FAQs
- What’s the average return you’ve earned for your clients?
- What is your investment philosophy?
- How many clients do you work with?
- How is your firm compensated?
- What is your minimum account requirement?
- How will you create my portfolio?
- How do you select stocks in which to invest?”
- Why should I choose Sommers Financial Management over a big-name firm?
- How is a Registered Investment Advisor different from a stockbroker?
- Why did you choose to build your business in St. Helens of all places?
- Do you take custody of or have access to my assets?
- What happens to my account if you get hit by a bus tomorrow?
- Will you take into consideration the social implications of investing my money?
- Are you registered with the State of Oregon, the SEC, or NASD (FINRA)?
- Do you have ANY potential conflicts of interest?
What’s the average return you’ve earned for your clients?
We create a personalized portfolio for each client based on your account balance, risk tolerance, and time horizon. Because every client is different, average returns vary by client.
To provide general performance figures, we created three model portfolios that are updated each quarter in our newsletter, alongside their benchmark indexes. These portfolios are a measure of how our stock evaluation system performs with regard to individual securities, and do not reflect any one client’s portfolio. The model portfolios also do not include international stocks, bonds, or real estate — important pieces of every investor’s portfolio. Additionally, the model portfolios are considered focused, with only 25 stocks held in each.
These model portfolios can give you an idea of the kind of performance Sommers Financial clients enjoy, as model portfolio holdings are also represented in client portfolios.
Average Annual Returns |
SFM Model Portfolio |
S&P 500 Index |
Dow Jones Industrial Avg. |
NASDAQ |
1-Year |
10.6% |
3.5% |
6.4% |
9.8% |
3-Year |
10.2% |
7.1% |
7.7% |
7.3% |
4-Year |
19.4% |
8.0% |
6.7% |
8.1% |
What is your investment philosophy?
Sommers Financial Management’s investment philosophy is based on the fact that each year 90% of money managers do not outperform their benchmark index (S&P 500, NASDAQ, etc.). Hence, we often use index funds as the basis for an all-weather, diversified portfolio. We then add a mix of actively managed funds and individual securities where we see opportunities to outperform the market.
The value added by an investment advisor is not exclusively based on investment performance, but also includes the anxiety lessened by a well-constructed, diversified portfolio built by a seasoned professional. We add value by helping you create a financial plan to achieve your life goals, and then guiding you through implementation of that plan.
How many clients do you work with?
Currently, Sommers Financial manages over $13 million for more than 85 clients. These clients include individuals, families, corporate 401(k) plans, nonprofit 403(b) plans, small business retirement plans (SEP, SIMPLE), and trusts.
How is your firm compensated?
Sommers Financial charges a flat fee of 0.4% to 1.2% of your annual account balance. This fee covers all the work we do for you, including answering financial questions and managing your portfolio. It does not include transaction fees levied by your custodial brokerage, but we always inform you of the added cost of those items.
We calculate your advisory fee each quarter, which gives us maximum incentive to increase your portfolio all year long. We prefer to deduct your advisory fee directly from your account so you can calculate the after-fee performance when reviewing account statements.
While we initially considered basing our fees on performance, federal and state regulators surmise that if advisors based their fees on investment performance, they would be prone to take big risks to earn big rewards. Hence, regulators do not allow performance-based fees, as they may not end up being in your best interest.
For those who prefer to manage their own investments but would like assistance preparing a long-term financial plan, we offer a formal, written plan for $350, which includes an information-gathering session and a meeting to review the plan.
What is your minimum account requirement?
Our goal is to be available to everyone who takes the initiative to begin getting their financial house in order. We offer comprehensive retirement plans to anyone, and will undertake management of investment portfolios greater than $30,000. However, if you indicate your commitment to investing for retirement, we impose no minimum balance requirements on retirement and other tax-advantaged accounts.
How will you create my portfolio?
There are two parts to financial planning: creating a plan to achieve your goals, and implementing that plan.
Creating a plan: We talk with you at length, asking pointed questions that help us understand your current financial situation, your future goals, and what financial success means to you. Our comprehensive plan focuses on retirement planning and is aimed at achieving financial freedom with a goal-based approach. Every client has different objectives, from funding education to starting a business or traveling. We spend enough time with you to customize a step-by-step plan that is flexible and will put your goals within reach.
Implementing the plan: Based on our discussions, we build an asset allocation model customized to your goals and current financial situation. Using a simple pie chart, we show you how much of your portfolio should be allocated to bonds, real estate, large company stocks, small company stocks, and international stocks. We then determine, based on tax implications, which investments you should hold in each type of account.
Once we have this overview of your investment objectives, we fill each piece of your pie with investments. Our compensation is not tied to investment products, so we don’t purchase your entire portfolio in one fell swoop. Rather, we wait until we see buying opportunities for each of the investments, thereby easing into your holdings over time.
Each year, we review the performance of the investments with you, along with the progress of the plan, and make any changes necessary.
How do you select stocks in which to invest?
While Sommers Financial utilizes many different investment vehicles, we hear the most questions about our stock selection criteria. We select stocks to invest in based on 98 pieces of data that are updated daily. With this data, we then calculate 24 metrics that are broken out into eight measures in three categories: Value, Cash Flow/Profitability, and Risk. Our investment selection process is based on growth at a reasonable price, and includes many of the same ideals that Warren Buffett employs when choosing investments.
