We are an independent Registered Investment Advisory practice that works with a select group of clients to help them make intelligent decisions with their investments and finances.  We have significant experience working with high net worth clients and understand their unique needs.  As fee only advisors, we have removed the conflicts of interest that exist with most brokerage, banking and other commission based providers.  We are motivated only by providing the best possible advice to our clients and not by the need to sell certain products in order to earn a commission.  Removing conflicts of interest in order to be completely objective with our advice, along with our independence, is central to our service model and one of many qualities that sets us apart from larger institutions.

A fee-only Registered Investment Advisory (RIA) company is one that does not earn or accept commissions or revenue from sources other than its clients for services rendered.  At its core, the fee-only model differs from other models that receive compensation from sources other than the client in the form of commissions paid by mutual fund companies or insurance companies.  Those commissions, often substantial, may tempt an advisor to provide an investment solution that generates the best outcome for themselves at the expense of the clients.  Advisors at most large brokerage firms and banks are required to generate and maintain a certain level of commission income in exchange for their continued employment.  At Potomac Wealth Management, LLC, clients can rest assured that our investment models and recommendations are made based on sound academic underpinning with the client’s interests as the only priority.

Minimum account sizes at Potomac Wealth Management, LLC are $250,000 per client.  Household accounts may be aggregated to meet this threshold.  Exceptions may be made to our stated minimum account size at the discretion of the advisor.  Please inquire with us if you would like to discuss your personal situation in greater detail.

As you consider various service providers to manage your funds, you will want to be sure there is an independent third party serving as a safekeeping function for your investments.  That provider is referred to as a custodian; they provide a measure of safety and protection for your funds against fraudulent schemes.  Potomac Wealth Management, LLC currently uses Shareholders Service Group as a custodian and broker dealer.  Shareholders Service Group in turn clears its transactions through Pershing, LLC, a subsidiary of Mellon Bank, and the largest independent clearing company in the U.S.

A fiduciary is defined by the Encarta dictionary as: “A manager entrusted to control property or to act on behalf of and for the benefit of another”.  In other words, a fiduciary is required to put the client’s interests ahead of all others’ including their own.  Most broker dealers, insurance agents and other commission eligible service providers do not serve in a fiduciary capacity.

Potomac Wealth Management, LLC is very different from its larger competitors.  Companies like Merrill Lynch, Bank of America, Morgan Stanley Smith Barney, Goldman Sachs, Wells Fargo Advisors and most other Wall Street companies make money, at least in part, by using proprietary investments or other investments that are lucrative for them to include when assembling client recommendations.  Potomac Wealth Management, LLC is completely independent and is therefore free to assemble recommendations from best-in-class offerings instead of those that meet a corporate agenda.  The end result to the client is often lower fees and better investment performance.

At Potomac Wealth Management, LLC, we believe investment markets work and are very efficient.  Markets throughout the world have a history of rewarding investors for the capital they supply.  Companies compete with each other for capital and investors by the millions compete with each other to find the most attractive returns.  This competition quickly drives prices to fair market values and ensures that no investor can expect greater returns without accepting greater risk.  Traditional managers attempt to beat the market by taking advantage of pricing “mistakes” and attempting to predict the future.  This often proves costly and futile.  Predictions go awry and managers miss the strong returns the market provides by holding the wrong stocks at the wrong time. Modern Portfolio Theory (MPT): Developed at the University of Chicago, by Nobel Prize winners Harry Markowitz and Merton Miller and later expanded upon by Stanford University professor William Sharpe, looks at a portfolio of assets based on how they perform as a group and not as individual securities.  As a result of their work, it is possible to develop an optimal combination of investments that will produce the highest rate of return for each level of risk.  These rates and risk levels, when graphed form an arc often referred to as the Efficient Frontier.

• Diversification:  Investors can reduce their risk of loss by diversifying systematically.
• Asset Allocation:  How an investor’s assets are allocated among asset classes and sub asset classes determines as much as 96% of his/her investment return; 4% is attributed to market timing and security selection.  By the way, the 4% attributable to market timing is typically a negative contribution.
• Invest Efficiently:  The most efficient way to achieve exposure to the desired asset classes while achieving broad diversification is probably the best way.  Fees and trading costs matter!
• Other Considerations include:  Minimizing taxes and turnover, thinking long-term, applying discipline, holding low-cost funds, and maintaining asset allocation parameters.

We provide robust periodic performance reporting for clients on a scheduled basis, not less than annually. Our performance reviews include an aggregate look at all accounts together as well as a look at how individual accounts have performed. Performance is also monitored at the account level and at the individual security level. Among the many features included in the report is a breakdown of how client assets are allocated among different asset classes which helps maintain adherence to financial planning guidelines.

Either party upon written notice may terminate client relationships at any time without penalty.

That form is available at this link for download.