The FOLIO Advisor program using WS Managed FOLIO’s is a Portfolio Management System. After opening an account with FOLIOfn Investments, Inc. in the FOLIO Advisor program, the Client and the Adviser (WS Wealth Managers, Inc.) choose Target Account Allocations.
The Target Account Allocation process is the selection of percentages applied to fifteen (15) WS Managed FOLIO’s available. (There are also two (2) specialty Model FOLIO’s managed by other investment advisers available.)
Generally, the Client and the Adviser will together select three “potential scenarios” with different Account Allocations—Yellow, Red, and Green. During a Yellow period, or a period of “caution” where the Client decides to be “relatively defensive” because there is a perceived risk of market decline, the Account Allocation might be: 40% Moderate Core; 10% Dividend Income; 40% Classic Defense; and 10% National Muni. During a Red period where the Client decides to be “very defensive” because of a perception of “near certainty” that markets will decline, the Account Allocation might be: 20% Moderate Core; 70% Classic Defense; and 10% National Muni. During a Green period where the Client believes an exposure to markets is attractive, the Account Allocation might include larger allocations to the nine (9) FOLIO’s designed to rise during periods of growth.
Once the Target Account Allocations are determined and funds are available in the account, the Adviser will “subscribe” the account to the appropriate WS Managed FOLIO’s in the amounts consistent with the Account Allocation for the period, according to the Client’s instructions. The Adviser’s Chief Investment Officer manages each FOLIO: buying, holding, selling and rebalancing securities; using best efforts to achieve the objectives of each FOLIO. The process is similar to the CLIENT choosing a collection of mutual funds where the holdings in each mutual fund is managed by the fund manager/s. In the FOLIO Advisor program, following this illustrative example, the WS Managed FOLIO’s are like mutual funds managed by the Adviser’s Chief Investment Officer.
The FOLIO Descriptions clearly indicate that the Adviser can tactically change the character (increase cash allocation) of the holdings in each FOLIO when it is deemed advantageous to do so, however one major benefit of the FOLIO Advisor program is the use of a Rotation Strategy where the Account Allocations are changed from the Green to Yellow to Red, etc. as deemed advisable by the CLIENT with guidance and advice from Adviser.
The Adviser does not claim to be able to predict the future with precision, but will periodically provide a balanced forecast to the Client using “Reasonably Reliable Leading Indicators” or RRLI’s that will assist the Client in choosing a Green, Yellow, or Red scenario Account Allocation. One major RRLI is the US Treasury Yield Curve. None of the RRLI’s are 100% reliable. Choice of the scenario by the Client will depend on their judgment and risk tolerance.
This is not a market timing system. It is an intelligent Asset Allocation Strategy for adapting to changing market conditions. It must be noted that moving from one allocation to another may deprive the Client of substantial gains if markets rise significantly during periods when a Red scenario Account Allocation is chosen. It must also be noted that significant market/account declines may occur without warning no matter what scenario Account Allocation is chosen. Investing always involves significant risk.
Cost of the program (subject to a minimum asset level) and management of the FOLIO’s by the Adviser is a fixed annual percentage of assets in the account. Fees are deducted quarterly in arrears. There is no extra cost for shifting from one Account Allocation to another. (e.g. from Green to Yellow) Actual FOLIO’s percentages will probably drift away from the target Account Allocation and can be manually “rebalanced” by the Adviser upon the Client’s request on an annual basis. A more frequent rebalancing of Account Allocation can be accomplished by “subscribing” to a pre-set “published” FOLIO Allocation.
While it is possible to transfer securities to FOLIOfn with an “in-kind” transfer, it is generally required that new funds be added to accounts in the FOLIO Advisor program by the transfer or deposit of cash. This can be accomplished by check, wire transfer or electronic (EFT) transfer. Rollovers of IRA accounts at brokerage firms can be liquidated at the old broker with account balance transferred via the ACAT system without tax consequences. Special arrangements are possible for positions in non-qualified accounts where there are concentrated stock positions and the intent is to sell a major part of the holdings after transfer but with the lower cost of using the FOLIO Advisor program.
Under specific agreement between the Client and Adviser, additional “custom made” or “Ready to Go” FOLIO’s may be subscribed to within FOLIO Advisor, however all normal fees shall still apply. Such “special” holdings will only be considered if in the sole opinion of the Adviser (using a fiduciary standard of care) such holdings are consistent with the best interest and risk tolerance of the Client.
Clients are encouraged to provide publically available information to the Adviser about specific securities that might lead to improved performance of one or several WS Managed FOLIO’s. It is important to recognize that the performance of each WS Managed FOLIO is less dependent on any one security and more dependent on how all of the securities in the FOLIO work together providing benefits from diversification. The FOLIO Advisor program and it’s powerful cost efficient technology can increase the value of those benefits.
The client has the option of choosing from eight tax lot tracking options to help manage capital gains and minimize current tax liability. The Adviser does not attempt to limit realized gains when managing the WS Managed FOLIO’s. The FOLIO’s are managed by the Adviser with the goal of total pre-tax return.
The Client will have access to information about the account and it’s holdings online at www.folioclient.com. This includes performance information, holdings in each FOLIO, back-testing and metrics for the FOLIO’s that are subscribed. Account Statements, Confirmations and Tax Documents are all available on-line. In fact, for efficiency and preservation of natural resources all information is supplied only electronically. Client is required to understand and accept the risks of on-line investing.
Client is required to carefully read all disclosure documents before deciding to participate in the FOLIO Advisor program using WS Managed FOLIO’s. These include: the FOLIOfn Advisor Addendum to Investment Advisory, Supervision and Management Agreement; FOLIOfn Account Opening Disclosure Affirmation; and FOLIOfn Advisor Customer Agreement.
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This is not a complete discription of the program, but rather a summary. For more information, be sure to engage with WS Wealth Managers Inc. for a more thorough two way communication.
Investment advisory services by WS Wealth Managers Inc., a registered investment adviser.
Securities and Custody thru FOLIOfn Investments Inc., Member of FINRA and SIPC.
FOLIO Advisor is a program offered to clients of registered investment advisers.
WS Wealth Managers Inc. and FOLIOfn Investments, Inc. are not affiliated.
