About KMI Wealth & Tax Management

KMI Difference

We are investment & tax management consultants. There are four major differences between what we do as consultants from what your broker, banker, financial planner, insurance agent, or any other financial professional has ever done for you. These four differences separate us from the rest of the financial services industry.

Same side of the table

The first difference is the "incentive."

We charge no commissions on any of our managed accounts. We believe that there is a conflict of interest between the commission and a client's best interest. When your broker calls you up and tells you to buy XYZ and you do it, he makes a commission and gets paid. Six months later, he may call you back and say that it is time to sell XYZ; you sell it and he gets paid again. This is a win-win proposition for the broker, but for you it could go either way; you can either make money or you can lose money. We believe that is unfair and represents a conflict of interest. For this reason, as consultants, we have established our revenue stream so that we win or lose with you.

The way we do that is by charging a fee as a percentage of your total assets under management or a flat hourly rate. So if your account is getting larger, we are both making money. The reverse is true as well: if your account is losing money, we are losing revenue too. In this way, we are winning and losing together. We believe that this is a fair arrangement in that our incentive is the same as yours. We are looking at your assets from the same side of the table and from the same perspective. We want the assets to grow and continue to be safe just as you do.

Risk adjustments

So, incentive is the first difference. The second is "performance."

When you talk about performance, most people talk about the rate of return. This refers to what you made last year"I made 8%, 12%, or 15%." But that is not what we are talking about. What we are referring to is "risk-adjusted performance." It does not make any difference how much you made last year if you do not take risk into account. Two managers could have both made 15% last year, but without knowing how much risk each manager took, you don't know if that 15% was a good or a bad return.

For this reason, we assess all performance on a risk-adjusted basis, both in terms of the managers and total portfolio returns. Our code of ethics requires us to quote performance numbers on a net/net basis. That means "after all costs have been accounted for," so you know exactly what you have made. A broker can call you up and say that the stock you bought at $10 is now at $12, so that you are up 20%. Now you know that does not sound right, when you paid 75 cents to buy the stock and you will have to pay 75 cents to sell it. As consultants, we would be required to say that at the sell, your $10 stock purchase was up 5%, net of all costs. That is substantially different than being up 20%. With risk-adjusted performance, we can assess how much risk is being taken for the performance that we are receiving.

Complete records

The differences so far are incentive and performance. The third difference is "reporting."

I am amazed at the number of executives who would never consider running their businesses without a balance sheet, a P&L, and a cash-flow statement, yet they are more than happy and satisfied to run all of their personal and corporate finances on nothing more than the monthly balance sheet that they receive from their brokerage firm, mutual fund company, or bank.

We believe that the monthly statement is inadequate, and therefore, every 90 days, we are going to send you a progress report. This quarterly report will include a balance sheet, P&L, and a cash-flow summary (if applicable). It will allow you, as a businessperson or any individual should, to make decisions about your personal and corporate assets; to plan and see where you are coming from and where you are now; and hopefully to make some forecast on where you are going. Also as part of the reporting and in addition to your regular quarterly progress report, we provide realized gain and loss statements at the end of each year for tax purposes. We believe that these reporting tools will give you the information necessary to make intelligent decisions concerning your assets. (Complete records may not be part of your planning process)

Personal security

The first difference is incentive, the second is performance, the third is reporting, and the fourth and final difference is "safety."

I am not just talking about the safety provided by the due-diligence process whereby we scrutinize both the independent money managers and ourselves, as consultants. I am talking more about safety regarding your lifestyle and the uncertain future. The difference is that, though you are much older than I am, I have already seen the remainder of your life through the lives of other clients. We have been down that path over and over again. We have gone through the estate transfer of wealth from one generation to the next. In that process, we have learned where you need to turn right and where you need to turn left. The life in front of you is an elaborate and dark maze; we have the flashlight and have been through the maze time and time again.

The other part of this safety is the fact that, as you work with us, we can show you how the goals and objectives you have established for your family can be maintained in your absence. The objectives you establish can be set forth and the family can be taken care of for the next generation. We are concerned not just with the safety of the immediate principal, but also with the safety of the next generations. To recap, the differences we offer are in incentive, performance, reporting, and last and most importantly, safety.

This is what sets KMI apart.

Please take a moment to see how KMI compares to the competition when it comes to the most desired characteristics in a financial advisor.

Characteristic	KMI	Traditional Advisory Model
Trustworthy, independent and objective advice	The KMI model charges fees the same way no matter what is recommended or implemented; eliminating all conflicts of interest between you and your advisor.	The traditional advisor charges fees/commission differently depending upon what is recommended. Allowing the advisor to determine their own compensation, which may or not be the result of recommendations that are solely in your best interest.

Comprehensive expertise	Comprehensive advice to all clients all of the time. Advisors are either Certified Financial Planners© (CFP TM), with significant experience or Enrolled Agents with Tax & Bookkeeping experience.	Comprehensive advice to some clients some of the time. The typical advisor has sufficient investment expertise, but is lacking in the other areas of financial planning, such as insurance, income tax and estate planning.

Personal service	Each advisor is limited to a manageable number of clients to ensure the highest possible level of personal service.	IEach advisor is allowed to service as many clients as they desire. To the extent they have more clients than they can effectively service, they build teams of junior advisors to shift client servicing responsibilities to.

Affordable	We have one fee schedule for all clients, which results in fees that are typically 30% to 50% less than traditional advisors charge for investments alone.	Fees are typically between 1.50% to 2.50% for only investment advice.

WELCOME TO KMI