our clients. We have created this investment philosophy because we believe in it. We are sharing this philosophy with our clients so we may use this investment philosophy to help them meet their goals.

What are your returns? Can I see your returns?

We craft individual portfolios tailored to meet our client’s needs. As a result, any composite or sample returns we could generate would be meaningless for your particular case. For this reason, we do not offer any sample returns. That being said, we would be happy to discuss with you what investments we typically recommend and how we craft our investment plans.

No firm, ours included, can represent, guarantee, or imply that their services or methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or crashes. No guarantees can be offered that your goals or objectives will be achieved. Furthermore, no promises or assumptions can be made that the advisory services offered by a particular firm will provide a return superior to alternative investment strategies.

We recommend that you avoid investment advisors who do not acknowledge this reality.

For more information about this, we recommend reading “Does Past Performance Have Anything To Do With Future Results?” and “Avoid Investment Advisors Who Sugarcoat Reality.”

How long have you been in this business?

Marotta Wealth Management (originally Marotta Asset Management) was founded in 2000 by David John Marotta. It was a rebirth of Marotta Money Management, a 1980s California-based financial planning firm that was co-founded by George and June Marotta and later sold in the late 1990s.

Combining art and science, Marotta Wealth Management has become known for its careful and analytical approach to investment management, financial planning, and wealth management alike. Each component of comprehensive wealth management is analyzed in depth before our practiced methodologies are accepted in the firm.

We then give away our researched methodologies as free advice via our articles. You can know what we do for our clients by reading our online guides for how you could do it yourself.

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