401k_plan

How is Interlake Capital Management, LLC, licensed or registered?
Interlake is licensed to provide investment advisory services by the State of Wisconsin, and can do business in all 50 states. You will find extensive information about Interlake’s business practices and personnel in the brochure version of the firm’s Form ADV Part II.

Back to top

 

Will Interlake have custody of my assets? Will the assets in my Interlake accounts be safe and/or insured?
Interlake will not take physical or electronic custody of your assets. Instead, they will be held at TD Ameritrade Institutional, which serves as the clearing broker for Interlake's trades. TD Ameritrade is insured by the Securities Investor Protection Corporation (SIPC). Please see the SIPC’s website for more information. All account assets will be held in your name or in the name of entities you have created, such as trusts or retirement plans. Neither Interlake nor TD Ameritrade can access or distribute funds from your accounts without your knowledge and permission.

Back to top

 

Do you offer financial planning, tax, or legal services?
We do not offer tax or legal services. We would be happy to offer recommendations to clients seeking professional help in those fields. As a highly specialized money manager, Interlake is not, strictly speaking, a financial planning firm. Inevitably, however, and for very good reason, we make every possible effort to understand our clients’ financial circumstances, objectives, time horizons, and investment preferences. Our personalized process recognizes the uniqueness of each client relationship, and nothing is more important to us than helping you achieve your personal and financial goals.

Back to top

 

Does Interlake receive commissions or other forms of compensation from brokerage firms, mutual fund companies, or other third parties?
None at all. As a fee-only firm, Interlake receives compensation exclusively from its clients. As a result, our advice is fully independent and objective. We make portfolio management decisions purely on the investment merits as we perceive them.

Back to top

 

What are the most important differences between your Allocation Portfolios and your Alpha Portfolios?
Interlake’s Allocation Portfolios offer a low-cost, tax-efficient, highly-diversified, index-based solution suitable for nearly any client. Interlake’s Alpha Portfolios offer an active, contrarian, relatively-concentrated, occasionally-hedged complement to our Allocation Portfolios. Our Alpha fees are a little higher than our Allocation fees, but they’re still below the industry norm, and our separately managed accounts are totally free of all the ugly, entangling expenses that plague many mutual funds (e.g., sales loads, sub-advisor costs, and, in too many cases, truly unconscionable 12b-1 fees).

Back to top

 

Why are fees for your Alpha Portfolios higher than fees for your Allocation Portfolios?
Our Alpha discipline is more labor-intensive than our Allocation program. It’s as simple as that.

Back to top

 

If Interlake’s Allocation Portfolios are so compelling, and so inexpensive, why might I want to participate in the Alpha Portfolios?
Our Allocation Portfolios help clients diversify across and within asset classes using inexpensive, tax-efficient, index-based exchange-traded funds (ETFs). Our Alpha Portfolios provide another layer of diversification—between passive and active management. We believe that this approach, sometimes referred to as a core-satellite strategy, provides clients with an institutional-quality mix of tactical and strategic investment programs. As academic research has long shown, most active managers underperform their benchmarks after fees and taxes. To outperform, we believe investors should seek managers who offer exactly what Interlake offers: an active discipline that’s agile, eclectic, contrarian, and relatively concentrated (as opposed to bloated, style-constrained, momentum-chasing, and highly diversified). For more information on our active discipline, please see our main Alpha Portfolios page.

Back to top

 

I’d like to participate in both programs, but I’m not sure how I should split my assets between them. Do you recommend a specific weighting between your Alpha and Allocation disciplines?
In short, no, but we certainly will help you understand each discipline, and how they fit together, as clearly as possible. The appropriate mix of our two programs is a subjective function of several factors: Your risk tolerance, time horizons, and investment objectives; the size of your accounts; the nature of any other holdings; and your personal investment philosophy and experience. We do not promote one approach over the other. Instead, we explain the risks, principles, and merits of each discipline in order to help you make an informed decision.

Back to top

 

Your Allocation Portfolios use index-based exchange-traded funds (ETFs). Which asset classes can I participate in using ETFs?
Most liquid asset classes are now represented by multiple ETFs, which enables us to choose the optimal vehicles for our clients on the basis of expenses, liquidity, tracking error, and other considerations. In larger accounts, we may use individual bonds rather than fixed-income ETFs. We do this to reduce the (already low) costs our clients pay and to enhance our flexibility and precision in managing fixed-income positions.

Back to top

 

Do you have account or household minimums?
Rather than impose arbitrary asset minimums, we have established minimum annual fees: $1,000 for the Interlake Allocation Portfolios and $2,500 for the Interlake Alpha Portfolios. Due to attractive economies of scale in our Allocation Portfolios, we have capped the annual fee for that discipline at $10,000 per household.

Generally, we recommend account minimums of roughly $50,000 for our Allocation Portfolios and $150,000 for our Alpha Portfolios. As part of a total household relationship, we can and will help with smaller accounts, but you should be aware that especially small accounts can limit the flexibility and efficiency of our investment programs. We are happy to discuss the constraints of small accounts on a case-by-case basis.

