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What are the motivating factors for a "Fee-Only" RIA firm to consider a new investment product for their clients?

We are a Sponsor Company of 2 new Real Estate based Reg D offerings and I have been directed to approach the "Fee-Only" RIA community to consider our products for their investors. What are the deciding criteria that would motivate a Fiduciary to research our investment offerings? Where is their comfort zone? How can they embrace an illiquid product during the current economy?

Mar 05, 2013 by Robert from Irvine, CA in  |  Flag
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Kevin J. McNab Level 19

Many fee-only advisor's first step in evaluating an investment is the fee or costs involved among other things. However, I can eliminate 90% of investments for my clients by first looking at the internal expense ratio. I would start there.

Comment   |  Flag   |  Mar 06, 2013 from Westminster, CO

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Jason Hull Level 20

I'm a fee only hourly planner - much different beast than one who does AUM. So, I'm going to look at risk-adjusted, AFTER-FEE returns. Slap too high of a management fee on there, and I'll not touch it.

Basically, I take the approach of passive investing. I am more of a fan of residential real estate (which is the anti-passive investment, I guess), where possible, but that's not practical for all clients. In the alternative, I'm going to look for something which as closely mirrors an index as possible.

In this case, I'd look at overall diversification (geographic, type of investment, etc.) as well as cap rates, performance metrics (vacancies, repairs, capital gains, turnaround time, etc.) that I'd look for in commercial and residential real estate, and then see how the overall portfolio of metrics weighs up against its competitors. I'd also look at the management team - who's doing the picking and who's doing the managing.

Hope this gives you an idea of the things I'd look for in an investment approach for a client. The more transparency, the better.

Comment   |  Flag   |  Mar 05, 2013 from Fort Worth, TX

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