Is Analytic Investment Management LLC legit?
- In US, all former and current institutions and individuals giving investment advice are required to register and disclose with SEC, and all are subject to government reporting, compliance, and exam requirements. Please check all the detailed information about Analytic Investment Management LLC and our representatives from SEC web site.
- However, US Government does not have resources to regulate significant amount of unregistered “Financial Advisors” catering to unknowing investors daily through Internet, emails, newspapers, radio shows, or TV programs.
- SEC article “How To Avoid Fraud” teaches investors how to avoid many fraudulent investment scams.
- SEC article “Ponzi Schemes” explains the Ponzi schemes frequently used by fraudulent “Financial Advisors”.
What is SMA (Separately Managed Account)?
- A SMA investor maintains full control of own SMA accounts 24×7, because a SMA Investor (1) owns the invested assets directly in the account under own name; (2) hires own investment advisers to manage the account; and (3) SMA accounts are held at an account custodian, and investment adviser can’t remove the funds or assets from the account. Our global clients use Interactive Brokers as their account custodian.
- SMA is similar to how real estate investment works. A real estate investor (1) owns investment properties under own name; (2) hire own contractors to manage the properties; (3) property documents are recorded at county recorder office, and contractors can’t take away the properties.
- In traditional opaque and difficult-to-understand financial products, such as mutual funds, hedge funds, private placements, structured products, or insurance products, funds are commingled with other investors, investment holdings are not immediately disclosed, liquidity is limited, investment managers have full access to the funds, so investors always have concerns about of the safety of the funds. Following are some alerts issued by SEC or FINRA about financial products:
How safe is my account with custodian Interactive Brokers?
Please read information about Interactive Brokers financial strength, account protection, and secure login system here and do your own due diligence.
Can Analytic Investment Management LLC manage my accounts with other custodians?
- Not at this moment. But we are constantly evaluating and looking for alternative custodians with low trading cost, strong financial strength, account security, and superior trading technology. Most account custodians have very high trading cost, which significantly reduces clients’ potential profit.
- We work for our clients exclusively, and we don’t accept soft money or other incentives from account custodians, therefore we only choose the best custodian for our clients.
Does Analytic Investment Management LLC publish back-tested results of model portfolios?
- No. We only publish results from actual investment accounts net of fees and trading costs. Having used some of the most powerful optimization and simulation software, and did millions of simulations on individual stocks and market indices, we know too well that market and trading executions are very complicated systems that can’t be represented by any optimized back-tested result. Investors should only trust performance data from real investment accounts, and should never make investment decisions based on hypothetical performance curve through over-optimized or back-test programs.
- See the 2014 SEC case against a very large RIA touting back-tested performance, and fined $35 million by SEC. A quote directly from the SEC filing states clearly the issue with back-tested performance:
The inaccurate compilation of historical data substantially improved the AlphaSector strategy’s advertised hypothetical and back-tested historical performance. If an investor made a hypothetical investment of $100,000 on April 1, 2001 (assuming a reinvestment of dividends and no further contributions or withdrawals), the investment would have been worth approximately $128,000 on August 24, 2008 if invested in the S&P 500 Index. With accurately timed (but still hypothetical and back-tested) signal implementation, the same investment in FSquared’s hypothetical ETF sector rotation strategy would have been worth $138,000. However, by implementing the hypothetical and back-tested signals one week early, F-Squared advertised the investment as worth $235,000 – an increase of approximately 350% more than if F-Squared had applied the signals accurately.
Does Analytic Investment use hedge in model portfolios?
- No. “Hedge” is really a dangerous marketing term. Hedge fund strategies such as long/short and market neutral have significant margin call and total loss risks during volatile time. Using put options and other derivatives to protect investment are very expensive. These strategies can’t make enough money under normal market conditions to compensate the risks taken. Therefore, going through a market cycle, these hedging strategies will significantly under perform. Frequently, these strategies can’t even beat regular fixed income investment.
- The best way to protect investment is staying in cash during volatile time or using fixed income to diversify. We offer two strategies combining both equity and fixed income investment to diversify: Smart Cash Flow is for conservative investors, and Absolute Return is for growth or aggressive investors.
Can Analytic Investment Management LLC lower capital gain tax of my investment?
- No. US tax laws are so complicated that many investors fall into the traps of tax saving investment schemes. Instead of focusing on real investment return, many mediocre and expensive financial products or services use marketing gimmicks to attract clients by claiming to lower investors’ tax bills with tax-loss tricks or obscure rules.
- The simple truths about tax are (1) paying tax on gain is always better than making no or less money; (2) deferring tax into future does not mean saving tax; (3) tax rate in the future could be significantly higher or lower than current rate; and (4) investors can always get real powerful tax-free investment gain using ROTH 401(K) or ROTH IRA to compound growth.
Can Analytic Investment Management LLC help report my tax from investment?
No. please read tax information and reporting for your Interactive Brokers account here, and consult a tax professional if you need any help.
How to terminate the investment management service?
Our clients can terminate agreement with us at any time. There is not any termination penalty or termination fee.
Clients can use any of the following approaches to terminate our service:
- The fastest way is to issue a full ACATS transfer from another brokerage account to transfer all positions and cash in your Interactive Brokers account into another brokerage account of yours. This takes around 1 to 3 business days to complete.
- If you want to keep using Interactive Brokers account on your own, just fill out the form to authorize Interactive Brokers to de-link your account from our management. This takes around 5 to 7 business days to complete.
