I. We process and clear all of our bond transactions internally, which is more economically efficient than paying an outside clearing specialist to do it. Many firms no longer have the skilled personnel required to provide clearing services, so they pay other firms to process and clear transactions for them. That is perhaps a more convenient way to clear transactions, but it's not better for you. Firms that clear through other firms pay about fifty dollars per trade to process the buy and sell side of each bond transaction, and that additional expense is passed along to their clients in the form of higher prices (lower yields). Since we do all of our own clearing, we don't have an extra buy and sell expense, so for five to twenty-five bond trades, with five to ten year maturities, that usually means 20 to 30 basis points better yields for our clients. (With longer bonds and/or larger amounts the difference is less).

II. Our trading department is not set up as an independent profit center the way it is at other firms. Instead, our trading department is simply an integral part of out overall sales team. So unlike almost every other firm, and the large brokerage houses in particular, our trading department doesn't keep a percentage of the profit for itself on each and every trade. "Trading cuts", as these percentages are commonly called, are typically about 20% of the profit per trade. Obviously, those trading cuts are passed along to increase the price (lower the yield) to their clients. Our trading desk is not set up to take the traditional trading cuts, which is a big reason we can consistently offer bonds at better prices.

III. Our traders average twenty-five years of trading municipals, day in and day out, and through all kinds of markets. Every day we bid hundreds of different items from bond brokers. We bid many more than we can use, but we bid almost all of them below the general market price. The net result is that at the end of the day, we buy our fair share of bonds and almost always at better prices than what is available in the general market. This unique trading style is a very effective technique for buying bonds at good prices, but is requires very experienced traders to do it properly.

IV. In over thirty-five years of trading the municipals most suitable for individual investors, we have gained an industry-wide reputation as good bidders on a broad range of bonds in each and every state. We have gained that reputation in part, because we do not take the customary trading cut or use an outside firm to clear our trades, and therefore can execute trades more efficiently. So bond dealers as well as estates and trusts call us every day, from all over the country to ask us to bid for a wide variety of bonds.
That gives us greater exposure to the market, further increasing your chances for a good buy. (It is also significant to note that the discount brokers who do not carry a municipal inventory very often buy their municipals from our trading desk.)

V. All of our salespeople are trained at the trading desk for at least six months before they qualify to become a member of our sales team. Even more importantly, all of our salespeople see every purchase price right off the trading desk just as we bought it, and that keeps them continuously attuned to the true market prices. That's a significant difference, because since other firms take a trading cut, they show their bonds to their salespeople at a marked-up price to cover that extra expense. Then they give their salespeople an arbitrary sales credit to work from. As a result their salespeople see artificially created prices instead of the true market prices.