At Tone Capital, what we do for clients amounts to so much more than any of the above industry terms convey. We work with individuals and families, advising them on most every aspect of their financial lives, including investment management, retirement planning, financial planning and cash-flow analysis, education and college planning, insurance analysis, and investment management for trusts. We also work with institutional clients, managing portfolios for corporations and non-profit organizations.
Yes, we are a fee-only Registered Investment Advisor (RIA), which means the only way we make money is from the fees our clients pay us. We do not receive commissions on our investment recommendations. As an RIA, we act as a fiduciary and are required to work in our clients’ best interest – which distinguishes us from other brokers and advisors not registered in this way. Since our firm opened its doors in 2016, we have operated as a fee-only RIA because we believe advising without conflicts of interest is the best way to serve our clients.
Good question! A broker may receive commissions for the products they sell to clients. Some brokers get paid every time a client makes a new investment or when they execute a change to a portfolio. Others get paid annually if a client continues to hold an investment. Fee-only RIAs, like Tone Capital, do not receive commissions. Also, brokers are held to a less stringent ethical code than RIAs since brokers are required by the SEC to recommend products that are suitable for their clients and not necessarily in the best interest of clients, as with RIAs (see above). While many brokers are certainly ethical and serve their clients well, there is the potential for conflicts of interest. Brokers are legally permitted to recommend a product that is suitable for a client that also pays them a high commission rather than a product that is best for a client that pays them a lower commission. With fee-only RIAs, there is no risk of such conflicts of interest. We work for our clients only. Since many brokers make a commission on the products they sell, potential conflicts of interest can impact the quality of advice the investor receives.
Yes, we are a fiduciary and as such we act on behalf of our clients to manage their assets. RIAs are legally and ethically obligated to meet the “fiduciary standard”: that is, their investment recommendations must be solely in the best interest of their client. When an RIA is developing a wealth management plan for a client, they must ensure that the client’s interests come first. We have witnessed first-hand how being required to meet the fiduciary’s ethical high bar – always working in a client’s best interest – benefits retirement savers. We have also seen how this standard ensures that our firm avoids the types of conflicts of interest other financial advisors face. When choosing a financial advisor, investors are well-advised to consider carefully the ethical standard to which different categories of advisors are held. These legal standards vary greatly within the investment industry – and can directly impact investors’ returns and overall wealth management plans.
Tone Capital makes money one way and one way only – from the fees our clients pay us. By definition, we are a fee-only firm. We are paid by and work for only one group of people – our clients. We charge clients based on the value of the assets we manage for them (also known as “assets under management” or AUM). On the last day of the quarter we take a snapshot of each client’s portfolio value and calculate the applicable quarterly advisory fee.
Unlike brokers and certain other financial advisors, Tone Capital does not make any commission selling investment products. In fact, we do not “sell” anything. We do not earn commissions for buying, selling, trading or holding any specific investment. This means we are not incented to invest in any specific investment product other than the one we believe is the best for our client(s). Tone Capital also does not charge “performance fees” – that is, an additional percentage of assets if portfolio performance is above a certain level. And we do not accept referral fees from any service provider. If we refer a client to an accountant, attorney, banker, real estate broker, or anyone else, we do not make money for this recommendation. When we refer a client to a service provider, it’s because we believe that is the best person to serve them and help them achieve their goals.
At Tone Capital, before making any investments for a client, we consider their unique circumstances, risk tolerances, and investment time horizons. We believe that the first tenet of a strong investment philosophy should be diversification, seeking portfolio investments that do not appreciate or depreciate in tandem. Second, we believe it’s important to be tax aware “without letting the tax tail wag the dog” (that is, tax concerns alone should not direct investment choices). And third, patience is essential; we focus on long-term goals and objectives.
At Tone Capital, we ensure that clients have clearly defined long-term goals and we seek to align their investment strategy with those goals. We believe that one of the best ways to mitigate the effects of volatility is to create a diversified portfolio while keeping in mind the maximum downside a client can tolerate. Prior to making investment decisions, it is imperative that we learn as much as possible about the investments we are considering. Performing proper and comprehensive due diligence (research and analysis) is critical when selecting investments for a client’s portfolio.
Tone Capital offers a proprietary strategy, Tone Capital Global Balanced, a low-volatility, tactical strategy designed to be "All-Weather", seeking to minimize downside risks across all economic environments.
We meet in person or virtually with clients throughout the year to ensure that we’re moving forward toward each client’s unique goals. We also send our clients quarterly performance reports that detail up-to-date information about their portfolios. Of course, our clients also have online access to their accounts via custodian websites. But rest assured, if a client has a question about the value of their portfolio, or about anything, they can simply contact their advisor. We are always happy to talk with clients.
At Tone Capital, we have clients in many states across the country. We stay up to date with new technologies so that we can video-conference or tele-conference if a client isn’t close to our offices in Richmond, VA.
Collectively, our team has the following designations: Chartered Financial Analyst (CFA), Certified Public Accountant (CPA), Wealth Management Certified Professional (WMCP), and Chartered Market Technician (CMT).
We would love to answer any other questions you have about Tone Capital and would welcome the opportunity to have a conversation with you!