- Send us an email with your account number to terminate the service. We will send you an electronics termination agreement to your email address on record for you to e-sign. Once we receive your e-signature, we will liquidate all positions in your account. After 3 business days, you can login your Interactive Brokers to transfer your settled fund out via wire, ACH, or check. Expect this process to take 7 to 15 business days.
Who may utilize the investment service of Analytic Investment Management LLC?
Due to government regulations, at this moment, we only accept non-US residents or California residents as our clients. If there are sufficient demands from residents of other States in US and there are capacities left in our model portfolios, we will consider registering in those States to serve the residents.
What type of accounts can be managed by Analytic Investment Management LLC?
All account types that our account custodian Interactive Brokers supports can be managed by us. For complete listing of account types, see Interactive Brokers web site. Following are the frequently used account types by our clients:
- Retirement accounts (Traditional IRA, Roth IRA, SEP IRA)
- Institutional accounts (Defined Benefit, Solo 401k, 501c3, Donor Advised Fund, Partnership, Corporation, LLC)
- General brokerage accounts (Individual, Joint, Trust)
Can I convert my IRA managed by Analytic Investment Management LLC to ROTH IRA? When should I convert?
- Yes, you have to open a ROTH IRA account at Interactive Brokers under our management first, then login your existing IRA account to issue an “Internal Full Conversion” instruction. If you want to do partial conversion, or convert from IRA outside Interactive Brokers, please follow the instructions here.
- ROTH conversion could have significant tax consequence, please review IRS publications carefully or consult with a tax professional before ROTH conversion. In general, the best time to convert traditional IRA/401k into ROTH IRA/401k is when market has large corrections or/and during the years with lower income.
Can I have multiple accounts managed by Analytic Investment Management LLC?
Yes, definitely. In fact, just let us know, and we can duplicate an account from your existing account. Our clients frequently use multiple strategies in multiple accounts.
How do I transfer IRA assets or deposit/withdraw between my account at Interactive Brokers and my other account with a different institution?
- After your Interactive Brokers account is opened, just login into your account, then click “Funding” tab:
- If your other account with a different institution is a brokerage account in US or Canada, you can use ACATS (US) or ATON (Canada) to transfer in and out of your Interactive Brokers account. You can follow the video instruction here or just click “Position Transfers” under the “Funding” tab, then follow on-screen instructions.
- If your other account with a different institution is a bank account in US, then you can follow the video instruction here to use ACH to transfer in and out of your Interactive Brokers account. The transfer limitation is $100,000 every 7 business days and there is 4 business days of credit holding. If you want to transfer larger amount of cash from your bank account or do not want to wait 4 business day for the fund to clear, use WIRE TRANSFER below.
- If your other account with a didfferent institution is a bank account in US or other countries, then you can follow the video instruction here to use WIRE TRANSFER from your Interactive Brokers account.
- For certain accounts, such as mutual fund company or insurance company accounts, that you cannot use above electronic transfer methods, here are the instructions to deposit a check to your Interactive Brokers account or withdraw your Interactive Brokers account using a check. Be careful not to trigger IRS IRA One-Rollover-Per-Year Rule if you use this approach to transfer IRA assets.
- After you submit deposit/withdrawal requests, click “Funding” then “Transaction History” to confirm and monitor the progress of the requests.
Can I rollover one or more qualified plan (defined benefit, 401k, 403b, 457, annuity, profit sharing, etc) accounts into an IRA account? How?
- If the qualified plan is from your self-employed defined benefit plan or Solo 401k plan, you can choose to keep the plan and open defined benefit or Solo 401k account at Interactive Brokers directly, then transfer assets from existing accounts into the Interactive Brokers account.
- Or you can follow the instructions here to rollover all non-ROTH qualified plan accounts into a single IRA account, and rollover all ROTH qualified plan accounts into a single ROTH IRA account. Since many qualified plan custodians require mailing hand-written paperwork in the rollover process, qualified plan custodians often use missing/incorrect paperwork as an excuse to delay or disapprove the asset transfer, and the process could take up to many months to finish. You have to follow up with your qualified plan custodians regularly to complete the rollover. Contact us if you have any question about it.
- If your qualified plan custodian gives you a hard time with your paperwork to prevent your asset from leaving its management, you can try to rollover your qualified plan account into an IRA account at the same custodian, then immediately transfer the IRA asset into the Interactive Brokers account electronically.
- After you submit rollover requests, click “Funding” then “Transaction History” to confirm and monitor the progress of the requests.
How is management fee calculated?
- Each day when market is open for trading, your account is charged a management fee equal to 1/X (X is the number of trading days in a given year, typically X is equal to 252) of the annual rate multiplied by the daily net market value of your invested assets. The fee is calculated and deducted automatically from your account by your account custodian Interactive Brokers.
- For example, at market close of the trading day during a year with 252 trading sessions, the account with $100,000 marked-to-market value investing in a model portfolio with an annual 2.5% management fee will be deduct $9.92 ($100,000 * 2.5 / 100 / 252) automatically by Interactive Brokers.
Why doesn't Analytic Investment Management LLC give a fee break for larger accounts?
Traditional buy-and-hold passive investment approaches have no capacity issue since they do not actively to manage risk, and buy-and-hold investment advisers can simply focus on accumulating client assets by providing fee break for larger accounts. We use very actively managed strategies to invest our own accounts as well as clients’ accounts, and all of our model portfolios have capacity limitation for the benefit of existing investors. It does not make sense for us to cut price to attract larger accounts at the expense of existing investors.