The Compass Advantage


Investors choose Compass to manage their assets for many reasons.  While everyone has their own priorities, the following attributes are often cited as most important by our new clients and those who have been with us for generations. 


Honesty is an investment advisor’s most important attribute.   It is more than being assured that someone won’t misappropriate your assets.   It is guaranteed by the fact that we use an independent custodian to assure the safety and accuracy of our client’s statements.  But, much more money is lost from misrepresentation and fraud than from outright theft.  Fraud can be committed in many ways.   The most common are false promises which misrepresent the investments and therefore the client’s likely outcome.  We believe the following are examples of industry abuses that indicate a lack of honesty on the part of an advisor.

Market Timing.  Not long ago, we wrote a newsletter that said market timers are either Cowards, Charlatans or Fools.   Cowards who know they can’t predict the future direction of the market, but they capitulate to their client’s desire to have a false sense of security.  Charlatans who use their unfounded claims of clairvoyance to defraud investors and Fools, the only honest market timers, who believe they can chart the future, but are too ill informed to understand the folly of their beliefs.  Whatever the reason, if an advisor claims the ability to protect investors from market declines with active trading, the wise investors should look elsewhere for financial advice.

Compass proudly states that we have no ability to predict what the market will do over the short to intermediate term.  We are investors, not traders.  We rely on the long term growth of corporate profits and historic ranges of stock valuations to make long term investments.

Conflicts of Interest.  Let’s face it.  Some financial arrangements are just designed to fail, at least as far as the client is concerned.  If the firm that manages your money has a range of product offerings that can differ in price, and therefore alter the benefit to the advisor, the most honest man in the world might be tempted to recommend the higher priced product.  The higher price might be due to commissions paid on actively traded accounts, or it might be from selling annuities, house sponsored mutual funds, private placements or hedge funds.  In all cases the person to ask if it is appropriate investment is not the sales person.

Compass is a pure registered investment advisor.   We do not accept commissions.  In fact, we pay all our client’s commissions, so excessive trading would come out of our pocket.  We only have one proven way to manage money; stock and bond accounts for a fee based on the account size.

Lack of Transparency.   If it sounds too good to be true, it probably is.  Every day somebody invents a new system to beat the market with an improved black box.   Don’t ask how they do it.  You wouldn’t understand anyway, but it’s been back tested and it’s been working like a charm lately.  They’ll just give you the magic asset allocation and follow the trading system to beat the market.

Compass thinks asset allocation should be based on the client’s needs, not as a way to beat the market.  We use actual bonds with a stated coupon and maturity.  We give clients a well-diversified stock portfolio that they can understand.  No packaged product, no third party managers, no magic formulas, no smoke and no mirrors.

Corporate Greed.  When we worked at major brokerage firms they all had the same definition of “productivity.”  It was how big the fees and commissions were per dollar of investable assets.  Advisors, managers and the firm were judged by their “productivity” and yes, more income to the firm was better.  You can’t blame corporations for trying to maximize their profits, but that probably wasn’t high on the investor’s agenda.

Compass doesn’t have any measures of “productivity.”  We charge a simple fee that declines as a client’s assets rise.   Our object is to grow our client’s assets and decrease our “productivity.”


Compass has been managing client’s accounts since 1997 and the founders began their careers on Wall Street in the early eighties.  We’ve lived through bear markets, stock market manias and panics, recessions and booms, falling interest rates and rising rates.  Not that somebody who hasn’t personally managed money in all these conditions should be disqualified from managing your money, but experience might help.  More importantly, in evaluating the performance of a manager it is important to include experience in bull and bear markets.  That’s true of both equity and fixed income markets.

Compass’ track record includes the bull and bear markets.  We’ve seen hundreds of clients through every imaginable market turmoil.   Our experience is one of our client’s greatest assets.


It may take years to prove to clients that they have made the right decision in trusting Compass with their assets, but the level of service will be evident immediately.  Because you deal directly with owners of the company, any question about the management of your portfolio will be answered immediately by the person who manages it.  We have no voicemail and no caller tree.  Our service team has decades of experience.   They get to know each client.  They are knowledgeable, and they have complete authority to solve any problem. 

Compass believes that the best service is provided by a person who knows you, can be easily reached and has the knowledge and authority to help you.


