- 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?
Sparrow Wealth Management (SWM) charges different fees for its various services:
- Investment Management – Our 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 held in one or more brokerage accounts 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 sized portfolios. Before starting, you will need to sign an Investment Advisory Agreement.
- Financial Planning Retainer – Our “base” fee for personal financial planning services ranges between $250 and $350 per month, depending on the complexity of your situation. This fee is paid quarterly, in advance. Before the engagement begins, you will need to sign a Financial Planning Agreement.
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 you will pay to other firms as you implement your financial plan and invest your assets:
As part of the financial planning process, we may recommend 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 achieve financial goals. You will always have the final decision about when and where you go to make these purchases. As a fee-only 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 versus actively managed funds (0.25% 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 custody your assets.
Transaction fees are very small—averaging 0.05% to 0.1% annually. Depending on your portfolio size, your total annual fee (including our fees, mutual fund expenses, and transaction fees) will likely range between .75% and 1.1% of your invested assets. When you compare our fees with the total costs you would pay at the big brokerage firms (where total costs range from 2% to 3%), you can see how exciting the potential savings are!
What is your relationship with the brokerage firms or custodians?
As a Registered Investment Advisor, SWM is an independent firm, which means we do not work for any brokerage firm or custodian. We can choose to work with any brokerage firm we want. Generally, we recommend clients use a discount brokerage firm who provides access to many no-load mutual funds, has 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.