What Does It Cost to Meet and How Do You Get Paid?
This is a good and important question, and we will spend time in our first meeting talking about this. We will make sure that you understand and are comfortable with how our compensation works and let you decide which method is right for you.
Forms of Compensation
We do get paid at Custer Financial Advisors. We earn money in one of two ways. It's important to us that you understand these fees and the options you have so that you can choose the best option for you.
Options 1: Advisory Fee Only Account
The fee only model includes everything that our hourly consulting fee covers. We have on going in-depth review meetings regarding client’s financial plan. (see graphic below) We do not charge an additional hourly fee with our advisory fee management. The fee is based on your assets under managements which includes our team of financial planners, investment research, portfolio managers working together to invest and manage the assets. This model is typically used by clients who want more than a one-time financial plan and do not want to worry about investing their assets on their own and want our team to manage their assets.
Rather than being charged an upfront commission or hourly consulting fee on your investments, you'll be charged a percentage of your assets with the fee-based model. You will be charged this fee every year, which comes out of your account, but you won't owe any hourly consulting fees. A significant reason we use the advisory account is because there is no charge to make changes in your account. This means if we think it's best for your situation we make the change and you won't get any additional charges.
What We Like About the Asset Under Management Model:
We encourage open communication with our clients. We believe that the more we know about your financial situation, the more valuable we can serve you. Therefore, we encourage you to reach out to us at any time with questions, concerns, or changes to your life circumstances. We do not bill you for our conversations or meetings.
We prefer to meet with our clients at least once a year to review their financial plan. This is an opportunity to discuss your goals, implement adjustments to your plan, and answer any questions you may have. Again, this meeting is free of charge.
Our team spends many hours each week researching and considering investment options. We take the time to understand your goals, timeline, and risk tolerance so that we can invest your assets accordingly. We are committed to providing you with the best possible investment advice.
We are compensated on a performance-based basis, which means that we share in the success of your investments. This aligns our interests with yours, as we are both motivated to see your account grow.
With our independent Broker-Dealer (LPL) we have access to many different investment companies. We can choose the top funds for each asset class. It does not matter which investment company we choose so we look for the top funds in each asset class that fit your portfolio.
There is no additional cost to buy and sell investments in your account. Our team can make as many trades as we want (if we think it will help your account). It doesn’t cost you any extra for trades.
You never wonder if we call, email, or recommend to meet if it’s a good idea for you. We don’t charge for time so when we talk we think it’s to provide value to you.
You never have to wonder if our team and research team are making a suggestion because it will generate a fee.
We are able to use mutual funds, bonds, stocks, ETFs, alternative investments with the Advisory account.
Access to our investment portfolio managers that may not be accepting new money into their funds
Option 2: Hourly Consulting Fee
We offer an hourly planning fee or projects-based plan. Below you can find a graphic of what is included in our hourly consulting.
You tell us what you need help with, and we bill you accordingly. This is a good option for people who want to manage their own investments but need some guidance on specific topics, such as taxes planning, cash flow, risk management, or tax-efficient distributions.
With the hourly consulting we prefer our clients to tell us the items they would like to focus on. That way we only charge you for time that you feel is most valuable to you. This type of arrangement works well for people who prefer to manage their investments on their own but want professional help to look over their plan, find areas to plan around taxes, cash flow, risk management, tax efficient distributions, common pitfalls or other do it yourself investors.
Option 3: Commission-Based Model (Front-Load Charge)
With this model, if you purchase a mutual fund, or other investment, you are charged a commission. This commission goes to pay the investment fund company, the advisors, and the managers of your funds. Often times for long-term investments, this is a one-time fee (which the industry calls an A-Share). Once you've paid the front-load commission, you won't pay a commission again for the time you have that investment. The amount of commission charged by the fund company varies depending on how much money you are investing and what type of investment you are making, but you only pay the commission when you put new money in the account.
After you pay the one-time fee, you will pay a much smaller annual fee (called a 12b1 fee, expense ratio, or "trail").
What we like about the Front-Load Charge:
-This can be the least expensive option if you are investing for the long term and you are willing to "buy and hold," meaning you don't need to make a bunch of trades in your account to feel like you're being a good investor.
-The more money you invest, the lower your commission percentage will be.
Downsides of the Commission-Based (Front-Load) Model:
With the front-load charge we are limited to what investments we would use in your account. We typically will stay with one fund company, so you don’t have to pay the front-load commission multiple times. Therefore, we are limited on the investment fund selections because we wouldn’t want to keep changing companies and incurring an additional commission.
What's the Best Option for Me?
This is a great question and one that our team has spent a lot of time and thought trying to determine. The truth is that we don't believe there is a 'one size fits all' approach to how to pay for your investments. Like the rest of your financial plan, what is right for you depends on your personal situation, the amount you're investing, and what your goals are. It's important to us that you understand your options and are able to make the decision you feel is best for you.