Compass buys stocks and bonds.  Don’t most money managers?  No!  The vast majority of advisors use mutual funds, ETFs, or sub-advisors.   This creates another level of expense, lack of transparency and poor accountability.  The advisor benefits by automating the investment process, freeing them to do what they does best.  Sell their services instead of doing research or managing portfolios.     

Many of today’s investment advisors have never bought an actual stock or bond in their lives.  It’s easier to just use passive ETFs, or pick a few hot mutual funds for clients.  We think investors can do better with the actual securities.  Why would an investor trade the benefits of owning a portfolio of companies that have been successful for decades and weathered every storm for the short term performance promises of an overactive manager whose only worried about next quarter?

There may be an investor who has held on to an ETF or mutual fund for generations, but most investors trade them, and usually at the wrong time.  They have reduced the art of finding great companies that can prosper for decades to a number and a few squiggly lines on computer screen.  They pick what is hot so they can pop in and out of a position at the push of a button.  Call chasing past performance money management if you like.  We don’t.

A bigger problem is looming for bond funds and ETFs that are used as a substitute for an actual bond portfolio: Rising interest rates.  Here again, most of today’s money managers have never lived through a prolonged period of rising interest rates that we may experience over the next few years.  We have and we know what to do.  We don’t own bonds with long maturities because their decline in price will easily eat up their low current yields. 

What you need in a rising interest rate environment is a real bond portfolio, that is laddered by maturity so you never have to sell a bond before it comes due, and you can reinvest gradually at higher and higher yields.  There isn’t a bond fund or ETF that does that.  Bond fund and ETF holders can look forward to years of negative returns.  Our clients can sleep at night knowing that they have short to intermediate maturities that will provide regular cash flow.  


Some advisors tout their consistency by showing the past returns of their currently recommended funds, ETFs or sub-advisors.   Of course this is utter nonsense since today’s recommendations are not what they recommended in the past.  They are just cherry picking what worked last year, not showing their actual performance.

Compass doesn’t use outside managers or mutual funds.   We have managed money for our clients in the same way since our founding and our record is available for examination. 


Our returns are reported after fees.   The fees we charge are low, and they include transaction costs.  We can charge our clients less than most managers because we have low overhead.   We don’t have a home office to support, layers of management, fancy offices, lavish travel budgets or ridiculous marketing costs; none of which would benefit our clients.  It is difficult for investors to know the total investment management expenses because the industry does everything possible to hide them.   Commissions, rebates, markups, trailers all come out of investor’s pockets but require a forensic accountant to find.  Compass works for one modest fee that is fully disclosed to every client.


Studies have shown that investors list performance as low on the list of reasons they select and continue with an investment advisor, well below service, accessibility and costs.   That’s unfortunate since we welcome perspective clients to review our equity performance record that goes back over twenty years.   When reviewed, they find that is the actual performance of all our accounts, not a hypothetical or model portfolio selected after the fact.   It covers bull and bear markets, manias and panics, times when value investing was in favor and times growth was in vogue.  We are proud of our record.

Still, what we are proudest of is the hundreds of clients we have successfully seen through their savings, retirement and gifting years.  For them, it’s not about the numbers, it’s about the fact that they accomplished their goals, lived comfortably and benefited the next generation.


Compass and our clients believe in long term investing, preferring to own great companies that can provide superior returns for decades.  So it is important that the firm they choose to manage their assets will be there to help them for an equally long time.

After 35 years of successfully managing our client’s assets, we see no reason to change our investment philosophy and commitment to personal service.  We have a strong team in place for the future, and will make the necessary investments to provide our clients with a great experience for decades to come.  After all, the best investments and relationships are meant to last for generations.

Compass Wealth Management LLC is a SEC registered investment advisor, clearing transactions primarily through Pershing Advisor Solutions and Pershing LLC subsidiaries of Bank of New York Mellon Corp. This letter is written by Compass for the benefit of its clients and does not necessarily represent the opinions of its affiliated organizations. It is based on information believed to be reliable, but which is not guaranteed to be correct. Nothing herein shall be construed to be a solicitation to buy or sell securities, indicate that past performance is predictive of future returns, or recommend individual investments.

Contact Compass


(203) 453-7000