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Experience the Nicollet difference

Frequently Asked Questions

How much does it cost to work with Nicollet?
What is the minimum necessary to work with Nicollet?
What are the differences between Nicollet's service and a mutual fund?
How long has Nicollet been in business?
How does Nicollet help with my taxes?
Does Nicollet prepare tax statements?
What help does Nicollet provide for my children's accounts?
Does Nicollet help with planning my estate?
How does Nicollet help with retirement planning?
How will Nicollet assist my heirs?
What is Nicollet's investment style?
How does Nicollet manage the risk in my portfolio?
How much turnover will I see in my portfolio?
I already have a financial advisor. Can I still work with Nicollet?
How do Nicollet's services differ from that of a stockbroker?
Can I work with Nicollet and still trade some stocks myself?
I have a large position in my employer's stock. What help can Nicollet provide?
What types of accounts does Nicollet work with?
What is Nicollet's privacy policy?

How much does it cost to work with Nicollet?

The fees we charge are a fixed percentage based on the value of the accounts we are managing. All other services we provide are included.

By basing our fees on the value of the accounts we manage, we have aligned our interests with yours. The only way we see our revenue increase is by growing the value of the your accounts.

Our fee arrangement is similar to the "expense-ratio" charged by mutual funds. You will find that our fees are often lower than the fee charged by actively managed funds. The fee charged for managing your bonds is lower than the fee for managing stocks. Therefore, the total fee you will pay depends on your mix of stocks versus bonds, and the size of your portfolio.

When you work with Nicollet, you will continue to hold your accounts with a major brokerage firm or bank (a custody agent). Most major brokerage houses and banks are willing to hold your accounts and work with Nicollet in exchange for any transaction fees (commissions) you pay when we purchase or sell a security.

Years ago, when commission rates were much higher, our service was only cost efficient for very large investment portfolios that could spread these commissions over larger valued transactions. Today, commission rates are quite low, making Nicollet cost effective for portfolios starting at $200,000. You will find our fee schedule is very competitive and your total cost of using Nicollet to be lower than that of most other investment management services.

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What is the minimum necessary to work with Nicollet?

The minimum amount a client needs to work with Nicollet is based on keeping our service cost efficient. Generally, we work with clients who have at least $250,000 available for investment. However, as commission costs continue to fall, we are able to effectively help clients with lower current investment balances. It really depends on the mix of stocks and bonds appropriate for you.

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What are the differences between Nicollet's service and a mutual fund?

Mutual funds are vehicles for pooling the assets of a large number of clients into a common investment portfolio. In exchange for investing client assets, mutual funds charge a fee based on the total amount invested in the fund. Nicollet Investment Management charges for its services in a similar manner. In a mutual fund, this is known as the "expense ratio."

Many mutual funds assess other charges to their investors. These charges may include 12b-1 fees for marketing expenses, initial up-front charges (know as "front-end loads"), and may assess charges for withdrawing your money (known as "back-end loads"). Nicollet Investment Management does not charge any of these fees.

Mutual funds also incur commission charges for purchasing and selling securities in the fund. Nicollet Investment Management's clients also incur commission charges on some purchases and sales of securities in their accounts, which are paid to their custody agent. In total, the fees paid by Nicollet Investment Management's clients are very competitive with most mutual funds and often lower than that paid on actively managed mutual funds.

In managing your bond portfolio, Nicollet offers a much more customized strategy. For many of our clients', their bonds are held for very specific reasons. Whether it's to produce needed income, fund a large expense, or provide stability, we believe the bonds you own should match your needs. In a bond mutual fund, your investment is pooled with other investors, and there is no consideration of your specific needs.

What Nicollet offers that mutual funds do not is a personalized investment service. We work directly with our clients to understand the purpose of their investments. We get to know our clients and assist them with planning their investment strategy. This one-on-one service differs greatly from the mutual funds where your only contact may be a monthly statement or periodic advertisement.

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How long has Nicollet been in business?

Nicollet Investment Management was established in 1971 in Minneapolis, Minnesota. We are privately owned and operated.

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How does Nicollet help with my taxes?

There are several ways Nicollet helps you manage your tax bill.

At the investment planning stage, we will analyze your finances to determine the most tax-efficient way to structure your portfolio. If your income taxes are complex, we can work with your accountant to incorporate a tax strategy with your investment plan.

When we begin investing your portfolio, we will have already examined the tax implications related to selling existing positions in your portfolio as part of our transition planning. If you have large low-cost basis stock positions, we have strategies for converting those positions in a tax-efficient manner.

If we use bonds in your portfolio, we will buy high-quality bonds that provide you with the best after-tax yield. This means we determine whether you should own bonds whose interest income is subject to federal and state income taxes, bonds exempt from state taxes, or own bonds exempt from both federal and state income tax.

More and more families are finding themselves subject to paying tax under the Alternative Minimum Tax (AMT) calculation. If you need tax-exempt bonds in your portfolio and are subject to AMT, we will buy you bonds whose interest is not a part of the AMT tax calculation.

