At Hill Investment Group, we are always looking to add quality individuals to the team. We get extra enjoyment when we are able to “rescue” them from what we refer to as the dark side of the financial industry … as Matt Hall describes here.

In that context, please join me in welcoming Abby Crimmins as our new client service associate. Abby comes to us from a wirehouse. In her own words, “After an unsettling start to my career, I was eager to find a financial firm that emphasized exemplary client service and aligned with my core values.”

Fortunately, a family friend introduced Abby to HIG, and to Matt’s book, Odds On.  After reading the book, she knew where she was meant to be. As good timing would have it, we too were seeking an individual with Abby’s talents to build on our client service team.

Augmenting her wirehouse experience (where she was selected to participate in an executive leadership development program), Abby is a University of Missouri-Columbia “Mizzou” graduate, with a bachelor’s degree in business administration, finance and real estate. Her attention to detail, process-oriented mind, and can-do enthusiasm will also be valuable assets to us and our clients, as she covers tasks that are perhaps best described as “a little bit of everything.”

During her Mizzou days, Abby traveled to New Zealand and Australia as part of an international business program. She also used the opportunity to try sky diving! When she’s not jumping out of airplanes (just the once … so far), she enjoys spending time with family and friends, trying new restaurants, attending concerts and working up a good sweat at the fitness center.

Abby also loves meeting new people and can’t wait to be helpful to you.

For years, Capital One® has been hiring outspoken celebrities like Samuel L. Jackson, Charles Barkley and Spike Lee to ask folks, “What’s in your wallet?” It’s a memorable ad campaign – and probably a successful one, as they run it every year during March Madness. But perhaps a more relevant question these days is, “What’s in your digital wallet?” Do you have the apps in place to manage your wealth, wherever you may roam? Here’s a summary of the apps you’ll find in our own digital wallets here at Hill Investment Group: HIG Wealth Access – A handy overview of your total wealth, including assets and liabilities such as home(s) and debt loads. HIG Client Portal – A place to check your financial portfolio, as well as to securely store critical electronic documents. HIG’s client portal includes accounts we manage as well as those held elsewhere (such as in a client’s company retirement plan). Custodian Login – Custodian account logins (for us, that’s Schwab), so you can deposit checks, initiate other financial transactions, and review account information. Banking/Credit Cards – Bank and credit card account logins, so you can keep an eye on your spending and saving activities. One of our goals is to enable all clients to Take the Long View® by having easy access to their information. Please reach out to us if we can answer additional questions about what’s in your digital wallet or we can point you in the right direction for your set-up.

Imagine this: You walk into a grocery store and buy a bag of apples priced at $1.50 – no sales tax. You hand the cashier two $1 bills. He hands you $0.40 in change and wishes you a nice day.

“Wait,” you say. “Don’t you owe me another dime?

“Oh, no,” he replies cheerfully. “I always keep a little extra for myself. I hope you don’t mind.”

As wrong as this may sound for the produce aisle, similar practices go on every day in muni and corporate bond markets, where they’re called markups and markdowns. Essentially, these are the commissions a bond broker/dealer takes out of your account for executing your trades. You incur a markup cost when you buy a bond and a markdown cost when you sell.

That last one is especially confusing, since a “markdown” usually means you’re getting a discount. Here, it means less money is heading into your pocket. And unless you have access to a (costly) Bloomberg terminal or similar resource, plus the details of your own trade, it’s usually an expense you never knew you incurred. Even with Bloomberg, here’s a peek at what a typical bond screen there looks like. Not so simple to decipher.

Given the relatively opaque nature of bond pricing, here’s how a typical transaction might work: Say you receive a nice, clean trade statement informing you that your bond broker just purchased a muni bond for your portfolio for $10,200 and sold one out of your portfolio for $9,800. Seems clear enough.

But here’s what may really have happened: The market rate of the bond you bought for $10,200 was actually only $10,000; the broker charged you a $200 markup and kept the difference. The bond you sold actually fetched you a market rate of $10,000, but the broker charged you a $200 markdown. For both trades, you paid the broker a relatively steep 2% fee.

We’re not suggesting bond brokers should work for free. One way they earn their keep is by charging you to transact your trades. That’s fair. But we’re less enthused about the relative lack of transparency on the amounts being charged.

This is especially concerning, since individual, retail traders are far more likely to incur higher transaction costs than large, institutional investors can command (such as a mutual fund company managing a fixed income fund). As described in this Vanguard report, “[I]n the municipal bond market, the bid-ask spread for a “retail” trade (less than $100,000 per bond) is typically higher than that for an institutional trade—sometimes substantially so.”

In the stock market, transaction fees are clearly disclosed on every trade confirmation. Plus, current stock prices are widely available to look up online, using any number of free services. It’s easy to see if the prices at which you bought or sold were vastly different from the “rack rate.” If transaction fees get out of line, you should be able to catch that too.

Compared to the stock market, the going price for bonds is much harder to find (again, usually requiring a costly Bloomberg subscription or similar service). And transaction costs are often hidden away within the totals on your trade confirmations. This makes it more difficult to tell whether or not you’ve received a fair deal.

Fortunately, over time, we’ve seen improvements in bond market pricing data and transaction cost disclosures. Last May, new regulations went into effect, requiring brokers to disclose markups and markdowns on bonds they sell to retail investors (that’s you) within the same trading day in which they bought them. The disclosures are reported to you after the trade has occurred.

That’s a start. But why not always require markup/markdown disclosures, for all types of bond trades? While we’re at it, why not require markup/markdown fees be disclosed in advance, in case you would like to do your due diligence on costs before you’ve already incurred them?

These are good questions. We hope, over time, they will be answered with continued clarifying action, until bond trades are at least as transparent and competitively priced as we see in the stock markets.