Investment Advisors in Wyoming

What an investment advisor does

An investment advisor recommends and often manages the money in your accounts. The work includes choosing an asset mix, picking funds or securities, rebalancing when markets move, harvesting tax losses when it helps, and talking you through bad years. Some advisors only manage a portfolio. Others add planning, insurance and tax advice.

The value is partly in the choices and partly in the behavior. Investors who panic and sell at the bottom lose more than a fee would cost them. A steady advisor can keep you invested through a rough year.

Advisor, broker, planner: sorting out the titles

The titles overlap and cause confusion. A registered investment adviser is paid by clients and has a fiduciary duty under federal or state law. A broker-dealer representative may earn commissions and must meet a regulatory standard of acting in your interest when making a recommendation, which is not the same as an ongoing duty. A financial planner may be either, or neither.

Ask directly: are you a fiduciary at all times, for every account? Get the answer in writing. Our financial advisors guide explains the differences in plain language.

Wyoming has no tax on investment income

Interest, dividends and capital gains are not taxed by Wyoming. For taxable accounts, that means the federal rate is the only rate to model. An advisor can still lower your tax bill by placing bonds and high-yield funds in retirement accounts, holding stocks that you plan to keep for years in taxable accounts, and timing sales.

The absence of a state tax also means you gain nothing by buying tax-exempt municipal bonds from Wyoming issuers just for state tax reasons. Compare yields after federal tax to decide. Confirm current federal rules with a tax professional.

The concentration problem

A lot of Wyoming wealth sits in one place. A mine supervisor in Kemmerer may hold company stock in a 401(k), own a home whose value depends on the mine staying open, and expect a bonus linked to production. A rancher may hold land, cattle and equipment, all of which suffer in a drought. A mineral owner may depend on a single basin.

Diversifying means adding assets that behave differently: broad stock funds across the United States and abroad, high-quality bonds, and perhaps real estate funds. It is not necessary to sell everything. Many advisors set a limit, for example a small share of the portfolio in any one company, and sell down to it in steps.

Energy and commodity exposure

Energy stocks and commodity funds can be a reasonable part of a portfolio, but a Wyoming investor already has exposure through work, property and local business. Adding more may double the risk. An advisor will usually look at your entire economic life, beyond your brokerage account, before recommending an energy fund.

That includes wind and solar investments. Wyoming has a large wind industry, and employees of those companies may also own their stock. The same logic applies: the job and the investment rise and fall together.

Investing royalty and sale proceeds

A Wyoming family that sells a ranch parcel or receives a large royalty payment faces the question of what to do with a lump sum. Rushing into investments is a mistake, and so is leaving cash idle for years. A common approach is to park the money in short-term Treasury bills or insured deposits, write down goals, and invest in steps over six to twelve months.

Set aside money for taxes first. Because Wyoming has no income tax, the federal bill is the one to reserve for. An accountant should confirm how the sale is taxed before any money is spent.

Fees you can expect

The common fee models are shown below, with their typical tradeoffs.

Fund expenses come on top of the advisor fee. A portfolio of low-cost index funds can cost a small fraction of what an actively managed mutual fund costs. Ask for the all-in number in dollars.

Active, passive and everything between

Passive index funds track a market at low cost. Active funds try to beat it, and most fail to do so after fees over long periods. Many advisors blend the two or use index funds for core holdings and a few specialized funds for particular needs.

Be wary of anyone who promises to beat the market. No one can promise returns, and a firm that does is breaking the rules. Ask how the advisor chooses funds and how often the portfolio changes.

Building a portfolio around your age and goals

A 28-year-old teacher in Laramie saving for retirement can hold mostly stocks, because decades remain to recover from drops. A 62-year-old oilfield supervisor in Casper planning to stop working in three years needs more stability, since big losses near retirement are hard to repair. A rancher with irregular income may keep a larger cash reserve.

Your advisor should write down a target mix, a range around it and the conditions under which it changes. If you cannot explain your portfolio to a friend, ask for a simpler one.

Retirement accounts and the Wyoming Retirement System

Public employees in Wyoming have a pension from the Wyoming Retirement System and may also have a 457 or 403(b). The pension reduces how much risk you need to take elsewhere. Other workers rely on a 401(k) or IRA. An advisor should look at the pension as a sort of bond-like asset and adjust the rest of your portfolio.

Our retirement planning guide shows how accounts fit together in retirement. College savings may also belong in the mix, and Wyoming offers its College Achieve plan through the State Treasurer.

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How to check an investment advisor in Wyoming

Use these steps before you move any money:

1. Search the SEC adviser database for the firm and read its Form ADV, which lists fees, conflicts and discipline.
2. Search FINRA BrokerCheck for the individual and any brokerage affiliation.
3. Contact the Securities Division of the Wyoming Secretary of State to confirm registration and ask about complaints.
4. Confirm that an independent custodian holds your assets and sends you statements directly.
5. Verify any credential such as the CFP mark with the group that issues it.

Walk away if you are pressured to decide quickly, promised fixed high returns, or asked to write a check to an individual instead of to a custodian.

Avoiding fraud

Small communities are close, and fraud often travels through personal trust. Affinity fraud targets churches, clubs and families. Watch for private investments that promise steady high income, oil and gas drilling programs sold by phone, and pressure to roll over a retirement account right away. The Securities Division can tell you whether an offering is registered.

If an opportunity involves mineral interests or oil and gas partnerships, get a lawyer to read the documents and an accountant to explain taxes. Treat unsolicited calls with suspicion.

Questions for your first meeting

• Are you a fiduciary for every account and every recommendation?
• What is my total cost in dollars, including fund expenses?
• How would you handle my employer stock or mineral income?
• Who holds my money, and where do I see statements?
• How will we meet if I live hours away?

Rebalancing and tax awareness

Over time, stocks grow faster than bonds and the mix drifts. Rebalancing means selling a bit of what grew and buying what lagged, bringing the portfolio back to target. In a retirement account this costs no tax. In a taxable account, sales may trigger gains, so advisors often rebalance with new contributions or dividends first. Selling losing positions can offset gains, subject to federal rules your accountant should confirm.

Without a state income tax, the question is only the federal rate. Holding a position longer than a year usually lowers it. The investing guide covers these basics for new investors.

Investing when income is irregular

An outfitter in Cody who earns most of the year in the summer may have nothing to invest in January. A contractor who works for energy companies may have a big year followed by a slow one. For irregular earners, a regular schedule still works. Transfer a set share of each payment into an investment account on the day it arrives, and keep the cash reserve in a separate savings account.

Retirement accounts for the self-employed let you contribute a large amount in a good year and little in a bad one. An advisor can set the rules in advance so you do not spend the money first.

How advisors handle bad markets

Every investor sees a market drop. The test is what happens next. A good advisor explains in advance how much your portfolio could fall, what the plan is if it does, and why selling after a drop usually costs more than waiting. Ask to see how the portfolio did in 2008 and in the early 2020 drop, using historical data for the mix being proposed.

Expect calls, not silence, during a rough stretch. Ask how the advisor communicates when markets move sharply, and how soon you get a reply.

Education savings inside the portfolio

A 529 account is an investment account with tax benefits for school costs. Wyoming residents can use the state’s College Achieve plan or another state’s plan. Check the fees, since they range widely, and pick an age-based option if you want the mix to become more conservative as the child approaches college. The college savings guide explains how accounts affect financial aid.

Treat the 529 as one part of the family portfolio, and do not let it crowd out retirement saving. Children can borrow for school, but no one lends for retirement.

Frequently asked questions