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|  | Fee Schedules Investment Management The fee charged for Investment Management Services is based on a flat rate schedule, applied to the assets under management. This arrangement avoids any "conflict of interest" questions arising from commission-based compensation and provides a mutual incentive for the success in growth of assets. The investment management fee is inclusive of all services and charges related to the investment management during the client relationship (not including trading fees charged by custodian). The fee is based on an annual percentage of the assets under management and is billed to the account on a monthly basis (Annual Fee /12). The determination of the annual fee amount is in accordance with the following scale for equity portfolios: Account Value | Annual Fee as % | $0 - $200,000 | 2.00% |
$next $800,000 | 1.75% |
$1,000,000 and above | 1.50% |
For clients with exposure to funds in the form of ETFs, for example clients with balanced portfolios, the fees may be lower but will not be higher. The aforementioned scale is very competitive with the internal management fees of actively managed mutual funds. Typically, mutual funds charge between 1-2% in management fees, excluding sales loads which can be an additional 5% in fees. Additional items adding the high cost of mutual fund ownership include redemption fees, 12-b1 fees, transaction fees, fund taxes and the cost of carrying cash in the fund. The cost of owning an actively managed mutual fund can be upwards of 5-6% of investors' assets when all is said and done. Under certain circumstances – depending on the client’s net worth and assets under management - we may enter into a performance-based fee agreement. The incentive-based fee may be determined as follows: - A base management fee charged as a percentage (typically 1%) of the assets under management of each account subject to this fee arrangement and is paid monthly (Annual Fee /12).
- An (negotiable) incentive fee component calculated as a percentage (i.e. 20%) of the Net Excess Profits (if any) in each account. Net Excess Profits shall be defined as realized and unrealized profits in each account that exceeds a predetermined (negotiable) “hurdle rate”[1] of return (i.e. 8%) per year on an annualized basis (also subject to a high water mark[2]). This fee is usually paid at the end of the year.
Wealth Management and Financial Planning We often work with outside financial planning firms to provide our clients with wealth management and financial planning services. Thus, some fees will be affected by arrangements between Brick Financial, the participating firm and the client. Fees can range from a couple hundred dollars for simple one time plans to a few thousand dollars for complex and ongoing services. Contact us at info@brickfinancial.com for more details. Note: All Wealth Management clients will receive Investment Management services. Hourly & Ongoing Consultation Clients with less complex financial circumstances may choose not to execute a full fledged financial plan or require on-going wealth management. For these clients we offer hourly consultation on a variety of personal finance subjects. The fee for this service begins at $299 per hour and escalates from there depending on the financial complexity of the situation. If you foresee a long term need for consultation, a retainer fee for service my be more appropriate. All of our fees are negotiable.[1] Hurdle rate: The return above which we begin taking incentive fees. For example, if a hurdle rate of 8% is established, and gross returns of 25% are achieved for the year, Brick Financial will only take incentive fees on the 17% return above the hurdle rate. [2] High water mark: The assurance that fees are taken on profits unique to an individual investment. For example, a $1,000 investment is made in year 1 and the account declines by 50%, leaving $500 in the account. In year 2, the returns of 100% are achieved, bringing the investment value back to $1,000. The high water mark assures that incentive fees on the return in year 2 are not taken, since the investment has never grown. The fund will only take incentive fees if the investment grows above the initial level of $1,000. | |
