What Do Wealth-Management Fees Include?
Wealth management is a service that financial institutions provide for clients with higher net worth and income, and most wealth managers have fee schedules that define the costs of asset management as well as charges for account handling and other private client services. Because wealth management involves a host of ancillary services, it can be hard for clients to understand exactly what's included in their wealth-management fee. The answer depends on the particular arrangement between you and your wealth manager, but the key point is that you should never expect a fee arrangement to cover absolutely everything the wealth-management company will arrange or do on your behalf.
Different wealth managers charge clients in different ways. The most common involves charging a percentage of the assets that the wealth manager has under management. Fee schedules often have sliding scales that reduce the percentage charged for wealthier clients. For instance, clients with $1 million under management typically pay around 1% of assets per year, according to one industry study, while those with $10 million pay closer to 0.7%.
Other companies charge fixed annual fees. The same survey suggests that typical fees might range $12,500 for a $1 million client and $55,000 for someone with $7.5 million or more. Those numbers are roughly in line with the normal percentage range for those who charge percentages of managed assets.
Source: Fool.com