Since we use individual stocks in your portfolio, we have considerable flexibility at year-end to work with you or your accountant in managing your taxable capital gain or loss. We can target gains or losses on individual stocks to help you manage your taxes. Mutual funds do not offer this flexibility.

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Does Nicollet prepare tax statements?

No. We will, however, work with your tax advisor. We retain all the information on activity in the accounts we manage. We can provide this to your tax advisor, relieving you of the time-consuming task of finding cost basis and trade information.

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What help does Nicollet provide for my children's accounts?

The accounts you have opened for your children are different from your other investment accounts in one respect-your goals for the account are specific to that child's needs. With your other accounts, the purpose is the more general needs of you and your family.

For this reason, separate investment strategies will probably be needed for each of your children's accounts. We will work with you to develop an investment strategy for each of your children.

If your goal is to use your child's account for college expenses, there are a number of things you will need to consider: How much should you be saving? Should you use separate investment accounts, 529b Plans, or just save the money in your own accounts? Should the money be invested in stocks or bonds?

We help you make these decisions as part of our services.

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Does Nicollet help with planning my estate?

Estate planning encompasses the efficient transfer of your assets to your heirs or favorite charities, and generally requires legal documents to express your wishes.

Nicollet will meet with you and your estate attorney when you are planning your estate. We will advise you on how your estate plan should be integrated with your overall investment plan. Coordinating this effort is the best way to ensure your wishes are properly carried out.

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How does Nicollet help with retirement planning?

Retirement planning is necessary because managing your lifestyle becomes more closely integrated with your investment accounts. When you retire, you will typically start using your investments for needed cash. We will assist you in planning for retirement by helping you with cash flow planning, giving you long-term projections, and examining the most tax-efficient means to produce the cash you will need. As you approach retirement, we will move your investments into securities appropriate for your needs.

We will also review your budgets and help you make financial decisions. If you have debts like a mortgage, we will assess the benefit of paying them off or help you develop a strategy for debt reduction. We will analyze decisions surrounding IRA distributions and help you develop tax-efficient strategy for withdrawals.

We can also set up your accounts for automatic withdrawals to be sent to you. All of the custody agents that work with Nicollet allow our clients to receive regularly scheduled withdrawals from their accounts. If you need a regular monthly check, we have the money automatically withdrawn and mailed to you or wired to a checking account.

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How will Nicollet assist my heirs?

When you pass away, Nicollet will be of service to your spouse or your family. We have found that regardless of the amount of estate planning you have done, there is still considerable time and effort required by your family.

Your family will need the services of your estate attorney and accountant to file all the required paperwork. But if you've been a client of Nicollet, we will have a lot of the information that they will need.

We will work with you to make sure your surviving spouse has the cash flow needed once you're gone. It is especially important to plan if your spouse is not interested in financial affairs.

It is our promise to our clients that we will help their family in any way we can.

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What is Nicollet's investment style?

For our stock investments, we concentrate on growth stocks. This means we are always looking to invest in companies with strong prospects to grow their revenues over the long-term. However, we always maintain a diversified stance with our stock portfolios and make sure to own the best companies in a broad range of economic sectors and industries.

Learn more about our investment strategy.

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How does Nicollet manage the risk in my portfolio?

The term "risk" is often used when discussing investments, but is seldom properly understood. Stock investing is inherently risky because the value of stocks can swing dramatically, but not being invested for your future is also risky. Managing risk is not about avoiding a loss. It is about using good judgment knowing you cannot be certain about the future.

The main risk you face is not having enough saved to afford your financial goals. A solid savings plan is the first step to addressing this risk. How you invest those savings introduces investment risk. This risk has to be managed at several levels, and we help you with this.

Time is one of the most important considerations when assessing your capacity to assume investment risk. The more time you have until you need your money, the greater your capacity to own more volatile investment such as stocks. Money you will need access to should be kept in less volatile investments.

As you approach retirement or as your savings grows, your investment strategy should change to reflect your changing capacity to assume investment risk. At Nicollet, it is through the investment planning process that we specifically address this issue.

The allocation of your investments between cash, bonds, and stocks directly reflects your ability to assume risk. By diversifying amongst these three investment types, we help you balance your portfolio to your needs.

When buying individual investments, we also manage risk through our portfolio management techniques and individual stock selection process. We seek to maintain a diversified portfolio of stocks, meaning we have investments in many different segments of the economy. Each individual investment is analyzed for its investment merit and the risks associated with the investment.

Risk is managed at many different levels for our clients. We seek to develop a strategy that balances each client's needs with their capacity to assume risk.

Learn more about our investment strategy.

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How much turnover will I see in my portfolio?

Turnover is a term used to describe the amount of buying and selling that occurs in an account. Nicollet clients do not experience a lot of trading in their accounts once their portfolio has been established.

Like any actively managed portfolio, Nicollet is constantly looking for new investments for our clients and assessing existing holdings. The actual volume of transactions will vary depending on a number of factors. If a stock hits our target price, we will cut it back or sell completely. If a company fails to meet our expectations, we may sell it and move to a new investment. If we find a solid new investment opportunity, we will buy the stock.

