Our Portfolio Challenge service is a one-time analysis of your investment portfolio and how it has performed compared to a professionally designed portfolio. We call it a "challenge" because if we cannot lower your costs and improve the risk/return profile of your portfolio, we'll reimburse our fee.
The Portfolio Challenge service includes two reports. The first is a summary report that lists the following attributes of your portfolio compared to a Blue Water portfolio along with some commentary:
|General allocation of stocks, bonds, and cash||Trailing returns for 1, 3 and 5-year periods|
|Stock percentage of your portfolio||Standard deviation for 3 and 5-year periods|
|Number of different stocks and bonds you hold||Bond credit quality|
|Average net expense ratio||Average effective duration|
|Average annual advisory fee||12-Month portfolio yield|
The second report provides the details behind the summary report and 1-page snapshots of each investment.
The Portfolio Challenge is designed for only IRAs (traditional, rollover, SEP), Roth IRAs, and taxable accounts (personal, joint, trust). Due to the limited investment options and sometimes unknown costs of 401(k) and 403(b) plans, they are excluded from this service. Stock options, restricted stock units, employee stock purchase plans, and foreign accounts are also excluded. (All of these accounts, however, can be included in one of our financial planning services)
The Portfolio Challenge is a great way to:
- Get an analysis of your portfolio’s composition, cost and performance vs. a professionally designed portfolio
- Compare your broker/advisor’s portfolio to that of a lower-cost, fee-only advisor
- “Kick the tires” and try out Blue Water before committing to one of our other services
Our pricing is dependent upon the number of different holdings you have in your portfolio.
|Number of Different Holdings||Fee for Service|
|Over 60||Contact for Quote|
At the conclusion of the Portfolio Challenge service you can:
- Apply the cost of the Challenge towards Blue Water Investment Management Services or one of our Financial Planning Services within 30 days of the Challenge
- Keep the reports but do not proceed with any other service
- Get a reimbursement because you already have a low-cost, well-performing portfolio
We will reimburse our fee for the Portfolio Challenge if we cannot:
- Lower your annual advisory fee by at least 0.15%, OR
- Lower your portfolio’s average net expense ratio by at least 0.05%
- Demonstrate at least a 0.25% improvement in the trailing 3-year or 5-year returns, OR
- Demonstrate at least a 0.25% reduction of the portfolio’s 3-year or 5-year standard deviation without a drop of 0.25% or more in trailing 3-year or 5-year performance
With adhering to these guidelines:
- We will use one of our normal portfolio allocations (ranging from 15% stock to 100% stock in 5% increments)
- The allocation we use will be within 2.5% of your stock percentage (we would use a 60% stock allocation if yours was 62% and a 65% stock allocation if yours was 63%).
- We will use our normal recommended funds and not cherry-pick very high performing or super low-cost funds just to “win”.
Your broker/advisor charges 1.20%/year for a portfolio that’s currently 76% stocks with a 3-year return of 6.0%. Blue Water would be significantly lower on advisory fees (0.85% is our highest). If we can demonstrate that our 75% stock portfolio has a trailing 3-year return of 6.25% or higher, than we have improved your portfolio’s risk/return profile and lowered your costs.
Let’s say you do not work with a broker/advisor and you have a 58% stock portfolio that has an average expense ratio of 0.50% and a 3-year standard deviation of 7.5%. If we can demonstrate that our 60% stock portfolio has a cost of 0.45% or lower and a standard deviation of 7.25% or lower while maintaining similar performance, than we have improved your portfolio’s risk/return profile and lowered your costs.
The Portfolio Challenge service is simply a comparison of two portfolios. It does not represent any sort of investment advice for your personal situation. Taxes and trading costs are not considered. The performance data delivered in this service represents past performance and does not guarantee future results. If you would like specific investment advice, please see one of our other investment services.