FREQUENTLY ASKED QUESTIONS

 

What are the advantages of a Separately Managed Account (SMA)?

What if I am located out of state or in another country?

Are you regulated or licensed?  What does CFP mean?

How do I know that my money will be safe if I invest with Lennox Financial?

Why do I need a broker?  How do I select a broker?

What is the minimum amount I need to invest?

What does it cost to invest with Lennox Financial?

Why should I believe that you are any good at managing money?

What kind of performance can I expect?

 

What are the advantages of a Separately Managed Account (SMA)?

            When you invest in a mutual fund, or a limited partnership, or an investment trust, your money is pooled with other investors’ money.  Usually you own an “undivided fractional interest” of the whole pool of money.  In a Separately Managed Account, your money is held in a separate account with your name on it, and it belongs only to you.  In a mutual fund, if other investors add or withdraw money (flow of funds) the performance of the fund (and thus your performance) can be adversely affected.  You do not have this problem in an SMA.

            In a mutual fund, the fund management is guided by the investment objectives stated in the prospectus.  In an SMA the account manager is guided by your own individual investment policy that is designed specifically and uniquely to meet your personal investment objectives.  It is the difference between buying clothes off the rack versus having them custom made for you.

            A mutual fund (or other type of pooled fund) may have tax consequences that are undesirable for you.  Whatever the tax consequences, you have no control over them.  With an SMA, you can request that the investment manager take your specific tax situation into consideration when investments are being made and/or positions are being sold.  In short, a Separately Managed Account gives you more control over your money and how it is invested for you.

 

What if I am located out of state or in another country?

            Lennox Financial has clients in many different states, and we have worked with investors as far away as Saudi Arabia, London, and Italy.  In fact we provide a valuable service for people who are located in a place where it is difficult for them to manage their own affairs, such as servicemen on foreign assignment.  With today’s technology, it is not hard to stay in close communication.  If you have access to the internet, you can view your account 24 hours a day in real time from anywhere in the world.  While it is always nice to meet face to face, and regulations require that we know who we are working with, distance is no handicap to helping you achieve your investment goals.

 

Are you regulated or licensed?  What does CFP mean?

            Yes, absolutely.  The securities industry is one of the most heavily regulated industries in America; and Lennox Financial has always gone the extra distance to build expertise and be sure that we are operating in compliance with all the state and federal regulations that govern our activities.  Primary supervision falls under the jurisdiction of the Investment Advisors Act of 1940 and its amendments, which gives regulatory power to the Securities and Exchange Commission and (because our office is located there) the State of Massachusetts.  John Boyle, doing business as Lennox Financial, is a registered investment advisor.  If you read the brochure on this web site, you will learn that John Boyle has also held a myriad of licenses, including insurance, commodities, mortgage, real estate, and securities.  While these licenses may not be necessary to act as an investment advisor and manager, they reflect his prior experience and professional expertise.

            CFP is a registered trade mark and stands for Certified Financial Planner.  John Boyle holds the professional designation of CFP.  This means he has completed a rigorous course of study that includes such topics as investment, taxation, risk management, and retirement & estate planning.  It is necessary to pass a series of examinations to obtain the designation; and it also means that the holder subscribes to a code of ethics.  You can learn more at www.cfp.net and www.fpanet.org.  

 

How do I know that my money will be safe if I invest with Lennox Financial?

            Lennox Financial never holds your money and does not have access to your assets.  In addition to being registered and regulated, this separation from access to your assets is a significant protection for you.  (Not all advisors operate this way, and you certainly do not have this protection in a fund.)  Your money and securities will be held at a licensed broker/dealer of your choice.  The broker should have federal SIPC insurance as well as private insurance to cover the assets in your account.  You will grant Lennox Financial authority to trade the securities in your account, but this authority will not include the ability to withdraw assets from your account.  Furthermore the account will be solely in your name and the assets will not be commingled with anything belonging to anyone else.

