Broker or Manager? You Decide… Broker or Manager? We do both. Investment Brokerage One of the most powerful advantages TVI offers is the simple fact that we have proven ourselves to be an incredibly competitive provider of bonds on a brokerage basis. We have comprehensive access and deep experience providing institutional and public funds investors with the highest yielding bonds available within the client’s specified parameters. Investment Management We have been students of the bond market for many years with a specialization in public funds investments. We have become expert in developing GFOA Best Practices Investment Policies, establishing appropriate benchmarks, constructing appropriate and efficient portfolios subject to the hierarchy of “Safety, Liquidity, and Yield” and assisting the client in every component of establishing a successful long term investment program. Naturally when serving as a manager or advisor, TVI would never add a commission or fee to the price of a bond purchased on the client’s behalf. This is confirmed at this link.And TVI’s proprietary Platinum Bond Reporting is available to both the brokerage client and the management client. Given that we provide both services and consequently have no incentive to “push” clients into brokerage vs. management, we are well qualified to provide an objective list of some of the strengths and weaknesses of each approach:Investment Management AdvantagesEfficient Use of Limited Staff. Hiring an investment manager or advisor to oversee a significant portion of the investment program means fewer staff hours are needed to compile investment reports or correspond with broker/dealers. Advisor Held to “Fiduciary” Standard. Per the SEC Website The advisor has, "...a fundamental obligation to act in the best interests of [the advisor’s] clients and to provide investment advice in [the advisor’s] clients’ best interests…" (https://www.sec.gov/divisions/investment/advoverview.htm)Broad Menu of Services. Investment managers and advisors often assist with developing an investment policy, establishing investment strategy, selecting benchmarks, identifying potential bonds for purchase and providing bond reporting.Investment Management DisadvantagesPotentially Higher Fees. Fees tend to be higher than the Self-Directed model of using a broker.Once Manager Selected, Lack Of Continual Competition For Service. Unlike a brokerage arrangement, an investment management relationship is usually formalized through a significant process and contractual commitments, often with a term of up to 5 years. Once that effort is complete, the manager operates with very little competition for their services until the contract expires. Manager Covers Many Accounts. Customization May Suffer. Given that most managers and advisors are responsible for a number of public entities, clearly the amount of attention available for each specific entity is limited.Brokerage AdvantagesMaximum Control Over Portfolio. Rather than outsourcing certain investment activities to an outside person or entity, investors who utilize brokerage services maintain maximum control over their portfolio.Potentially Lower Fees. Brokers are only compensated when there is investment activity in an account. An investment advisor on the other hand, will continue to charge a fee on the investor’s assets regardless of account activityContinual Competition Between Providers. The client utilizing brokers is under no obligation to use only one provider. The client can contact as many brokers and receive numerous offerings and additional services as often as the client wishesBrokerage DisadvantagesCan Be Time Consuming. Maintaining relationships with one or many brokers can take time, particularly if the investor’s portfolio has bonds maturing frequently.Limited Services. The services that brokers offer are often limited compared to services offered by an investment advisor.Broker Held to Lower “Suitability” Standard: …FINRA Rule 2111 requires that a firm or associated person have a reasonable basis to believe a recommended transaction or investment strategy involving a security or securities is suitable for the customer… (https://www.finra.org/rules-guidance/key-topics/suitability/faq) Question? Name Email Address Phone Question Thank you! Oops!