Back to top

 

Why are fees capped at $10,000 annually for Interlake’s Allocation Portfolios?
We believe that a semi-passive, index-based program makes great sense for most investors, from those with modest accounts to those with the largest estates. In most cases, a financial professional can provide indispensable guidance, discipline, and insurance against the emotional decision-making that can quickly tip a portfolio out of balance, expose investors to too much (or too little) risk, and inflict lasting damage on returns. Beyond a certain point, however, the time and technical expertise required to provide this service is not directly proportional to assets under management. To put it simply, a $10 million Allocation Portfolio does not require five times the time, effort, or expertise needed to manage a $2 million account. This is why we cap our Allocation fees at $10,000 per year per household. The most important reason to do business with Interlake is the exceptional quality of the firm’s investment disciplines. We hope our fair, transparent, intelligent fee structure also encourages you to work with us, and we hope it reflects our high regard for clients’ hard-earned assets.

Back to top

 

Your fees are reasonable, but if you simply buy and hold index funds in your Allocation Portfolios, why should I pay anything at all for that? Can’t I do the same thing on my own?
First, it’s important to note that our Allocation Portfolios do not employ a purely passive, buy-and-hold approach. By identifying best-in-class investment vehicles, rebalancing intelligently, harvesting tax-losses where appropriate, and minimizing the role of emotion, Interlake’s approach adds meaningful value within the framework of strategic asset allocation.

Can you do the same thing on your own? Maybe. Given what we’ve learned from leading scholars of behavioral finance, however, it’s exceedingly unlikely that you will.

In managing their own programs, individual investors face several challenges, the most important of which aren’t technical or intellectual. They’re behavioral and emotional. The problem isn’t that investors are insufficiently bright; it’s that they’re insufficiently robotic! Because we’re human, we tend to become euphoric and chase momentum in bull markets (thus over-exposing our portfolios to risk) and become despondent and bail out in bear markets (thus under-exposing our portfolios to risk). That’s a recipe for an unhelpful combination: buying high and selling low. It’s also difficult for investors to maintain an appropriate middle ground between confidence and humility, which is a necessary foundation for prudent investment management.

The literature on behavioral finance, which emphasizes the effects of human cognition and emotion on financial decision-making, is not only extensive and fascinating; it also provides a solid foundation for Interlake’s philosophical and practical approach to money management.

For more on the value of working with Interlake, please see “The Logic of Paying for Good Professional Help.” For more on the insights of behavioral finance, please see our Suggested Reading page. And for additional information on our index-based discipline, including a discussion of our Intelligent Rebalancing program, please see our main Allocation Portfolios page.

Back to top

 

I like what I’ve seen and I’m ready to explore a relationship with Interlake in more detail. How do I get started?
The first thing you should do is call or write so we can discuss your circumstances and objectives. As part of our fiduciary responsibility to our clients, we conduct a thorough profiling process before initiating a new relationship. For more on the account-opening process, please see our Getting Started page. You may also express your interest in our firm through our Contact Interlake page.

Back to top

 

I have an advisory relationship at another financial institution, but I like what I’ve learned about Interlake. Will it be a hassle for me to transfer my accounts to your firm?
Not at all. With the assistance of our custodial partner, the transfer of your assets to Interlake will be quick and easy. You’ll need to sign our investment management contract, an agreement with TD Ameritrade, and any applicable account transfer forms. Generally, you can then submit those documents to us in person, by postal mail, or by facsimile. We accept most client communications by e-mail, but these contractual account-opening documents are exceptions to that rule. In addition, we strongly recommend submitting originals of any account transfer forms, which we will provide to you.

Back to top

 

I’d like to participate in Interlake’s investment programs, but I value my relationship with another financial professional. Can I have you manage some of my assets without abandoning my current advisory relationship?
Of course, in one of two ways. First, ask your current advisor to contact Interlake. We might be able to offer Interlake’s Alpha Portfolios through his or her platform. Second, you can split your assets between firms, thus maintaining your existing relationship and participating in Interlake’s institutional-quality programs.

Back to top

 

You describe your fees as “marginal.” What does that mean?
It simply means that the fee indicated for assets in each range apply to assets in that range only, with a lower fee applied to any assets over each threshold. To take one example, a household with $1.5 million in assets in our Alpha Portfolios would pay 1.5% per year on the first $250,000, 1.25% on the next $750,000, and 1.00% on the next $500,000. For Interlake’s Allocation Portfolios, fees are capped at $10,000 annually. For more detailed information on Interlake’s fee structure, please see our Fees page.

Back to top

 

Why do you use Exchange-Traded Funds (ETFs) instead of mutual funds in your Allocation Portfolios?
This is simple: They’re less expensive, more tax-efficient, more transparent, fully invested, and more flexible.

The only circumstance in which we might recommend open-end mutual funds over ETFs is when someone makes regular, modest contributions as part of a dollar-cost-averaging program. In that instance, the investor may want to avoid the per-trade brokerage commissions required to purchase ETFs.

Above all, we would never recommend a mutual fund with a sales load. Why? In part because we would never buy one ourselves! Loads are outrageously expensive and they create all sorts of perverse incentives and constraints.

For the broker, the incentive is clear: Peddle funds with generous loads rather than less-expensive but otherwise equivalent alternatives.

For the investor, the effect of buying a load fund can be truly ridiculous. Imagine you want out of a particularly mediocre fund, but you just paid more than 5 percent to buy its “A shares” a few months ago. You decide to stick with it, not on the merits of the fund, but because you feel handcuffed by the sales charge you’ve already paid! You don’t need that problem, and you’ll never face it at Interlake.

For more information on our use of ETFs, please see our Allocation Portfolios page.

Back to top