The actual transaction activity of your portfolio is dependant on what is happening in the market and with our investments. However, we believe our long-term approach leads to lower-than-average turnover for an actively managed portfolio.

Learn more about our investment strategy.

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I already have a financial advisor. Can I still work with Nicollet?

Yes. The day-to-day job we do for our clients is to manage their stock and bond portfolios for them. If you are working with a financial advisor and have already established an investment plan, you can still work with Nicollet.

Some advisors are financial planners who will develop a plan for you, but do not have the expertise to manage those assets. You can hire Nicollet to manage your large-cap stocks, mid- and small-cap stocks, and/or your bond portfolio.

Many advisors use mutual funds to invest their client's assets. If you prefer owning individual stocks, hiring Nicollet to handle your stock investments would be a good alternative. If your advisor recommends you own some bonds, our individualized bond portfolio management would be a real benefit to you.

We can be hired to manage all or a portion of your portfolio, even if you have an advisor.

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How do Nicollet's services differ from those of a stockbroker?

The traditional stockbroker/client relationship is a service for the "do-it-yourself" individual; people who want to be involved with every decision in their portfolio. The stockbroker makes individual investment recommendations, but requires a client's approval for most decisions. The traditional broker is most often paid from commissions his firm earns each time a security is bought or sold.

Nicollet Investment Management's service is different from the traditional stockbroker. We establish a long-term investment plan, which is our guide for the day-to-day management of our client's accounts. Nicollet is not paid from trade commissions, but earns a fee based on the total amount managed for each client.

Many stockbrokers are moving away from their traditional client relationship to managed account programs, also known as "wrap programs." The term "wrap" refers to the fact that the stockbroker's firm consolidates all fees into a single charge based on the value of the client's account(s). The stockbroker will then hire investment managers who will buy individual stocks, bonds, or both in their client's account(s).

Wrap program clients at some brokerage firms can hire Nicollet Investment Management for our expertise in managing stock portfolios for the broker's clients.

We are professional investment managers.

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Can I work with Nicollet and still trade some stocks myself?

Yes. For many of our clients, Nicollet manages their entire investment portfolio. However, we are willing to work with clients who want us to handle only some of their accounts. Typically, if a client wants to continue to be active in the markets and invest or trade certain stocks, we will establish a separate account for that purpose. This account would be outside of our management and invested directly by the client.

To the extent a client has accounts outside of Nicollet Investment Management, we still like to review the holdings of those accounts to ensure the overall portfolio is aligned with their investment plan. Nicollet Investment Management's service is best used to handle the core assets in your portfolio.

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I have a large position in my employer's stock. What help can Nicollet provide?

Large concentrated positions in individual stocks, whether they are your employer's stock, a stock you've inherited, or one you invested in, need to be carefully considered. The first thing to recognize is that you've been successful with an investment, and having a large position in a single company is a good problem to have.

When we make recommendations on concentrated stock positions, we view it as a part of your overall finances. What is your capacity to assume the risk inherent in holding a large portion of your wealth in one stock? As you know, even the best stocks can run through tough periods and we need to know your willingness and capacity to weather a stock's tough periods.

Generally, if the large stock position you hold represents the bulk of your savings, it is advised to diversify that position. How you diversify is determined as part of our planning process.

For most people, the top concerns about selling a concentrated stock position are taxes and future upside in the stock. The tax you will pay depends on where the stock is held. With employer stock grants (and options), typically you will pay higher income tax rates on any stock sales (or option exercises). For stock you own in your own accounts, the tax will generally be the lower long-term capital gains rate.

The tax consequences of selling a stock should always be considered, but should not be the sole consideration. Wise investment planning can often mean taking a gain, paying the tax, and moving into a new investment. As experienced investment analysts, we can help assess the investment opportunity in a stock you hold. This can include setting target prices for cutting back a position, or recommending an immediate sale. Our experience can help you devise a strategy for your concentrated stock position that balances the investment opportunity in the stock with your capacity to assume risk.

Nicollet also offers investment strategies tailored to the tax-efficient sale of concentrated stock positions subject to capital gains taxes. Please contact us for more information.

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What types of accounts does Nicollet work with?

We are able to manage any investment account where you have investment discretion. For individuals and families this includes taxable brokerage/bank accounts, IRAs, trust accounts, business accounts, children's accounts, and 401(k) plans that include the personal choice investment option.

For businesses, Nicollet can help manage general business accounts, 401(k) accounts, profit sharing plans, and we have strategies designed for tax-efficient management of deferred compensation plans.

There are certain accounts we cannot manage. Examples are your 401(k) accounts when your plan does not offer the personal choice investment option, 529(b) plans for education saving, 403(b) plans, and similar retirement plans. As your investment manager, we will help you with your investment elections in those accounts we cannot manage. We do not separately bill for this assistance, but consider this as a service to our clients.

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What is Nicollet's privacy policy?

We are trusted advisors for our clients. One way we earn that trust is through total discretion. It is Nicollet's policy that all information we have on our clients is strictly confidential. Our clients need to know that they can freely discuss their finances, investments, and goals privately, and we consider every meeting to be confidential.

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