Who is Arlington Capital Management?
Arlington Capital Management (ACM) is a privately held, SEC Registered (www.sec.gov) Investment Advisory (RIA) firm specializing in providing portfolio management services to individuals, families and small businesses. Founded in 2000, ACM employs a proprietary proactive investment methodology that seeks to achieve attractive risk-adjusted returns during a variety of market cycles over a long-term investment horizon. Our Proactive Asset Allocation Strategy (PAAS), Proactive Income Strategy and Proactive 401(k) Strategy have all been developed in-house, and all portfolio decisions are made internally by our Investment Policy Committee, chaired by Joseph LoPresti.
As a fee-only RIA, our revenue is solely derived from the fees assessed on assets under our management. We do not earn commissions of any kind. As advisors held to the highest fiduciary standards in today’s financial services industry, we are obligated to act in the best interests of our clients.
Who are your clients?
ACM has $299.0 million in client assets under advisement (as of 3/31/2017), predominantly for individuals who are either at or near retirement and who seek assistance with both further building and preserving their wealth. Members of our Private Client Group typically engage us for one of the following reasons:
In addition to our Private Client Group, we also manage qualified plans for small to mid-sized businesses.
- They do not have the time and/or the inclination to proactively manage their assets
- They are tasked with managing larger amounts of assets than which they are comfortable
- They lack the discipline to proactively manage their portfolios, often becoming emotional in their decisions
Who is your Staff?
The firm is solely owned by Joseph LoPresti, who is President and Chief Investment Officer of Arlington Capital Management. Additionally, we employ senior portfolio management, technology, marketing and operational professionals who bring strong industry backgrounds to ACM. All share in the firm’s commitment to providing our clients with the best possible investment advice and exceptional client service.
What is your Investment Philosophy?
We believe in providing you with a dynamic and proactive investment strategy designed to adapt to prevailing market conditions. Further we emphasize the need for appropriate asset allocation for each client, based on individual risk tolerance and unique financial situations. We manage portfolios in one of five (5) risk-based models ranging from conservative to aggressive. Each model is proactively managed in an effort to build wealth during bull market conditions while attempting to reduce risk during bear market conditions. Utilizing our proprietary research and portfolio construction processes, we strive to both build and preserve client wealth in each of our models.
How does your Philosophy differ?
Arlington Capital Management rejects the use of passive portfolio management approaches or so called “buy and hold” strategies, in which a percentage of portfolios are invested across a wide variety of asset classes and held despite changes in market conditions. We view this approach as uneducated and archaic. Our Proactive Asset Allocation Strategy (PAAS) approach utilizes dynamic, proactive strategies that influence our buy, sell and reallocation decisions.
What type of investments do you use?
While we have access to the entire universe of investment options available in the global marketplace, we currently employ the use of the following instruments (including but not limited to):
- Exchange-Traded Funds and Exchange-Traded Notes (ETFs and ETNs)
- Individual equities (stocks)
- Variety of income producing assets, including but not limited to, bonds, preferred stocks, energy trusts, REITs Institutional no-load mutual funds.
As fee-only advisors held to the highest fiduciary standards, we seek to build portfolios in the most cost efficient manner for our clients. The actual composition of an individual’s portfolio can differ depending on their appropriate asset allocation model and their unique financial situation.
Is my account commingled or separately managed?
Your account is always separately managed in consideration of your individual situation. Please note that all client accounts are held in individual name at the selected custodian. Your assets will never be commingled with another client’s assets, as in a mutual fund.
When you invest in a mutual fund or other commingled vehicles, your funds are pooled with those of many other investors. Money managers who run mutual funds do not take into account clients’ individual objectives, investment time horizons, tax considerations, etc. The pools of money are simply invested at the discretion of the manager without concern for your unique situation. Additionally, investment in pooled vehicles sometimes inhibits one’s ability to see what they ultimately own through their share of the pool.
How often do you trade my account?
Once we have initially invested your portfolio in the appropriate Proactive Asset Allocation Strategy (PAAS), we will only trade when we deem it necessary to reallocate in accordance with prevailing market conditions. We do not participate in any commissions and do not get paid to transact your account.
How often do you review my investments?
We review all of our Model Portfolios on a daily basis. Our Investment Policy Committee meets each morning to review overall market conditions as well as industry, sector and asset class exposure. If we deem it appropriate to make a tactical change to any Model, we will implement the necessary trades in all related portfolios that day. Additionally, we continually monitor all securities held at the firm as well as potential candidates for inclusion in our Models. Every security purchased at ACM is assigned specific trading parameters. Should a specific security be deemed to materially stray from these parameters, a sell decision or other risk management strategy may be employed.
We make every effort to keep our clients informed as to our thoughts about the markets and our Model portfolio construction so that they are never surprised when changes are implemented.
Will you consult me prior to making trades?
As you grant us Limited Power of Attorney to manage your accounts, we generally do not consult you when making trades. We exercise discretionary authority over portfolios, enabling us to react quickly when market conditions dictate.
Your custodian will generate trade confirmations immediately following our transactions and you may view these electronically or receive hard copy. If Arlington Capital Management implements major changes to our allocations, we will send you our proprietary Flash Report via your preferred means of communication that will provides a brief rationale for our decisions.
