What investment services and advice can you provide me?
We are a State of California registered investment advisor that is required by law to act as a fiduciary for our clients. We are a full-service, wealth manager that provides financial, tax, and estate planning, investment advice, and management as a single integrated service offered at a flat fee. Your accounts are held at Charles Schwab. Charles Schwab is responsible for safeguarding your money and securities. Blom Levy & Co. monitors your investments as needed in response to market developments and when necessary, we contact you with recommendations. We do not make trades without first obtaining your consent. We do not have control over your money and that may in some cases be inconvenient but we believe that the authority to move money and make payments must never be provided to non family members.
Our investment advice is limited to publicly traded bonds, stocks and ETFs. We assert that these basic building blocks are the most cost effective and efficient, and that, outside of basic insurance products, financial products should be avoided.
Why do you specialize in bonds and bond ladders?
Our expertise is creating bond ladders that optimize reliable cash flow tailored to your unique household balance sheet. Bonds allow us to carefully engineer and manage a portfolio that meets your specific performance and volatility bounds. The common belief that bonds are inherently low-return assets is false. Bond portfolios can be constructed to target any risk-adjusted return, including those of stocks and real estate. By examining the current yield curve, we can determine how to maximize reliable periodic cash payments over time, balancing yield and volatility. Generally speaking, we seek to extend the maturity of a bond ladder until the yield curve flattens out while adjusting for each household's financial risk capacity. This process is dynamic, akin to navigating a ship through the ocean. However, with bonds, we have significantly greater visibility and control over maximizing returns in line with your balance sheet’s risk capacity compared to using stocks or real estate.
What is your relevant experience, licenses, education and other qualifications?
Kristian has 23 years of experience in professional investment management. He has passed the Series 65 Uniform Investment Adviser Law Exam. He managed an international export/import and retail company in his native Sweden at a young age while attending school. In the 1980s he began developing a series of quantitative investment systems that he traded with his own money. While working for a small hedge fund, where he further developed his systems, and then for Morgan Stanley as a financial advisor, Kristian came to understand, not just the technical and mathematical obstacles to effective wealth management, but the greater behavioral obstacles to financial independence. In 2011, he launched Blom Levy & Co. to be able to bring his approach to wealth management and planning to clients without the conflicts of interest of sales and assets under management targets.
What fees will I pay?
You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. To minimize the fee drag on your investments, we charge a single flat fee of $8000.00.
Fees are not deducted from your account. Fees are payable by check or electronic transfer. Fees are payable quarterly or annually in arrears. We invoice you at the end of each quarter or annually. The same fee arrangement is available to cover all accounts for one family unit defined as parents and immediate children. The fee amount can be found on page 3 of the Advisory agreement. You may cancel our agreement at any time without any penalties.
You may incur charges for custody, purchases and sales of stocks, options, fixed income securities etc. and/or Mutual fund transactions, exchanges, redemptions etc. Such charges will vary by investment type. Please refer to the Charles Schwab retail pricing schedule for more detail. Such fees are paid directly to Charles Schwab. You may incur charges for specific tax, estate and legal advice that occurs occasionally. Such fees are paid directly to the respective law or accountancy firm.
What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?
When we act as your investment adviser, we have a fiduciary duty to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money can create some conflicts with your interests.
Our flat-fee model is designed to minimize conflicts of interest and to make the pricing structure easy to understand. The fee is based on services provided, rather than the size of your portfolio, products sold or performance. Performance fees may sound good to the naive investor but this is the most conflict prone fee model. Performance fee models directly encourages advisors to take excessive risks with client money, and to make trades for larger clients first, but there is also no evidence that performance fees actually produces outperformance, or better long term investment outcomes,
However, all payment for services models have the potential for some degree of conflicts of interest. For example, a flat-fee model can be more expensive than the fee based on Assets Under Management model if the investor’s assets are relative small. Therefore, we recommend that new clients have at least $800,000.00 of investable assets. One can also argue that a flat fee encourages us to spend less time on your accounts in order to maximize our profit per hour. We assure you that we spend whatever time it takes to care for you and your accounts in the best possible way. However, our view is that it should not matter how much time we spend on your accounts; what matters is that you receive the best possible quality of advice relative to what you pay us. We encourage you to think about these issues and to ask us questions that come up for you.
Do you or your financial professionals have legal or disciplinary history?
At the launch of Blom Levy & Co. in early 2011, Kristian misunderstood the process of transferring his clients from his old firm to Blom Levy & Co. This resulted in Kristian briefly, and unintentionally operating without a license which is reflected on his personal disciplinary record.
Other than this, the firm has had no customer complaints or disciplinary actions. We encourage you to feel comfortable asking us about this or anything else that you want to understand better. Our goal is to establish a trusting relationship based on complete transparency into our firm and our services. We encourage our clients to check the disciplinary record of our firm and Blom Levy & Co.’s representatives.