Why We Are Different

Diversity of Investments to Mitigate Risk

Rudman Cannon uses a combination of investments to diversify risk and provide value added in up an down markets:

  • We manage a Real Estate fund that gives clients an opportunity for monthly cash flow with an 8% preferred return.
  • We manage an Option Hedge fund, which protects and provides the opportunity for a positive return when markets are going down.
  • We purchase Pre-IPO restricted stock in companies that we feel have a chance of going in public within 2 years. Previous companies we purchased before they were public were Facebook and Twitter.
  • We only use No Load/ Low Expense mutual funds. Historical results have shown a major difference in growth amounts of monies invested with lower expenses.

Our Fiduciary Standard

Federal and state law requires that Registered Investment Advisors are held to a Fiduciary Standard. This law requires that an advisor act solely in the best interest of the client, even if that interest is in conflict with the advisor’s financial interest.

Investment Advisors must disclose any conflict, or potential conflict, to the client prior to and throughout a business engagement. Investment Advisors must adopt a Code of Ethics and fully disclose how they are compensated.

Unfortunately, only a small proportion of “financial advisors” are federally or state-registered Investment Advisors. Most so-called financial advisors are considered “Broker-Dealers” by the United States Securities and Exchange Commission (SEC).

They are held to a lower standard of diligence on behalf of their clients. In fact, they are required by federal law to act in the best interest of their employer, not in the best interest of their clients.

Because broker-dealers are not necessarily acting in your best interest, the SEC requires them to add the following disclosure to your client agreement. Read this disclosure, and decide if this is the type of relationship you want to dictate your financial security:

“Your account is a brokerage account and not an advisory account. Our interests may not always be the same as yours. Please ask us questions to make sure you understand your rights and our obligations to you, including the extent of our obligations to disclose conflicts of interest and to act in your best interest. We are paid both by you and, sometimes, by people who compensate us based on what you buy. Therefore, our profits, and our salespersons’ compensation, may vary by product and over time.”

If this disclaimer appears in agreements you are signing, you should ask questions of your advisor. Obtain complete disclosure about how he or she is compensated, and where his or her loyalties lie. Then decide if the relationship is in your best interest.

Who is a Fiduciary?

Fiduciary responsibility does not arise only in the financial services industry. Professionals in other fields also are legally required to work in your best interest.

Type of Professional Who is a Fiduciary?

Physician
Yes, follows the Hippocratic Oath

Lawyer
Yes

Stock Broker
No

Insurance Agent
No

Registered Representative
No

CFP Practitioner
Maybe*

Financial Planner
Maybe*

Fee-Only Financial Advisor
Yes

CFP Practitioner Fee Only
Yes

Fee-Only Compensation
This model minimizes conflicts of interest. A Fee-Only financial advisor charges clients directly for his or her advice and/or ongoing management. No other financial reward is provided, directly or indirectly, by any other institution. Fee-Only financial advisors are selling only one thing: their knowledge.

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