Investment management / 0.60% to 0.85% a year
Low cost portfolios, rebalanced on rules.
The portfolio is the last decision in the plan, not the first. Once the plan says what the money is for, the investing is mostly a matter of not getting in its way.
What is in them
Six funds, give or take.
A total US stock market index fund. A total international stock index fund. A US bond index fund, plus short term Treasuries for money you will spend within five years. A small tilt toward smaller and cheaper companies for clients who want it and can sit through the years it lags. That is the list. Expense ratios average under 0.08%.
The mix between stocks and bonds comes from the plan: specifically, from how many years of spending the bond side needs to cover when stocks are down. A couple retiring next year holds more bonds than a couple retiring in twelve. Nobody holds a mix because a questionnaire said they were a "moderate."
Rebalancing runs quarterly on written rules: any asset class more than 20% off its target weight gets traded back. Between quarters we rebalance with new cash and withdrawals so we sell less and pay less tax.
What is not in them
- Individual stocks, including your company's. Those live in the equity compensation plan with a sell schedule, not in the portfolio.
- Active mutual funds, hedge funds, private funds, structured notes or anything with a glossy brochure.
- Annuities and insurance products. We do not sell them and cannot be paid for them.
- Crypto. If you want to hold some, it comes out of the spending money, not the plan.
- Market timing. We do not move to cash because of an election or a headline, and we will tell you so before you hire us.
The fee
0.60% to 0.85%, and why not flat.
Our planning fee is flat because the work does not scale with your balance. Management is charged on the balance because the risk and the liability do. A $3M portfolio is more work to keep tax efficient than a $600K one, and it is where our errors would cost the most. Even so, the rate falls as the balance grows, and it is lower than the 1% most firms charge for the same funds.
Only planning clients can hire us for management. The portfolio has to be built from a plan, and the plan has to exist first. See pricing for the schedule and the 30 year comparison with a 1% fee.
| Balance under management | Rate | On $1,000,000 |
|---|---|---|
| First $1,000,000 | 0.85% | $8,500 |
| Next $1,000,000 | 0.70% | $7,000 |
| Above $2,000,000 | 0.60% | $6,000 |
Blended. A $2.5M portfolio pays $8,500 + $7,000 + $3,000 = $18,500, or 0.74%. Custody is at a large independent custodian; we never hold your assets ourselves. Fund expenses are paid to the fund companies, not to us.
Reporting
One page a quarter, in sentences.
Each quarter you get a one page report: what the portfolio is worth, what you put in or took out, what it returned, what you paid us in dollars, and what we traded and why. If we did not trade, it says so. The custodian sends its own statement separately, so there are always two sets of eyes on the balance.
Withdrawals in retirement follow the drawdown order from the retirement plan: usually taxable first, then traditional, Roth last, with the tax planning calendar deciding the exceptions. Monthly transfers land on the first, like a paycheck.