Offering an expansive list of investment strategies and specializing in independent research, Zacks Investment Management is a Chicago-based financial advisor firm with billions in assets under management (AUM). The research-driven firm is an offshoot of the well-known independent research firm, Zacks Investment Research. It has a relatively small team of financial advisors on staff.
Zacks Investment Management primarily works with both non-high-net-worth and high-net-worth individuals, but also has a number of institutional clients on its books. These include investment companies, pooled investment vehicles, pension and profit-sharing plans, state or municipal governments, other investment advisors and wrap programs.
Zacks Investment Management Background
Zacks Investment Management's roots date back to 1978, when quantitative equity analyst Leonard Zacks founded Zacks Investment Research. Zacks Investment Management, which was formally established in 1992, is a wholly owned subsidiary of the well-known research firm that provides data and analysis to investment professionals.
Many of Leonard Zacks' ideas shape Zacks Investment Management's strategies and philosophies, including its policy of using of earnings estimates to pick stocks and its proprietary stock-ranking model. The firm itself also heavily values research when making investment decisions, and it has a team of PhDs on staff dedicated to making proprietary quantitative models and studying academic articles.
Zacks Investment Management Clients and Minimum Account Sizes
Separate from its investment management services, Zacks Investment Management offers its investment strategies to other investment professionals to utilize. Its client base for this portion of the business, which it refers to as its wholesaling business, includes third-party brokerage firms, registered investment advisors and independent broker-dealers.
Zacks Investment Management generally requires a minimum investment of $500,000 for its traditional investment advisory services. This minimum applies to both its wealth management program accounts and its individual fixed-income securities accounts. However, the firm may be willing to accept clients who have less than this minimum.
Services Offered by Zacks Investment Management
Zacks Investment Management primarily provides discretionary investment management. It offers clients different strategies in its wealth management program, which is focused on asset allocation. Clients interested in an alternative approach to investing have the choice of four alternative investments strategies. Additionally, the firm has its online investment advisory program, Zacks Advantage.
When it comes to financial planning clients, Zacks may use the services of certain unaffiliated firms for assistance in providing advice.
Zacks Investment Management Investment Philosophy
Zacks Investment Management's investment philosophy is centered on Zacks Performance Rank, a proprietary stock-ranking model developed by Len Zacks, Zacks Investment Research founder. This stock selection model is based on trends in earnings estimate revisions and earnings surprises. Relying on this model as well as its own research, software, other models and databases, Zacks creates customized portfolios comprisint stocks and bonds entirely in-house. Zacks says this unique blend of techniques is intended to offer "enhanced diversification and risk control." Because all research and strategies are in-house, Zacks claims this results in greater transparency and lower fees.
Zacks offers a number of different investing strategies. The firm will determine which strategies are appropriate for your portfolio based on a number of factors, including your goals, risk tolerance and time horizon. Once that's determined, a member of Zacks' investment committee will create your portfolio using the firm's models and satellite strategies, which are supported by Zacks Investment Research's insights. The firm actively manages client portfolios and monitors strategies on a daily basis, again using data from Zacks Investment Research as a resource.
Zacks Investment Management Fees
Zacks Investment Management offers three sets of services with distinct fee schedules to match each. The firm charges the following asset-based fees for its retail wealth management program:
|Retail Wealth Management Fee Schedule|
|Up to $500,000||1.80%|
|$500,000 - $1,000,000||1.65%|
|$1,000,000 - $1,500,000||1.50%|
|$1,500,000 - $2,000,000||1.45%|
|$2,000,000 - $2,500,000||1.35%|
|$2,500,000 - $3,000,000||1.30%|
|$3,000,000 - $3,500,000||1.25%|
|$3,500,000 - $4,000,000||1.20%|
|$4,000,000 - $4,500,000||1.15%|
|$4,500,000 - $5,000,000||1.10%|
|$5,000,000 - $10,000,000||1.05%|
|More than $10,000,000||1.00%|
Wealth management clients who solely have individual fixed-income securities, including treasury, corporate and municipal bonds, will follow the fee schedule below:
|Fixed-Income Wealth Management Fee Schedule|
|$500,000 - $2,000,000||0.65%|
|$2,000,000 - $4,000,000||0.50%|
|$4,000,000 - $6,000,000||0.40%|
|More than $6,000,000||0.25%|
Zacks uses yet another fee schedule called Zacks Strategies Direct for clients who join the firm as a referral. These rates go as follows:
|Zacks Strategies Direct Fee Schedule|
|Up to $500,000||0.99%|
|$500,000 - $1,000,000||0.90%|
|$1,000,000 - $2,000,000||0.80%|
|$2,000,000 - $5,000,000||0.70%|
|More than $5,000,000||0.60%|
In addition to asset-based fees and other costs, Zacks Investment Management charges performance-based fees to certain qualified clients. These fees will be based either on the account's total return or the amount by which it surpassed a benchmark. Fee rates will be negotiated based on a number of factors, including the amount of assets under management, how long a client has had the account and the client's investment guidelines. Zacks says these fees will not be more than 20% of an account's total return over the period of a year.
What to Watch Out For
Zacks Investment Management has not been subject to any disciplinary actions by regulators over the past decade. However, prospective clients should be aware that Zacks Investment Management is mainly focused on investment management. Though Zacks can meet clients’ financial planning needs, it may rely on financial planning services provided through unaffiliated firms to do so.
Also note that Zacks does charge performance-based fees to certain clients. As these fees are based on how well a portfolio performs, they may incentivize advisors to take more risks in an effort to increase portfolio performance.
Opening an Account With Zacks Investment Management
To find out more about working with Zacks Investment Management, go to the firm's website and click the green “Contact” button in the top right hand corner. There you can find the email addresses and phone numbers for each of the firm's investment advisors as well as the private client group's executive director.
There's also the option to send Zacks Investment Management a message and have the firm follow up with you. Simply fill out the form with your name, email address, phone number and a message.
All information is accurate as of the writing of this article.
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