            Additionally, we recommend that you open your account with a licensed broker/dealer that provides the ability for you to view your account in real time on the internet.  This way you can monitor everything that is going on in your account at all times.  Most clients find that this is not only a good security precaution, but if Lennox Financial is providing full management service, it allows them to learn by looking over our shoulder.

 

Why do I need a broker?  How do I select a broker?

            Securities can only be purchased through a licensed broker/dealer.  Some firms merge multiple activities and keep the trading in house, but this has the potential to lead to abuse, fraud, and theft.  We recommend that the function of purchasing securities be separated from the management or advisory service.  Thus we recommend that you select an independent, reputable, and insured broker/dealer.  Additionally, since Lennox Financial is providing advice and/or management, there is no need for you to pay for any additional services (beyond trading) from a broker.  A high quality, deep discount broker is all you need.  We do recommend that the account has the ability to be viewed in real time on the internet.

            You are free to use any broker/dealer that you choose (unless the broker/dealer will not cooperate with us, or imposes costs or other impediments that make it undesirable for us to accept your account).  If you do not know how or where to look for a broker, we will be happy to suggest some names for you to investigate.  Depending on the type of account that you select with us, you should know that it may be advantageous for you to be on an institutional platform, and on the same platform as our other clients.  This can improve service and the efficiency of trading by allowing us to perform block trades and monitor positions more easily.  After much experimentation, we have found that the institutional platform at Ameritrade Advisor Services seems to offer an excellent combination of service and low price, which means a good value for you.

 

What is the minimum amount I need to invest?

            Lennox Financial does not like to impose a minimum as a way of screening prospective clients.  There is no minimum if you open a self-directed account.  We have found through experience that the objectives of managed accounts are jeopardized due to a lack of efficiency if the accounts are too small.  Therefore we look for at least $100,000 in balanced, long-only portfolios, and $150,000 in All-weather accounts that employ hedging techniques.  Special speculative accounts can be as small as $25,000 and fixed income accounts start at $250,000.  The typical account size we have had great success with, and like to manage, ranges from $500,000 to $2,000,000.  We would be happy to discuss your individual situation.

 

What does it cost to invest with Lennox Financial?

            The real answer to this question is the improvement in net performance that you can expect after all fees are deducted.  In the past, we have been able to keep our clients delighted with their net results.  Our fees are structured to be competitive with the other investment choices available to you.  Our goal is to have your self-directed account cost less and perform better than if you invested through a full service broker.  Our managed accounts are designed to provide more service and be price competitive with mutual funds.  In the end, we expect to provide better results because the account is tailored to your individual situation.  A full schedule of fees can be obtained by requesting us to mail you a disclosure brochure.

 

Why should I believe that you are any good at managing money?

            Decades of experience and multiple licenses sound good, but the real proof is in the satisfied clients that have stayed with us over many years.  Unlike a mutual fund, we cannot publish one performance number, because all of our accounts are managed by different individual investment policies.  However, with risk management as a guiding principle, we have consistently made money, even in years when the major stock indexes turned in a negative return.  It is easy to exaggerate and promote false expectations.  We try hard to be very realistic and honest.  In the past we have suggested clients start with a small investment, and then add to their account as they gain confidence in the ability of Lennox Financial to meet their investment needs.  Using this approach we have attracted over time a number of multi-generational accounts where whole families have invested with us from grandparents to grandchildren.  John Boyle would be happy to discuss realistic performance expectations with you based on your specific circumstances.

 

What kind of performance can I expect?

            As stated above, we cannot guarantee a specific result; and everyone’s situation is different.  However, we would be happy to discuss the kinds of results we have had in the past, and provide realistic guidance regarding expectations for the different kinds of accounts that we offer.  Ultimately, performance is dictated by the markets.  Our goal is to provide positive results within the guidelines that you set.  In the past, we have been able to exceed expectations.  Our number one priority is to have satisfied clients; and we do everything possible to obtain great performance from the portfolios that we manage.  Please give us a call for an honest and frank discussion of what we can do for you.  Call 781-592-6662

 

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