Whether therefore you eat, or drink, or whatsoever you do, do all to the
glory of God.
- I Corinthians 10:31

Frequently Asked Questions

5. What is the SMA cost?

The annual fee to the investor is generally 100-250 basis points (bps) per year depending mainly on the account size. (100 bps equals 1.0%.) Fees are based on the value of the managed assets at the end of the quarter and are deducted each quarter from the account. There are three main components of the cost in basis points:

  1. Investment Advisory Fee – generally 40-100 bps for assistance in selecting the investment(s) best suited to the investor, setting up the account(s), monitoring the investments, answering questions and advising the investor
  2. Back Office Services Fee – generally 40-100 bps for transactions, record keeping, compliance, investment manager oversight, holdings and performance reporting and related back office services; often paid as part of a WRAP fee to major securities firms; may include an asset-based custodial fee (20-40 bps, available on larger accounts) or a transaction based custodial fee (-30 per trade)
  3. Investment Management Fee – generally 40-100 bps annually to create and manage the diversified portfolios, provide quarterly reports and otherwise facilitate the provision of good investment management services to the investor via his/her adviser

These fees are influenced by the account size. For example, transaction costs can exceed 100 bps per year for a $50,000 account or be less than 20 bps for a $250,000 account. Brokers often charge an all inclusive wrap fee of 200-300 basis points, depending on account size. They often have minimum fees that imply a minimum account of at least $100,000. The total fees through Registered Investment Advisors (RIAs) are often somewhat less than the broker wrap fee.

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