Fee-based asset management programs provide investors with investment advice on an annualized fee basis, paid quarterly in advance, based on the size of the investment account. Fee-based asset management ties the compensation of the financial advisors to the performance of the investment portfolio over the life of the account. Financial advisors who are fiduciaries, are required to act in your best interest of their clients, avoid conflicts of interest and disclose all material facts, including costs associated with the financial advice. Some fee-based asset management programs provide important benefits to investors, including:
- Investor Holds Securities in Own Account;
- No Unrealized Capital Gains Exposure;
- Access to Specialty Manager Style or Asset Class;
- Investment Allocation Based Client Risk/Return Profile;
- Tax Lot Accounting and Tax Loss Harvesting;
- Transparency of Fees and Costs; and
- Portfolio Accounting and Performance Reporting.
Fee-based asset management programs are subject to different investment minimums depending on the type of investment program. For instance, separately managed accounts require greater minimums investments than ETF and mutual fund portfolios. Management fees vary across the spectrum of investment advisory services with economies of scale an important factor when selecting which type of fee-based asset management program to employ. Asset allocation requirements and account minimums are a critical consideration when balancing the costs and benefits related to risk and management fees. The various types of fee-based asset management programs that investors should consider include:
- Mutual Fund Portfolios;
- ETF-Based Managed Portfolios;
- Separately Managed Accounts;
- Unified Managed Account Portfolios; and
- Multiple-Strategy Portfolios.
True North Financial Advisors can review your current holdings and select the appropriate asset managers and determine the suitable investment allocations for each of asset manager through the development of a personalized investment policy statement.
