Frequently Asked Questions

CWM was formed in 2002. Terry Donahe, the firm’s founder, has been in the financial services since 1988.

You can check the credentials and background of our principals, or any financial advisor, using FINRA Broker Check available through the Financial Industry Regulatory Authority.

There are many designations in the financial services industry and most people cannot differentiate one from the other. This is unfortunate, because they are not all alike.

You can learn more about these designations at the Financial Industry Regulatory Authority:
– FINRA’s Understanding Professional Designations

The State of Oregon plans to prohibit the use of certain designations:
– Oregon to ban misleading ‘credentials’ (pdf download)

Yes. We are compensated solely through fees. We do not receive commissions, referral fees or other forms of compensation. Read more about our fees >>

We are members of the National Association of Personal Financial Advisors (NAPFA), the only international association of Fee Only financial advisors. You may verify our membership by visiting the NAPFA web site, clicking on the link “Find an Advisor” and searching Portland, Oregon.

We are different not because of a particular characteristic. We are different because no other firm in the area offers all of the following:

• Comprehensive Financial Planning. While other firms talk about it, we actually do it. We believe you are more interested in using your money to realize your goals than achieving eye-popping returns.
• Low cost passive investment management. There are very few firms in the region that are committed to this approach.
• Credentials. Our advisors are among the most credentialed in the region.
• Independence. We are not affiliated with a bank, a major wire house, an insurance company, or a credit union. We work for our clients.
• Fee only compensation. We work for and are paid by our clients. We receive no other compensation.
• Trust. Our clients work with us, because they trust us, they appreciate our client service and they know we place their best interests in front of all others.

They are all unique and they all have their unique objectives. Many of our clients are in retirement or actively planning for it. They are corporate executives, professionals, and business owners.

We do not have a minimum account size. Our minimum annual fee is $3,000. If we determine after visiting with you that the fees you would pay our firm would be excessive (in excess of 1.2%), we will encourage you to consider working with a different firm.

We believe you should be involved in making decisions about the general manner in which your portfolio is managed. We will ask you to help us build your Investment Policy Statement.

However, it will not be necessary for you to actively monitor your portfolio by frequently checking them via the Internet. In fact, we discourage this. It is not necessary and it often leads to a short-term perspective which is contrary to our long term investment philosophy.

We ask that you give CWM discretion over your accounts. This empowers us to manage your portfolio in accordance with your Investment Policy Statement. It also allows you to live your life without worrying about how to manage your investments.

If you experience a material change in your financial circumstances, we will work with you to determine if changes to your portfolio are appropriate. We can make changes without incurring surrender penalties or early withdrawal fees.

No. The CWM investment advisory agreement allows either party to terminate the arrangement at any time for any reason.

We will rebalance your portfolio annually. We may make other adjustments if there has been a material change in your circumstances.

Your account will be held at a major custodian (Scottrade or TD Ameritrade), so that your investments are secured by a third party.

The chart below shows the trading charges at various broker dealers. We use TD Ameritrade and Scottrade for client accounts.

You will have access to your account 24/7 on the Internet. Once your account has been established, you will be given a login ID and temporary password to access it.

Yes. You will receive account activity statements monthly, performance reports quarterly and tax reports at the end of the year.

Unless you specifically request otherwise, your reports will be sent electronically via email. If you choose to receive hard copies in regular mail, you may be charged a small administrative fee for this service.

Investment advisory fees are deducted from your account on a quarterly basis in arrears. We provide you with an invoice every time we bill your account.

You are the only person authorized to access the funds in your account. As your advisor, we act under a limited power of attorney given by you to trade within your account and to receive a fee for managing your account.

Your account will not have FDIC insurance. Your account will be held at a major custodian (Scottrade or TD Ameritrade) that provides coverage through the Securities Investor Protection Corporation (SIPC) up to $500,000 (including cash up to $100,000). SIPC helps individuals whose money, stocks and other securities are stolen by a broker or put at risk when a brokerage fails for other reasons.