You will also receive monthly statements from your custodian, as well as our weekly PAAS updates and periodic market commentaries.
Please note that when we first begin working together, we will likely have much more personal interaction than later in the relationship when a greater comfort level exists. We will make every effort to ensure you understand our philosophy and processes, and in turn, that we thoroughly comprehend your investment objectives and tolerance for risk.
Who holds my funds and are they insured?
As a registered investment advisor, we do not take possession of any client funds. All clients must select a custodian for custody and safekeeping of their securities under the appropriate legal name. The custodian is responsible for the sanctity of your assets and provides safekeeping for securities and monies.
You simply grant us Limited Power of Attorney to buy and sell securities on your behalf in accordance with mutually determined investment guidelines.
We currently recommend Charles Schwab as custodian for our clients and they maintain some of the highest levels of insurance per client account in the industry.
What is Limited Power of Attorney?
Limited Power of Attorney grants our firm the ability to buy and sell securities on your behalf in the designated custodial account, in accordance with mutually determined investment guidelines. We are granted discretionary management over the portfolio, but have no right to put money in your account or take money out of your account (with the exception of our approved quarterly management fees).
As a discretionary manager we can utilize block trading at preferred custodians allowing you to participate in average price execution when we trade a large number of shares for our clients.
May I trade in the account(s) you manage?
We generally recommend that you do not trade in our managed portfolios, as it can disturb the desired asset allocations, etc. Additionally, it makes it difficult to discern performance metrics when clients make decisions in portfolios over which we have discretionary authority. We will, however, be happy to assist you in opening a separate account at your custodian in which you can execute personal trades.
May I review my account online?
Provided that your custodian provides that capability, you will be able to view all accounts that we manage. Please note that our preferred custodian is Charles Schwab and they provide 24/7 web access to all accounts held at their institution.
How often will you meet with me?
While we typically meet most frequently in the early stages of our working relationship, we recommend that we meet no less than annually. However, many of our clients meet with their portfolio manager semi-annually or even quarterly depending on the complexity of their situation, or when major life changes such as marriage, job change or retirement occur.
Initially, we will have a series of consultations over the phone and/or in person to mutually determine your asset allocation, complete the necessary documents and ensure our relationship begins smoothly.
Of course, we welcome your inquiry at anytime and invite you to call or email should you have a questions or concerns.
How often will I receive reports from ACM?
We prepare comprehensive, customized quarterly reports to each of our clients. These include portfolio valuations, transaction histories and a copy of the fees submitted to your custodian for payment to ACM. You will also receive monthly account statements from your custodian, and may request reports be generated on demand from either ACM or your custodian at any time.
Who will work directly with me?
You will work directly with your lead advisor. Additionally, you will be supported by a member of our Operations staff who can assist with most client service requests.
Please note that unlike large banks or brokerage firms, we do not reassign existing portfolios to junior staff members or frequently change portfolio managers. We recognize the importance of the trusted advisor relationship and believe continuity is critical to a successful partnership.
Will you coordinate with my accountant or lawyer?
With your express written permission, we will share your portfolio information with your tax or legal advisors to ensure coordinated efforts on your behalf. We can provide duplicate copies of quarterly statements or specific annual reports to assist your accountant with tax preparation.
Please note that we do not render legal or accounting advice, but can refer you to a reputable professional upon request.
What information do you provide for tax purposes?
Your custodian (i.e., Charles Schwab) is the official record keeper and will provide you with monthly statements and annual reports critical to filing taxes. However, we have sophisticated portfolio management software that enables us to continually monitor your transactions, tax basis, realized and unrealized gains and losses, etc. We will gladly provide you a professional report upon request.
How is ACM compensated?
As a fee-only Registered Investment Advisor, we are solely compensated by advisory fees assessed on the money we manage. We charge an annual percentage fee, based on the value of clients’ portfolios. We do not participate in any commission generation or sale of investment product at Arlington Capital Management.
What is your fee schedule?
Assets under Management Annual Fee
Less than $500,000 $7,500
Over $5MM 0.80%
How and when am I billed for advisory fees?
Arlington Capital Management bills our clients quarterly, on the calendar quarter. We mark your portfolio to market and value the portfolio as of the close of the last business day of the prior quarter, and bill in advance for the following quarter according to our standard fee schedule.
Our clients typically authorize direct payment to us from their custodian, and a copy of the management fee is provided from ACM with your quarterly reports.
It is worth noting that advisory fees are a tax-deductible expense for many clients.
Are there any other costs involved in working with ACM?
You will pay transaction fees to your custodian for any trade executed in your account. All trade confirmations will contain the transaction cost information.
Should there be any mutual fund trades in your portfolio, you will incur the expense associated with the operational costs of the fund. We do not routinely utilize mutual funds and strive to select those with the lowest expenses ratios when necessary.
All performance reporting is provided net of any fees or expenses incurred.
What are your policies regarding privacy and confidentiality?
We have implemented a best practices methodology of multi-layered security systems for our office, including firewalls, intrusion detection and prevention systems, anti-virus and anti-spy ware programs.