How can I learn more about Tom Mullooly?
That’s easy: to learn more about Thomas P. Mullooly, simply follow this link.
What is the difference between a stockbroker and an investment advisor?
To answer bluntly, a stockbroker is an employee of a brokerage firm. In almost all cases, stockbrokers are compensated 100% on the commissions and trailing fees they generate. So stockbrokers must continually raise new money to invest — or continue to own investments that need to be turned over. A stockbroker’s compensation is NOT tied directly to their performance of the recommendations to their clients. Clearly, there may be times when the stockbroker’s interests may be in direct conflict with your interests.
A Registered Investment Advisor firm may not accept commissions unless he is affiliated (employed) with a brokerage firm. This includes receiving trailing fees for mutual funds and annuities. The only compensation a fee-only investment advisor firm (like Mullooly Asset Management) receives comes from clients. Which is why, at Mullooly Asset Management, we take responsibility for our recommendations and believe all industry members dispensing investment advice should be accountable for investment performance.
So an Investment Advisor works only on fees from clients?
A fee-only investment advisor? Correct. There is no other compensation. The advisor works solely in the interest of the client.
What other kinds of fees can a client expect when working with a Registered Investment Advisor firm?
The other expenses that clients may have would be any expenses the brokerage firm assesses. This is WHY so many Registered Investment Advisors use discount brokerage firms…to keep YOUR COSTS down. Discount brokers also make available almost ALL mutual funds, load and no-load, to the clients. Even no-load annuities, too!
So you do NOT work for a discount broker?
Correct. We utilize a discount brokerage firm for trades. We are not employed by a brokerage firm. We also have clients who have chosen to maintain account relationships at full service firms. This is because they may wish to maintain a long-standing relationship with another firm or a particular broker (they are not yet ready to tell their nephew, the junior broker at another firm, they are dissatisfied). If you so desire, we can notify your brokerage firm or broker to simply mail duplicate confirmations and statements to our firm for tracking purposes.
So, I do not necessarily need to have all my assets moved to a discount broker?
Correct. Some clients have assets scattered literally at several firms. In many cases, we have separate arrangements for clients that want and need advice on the options in their retirement plans or 401(k) plans where they are employed. There is no possible way to maintain custody of assets like that!
I do not make very many transactions, why should I pay a fee for assets I may not be doing anything with?
Good question. Clients that deal with big brokerage firms often ask this one! Let’s walk through an example that may open your eyes. There are two issues in this question. The first deals with costs, the second with the “buy and hold” mentality, which we can discuss later.
Say the client has an account with Big Firm XYZ. He owns a few stocks and also has $75,000 in three of the firm’s growth mutual funds. Each fund has sales charges and management expenses of 1.7% per year. Remember, sales charges, like 12b-1 fees, are in addition to management expenses.
On the mutual funds alone, the client is paying $1275 in expenses. ALL MUTUAL FUNDS have management expenses, even no-load funds need to pay for advertising and other costs. Some mutual funds have higher expenses than others. There may very well be another fund (maybe a no-load fund or exchange traded fund?) with a similar objective that has FAR lower fees.
By the way, you can go through the same exercise with annuities, and find the same result.
The next step in this process: suppose you have been in these funds for four years. Ask yourself if the advice and timely recommendations you have received have been worth the $5100 you have paid so far. Wait! We are not done! You may still be subject to a back-end fee if you redeem shares!
One more thing. How much is your firm charging you just to maintain these accounts? $100…$150…$200 in annual fees? Extra for check writing privileges? Account Inactivity fees? IRA fees? Has your account been farmed out to a call center? Clients have told me they are being charged a fee each month to have their dividend checks mailed out!
While there is no guarantee that a discount brokerage firm will NEVER charge fees, or raise fees, most investment advisors, including Mullooly Asset Management, want to make sure their clients are NOT being charged unnecessarily.
Someone told me that fees paid to an investment advisory firm are deductible? Is this true?
Very possibly. If you can itemize your deductions, you may be able to deduct what you pay for investment advice. Check with your tax specialist for the final call.
Can I deduct the commissions I pay my broker?
I am involved in a program with my brokerage firm where I pay a fee instead of commissions. Isn’t this the same thing?
No! The growing trend in brokerage firms is to “wrap” the clients up in annual fees, instead of commissions. Read the fine print, they will tell you that these fees are “in lieu of commissions” and therefore NOT a deductible expense. Additionally, if you have fixed income (bonds), why are you paying a fee for assets you may never sell? Did they reduce or eliminate the markup in the bonds when they were bought or sold? What is their policy on IPO’s, where there already IS no commission charge? Do you own mutual funds in a wrap account? Why are you paying fees on top of fees? Again, we will not even broach the subject of performance.
At Mullooly Asset Management, we will negotiate your fee upfront and put it in writing. This is so there will be no gray areas, no misunderstandings of what is included and what is not included. This is because you are our client. We work for you.
Remember, the only compensation Mullooly Asset Management may receive comes from our clients.
We set the firm up this way! We do not want our goals to run in conflict with the goals of our clients. Which is why we take responsibility for our recommendations and believe all industry members dispensing investment advice should be accountable for investment performance.
Can I access my accounts online?
You can access your accounts online through this website. Simply look for the box on the right side of every page on this site “Client Tools.”
I need more information! What next?
You can call us at 732-223-9000.