These are some of the questions we get asked:
What is the difference between a boutique firm like Fairmont Equities and a larger firm?
There a number of fundamental reasons why investors are increasingly moving away from dealing with large firms.
We have recently seen ASIC come down hard on large firms because of rogue advisers who slip through the cracks of a large firm. There have also been concerns about large firms encouraging their staff to cross-promote other products.
A boutique firm is different in that it tends to be run by the owner of the company with a few trusted advisers.
Clients can therefore build closer relationships with their adviser at a boutique firm such as Fairmont Equities.
There is also an issue with biases and vested interests when it comes to research (for example, notice how BHP is always a buy with some of these big brokers despite trading anywhere from $50 to $15 during the last few years?)
What is the difference between Fairmont Equities and a Financial Planner?
Financial planners are essentially jacks of all trades concerning finance and provide a range of advice with areas such as insurance, estate planning, and setting up an SMSF.
At Fairmont Equities, we are specialists in Australian shares. Investing in the share market and managing share portfolios is all we do.
This means that our advice will always be more “on the ball” and it is this edge that makes the difference.
What we have found from speaking to investors over the years is that they are concerned that planning firms are often affiliated with a larger company that produces other “products” that can be sold to them.
We have also been told that many are not nimble enough to take advantage of fast moving markets. Finally, the other concern most investors have is the layer of fees from some planners, whereas we have a simple transaction cost to ensure we get paid for our advice.
Put another way, a financial planner is like your local GP that can narrow down what you need to do, and we are like the specialist doctor that steps in and cures the problem.
Do you do anything other than invest in Australian equities?
We essentially invest in anything listed on the ASX, and that includes equities, options, IPO’s and ETF’s. We specialise in shares. It’s all we do, which means we do it well. For any other advice, we can refer you on to another specialist in the field.
What does your typical client look like?
We work with active investors who are in it for the long haul.
We do not work with day traders or currency speculators.
At the other end of the spectrum, we also do not take on investors who want to invest today and close their eyes and cover their ears for the next 10 years and hope everything works out okay.
Our clients want their portfolio to be actively managed.
Some are SMSF’s and hold a core portfolio of positions that rarely changes. Others are still accumulating wealth and like to be a little more active.
Our minimum portfolio size is $100,000, but we also manage portfolios worth several million dollars for clients that have had enough of expensive private banks that can’t justify their fees. This is a trend we are seeing more of.
Why do you ask for a minimum amount to invest e.g. $100k?
The main reason we have a minimum is to ensure that our clients have the best chance to make money. As with all brokerage firms, there is a minimum fee that gets charged for advice (in our case it is the $90 per trade minimum).
If this fee is too large a percentage of each trade, then it makes it harder for you to make the same sorts of returns as our other clients. The mathematics of it shows that balances of $100k are required as a minimum.
Ideally, amounts of about $250k or more allow you to achieve full diversification. The minimum amount can include stocks as well as cash.
What happens once I have signed up to be a client?
After opening a trading account with us, we will discuss your goals and objectives and create an investment strategy which suits your goals and risk profile. We will then advise you when you need to take action with any of your existing shares or invest in new shares.
What do I do if I already have shares?
Most clients allow us to manage their current portfolio of shares. However, if you want to keep your existing broking account, then you can transfer part or none of your current holdings and we can use your new account here for new purchases while some core holdings remain with your old account.
Why combine Technical & Fundamental Trading Styles?
If it is so beneficial to combine both fundamental and technical analysis, then why doesn’t everyone else do it?
It is hard to know for sure but we think a lot of it must do with the fact that it is because it was always done that way.
When you build a car, you generally use an internal combustion engine, stick it in the front, and fill it up with petrol. There is a new breed of car, Tesla being the most obvious, that has come in and changed the way people think about the old ideas.
Old broking forms were all about the stock fundamentals. Charts were difficult in the days before powerful computing and it was generally accepted by the mainstream as a tool for traders only. This stereotype unfortunately persists to this day.
We are probably not the first to combine both fundamental and technical analysis and give them almost equal consideration, but lots of investors that follow our work believe we are head and shoulders above those that attempt to do the same. At the end of the day, the results do the talking.
