Services

Fees

We charge a comprehensive annual advisory fee.

What is a comprehensive annual advisory fee, and why would you use one?

A comprehensive advisory fee is an annual fee that’s based on your assets, income, and overall complexity of your financial situation. In many cases, it will be similar to the asset-based fee that is charged by many financial professionals. The annual fee is fixed, and is reviewed every two years or when your circumstances change. It does not vary with your account balance, as does the more common billing system called “Assets Under Management” or AUM. Our fee is billed quarterly and is generally withdrawn from your account.

Why have we chosen this method?

We use a comprehensive annual fee in order to reduce conflicts of interest and to give you the greatest confidence in the objectivity of our financial guidance. It’s that simple.

Why is this important?

Years ago, if you wanted to invest in stocks, you needed to go through a broker. He (it was usually a he) would offer advice, place trades for you, and collect a commission on the trades. This created an incentive for brokers to trade often, since the commission is the way they earned money. This system creates a conflict of interest because sometimes the best thing for the client is not to make so many trades. This led to a new model, billing clients based on Assets under Management, or AUM.

AUM offers fewer conflicts of interest than commission-based selling, as a financial provider under the AUM system makes more money when the client makes more money, regardless of whether there are trades. It’s an improvement over commissions, but there is still a conflict of interest, because the financial services provider is charging you only on the assets he or she manages, and therefore may tend to treat those assets differently than non-managed assets.

The Problem

If the advisor only earns a fee only on the assets they manage, there is a conflict of interest in giving you advice on assets the advisor does not or cannot manage. For example, you might want advice on whether to take funds out of the market to pay off your mortgage. If the funds stay in the market, your advisor gets paid; if you pay off the mortgage, the advisor does not get paid. This creates a conflict of interest.

Another Example

You may have a 401(k) plan that the advisor can’t manage because you’re still working for the employer who sponsors the plan. You’d like advice on how to invest it, but your advisor can’t manage this asset, and in some cases your advisor could be in regulatory trouble for offering advice on assets they don’t manage. After you stop working, is it best to leave the 401(k) plan where it is, or roll it into an Individual Retirement Account (IRA)? There are many factors that may impact that decision. If the advisor can only be paid if you roll the account over into an IRA, there is a conflict of interest for that advisor in advising you to do so.

We bill clients using a fixed annual advisory fee because it more accurately reflects the many services we provide for you. In addition to portfolio management, we offer comprehensive financial planning, risk assessment and big-picture advice that incorporates a wide variety of options and strategies for growing, preserving and safeguarding your wealth. Using a comprehensive advisory fee, we are able to charge you more accurately for the services we provide, and we are free to offer you sound, balanced advice.