Review Compensation Arrangement

Again, unlike a brokerage account relationship where compensation is usually based upon commissions from transactions, we derive our compensation from a management fee which is calculated as a percentage of the assets being managed.  We prefer this “partnership” arrangement because our only incentive is to do the best job possible for the client.  As a firm, we become more successful as the accounts perform better and, conversely, we become less successful if the accounts perform poorly.  That is why we look at it as a partnership.  We are in this together.  The problem with commission based compensation is the conflict of interest, whereby the broker can actually become more successful by simply executing more transactions, which could actually be detrimental to the client.

Our fee schedule is based upon various factors, including the size of the account, complexity of administration (special requests, extra reporting, requirement of frequent meetings, etc.) and type of management (growth, income, etc.).  Fees are paid quarterly and are normally deducted from the accounts, however, some clients prefer to pay the fee directly to our firm.  In all cases, we want to make sure the fee schedule is appropriate and fair for the service being performed.

At this point, if we both agree that there is a good fit, we can then move on to the next step of establishing accounts.