Frequently Asked Questions
ADV Part 2A describes Spire Wealth Management LLC. ADV Part 2B gives information on our advisors. These documents are filed with the Securities Exchange Commission each year. You can get the latest copy of these documents and the Privacy Statement here.
Who is Spire Wealth Management LLC?
Spire Wealth Management, LLC (Spire) is a SEC registered investment adviser (RIA). Spire provides the required registration filings for the wealth and investment advisors who work under the Stone Toro brand. Spire provides other services and tools to make our jobs easier like technology, insurance, operational oversight, and access to discount brokerage accounts for our clients.
Is Stone Toro a company or an advisory team?
Stone Toro is a company that uses an institutional approach to managing money. It’s investment advisor representatives are registered with Spire Wealth Management LLC, a SEC registered investment adviser. The Stone Toro name and logo are trademarked. Prior to the current Stone Toro company, there were several other companies that used the Stone Toro name and logo. These companies included other owners who are no longer part of the current Stone Toro company. The investment approach and research used by Richard Jenkins, Founder, evolved from his leadership in these prior companies. In its asset management business line, Stone Toro delivers its strategies in retail products for other investment advisors and broker dealers to use in managing their clients’ money.
Service is our first priority. We can’t control the markets or the amount of money you have to invest, but we can control how we create your investment experience. If we haven’t met your expectations, please tell us. We want to know. We love to hear from our clients because they help us build a better company with happier clients. Every client experience starts with getting to know you. We tailor our communication methods, frequency, and content based on what works for you. We are not a mass-production shop that cranks out paper and emails just to count the number of time we sent you something. Each communication is designed to meet your expectation. If you need more or less information, we will try to accommodate your requests.
Which Stone Toro advisor should I use?
Stone Toro’s advisors work independently and deliver their own institutional process and strategies to their clients. All Stone Toro advisors have had institutional money management experience. Prospective clients may interview Stone Toro advisors to identify the approach and strategy that best fits their financial goals and investment philosophy. If you prefer, we can help you determine which advisor would be the best fit for you.
How do I become a Stone Toro advisor?
Stone Toro’s unique offering has a broad appeal to retail clients and helps differentiate advisors at Stone Toro from advisors at other firms. This competitive advantage makes becoming a Stone Toro advisor appealing on several levels. For those already managing money for clients, your first step would be to contact us to arrange an introductory call. We can help you adopt our institutional process for your clients. We are always happy to hear your story and why you want to move your book of business, but not every applicant is good match. For those entering the industry, we recommend that you obtain training at another firm and develop an understanding of how other firms approach money management. In rare cases, we will train an advisor, but there has to be a compelling reason for us to invest in your training.
Each of our advisors runs their own strategies based on the needs of their clients. Richard Jenkins built Stone Toro to deliver an institutional approach to the average retail investor. Each advisor utilizes this approach to deliver a customized solution to meet their clients’ specific risk tolerance and investment time horizon. Whether you need a particular slice of your portfolio managed or your entire net worth, we have advisors that can design a solution that incorporates your specific needs. While we have access to some of the best private equity, real estate, and hedge fund solutions, we find that the investor with less than $10 million should consider more liquid investments for their investment selections. As such, we design our portfolios to have daily liquidity and high return-to -risk ratios.
What is an absolute return strategy?
Absolute return strategies are designed to create portfolio returns in both up and down markets. Let’s consider an example to illustrate how this works. Imagine you have two investments that both average 12% return per year; however, when one of the investments goes down, the other goes up by the same amount. They would be described as oppositely correlated. If you bought and held both investments, you would average a 12% return over an investment cycle. Your portfolio would not have any volatility as the up and down movement of the two investments cancel each other out. To date, there is no such paired investments available, but we can buy several investments in one portfolio that significantly reduce total volatility. In the past, we would use stocks paired against bonds to do this. Bonds have historically low yields and have become more correlated to stocks. The current solution that we employ is to use alternative ETFs that have low correlation to equity and bond markets as well as to each other. Having alternative investments available to the average investor is fairly new. Most of these alternative ETFs emerged out of the 2007-2009 financial crisis. These types of investments are called liquid alternatives and include mutual fund, ETF, and ETN product types. Stone Toro was an early adopter of these investments because they also built and distributed liquid alternatives. Very few wealth managers have experience with this type of investment while the institutional world has been using private-issue versions of them for years.
Aren’t alternative investments risky?
The first alternative investments were hedge funds, which were designed to “hedge” risk and make the portfolio less risky. Overtime, more risky strategies emerged to raise the level of returns possible. One of the more famous risky hedge funds bet on the crash of the mortgage market. This bet produced as much as an 800% return in one year. Due to the regulatory restrictions, liquid alternative investments (like those used in Stone Toro portfolios) have less risk, and accordingly, less return than high-risk hedge funds. As we all have been taught, the bigger the risk, the bigger the reward. This holds true in the securities markets, too. Junk bonds pay more than investment grade bonds because of the added risk. Volatile stocks tend to produce higher returns than stable stocks. The reason more people don’t buy these riskier investments is that they can’t tolerate the volatility. In an absolute return portfolio, we use alternative investments to reduce portfolio volatility and increase return. In fact, an absolute return portfolio often seeks out higher return investments because it can “hedge” the risk with other non-correlated investments.
