Wealth Management Fees
There are many fees related to managing clients assets thus clients should understand them. Fees are generally broken up into three categories. Those charged by the Advisors, those related to the Custodian and those related to the Funds or assets selected. Some are defined up front by the Advisor and some aren't. Clients should discuss all of these with their advisor thoroughly as some clients are unaware of them until after they see them on their statement. This discussion can only provide highlights to costs (as there are probably more than outlined below) so discuss this topic in detail with your advisor.
Advisor Fees. These are charged for managing client assets as defined in the Investment Agreement (as per regulation) signed upon initial relationship with the advisor. These fees must be also be defined and filed regulatory body the advisor or advisor's firm falls under. Most fees are associated and based on Assets Under Management (AUM) and are defined as a percentage over an annual period. They can be charged over the year or at end of year which ever is specified in the Investment Agreement. There are other fees potentially as well such as "rebalancing fees" which clients should be aware. At BCA we only charge AUM advisor fees of 1% on assets under $1 million and 0.80% over $1 million.
Custodian Fees. They can range from trading fees to money transfer fees. Depending on the Custodian, trading fees maybe based on shares traded or "per ticket" ie a minimum charge per trade. Since BCA uses TD Ameritrade Institutional clients do not incur trade fees. Many institutionally based wealth management firms use other platforms for a variety of reasons and often do charge trading fees. Clients should understand the these fees which the Advisors should explain.
Fund Fees. They can range from operating fees (ETFs, Mutual Funds, Third Party Managers) to sales fees (12B-1) relegated to mutual funds. These are usually expressed as an annual percentage of the assets owned. Mutual funds can have upfront fees as well load fees expressed as a percentage. Mutual Funds & Third Party Managers also may have early withdrawal fees as well. ETFs (exchange traded funds) can have lower total fees thus in part why they have become popular. Individual stocks or bonds of course don't have any fund fees. At BCA we use ETFs and individual stocks mainly.
When choosing an Advisor total fees charged should be considered and disclosed. Since some Advisor's provide custom portfolios, sometimes these fees are difficult to quantify upfront. BCA uses primarily its own 7 model portfolios thus the costs associated with them can be defined at a given point in time and may vary depending on their composition over time. Clients should consider these costs as they can impact net returns of investment.
At Brecken Capital Advisors we actively manage clients assets through the use of 7 proprietary model portfolios designed to match each client's risk tolerance with our views of the market & economy. We use a combination of ETFs and individual stocks with TD Ameritrade Insitutional as our Custodian who does not charge trading fees. Additionally, we transparently measure both cost & performance for our clients. For more insights see our website and disclosures found there at BCA.