Fees and FAQs
- What do you charge for your services?
- What is your blended investment management fee for various size portfolios?
- Are there any other fees that I will have to pay?
- What is your relationship with the brokerage firms or custodians?
What do you charge for your services?
- Investment Management – the annual charge is 0.75% of assets under management for amounts up to $3,000,000, 0.50% for amounts between $3,000,000 and $5,000,000, and 0.25% for amounts over $5,000,000. The term “assets under management” refers to assets that are held in one or more brokerage account(s) where SWM has a Limited Power of Attorney. This fee schedule is negotiable based upon portfolio size and other business considerations. Fees will be paid quarterly, in advance. There is no minimum fee for asset management. Please refer to the chart below for our fee on various size portfolios. Before starting, you will need to sign an Investment Advisory Agreement.
- Financial Planning Retainer – the “base” fee for personal financial planning services ranges between $150 and $300 per month, depending on the complexity of your situation. Most clients will be at the $150 per month rate. This fee is paid quarterly, in advance. Before the engagement begins, you will need to sign a Financial Planning Agreement.
- Hourly Financial Planning – the fee for the initial 2-hour meeting is $500. Additional meetings or time spent advising the client are billed at $300 / hour. Before your initial meeting, you will need to sign an Hourly Financial Planning Agreement and pay the $500 fee.
What is your blended investment management fee for various size portfolios?
Key: k = thousand; MM = million
Are there any other fees that I will have to pay?
Yes, there are additional fees that you will pay to other firms as you implement your financial plan and invest your assets:
- As part of the financial planning process, SWM may recommend that you purchase additional insurance (life, disability, umbrella, property, etc), hire an estate planning attorney, hire an accountant, etc. Therefore, you may need to spend additional money to implement your financial plan and to achieve your financial goals. You will always have the final decision as to when and where you go to make these purchases. As a fee-only financial advisor, SWM will not benefit financially from any of these purchases.
- As part of the investment management process, you will have to pay two additional types of fees—mutual fund fees and transaction fees. First, all mutual funds (even no-load funds) charge management fees and other expenses to pay for the costs of running their funds. These expenses are clearly outlined in a fund’s prospectus. Since SWM primarily uses low cost passively managed funds, you will pay far lower fund management fees compared with actively managed funds (0.35% vs 1.5%). Second, you will pay transaction fees (for buying and selling securities and mutual funds) to the brokerage firm where you choose to hold, or custody, your assets. Transaction fees are very small—averaging 0.05% – 0.1% annually.
Depending on the size of your portfolio, your total annual fee (including our fees, mutual fund expenses, and transaction fees) will probably range between .75% and 1.1% of your invested assets. When you compare our fees with the total costs that you would pay at the big brokerage firms (where total costs range from 2-3%), you should get pretty excited by the potential savings!
What is your relationship with the brokerage firms or custodians?
As a Registered Investment Advisor, Sparrow Wealth Management is an independent firm, which means that we do not work for any brokerage firm or custodian. We can choose to work with any brokerage firm that we want. Generally, we recommend that clients use a discount brokerage firm that provides access to many no-load mutual funds, excellent customer service, low transaction fees, and is financially sound. Since brokerage firms provide valuable support to financial advisors, we are also concerned with the quality and service of the custodian’s advisor support team.