Investing involves risk and the potential to lose some or all of your investment. Carefully consider the investment objectives, risks, charges and expenses before investing. A prospectus contains this and other important information.

Yes. CWM has a strict privacy policy. We provide this policy annually to all of our clients. The policy indicates we will not share your personal information with anyone unless we have your permission, or we are required to by a legal or regulatory authority.

This depends on the situation. In some situations, regulations may prevent us from providing advice about other assets you own. In general, we will not provide advice about assets that not under our direct management.

In general we will sell these investments and use the proceeds to construct your portfolio. We understand the clients can become attached to certain investments. However, our responsibility is to follow your Investment Policy Statement. If the sale of these investments will result in a significant tax liability, we will suggest alternative strategies.

CWM charges 0.75% of assets for the first $1 million under our management. The minimum annual fee is $3,000. This fee is paid monthly on a pro-rata basis in arrears. (Please see our Fee Schedule for more details.)

CWM builds portfolios using no load mutual funds and exchange traded funds. These funds contain internal expenses. Our portfolios contain 8–25 individual funds and the average internal expense is less than 0.25%.

To build your portfolio, we will purchase funds. The custodian (Scottrade or TD Ameritrade) will charge a commission for each transaction make in your portfolio. These transaction fees are typically $200–$400 depending on the broker’s fee schedule and the number of transactions required to build and service your account. Neither Scottrade nor TD Ameritrade charges a separate account fee.

When we rebalance your portfolio, we will sell and buy individual funds. This will result in trading commissions. We rebalance annually.

Our fees are typically 25% lower than other investment advisory firms. We can do this, because we practice low cost passive investment management. Our firm does not incur the costs borne by those that actively manage portfolios. We do not spend money on proprietary research, software and other tools designed to help an advisor outperform the market. Frankly, we think this is a waste of money.

As a result our overhead is quite small and we not need to charge our clients as much as our competitors. We pass this savings along to our clients, because this is simply the right thing to do.

Our hope is to reduce fees further as our firm grows and we are able to achieve economies of scale. Our clients are helping us build the firm by referring us to their family, friends and colleagues.

CWM receives compensation for its services only from its clients. CWM does not sell financial products (e.g. mutual funds, annuities, CDs) and therefore does not earn commissions. Further, we do not accept fees for referring our clients to other advisors. We are focused solely on helping you achieve your financial goals.

The Internal Revenue code (Section 212) allows those who itemize their deductions to deduct investment advisory fees under the “miscellaneous” section of Schedule A. This deduction is subject to a floor of 2% of adjusted gross income. Please consult with your tax advisor about deducting your fees.

Terry Donahe holds the following credentials:

• CERTIFIED FINANCIAL PLANNER™ (The CFP Board of Standards)
• Chartered Financial Consultant (The American College)
• Chartered Life Underwriter (The American College)
• Masters of Science Management (The American College)
• Masters of Science Financial Services (The American College)

Yes. You may review the CFP Board’s Standards of Professional Conduct. These standards state that a CFP® certificant “shall at all times place the interest of the client ahead of his or her own.” Further, those providing financial planning services must adhere to the “duty of care of a fiduciary.”

There are some excellent resources to help you choose an investment advisor or financial planner:

• The Certified Financial Planner Board of Standards:
  – How to Choose a Planner
• The Securities and Exchange Commission:
  – Investment Advisers: What You Need to Know Before Choosing One
  – Protect Your Money: Check Out Brokers and Investment Advisers
• CFA Institute:
  – What Every Investor Should Know (pdf download)
• National Association of Personal Financial Advisors:
  – Tips & Tools

There are really two stages to this process. First identify advisors who meet certain objective professional criteria. (See the resources above to identify those criteria). Second, you should interview 3–5 advisors who meet your professional criteria/checklist and choose the one with whom you are most comfortable. You should like the person, trust the person and feel the person will ardently serve your best interests.

