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What exactly am I getting for the fees I pay?

What exactly am I getting for the fees I pay?

| February 12, 2019
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People often ask me, "How do you get paid?". They are sometimes unsure of the differences between commissions, fees, and how charges are calculated for various services.

In general, compensation for advisors breaks down into these four models:

  • Fee-based advisors who are compensated through a combination of fees, assets under management and/or commissions.
  • Fee-only advisors who only charge an hourly or a flat fee for the planning services they provide.
  • Advisors who charge based on assets under management (AUM), for example, 1% of the investment account value.
  • Advisors who only receive commissions based on the sale of a product or a financial transaction, such as a stock trade.

Treece Financial Group operates as a fee-based advisor. We are generally compensated by the assets we have under management. These fees vary based on the size of the account and the specific money management, but our fees are very competitive, fully disclosed, and mutually agreed upon. We may also charge for the preparation of a financial plan, for providing advice on 401k plans, and we may also receive a commission on insurance products.

While our fees are competitive with other advisors in South Florida, we take a more holistic approach that encompasses much more than a written financial plan or managing an investment portfolio.

Our top priority is keeping our clients happy by delivering on their investment in us beyond their expectations.

First, we make our clients smile is by following Warren Buffett’s two famous rules:

  1. Don't lose money.*
  2. Don't forget Rule No. 1.  

Second, we provide services that no other advisor does to the level that we do, including:

  1. All meetings and consultations are complimentary. No matter what your concerns - we’ll take the time needed to make you feel comfortable and informed before any financial decisions are made. We pride ourselves on having a very insightful 3-step investment process that leads to more informed and personalized investment decisions.

  2. As an Accredited Investment Fiduciary (AIF®), we assiduously avoid conflicts of interest, and any such possible conflicts must be fully disclosed to you.

  3. We diversify with multiple money managers. Unlike other advisors who may only diversify investments for high net-worth clients, we are unique in that we provide specialized management for smaller amounts with consolidated reporting showing all assets in one place.

  4. We will not talk people into taking on more risk than they are comfortable with or suggest “riding their investment to the bottom”.

  5. Leverage for growth in an up market. Peace of mind in a down market. Advisors oftentimes control risk by placing clients assets in very low-earning bond funds. Yes, that diversification can help, but when the market is up the assets are not growing as strongly as they could be. We want you to invest when the market is up and have it work for you. There are no guarantees that it is always perfect, but when the market is down, we will work with managers that work with leverage and that will also go to 100% cash in a crisis. We are genuinely motivated to grow your portfolio and preserve your wealth because it is in our best interest, too.

  6. We are licensed for guaranteed insurance products.* 

  7. We focus on what’s best for the whole person/whole family. We work with a diverse clientele and many types of families — including those with complicated relationships — with respect, compassion, and understanding. For those of us that do not have any local family or are solo-agers – we are their advocates. We won’t abandon you when you need the most support.

  8. We help our retired clients “age stronger”.  Our team has developed a high level of experience and capability in dealing with elder care issues, including establishing caregiving services, long-term care, working with experts in identifying assisted living facilities, assisting with the physical move to a facility, retro-fitting housing to stay at home, planning for death, and dealing with dementia and other health-related issues. We work closely with senior care managers and certified aging-in-place specialists.

  9. Our broker-dealer affiliation with Cetera Advisors means that we are not held to a sales quota or tied to selling only proprietary products. We have the independence and freedom to recommend the financial solutions that best suit your needs, ensuring your objectives are what drive all decisions, while our broker-dealer's network of people and resources help us pursue your unique goals and vision for the future.

  10. We provide referrals through an extensive network of allied professionals (insurance agents, attorneys, accountants, movers, senior services, etc.) that we know personally and work closely with. We never receive any compensation from these referrals.

In contrast, fee-only refers to people who are not generally insurance licensed, and may also not be associated with a broker-dealer, which is a big supervision issue. Fee-only is much more limited, usually meaning less licensing, less regulation, and fewer capabilities.

Fee-only advisors are not usually insurance licensed, and ironically, often what you need may be something that is insurance based. It’s up to them, since they are not going to be insurance licensed, to refer that out to somebody else. I believe this scenario creates a conflict of interest where if they are trying to have assets under management (which is how they are paid), they definitely don’t want to refer a lot of business out. I believe it is better to have somebody that is completely licensed and regulated to offer you whatever it is that you may need.

Have any questions after reading this?

Would you like to meet with me for a complimentary consultation to discuss your unique needs?

Please call me at 305-751-8855. I am happy to chat with you!

*All investing involves risk, including the possible loss of principal.  There is no assurance that any investment strategy will be successful. Guarantees are based on the claims paying ability of the issuer.

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