Why should I choose Sommers Financial Management over a big-name firm?
Two words: personalized service. When you call Sommers Financial, a person — not a machine — will answer. When you have questions, a licensed advisor, not an office clerk, will answer them. Our flat fee is straightforward, and includes prompt, personal responses to all your investment-related questions.
Large investment firms often charge higher fees, and yet they rely on a cookie-cutter approach that does not allow for individualization. At Sommers Financial, we know every client’s name, and we stay in touch with you so we can create and update a completely personalized portfolio uniquely suited to your needs and desires.
To be sure, at Sommers Financial you won’t be dazzled by a fancy high-rise office suite or Armani suits, but you also won’t be charged higher fees to maintain that glittering façade. Our hometown, home-grown approach to investment planning and management reflects our approach to business: honest, direct and personalized.
How is a Registered Investment Advisor different from a stockbroker?
Sommers Financial Management is an Independent, Fee-Only Registered Investment Advisor, a title that means we are paid only by our clients — never through commissions or hidden fees. Registered Investment Advisors must act in accordance with the Investment Advisor Act of 1940, which holds such advisors to a “fiduciary” standard, meaning they must act in the best interest of their clients at all times.
Stockbrokers are different. Although they often masquerade as advisors, stockbrokers are exempt from the Investment Advisor Act, which means they do not have to act in your best interests, and they can recommend investments that are held to a lower suitability standard. The investments they recommend to their clients as “suitable” often include conflicts of interest:
- Mutual funds managed by the stockbroker’s company
- Mutual funds from companies that pay the stockbroker an incentive fee to steer more clients their way
- “Principal transactions” in which the brokerage firm sells you investments from their own account (Why are they selling, but recommending you buy? Hmm …)
Stockbrokers and other sales-driven “advisors” earn commissions on the investment and insurance products they sell to you, while Independent, Fee-Only Registered Investment Advisors are compensated by advisory fees only. Unfortunately stockbrokers have historically been able to print “Financial Advisor” on their business cards, leading investors to believe their advice is objective. Only Registered Investment Advisors are legally obligated and financially incentivized to act objectively on your behalf.
If you want investments that are made in your best interests, ask for an Independent, Fee-Only Registered Investment Advisor, not a stockbroker or “financial advisor.”
Why did you choose to build your business in St. Helens of all places?
Adam Sommers gained experience at two large firms in Portland and worked at the SEC in Washington, D.C., before deciding to found Sommers Financial in his hometown. Adam has a personal stake in the St. Helens community, though the company’s client base has expanded to Portland and other cities.
Because today’s technology allows for multiple channels of communication, Sommers Financial Management welcomes clients in any location.
Do you take custody of or have access to my assets? (In other words: Do I have any protection that you won’t disappear to South America with my money?)
Sommers Financial has no access to your funds, other than the limited power of attorney you grant us to transact on your behalf, and to deduct our agreed-upon advisory fee. Your money is also protected by the Securities Investor Protection Corporation (SIPC), which ensures delivery of your investments to you even if your custodial brokerage becomes insolvent.
What happens to my account if you get hit by a bus tomorrow?
As an Independent, Fee-Only Registered Investment Advisor, Sommers Financial partners with a custodial broker to handle your account statements and transactions. You always have direct access to this broker, so if Sommers Financial is suddenly unable to manage your account, you can work with the broker directly. You could then contract with a new investment manager who could assist you with the management of your investments.
Will you take into consideration the social implications of investing my money? (In other words: Do you invest in socially responsible investments?)
Sommers Financial asks clients about their interest in socially responsible investing, and for those who indicate an interest, we incorporate environmental, social, and governance factors into our investment selection criteria.
Socially responsible investing is becoming more popular and is integrated into an increasing number of investment plans. However, as of 2006, Morningstar listed only 102 distinct socially screened funds. That means socially responsible investing limits the menu of investment choices, and it means we cannot be certain that the investment returns of these more selective portfolios will perform similarly to less restrictive portfolios. Also, due to changes in business activity, as well as mergers and acquisitions, we cannot guarantee that selections will be honored at all times.
We understand and support the desire to feel good about where you invest your money. We will do our best to take into consideration requests for socially responsible investing when building and managing your portfolio.
Are you registered with the State of Oregon, the SEC, or NASD (FINRA)?
Until a Registered Investment Advisor oversees more than $25 million, they are required to register with the state in which they are based, rather than nationally. Hence, Sommers Financial is registered with the state of Oregon, and our registration can be found here www4.cbs.state.or.us/ex/dfcs/dfcslic/adviser/.
It is important to note that our state registration does not mean we are not the same as federally registered RIAs. We have the same background, education, and licensing requirements as advisors that are registered with the SEC.
Do you have ANY potential conflicts of interest?
We do not have any conflicts of interest. Our fees are solely based on your account balance, so our primary interest is in increasing that balance. As an Independent, Fee-Only Registered Investment Advisor, we are also legally and ethically bound to act in the best interest of our clients. Period.
If it is best for you to withdraw funds from your account, we advise you to do so. If it is deemed appropriate for you to pay off debt rather than invest in an IRA, we will recommend that you do so. Sommers Financial will always provide data and reasoning to back up recommendations — to demonstrate what is truly in the best interest of the client.