Fees and Compensation
(An Excerpt from the Five Seasons Financial Planning Form ADV Brochure)
As discussed in the “Types of Advisory Services” section above, financial planning services (e.g. retirement planning and projections, tax minimization strategies, insurance needs analyses and reviews, advice on debt management and education funding, etc.), as needed or requested by the client, are included in Wealth Management fees.
The vast majority of Wealth Management client accounts are held by our independent custodian, TD Ameritrade Institutional, and these will be referred to below as “custodial” accounts. By necessity or choice, however, some retirement plan accounts, annuities, and cash value life insurance policies under our management may be custodied elsewhere, and these will be referred to as “held-away” accounts.
“Custodial” Accounts Under Our Management – Custodial accounts under our management will be listed in the client’s Investment Policy Statement. For clients with custodial accounts under our management, the client will be required to provide a written authorization (included as part of TD Ameritrade Institutional’s account applications) permitting our fees to be paid directly from the client’s account(s). Client fees will be billed in arrears, meaning that Five Seasons will invoice the client after the three-month billing period has ended, and fees will be based on the amount of client assets under our management at the end of every quarter. At this time, Five Seasons will send a statement to the client showing the amount of the fee, the amount of client assets on which the fee was based and the method by which the fee was calculated. It will be the client’s responsibility to check the accuracy of the fee calculation; the custodian will not determine whether the fee is properly calculated. The resulting amount disbursed from the client’s account(s) will be included in the periodic account statements sent from the custodian to the client.
Five Seasons Financial Planning applies the following fee schedule for Wealth Management custodial accounts:
Assets Under Management Annual of Annual
At End of Quarter Advisory Fee* Advisory Fee
For the First $250,000 1.00% 0.25%
For the Next $250,000 0.90% 0.225%
For the Next $500,000 0.80% 0.20%
For the Next $1,000,000 0.70% 0.175%
For the Next $3,000,000 0.60% 0.15%
For Amounts Above $5,000,000 0.50% 0.125%
In addition to the fees illustrated in the schedule above, Five Seasons will charge the client a 0.5% annual advisory fee (0.125% quarterly) for managing any custodial account balances allocated to individual equity securities (as differentiated from equity mutual funds). However, it should be noted that the decision as to whether or not individual equities will be a part of a given client’s account(s) under management will be made by mutual agreement between Five Seasons and the client during the development of the Investment Policy Statement (for more information on the IPS, please refer to the description of Wealth Management services under the “Types of Advisory Services” heading above). Only a small minority of Wealth Management custodial accounts contain individual equity securities.
Any custodial client account balances that are allocated to cash and cash equivalents (e.g. Money Market funds), solely to meet the client's short-term financial obligations and/or the client's need for income (as described in the Investment Policy Statement), will not be subject to fees. In addition, the first quarterly Wealth Management fee will be prorated according to the actual number of days any client accounts are being managed by Five Seasons.
“Held-Away” Accounts Under Our Management – “Held-away” accounts under our management will also be listed in the client’s Investment Policy Statement. Some “held-away” custodians offer clients the ability to allow their financial advisors to withdraw advisory fees directly from these “held-away” accounts under our management. Clients without any custodial accounts under our management may take advantage of this facility to pay our fees if it is available. In this case, the client must consent in advance to direct debiting of their investment account(s).
As with Custodial Accounts, client fees will be billed in arrears, meaning that Five Seasons will invoice the client after the three-month billing period has ended, and fees will be based on the amount of client assets under our management at the end of every quarter. At this time, Five Seasons will send a statement to the client showing the amount of the fee, the amount of client assets on which the fee was based and the method by which the fee was calculated. It will be the client’s responsibility to check the accuracy of the fee calculation.
For managing “held-away” accounts, Five Seasons will charge the client a flat 0.5% annual advisory fee (0.125% quarterly) based on ending account balance(s).
Wealth Management fees are not negotiable. Current client relationships may exist where the fees are higher or lower than the fee schedules above.
Financial Planning Projects
Fees for Financial Planning Projects are mutually agreed upon in advance by Five Seasons and the client, and are dependent upon: (1) the type and number of financial planning topics to be addressed in the Project, (2) the complexity of the client’s financial affairs, e.g. the number of investment accounts and types of assets owned, and (3) the time and effort to be expended by the Advisor in generating and verbally presenting the written financial plan. The minimum Financial Planning Project fee is $600, and most Project engagements cost less than $2000.
The financial planning topics to be addressed in the Project, i.e. the so-called “scope of engagement”, and the agreed-upon project fee, are detailed in a written Financial Planning Project service agreement. Five Seasons Financial Planning requires a deposit by check for Financial Planning Project engagements in the amount of the lesser of $500 or ½ of the quoted project fee. The balance of fees due are payable by check immediately after the verbal presentation of the written plan to the client, at which time an invoice will also be presented.
Projects spanning more than three months will be billed quarterly. Fees are not collected for services to be provided more than 6 months in advance. The proposed fee for a given scope of engagement is not negotiable. However, clients may respond to a given fee proposal by reducing the scope of engagement, which will result in a lower proposed fee.