Advisor Compensation

COMMISSION BASED

Stocks 

  • Minimum $30 charge
  • Maximum 1% of purchase
  • No residual expenses for Investor or income for Financial Advisor

ETF's (passive management)

  • Minimum $30 charge
  • Maximum 1% of purchase 
  • Average annual expense ratio = 0.50%

Bonds

  • Commission built into price of bond
  • No residual expenses for Investor or income for Financial Advisor 

A Share Mutual Funds (active management)*

  • 0% - 5.75% upfront commission depending upon amount of investment

Financial Advisor and Mutual Fund Company split

  • Average annual expense ratio = Avg. 1%
  • Financial Advisor receives on average 0.25% (12b-1)

C share Mutual Funds (active management)

  • 0% upfront commission
  • Average annual expense ratio = 1.75%
  • Financial Advisor receives on average 1.0% (12b-1)
  • Investor must typically own C Share Mutual Fund for 1 year or be subject to a 1% sales charge

Fixed Annuities

  • Commission built into price of annuity
  • No residual expenses for Investor or income for Financial advisor

Variable Annuities

  • 0-7.5% upfront commission
  • Average annual expenses = 2.5% - 3.75%
  • Financial Advisor receives on average a 0.25% - 1% residual income
  • Investor must typically own Variable Annuity for 4-7 years to avoid surrender penalties


FEE BASED

Fee based investing has become very popular over the past decade. The concept of paying your Financial Advisor a percentage of the total assets you have under management has significant benefits.

  • Investors avoid paying commissions to purchase or sell investments
  • Financial Advisor doesn't get paid based on recommendations to purchase or sell
  • Aligns client and Financial Advisor interests

Fee based accounts are billed forward in January, April, July, and October and appear on the following statement February, May, August, and November. This amount can be found on the corresponding statement.

  • < $250,000                                          1.30% annual percentage fee
  • $250,000 to $500,000                         1.20%
  • $500,000 to $750,000                         1.10%
  • $750,000 to 1 million                           1.00
  • 1 million and up                                     .90

Example:

  • January 1st account value = $75,000
  • Account is < $250,000 = 1.30% annual fee
  • 1.30% X $75,000 = $975.00 annual fee
  • 1.30% / 4 = .325% quarterly fee
  • $75,000 X .325% = $243.75 quarterly fee
  • Fee based charges will show on the following statements February, May, August, & November.

*Most mutual fund companies offer upfront commission break point if as an investor purchase more dollars' worth of fund in the mutual fund family. 
**Mutual funds are sold by prospectus only.  Investors should carefully consider investment objectives, risks, charges and expenses.  This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.