2. What differentiates an investment adviser from a broker?

The major difference lies in the client relationship. Brokers are typically paid for transactions between two parties. The greater the number of trades a client makes, the more the broker will make in commissions. Consequently, trades will always benefit the broker but they do not always benefit the client. In contrast, an investment adviser is usually paid a fee tied to the market value of the assets under management. As a result, the interest of the client and the adviser are much more closely aligned.

3. How is FRM compensated?

FRM is compensated through separate fee structures (equity and fixed income) designed to closely align its interests with its clients. Fees are charged on a quarterly basis in arrears.

4. What services does FRM offer?

FRM is a discretionary manager of equity, fixed income, and balanced portfolios all with a value orientation.

5. What makes FRM unique?

By adhering to a disciplined value investment philosophy and emphasizing price sensitivity, FRM has delivered superior long-term investment performance while striving to minimize risk. FRM prides itself on remaining steadfastly committed to this approach even in times of speculation. The commitment of FRM to this discipline is the chief reason for its historic success in compounding its clients’ assets at an above average rate.

6. Who makes the investment decisions?

The principals of FRM are highly trained and experienced in security and portfolio analysis. Accordingly, they personally select all securities with respect to each client’s investment guidelines. Unlike managers at other firms that pass on the decision making to other managers or mutual funds, FRM has no such intermediaries. FRM is an independent firm with the sole purpose of serving the client and the client only.

7. What does it mean that FRM has “discretion” over an account?

Within its investment advisory agreement, FRM requires a limited power of attorney from each of its clients. This authority allows FRM to be the sole decision maker for the management of all client portfolios. With the limited power of attorney arrangement, the client retains sole authority for the movement of assets in or out of his/her account.

8. Why does FRM require a third-party custodian?

For the protection of their clients, FRM requires a third party custodian to hold all client assets for independent accounting and safekeeping.

9. What is a Chartered Financial Analyst (CFA)?

Chartered Financial Analyst is a professional designation earned by candidates that have passed a series of rigorous examinations measuring their competence and integrity. Awarded by the CFA Institute, it is one of the fastest growing professional credentials in the world and is a globally recognized standard. The CFA Institute leads the investment industry by setting the highest standards of ethics and professional excellence.

10. How do the principals of FRM manage their own assets?

The principals of FRM invest in the same securities as their clients with one over-riding restriction. They only purchase or sell a security after all of their clients have had an opportunity to purchase or sell that security first. The principals and employees of FRM file a personal security transaction report each quarter to ensure that no violation of this restriction occurs. Again, this is done to keep the interest of FRM closely aligned with that of the client.