Stone Toro focuses on delivering its Wealth Management solutions to the retail investor with $1-20 million of assets to invest. We do provide advice to investors with less as $1 million, but accounts with at least $100,000 benefit more from the types of strategies we employ. Wealth management services can be comprehensive in nature and include coordination of estate, tax, and financial planning into the investment solutions. Wealth management differs from investment management services by the level of involvement we have in designing and implementing financial solutions for your goals
Stone Toro provides Investment Management solutions for a variety of client types. These tend to be investment mandates that either institutions or ultra-high net worth clients want managed by Stone Toro. For example, we have some individuals that want a global allocation strategy with risk levels managed to a specific range. These clients have other investments and possibly other advisors. For institutions, we build alternative investment solutions to fit within a broader range of investments. These solutions include regular due diligence, investment monitoring, and re-balancing. For small to mid-sized institutions, we can help at all levels of the process including a) establishing an investment policy statement, b) forming an investment committee, c) creating an asset allocation recommendation, and d) selecting and trading investments within the portfolios.
Stone Toro provides Asset Management solutions to institutions and family offices. These solutions include private fund management, registered fund management, coordination of fund operations, and consulting for existing fund operations. RIAs and Broker Dealers often want to launch a fund with their own brand on the fund; however, they often don’t have the experience in fund operations to accomplish this. In many cases, Stone Toro has helped with these decisions and development of a client’s first fund launch. As a recognized expert in building and operating Asset Management businesses, Richard Jenkins, our Founder, provides consulting to a variety of asset managers and private fund operators.
Wealth Management and Investment Management clients find that moving their investment accounts isn’t hard and often saves them money on account maintenance and trading fees.Hand us your last account statement, sign a couple of forms and we’ll move your accounts to one of the four discount brokers Spire makes available to us. We handle all the paperwork and walk you through getting online to access your accounts. We have found that the services, investment offerings, and technology improve client experience and investment results. Asset Management clients benefit from our extensive network of prime brokers, execution brokers, research groups, key vendors, and distribution channels.We help with multi-prime and multi-custodian structures, establish operational process, build account servicing solutions from technology to personnel.
Do Stone Toro or Spire Wealth Management LLC have access to my money?
Stone Toro trades and administers your account activity. The discount brokers that we use are the custodians of your investment assets. This provides a separation of duties that increase the internal accounting controls of managing your account. Brokers that also trade your accounts don’t have this separation of duties except within their own staff who handle your account. By having an outside fiduciary monitor the custodians’ activity in your account, Stone Toro and Spire provide additional oversight for your investments.
How much do you charge for trades?
Stone Toro does not charge for trades, but the discount brokers who provide settlement and custody do have trading fees. Spire Wealth Management LLC has negotiated fees with the discount brokers. Advisors pass on this savings to their clients.In many cases, Stone Toro uses no-fee trades to keep costs low.
What account reports do I get?
The discount brokers that we use provide statements, tax reporting, and information on your investment holdings. Some advisors at Stone Toro elect to provide performance reports or other summary reporting as additional information. The custom nature of our service makes it possible to do special reports if our clients require it. In addition, our wealth management clients get assistance coordinating tax reporting with their CPAs including income estimates, capital gains reporting, and K-1 reporting.
For our Asset Management clients, performance reporting in the form of fact sheets or tear sheets can be prepared if needed. Our Wealth Management and Investment Management clients can request that their accounts have performance reports issued on an agreed upon schedule. We do not publish a sample account or composite performance number as each client has unique facts and circumstances that impact performance. If you want to see the daily balance of a sample account (client info redacted), we can provide that to you to show how our strategies performed for that client. We do track this information for all of our clients along with the level of risk the account took and the ratio of return to risk taken (Sharpe ratio).
How does Stone Toro’s absolute return strategy produce returns in down markets?
Typically, our absolute return portfolios will have 50-60% allocated to non-correlated alternative ETF funds (Alts). These investments are built to have less impact from stock or bond market movements and to produce additional return during times of market stress. A simple example would be an ETF that goes long high-dividend-paying, low-beta stocks and short no-dividend, high-beta stocks. During a downturn in the market, this type of strategy benefits from the high-beta stocks going down (shorted) more than the low-beta stocks (long). The returns from these Alts are designed to offset the paper losses experienced in traditional stocks and bonds while still producing long-term investment performance. A hedged portfolio like this is fine if all we wanted to be was defensive in our strategy; however, we extract additional returns from buying more of what went down and taking profits from what went up. This approach seeks to produce added returns to the portfolio. We call this added return Variation Alpha. Our studies of large university endowment funds showed that this added return was the primary reason for their long-term success. The strategy is designed to extract Variation Alpha of 3-5% annually in markets with normal volatility and is designed to be even higher when volatility increases.
What do hedge fund managers mean when they talk about Alpha?
Alpha has been an overused word and under-produced outcome. It simply refers to outperformance of investment returns. It becomes more complicated when you compare investments with different levels of risk. So, to be more precise, Alpha is outperformance of risk-adjusted returns. The first question then becomes “compared to what?” Benchmarks and indices are published for specific investment categories. Often, Alpha is expressed relative to these benchmarks and/or indices. Alpha has little meaning in the short run, but becomes more significant the longer the investment holding period. For example, 2017 was an exceptional year for the U.S. stock market. If the index for comparison was the Dow Jones Industrial Average, it may be difficult to show Alpha for 2017, but performance in the Dow has been historically low with exceptional volatility since March 2000. Many investment managers have Alpha when compared to the Dow over this time period.
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