Validea Legends Advisor - FAQ

What is the Validea Legends Advisor?

The Validea Legends Advisor is an automated advisory service that utilizes technology to build a custom portfolio for you using a variety of different investment classes including stocks, bonds, real assets, real estate and private equity (via publicly traded private equity firms). Upon opening an account with us, you will be asked a series of questions to help us identify your goals and tolerance for risk. The answers to those questions will be used to build a portfolio that fit your specific needs. The equity portion of all our allocations is built using a combination of our proprietary guru-based system, which selects stocks using the proven strategies of Market Legends, and actual guru holdings, via a position in Berkshire Hathaway.

How is my investment allocation determined?

Upon opening your account, you will complete an online questionnaire that analyzes your investment goals and your tolerance for risk. Our computerized allocation system will then calculate a score based on your responses and assign you to one of our five portfolios, which range from Conservative to Ultra Aggressive. Before your portfolio is invested, one of our consultants will manually review your answers to ensure that the portfolio that our computerized system has assigned you to is appropriate given your goals and risk tolerance. If we would like to suggest any changes as a result of that review, we will contact you directly and schedule a personalized investment consultation. If you require additional assistance in building your investment allocation or do not feel the portfolio selected by our computerized system is appropriate, you can always speak to one of our financial advisors free of charge.

Is my investment allocation determined by a person or a computer?

The holdings in each of our 5 investment allocations were selected by our investment advisors and not via a computerized system. Your personal account allocation is initially determined by a computerized system using the responses you provide to our risk questionnaire. That allocation is also reviewed by one of our consultants prior to your money being invested to ensure its suitability.

How do you determine when to rebalance my account?

Over time, allocations among asset classes in your accounts will move away from their target weights based on market movement. Eventually, this will require a portfolio rebalancing to bring each asset class back to its target weight. We review all our accounts periodically to determine whether rebalancing is appropriate. In deciding when to rebalance each account, we use a variety of factors, including how far each asset class has moved from its target allocation, the relative value of each asset class at the current time, and the tax implications of rebalancing (for taxable accounts). Asset class rebalancing is not performed on a preset schedule, but is instead performed as needed based on these factors.

Do you ever change the ETFs used within client accounts?

On an infrequent basis, we may change the ETFs used within accounts if we believe that the change will allow us to more optimally achieve our investment goals. Some potential reasons for a change include risks and return potential, costs and fees, or the optimization of our investment strategy.

What is your market rotation system and how does it affect my account?

Our market rotation system will slowly reduce exposure to various asset classes when our technical criteria indicate that further losses may be likely. When the system's rules are trigerred, we will slowly reduce exposure to that asset class and raise cash. When the asset class begins to exhibit positive momentum again, we will return it to its target exposure. The goal of the system is not to avoid losses, but instead it seeks to limit losses during periods of significant decline. In our historical testing, the system has helped to limit volatility within our portfolios. The market rotation system is applied to a portion of the equity positions in our accounts (the portion labeled market rotation) as well as our positions in real estate, private equity and real assets.

What does the Validea Legends Advisor cost?

The management fee for the Validea Legends Advisor is 0.25%. Total fees (including commissions and fees for the ETFs we invest in) currently range from 0.52% for our conservative option to 0.80% for our most aggressive option. Fees can vary over time as weightings of each asset class within the portfolio change based on market movement. The ETFs within the portfolio may also be changed in the future, which would affect total fees. When selecting ETFs to use for the Validea Legends Advisor, we have focused on funds that we believe deliver the best value at a reasonable fee level. We have also incorporated individual stocks, including Berkshire Hathaway, into our investment allocation to help limit fees.

Where will my account be held?

All accounts are held at a third party custodian, FOLIOfn Investments. We have worked with FOLIOfn since 2005 and they also house all our high net worth client managed accounts. When you open your account with the Validea Legends Advisor, you will be transferred to FOLIOfn's website to complete the account opening process and your risk assessment. You will then be allocated to one of our investment models based on your goals and risk tolerance. After opening your account, you will have real-time access to your holdings and performance via the FOLIOfn website.

How long have you been managing money?

Validea Capital has been managing money for high net worth clients since 2005. We launched the Validea Legends Advisor in 2017.

What types of accounts do you manage?

We manage any type of account that is typically accepted by online brokers. These include taxable and retirement accounts, including regular IRAs, rollover IRAs and SEP IRAs, as well as trusts and other account types.

What is the minimum required balance to open an account?

Our minimum initial account size is $25,000. Multiple accounts can be combined to reach the minimum.

How do I deposit money into my account?

As part of the account opening process, you will be provided with instructions to fund your account. This can be done via EFT, wire, check or the transfer of an existing brokerage account. You will also have the ability to withdraw funds from your account via the same methods (wire, ETF, check or transfer).

Can I speak to an advisor if I want to?

Yes, unlike other Robo Advisors that charge a fee to speak to one of their investment consultants, access to our advisors is always free. Once you begin the account opening process, you will be assigned a representative and provided with their direct contact information. If you have any questions during the process or once you become a client, you can always pick up the phone and speak to one of our representatives.

How safe is the personal information I provide to you?

All the personal information you provide to open your account is sent by you directly to our custodian, FOLIOfn Investments. FOLIOfn uses the latest technology to ensure your information is safe, including secure web transmission and the latest encryption standards.

How do I pay the account management fees?

Our 0.25% management fee is directly deducted from your account at the end of each quarter. The fees for the etfs we use within the account are deducted daily from the fund's net asset value.

Can I change my investment allocation?

Yes, you can change your allocation at any time by contacting us directly. Upon request, we are always happy to re-review your risk tolerance and investment goals to make sure that your current investment allocation is still suitable for you. As part of our communication schedule, we also will reach out to you on a regular basis to ensure nothing has changed in your personal circumstances that would necessitate an account allocation change. If anything in your personal or financial situation (i.e. the loss of a job, a health related emergency) changes and you feel that your allocation should be reviewed, please contact us as soon as possible.

Are there any restrictions on closing my account?

No, you can close your account at any time by contacting FOLIOfn Investments or Validea Capital.

When will I receive account statements?

You will receive monthly statements from our account custodian, FOLIOfn Investments.

How do I track my performance?

You can track your performance at any time by logging into your account at FOLIOfn. Performance tracking is provided since inception and over a variety of other periods and performance can be compared to major indices.

Is tax information provided?

Yes, you will receive a year-end 1099 and will also be able to view and download detailed gain and loss data directly from your account.

How closely will my investment allocation mirror the allocations outlined on the web site?

When you initially open your account, you will be invested in exact accordance with the target percentages of the model you are allocated to. Over time, your account will stray from these allocations based on market movement and you will be brought back to target allocations when those deviations reach a large enough level.

How liquid are the holdings in each portfolio?

All of our holdings are in highly liquid stocks and ETFs.

How often do you communicate with clients?

As a client, you will receive our quarterly client letter and performance update. If you require more frequent communication, you can reach out to your investment consultant at any time.

Will I receive K1s for my account?

Yes, our private equity model invests in publicly traded private equity companies, most of which provide annual K1 tax forms. If you do not wish to receive these forms, let us know and we can remove the private equity model from your investment allocation.