You can check the credentials and background of our principals, or any financial advisor, using FINRA Broker Check available through the Financial Industry Regulatory Authority.

There are many designations in the financial services industry and most people cannot differentiate one from the other. This is unfortunate, because they are not all alike.

You can learn more about these designations at the Financial Industry Regulatory Authority:
– FINRA’s Understanding Professional Designations

The State of Oregon plans to prohibit the use of certain designations:
– Oregon to ban misleading ‘credentials’ (pdf download)

This is an investment management firm that has registered with the United States Securities and Exchange Commission or a state regulatory agency. Individuals representing RIA firms must act in a fiduciary capacity on behalf of their clients.

A fiduciary is a person/firm to whom property or power is entrusted for the benefit of another. The National Association of Personal Financial Advisors (NAPFA) adopted the following definition:

“A financial advisor held to a Fiduciary Standard occupies a position of special trust and confidence when working with a client. As a Fiduciary, the financial advisor is required to act with undivided loyalty to the client. This includes disclosure of how the financial advisor is to be compensated and any corresponding conflicts of interest.”

We are proud to be a member of NAPFA and we accept our role as a Fiduciary.

The Certified Financial Planning Board of Standard requires that certificants providing financial planning services must act according to “the duty of care of a fiduciary” which includes acting “in the best interest of the client.”

In a broad sense wealth management is the accumulation, allocation, preservation and transfer of material wealth. It requires coordination across the following planning areas: risk management/insurance, investment management, tax and accounting and estate planning.

We receive this question frequently. We would suggest that, if you can answer “yes” to ALL of the following questions, you really don’t need us.

1. Are you willing to learn how to manage your investments? While this does not require obtaining a Ph.D. in economics from an Ivy League university, it will necessitate a serious long-term commitment.
2. Do you have the time to manage your portfolio? While passive management does not require tracking the stock market daily, it does require staying on top of your portfolio and making adjustments when conditions warrant.
3. Will you enjoy managing your own portfolio? People prefer to do the things they enjoy. They tend to avoid things they don’t enjoy. How do you feel about this? We are passionate about using low cost passive investment management strategies to serve our clients.
4. Can you manage your emotions? Successful investing has more to do with managing one’s emotions than it does in managing a portfolio. How did you feel about your investments when the stock market crashed recently? We take a stoic view of investment management and we remained fully invested and totally committed to our principles during the worst market performance since the Depression.

If, on the other hand, you answered “no” to any of these questions, you would benefit from working with our firm.

Please see this section of our web site.

Our objective is to recommend those investments that meet your unique needs and that you will be able to own without feeling uncomfortable. To accomplish this, we will ask you questions about your financial circumstances, your investment experiences, your interests, and your preferences. We will also ask you to complete a financial risk tolerance profile. You may learn more about this unique diagnostic tool at FinaMetrica’s web site, www.myrisktolerance.com

An investment policy statement (IPS) is the document that summarizes all of the important aspects of the management of your money. It will address such elements as your investment philosophy and investment goals. It will also document the specific approach that we will use to manage your investments. An IPS is very much like a road map that will keep us on track as we navigate into the future together.

An index fund is a portfolio of securities that represent a particular sector of the market. You are probably familiar with the Standard & Poor’s 500 index. It contains stocks for the 500 largest publicly traded companies in the United States. There are several index funds that attempt to replicate the performance of this index by holding the same stocks as the index and in the same proportion. There are many other indexes tracking everything from small cap international stocks to the health care industry.

How would you feel if you knew that “average” is actually much better what most investors experience? Most investors earn returns that are considerably below the results of the broad, unmanaged market. The reason is that these investors use strategies (e.g. market timing, stock picking, leverage, etc) that consistently result in underperformance. Considerable academic research indicates a low cost, well-diversified passively managed portfolio results in better long term results than an actively managed portfolio.