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Rating:RIA Lets Everyone In On Portfolio Email Routing List Email & Route  Print Print
Friday, June 16, 2006

RIA Lets Everyone In On Portfolio "Masters"

Reported by Marie Glancy

If the average investor is tired of high fee funds with poor performance and ready for more transparency, says Dan Kiley, the Retirement Corporation of America hopes to meet that demand. Kiley is founder and CCO of the Cincinnati-based registered investment advisory firm, which has developed the Money Masters Investment Portfolio to give individual investors access to what it deems the top fund managers -- 10 in stocks, 5 in bonds.

Holders of online "R Accounts," launched Tuesday, will consult with the advisory staff of RCA to settle on a risk/return strategy. RCA will allocate their investments accordingly among funds run by the 15 "masters," chosen for their results over the past decade or more. The proud few? Ronald Baron of Baron Funds, Robert Baker of Van Kampen Funds, William Danoff of Fidelity, Christopher Davis of Davis Advisors, James Drasdo of American Funds, David Herro of Oakmark, Bill Miller of Legg Mason, Brian Rogers of T. Rowe Price, John Rogers of Ariel Capital Management, Rudolph Younes of Julius Baer, Daniel Fuss of Loomis, Sayles & Co, Bill Gross of PIMCO, Jeffrey Gundlach of TCW, Greg Habeeb of Calvert Group, and Ken Leech of Western Asset.

Kiley's concept is one peculiarly well-suited to the post-Spitzer era: RCA emphasizes it accepts no commissions from the funds it's singled out, so the choices are strictly performance based. It's also geared towards a baby boomer market that, Kiley believes, is souring on high fees while the market moves in the other direction. The R Accounts have no minimum balance, no commissions, no transaction fees, and no exit penalties. They have, however, a one-time $195 set-up fee and an annual management fee of 1 percent or less, as well as the fees associated with the underlying funds.

The business model bears certain similarities to the Masters' Select Funds offered by Orinda, California-based Litman/Gregory Fund Advisors. Like RCA, Litman/Gregory aims to harness the prowess of top stock-pickers, and there is some overlap between the two firms' ideas of who those are (Davis, Herro, Miller and John Rogers are on both rosters). But Litman/Gregory launched the Masters' Select series as proprietary funds, hiring the pickers as sub-advisors and letting clients handle allocation.

Kiley's spent two decades in the RIA business with Retirement Capital Advisors, a firm that manages portfolios for high net worth individuals. "Clients would come to us and say, 'It would be great if you could do the same thing for my son or daughter,' " he said. Those comments prompted months of research, which pointed to the conclusion that small-scale investors "don't know where to turn."

In conjunction with Tuesday's launch, RCA released the results of a national survey compiled by Rasmussen Reports last month, which found that over a quarter of respondents think it takes $100,000 in personal assets to get access to top-quality financial advice.

In forming the Retirement Corporation of America, Retirement Capital Advisors has partnered with New York-basedDiligent Partners, a tech consulting firm for the financial services industry, and The Professional Education Institute, a Burr Ridge, Illinois-based education and training firm. Fidelity is the third-party custodian for the Money Masters portfolio. 

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