Do I still have to do the trading myself?
You have access to place a trade on your portfolio, just like you would any other online broking account – but you don’t have to.
About 99% of the time, if we agree on an opportunity together, then we will place the trade for you and, if necessary, work the order throughout the day.
We have “adviser access” to your portfolio which allows us to buy and sell something with your permission – which is well suited to when our clients are taking our phone calls whilst not at home or on a holiday.
Do I still retain ownership/control of my shares and cash?
Yes. Shares are held on your own CHESS holding and cash is held in your own settlement account earning interest. We cannot do anything without your approval so you still maintain control over what we do.
What advice do I receive?
We provide you with personal advice, not general stock tips. This means that we consider your personal circumstances and then advise you on what stocks you need to be holding, or what you may need to dispose of.
We will proactively inform you of any recommendations. We won’t give you advice on other matters such as taxation, but we can liaise with your accountant at tax time.
Will anyone call me if I need to be selling something?
Yes, we will contact you if we believe that action needs to be taken. This is because firstly we are not a simple general advice newsletter service.
Secondly, we do not have thousands of clients like a large broking house. We only take on a limited number of clients which means we have time to have a conversation about your portfolio.
Can I phone in to discuss some of my own ideas?
Yes, and we encourage you to call us with ideas to discuss. We only take on a limited number of clients which leaves us free to have a chat with you about the markets and any opportunities.
What returns can I expect?
We cannot quote returns as every investor is slightly different. You may aim to beat the market every year by 3%. You may want to aim for 10% a year.
Investors have different risk profiles. The best thing we can do is allow you to trial our research for 8 weeks to get a feel for the recommendations.
You can look at recent trading examples, read our blog, and check out our case studies to get an idea of what to expect.
Am I locked into any contracts?
No, you can stay for as long or as little as you like. Our clients have been with us for many years and the aim is to help grow their portfolios over the long term. If you give us a go and your circumstances change in the short term, then you are free to move on.
What are your fees?
We charge a brokerage fee when we make a transaction – that is it. There are no set-up fees, or other ongoing fees (some firms charge 1% or 2% of your funds to “manage” your portfolio).
When we make an investment, the brokerage rate is 0.9%+GST, or $90 as a minimum. We also pay the platform costs for you. So you essentially pay as you go. It can’t get fairer than that.
Are there any discounts for having a “large” portfolio or for doing “lots of trading”?
No, because it wouldn’t be fair on our other clients. Our fees are competitive and you get value for money.
Do you trade stocks every day
Since we do not day trade, clients should not expect to be trading every day. Sometimes there are many opportunities and you may find that there is almost a trade every week for a period of time.
At other times it is best to sit tight so many weeks may pass without any trading occurring.
Activity depends on each individual’s circumstances, but we never get accused of “churning”.
Even when we are not trading, we are still monitoring the market and your positions. So although a trade didn’t occur today, it doesn’t mean that we didn’t make a “decision” that day (in other words, a decision to hold as is, perhaps based on a lack of new company information and price action).
What sort of reporting do I receive?
When using the ANZ Share Investing service, you receive standard reports at the end of the year which includes cash transactions, trading history, and a holding statement for 30 June. This is available as both a PDF and excel spreadsheet. You will also receive contract notes each time a transaction is made.
Do you have any ties to the big banks?
No, we are independently owned and run. We also do not white label or use another firm’s research.
We produce our own research and ideas. We will look at other research of course to get a balanced view, but we aren’t contracted to use anyone else’s ideas.
We also only invest in Australian securities which means we don’t have other “products” to push to our clients.
Who is Fairmont accountable to? E.g. ASIC? Are you audited by any authority?
In order to provide advice and deal in securities, we need to be licensed through ASIC, a member of an external dispute resolution scheme such as FOS (Financial Ombudsman Service), have PI insurance, and receive a yearly ASIC audit.
Fairmont Equities is authorised through an AFSL holder which means that all of the above points are covered. Any individuals providing advice also need to be PS146 accredited and conduct a minimum of 30 hours of training every year.
If you have other questions we’re always happy to answer them. Either call us on (02) 9375 0138 or send us your question via our Contact Form here.