We get paid by charging a flat annual asset management fee. Our standard management fee is 1%, and the fee decreases as the account we’re managing becomes larger (see the fee schedule below). Please continue reading to see a hypothetical scenario which illustrates how, and why we use the fee-based model.
Mr. and Mrs Jones bring Five Pine Wealth Management $100,000 to invest. As fee-based advisors, we get paid by charging a flat 1% asset management fee. This fee is an annual fee based on the value of the account, and is billed to the client’s account monthly. On $100,000, the 1% annual fee would be $1000 for the year. Since the fee comes out of the account monthly, $1000/12 months would equal roughly $83 per month. The $83 fee comes directly out of the investments and clients never have to write a check or actively make a payment.
We use the fee-baseed model because it aligns our interests and puts us on the same side of the table as our clients. If we can grow Mr. and Mrs Jones’ account from $100,000 to $150,000, Mr. and Mrs. Jones are happy because their account has grown by $50,000, and we as the advisors are happy because 1% of $150,000 is more than 1% of $100,000. At $150,000, our compensation is $1500 per year, or $125 per month. Because we do better as our client’s account does better, we have incentive to choose the best performing funds while keeping investment costs as low as possible.
on the amount between 0 – $250,000 = 1%
on the amount between $250,001 – $500,000 = .90%
on the amount between $500,001 – $750,000 = .80%
on the amount between $750,001 – $1,000,000 = .75%