FREQUENTLY ASKED QUESTIONS (FAQs)

● I’m interested in becoming a client of Zak Investment Management Company                  (ZIMCO), what are the next steps?

               ● Does ZIMCO need to hold my assets in order to manage them?

               ● How does ZIMCO get paid?

               ● What is ZIMCO’s minimum fee?

               ● What is ZIMCO’s minimum account size?

               ● Are investment management fees tax deductible?

               ● How do I know how well my account is doing?

               ● Why should I choose investment management with ZIMCO rather than use
                  a stock broker?

Q: I’m interested in becoming a client of Zak Investment Management Company (ZIMCO), what are the next steps?

A: We would very much appreciate the opportunity to get to know you better. The first step in the process is to click on the contact us section of this website and send us an e-mail or give us a call. A representative of ZIMCO will set up a meeting with a ZIMCO investment professional for a portfolio review at no cost.

We will discuss your goals and objectives, analyze your portfolio, and develop a plan to put you on a path to realizing your aspirations. If you are interested in moving forward with a partnership with ZIMCO, we will execute an investment management agreement and begin the process of transferring your assets to our custodian, Charles Schwab. The entire process should take as few as 2-3 weeks.

Once the assets are custodied at Charles Schwab, we will begin the process of making investment changes (if needed), and managing your accounts. During the early part of this process there will be a high level of communication with you so that you are never out of step with your assets or what investment decisions we are making on your behalf. Typically, we’d like to meet with you again in the first six weeks of establishing a new relationship to show you what we have done and to address any questions you might have.

Q: Does ZIMCO need to hold my assets in order to manage them?

A: No, your assets will be custodied (held) at Charles Schwab. You will retain full ownership of the assets and will be the only person able to withdraw the assets. As your investment manager, ZIMCO will be able to place trades on your behalf. You will receive regular statements (either monthly or quarterly, depending on your preference) on your account. In addition, you will be able to monitor your account at any time by logging onto the Schwab website using the secure
access link provided on the ZIMCO website.

Q: How does ZIMCO get paid?

A: We get paid based on a percentage of assets under management in your account. We think this is the fairest fee structure because it puts us on the same side of the table as our clients. The more money that we make for our clients, the more money the firm makes in fees as a fixed percentage of a higher account market value. If the account goes down in market value, we share in the loss, as the fees we collect decrease in value. We charge our clients based on the market value of the account at the end of the quarter. At quarter end, our custodian, Charles Schwab will debit your account for a quarter of the annual fee. If you have not been a client for the full quarter, your fee will be pro-rated based on the amount of time your account has been managed at ZIMCO.

Q: What is ZIMCO’s minimum fee?

A: One of the main goals when ZIMCO was established was to be able to help investors of all sizes, nor just the superrich. When the founder of ZIMCO was a Portfolio Manager for one of the nation’s largest banks, he became increasingly discouraged that he had to routinely turn away clients who wanted to work with him because their accounts didn’t meet the minimum dollar size set by the bank. Unfortunately, this tiering of clients continues to get worse as fees, including minimum fees, continue to climb higher within the financial services industry and the amount of assets a client must have to work with an individual is relegating all but the super wealthy to 1-800-Invester call centers.

At ZIMCO, we believe it is extremely important to work with our clients on a one-on-one basis, and to assist investors across the wealth spectrum. As a result, while other financial services firms are establishing minimum fees of $12,000 to $15,000, we have adopted a much more reasonable minimum fee of $4,000.

Q: What is ZIMCO’s minimum account size?

A: Technically, there is no minimum account size, however at the $4,000 minimum fee, we would caution investors with less than $300,000 (which works out to a 1.33% annual fee) that their money might be better treated elsewhere on an after-fee basis.  In order to be on our standard fee schedule, a client would need to have approximately $450,000 under management, which works out to 9/10th of 1%.

Q: Are investment management fees tax deductible?

A: Investment management fees may be tax deductible depending on your unique financial circumstances. The general rule is that the investment manager fees related to taxable income are tax deductible as miscellaneous itemized tax deductions on Form 1040, Schedule A. However, the deductions are subject to the 2% AGI Floor. Please consult your tax professional regarding your individual situation before making any tax-specific decisions.

Q: How do I know how well my account is doing?

A: In addition to receiving regular statements and having access to your account online, a professional with ZIMCO will meet with you at least twice a year to discuss your relationship, evaluate your portfolio’s performance and make sure we are meeting your goals. 

Q: Why should I choose investment management with ZIMCO rather than use a stock broker?

A: The evolution of the brokerage industry is an interesting story. Thirty years ago, the majority of brokers’ earnings were generated by commission dollars. The typical scenario would play out like this: A client would call his broker and say he was interested buying XYZ stock or vice-versa. A good broker would do some research on the stock, or already have an opinion on the stock, and then if both client and broker agreed that it was a good idea, the trade would be placed, and the broker would receive a commission. In those days, a 200-share trade of a $30 stock might cost the client $300 in commission. Given the high cost of the stock commission, it’s not surprising that investors began to be somewhat dubious when their broker called them, because they were questioning whether the broker’s stock idea was truly in the client’s best interest or if the trade was just to generate commission revenue.

Today things are quite a bit different. In my experience, the typical broker doesn’t spend a lot of time following companies or the market, but instead focuses his efforts on gathering assets. Once the broker gets a new client, he or she typically puts the client in something called a wrap program where the client is charged a percentage of assets under management. The broker then helps the client choose mutual funds or third party money managers to invest the assets. At this point you might be wondering, "What’s wrong with that?" After all, "Isn’t that the way that ZIMCO gets paid?" Plus, it seems better than the example of the $300 commission from 30 years ago.

The problem arises when you realize that paying the broker to be in the wrap program is only the first layer of the cost to you, as you still have to pay the investment manager or mutual fund manager to manage the investments. In other words, brokers of today are essentially intermediaries, or middlemen, who increase the cost of having your assets managed. At ZIMCO, we cut out the middleman in order to make the investment process as cost efficient as possible. After all, it isn’t how much money you make that’s important, it’s how much money you’re able to keep.

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