A traditional account is customized and managed by Bill Peattie based on input from the client regarding the goals, risk parameters, liquidity needs, tax situation, time horizon and any other unique needs and circumstances of the client. The traditional account is fee-based, and there is no "profit sharing" with Peattie Capital. Annual fees are 1.25% for the first $1mm under management and thereafter are on a sliding scale.
There are no lockups or "gates" of any kind. The account belongs to the client who can close it or move money out at any time.
Accounts are usually held at Charles Schwab & Co., and clients pay a commission on every transaction, which goes to Schwab. Commissions are currently $9 per trade, but can vary.
If the client prefers to hold an account at a different brokerage firm, the client and Peattie Capital can sign a Limited Power of Attorney, giving PCM discretionary investment authority over that account. In this case, the client pays whatever commissions that brokerage charges, all of which go to that firm.
Peattie Capital will not transfer money to itself to pay management fees, nor will Peattie Capital accept instructions to wire funds out of an account. Any request to transfer funds must come from the client and be communicated directly to Charles Schwab & Co. in writing. Forms to do so are available on Schwaballiance.com where they can be completed and submitted electronically. Alternatively they can be printed, completed, and faxed to Schwab at 1-877-283-2762 .
An Income Account is designed to generate more income than is available in today's traditional fixed income products, because of today's low rates. Typically the income account consists of a variety of Master Limited Partnerships (MLPs), which have healthy yields, and have tax advantages as well.
It will also contain dividend paying common and preferred stocks, and might also include a bond or two and/or other instrument with an attractive payout.
The same guidelines exist with Income Accounts as with Traditional Accounts except that the annual fees begin at 1% for the first $1mm and thereafter are on a sliding scale.
Please refer to Firm_Brochure_10_Page.pdf for more information.
Split accounts are accounts whose holdings are split roughly 50/50 between "income" positions and "custom" positions. For this type of account, fees begin at 1% for the first $1mm, and thereafter on a sliding scale. I have several clients who want exposure to both income and custom opportunities, and we agreed that one single account with both types of investments would be a simple and effective way to accomplish their goal.
Short accounts are meant to profit when the market goes down, by being largely exposed on the short side of the market. I anticipate that short accounts will be used tactically, that is, as a hedge for significant long holdings.