Registered Investment Advisor Scottsdale, Arizona
Life Story Wealth Planning
Est. 2024

Chapter · Fees

Results, not fees.

So, what does this cost?

Potentially nothing.

Most advisers charge a management fee. Whether your portfolio goes up, down, or sideways, the fee is charged. I do not. If the strategy I run for you does not work in a given quarter, if it does not exceed a defined threshold, I am not paid for that quarter. When it does exceed the threshold, I am paid a share of the excess gain. That is the whole model.

In my own words

The wording below is copied exactly from my Form ADV, the brochure I file with regulators. The advisory agreement you sign sets the fee.

We do not charge asset-based management fees for our wealth management services. We charge a performance-based fee equal to 30% of the net gains (after transaction costs) in a Client's account that exceed both (i) the account's high-water mark and (ii) a cumulative hurdle rate of 1.5% per quarter.

Verbatim from Form ADV Part 2A, Item 5.

What that means, in plain language

Two things have to be true before I am paid anything.

  1. 01

    Your account has to reach a new high.

    This is the high water mark. If your portfolio drops and later recovers, no fee is charged on the recovered ground, the water mark is the previous peak. I am not paid twice on the same gains.

    A stylised portfolio value line rises to a peak, dips, recovers back to the peak (no fee zone), then continues to a new high (fee zone). Previous peak Returns to peak. No fee here. New high. Fee only above.
    The line is your portfolio value over time. Recovery to the previous peak charges no fee. Only gains above the peak count.
  2. 02

    The new high has to clear the hurdle, for that quarter.

    This is the hurdle rate: 1.5% above the high water mark for each quarter since it was set. One quarter after a new high, the bar is 1.5%; after two quarters, 3.0%; after three, 4.5%. Small gains do not trigger a fee.

    A stylised diagram showing two quarterly gains: one below the hurdle line (no fee), one above the hurdle where only the portion above the hurdle counts as fee. Hurdle · 1.5% Below hurdle No fee. Above hurdle Fee on excess only. 30% of just this
    Two hypothetical quarterly scenarios, shown for the first quarter after a new high. An illustration of how the fee is calculated, not actual or projected results. Below the hurdle: no fee at all. Above: the fee applies only to the slice above the hurdle line.

When both conditions are met, the fee is 30% of the gains above the hurdle, net of transaction costs. Otherwise, there is no fee for that quarter.

Why the model is built this way

I built it this way so my incentives line up with yours. If you do well, I do well. If you do not do well, I do not do well. That is how I want the arrangement to work, and it is a large part of why the firm exists.

Want to see how this would apply to your portfolio? Start a conversation.

Start a conversation