We live in a world in which trades occur at lightning fast speeds, literally measured in milliseconds. Yet, our goal is to be so careful that we do not have any mistakes to fix. Capstone has not made a trading error during 2013, or any year to date this year. However, we thought the process sheds some real light on what it means to be a fiduciary (putting you first!), so…here is how it works.

If we were to make a trading error in your account (say we bought the wrong stock for you due to our error), we would need to rectify this situation as soon as it is recognized. At that point, we would document the incident and make the trade to correct it. If we had purchased the wrong stock for you, we would have to sell that stock. Any loss on the transaction would come out of our pocket. So, you would be made whole in this transaction and we would be on the hook for any loss that occurred due to our error. If the market went in the other direction, there would actually be a profit from the error (likely to be the case about half the time). Capstone cannot profit from an error in your account. So, the profit would be moved to an error account. From there, we would have to designate a charity to receive the profit from this error.

Rest assured, we hope to continue to be error free in the future. However, should we make an error we will be donating any profit to charity. So, if you have a charity that you think is particularly worthwhile, let us know and we will be glad to consider it should we err. At Capstone, we know to err is human, but….to give the profit to charity……that is divine!

By Ted Schwartz, CFP©