Fee Only Relationship – R.O.I.
believes it is very important to financially motivate an advisor to do what is in the best interest of clients. R.O.I. believes
this is best accomplished via a 100% disclosed (Fee Only) Fee Relationship.
Fee – The fee is calculated as a percentage of managed assets. In this manner the advisor is
paid more if the managed assets grow, but paid less if they decline. Due to this fee structure R.O.I. is highly
motivated to do its best to achieve excellent investment returns for its clients. As can be seen
from R.O.I.'s past Investment Returns history, R.O.I. has had admirable investment returns for a long period. Because investment management
does not become proportionately more time consuming and difficult as managed assets grow, R.O.I. believes a declining
fee schedule should be used. Because R.O.I.’s family managed office in the home structure (see About Us , Organization Structure)
minimizes overhead, R.O.I. can have a competitive initial fee percentage which rapidly declines. The family managed
office in the home structure also allows us to be able to work with middile income clients and not just the rich and
famous. R.O.I.’s current fee structure is:
1.25% of the first $250,000 of managed assets, plus;
1.00%
of the next $250,000 of managed assets, plus;
0.75% of the next $250,000 of managed assets, plus;
0.50% of the next
$250,000 of managed assets, plus;
0.25% of any managed assets in excess of $1,000,000.
For example, a client with a $1,250,000 portfolio would pay, per year:
1.25% x $250,000 = $3,125, plus; 1.00% x $250,000 = $2,500, plus; 0.75% x $250,000
= $1,875, plus; 0.50% x $250,000 = $1,250, plus; 0.25% x $250,000 = $625; for a total of $9,375/year, or .75% x $1,250,000.
R.O.I. is a member of the National Association of Personal Financial Advisors (NAPFA), which is "the nation’s
leading organization dedicated to the advancement of Fee-Only comprehensive
financial planning" (see NAPFA Advisor Values). To be a NAPFA member a financial advisor must be compensated in a fee only manner.
NOTE:
Most Financial Planners/Investment Advisors are paid: (1) A "bargain" fee for a "financial
plan", and/or a fee equal to a percentage of assets managed (this fee is often disclosed); AND,
(2) Commissions on products sold to the client (these commissions are seldom disclosed, and are usually several
times larger than the often disclosed fees). In professional parlance, this is usually referred to
as "Fee Based" compensation. R.O.I. IS NOT COMPENSATED ON THIS BASIS!
A "Fee
Based" advisor might charge about $500 for the Financial Plan (disclosed), and then receive a commission from an insurance
company or broker, up front, of 4%-8% ($50,000 to $100,000!! NOT DISCLOSED!!) for putting the above $1,250,000 portfolio
in an indexed or variable annuity that was recommended by the $500 Financial Plan. It would take five to 10 years of
continuous, satisfactory service (see Services) for R.O.I. to be similarly compensated. After receiving the undisclosed $50,000 to $100,000 up front commission,
is the "Fee Based" advisor motivated to take care of the client for five to ten more years, or to sell another annuity
to someone else and make another huge undisclosed commission?
Most investment advisors charge higher fees for investment management only. But with R.O.I., this
fee is for ALL the services R.O.I. provides, not just investment management (see Services), and is the only compensation R.O.I. receives, thus making R.O.I. a Fee Only
Advisor.
POSSIBLE CONFLICT OF INTEREST - Because
R.O.I. is paid only on a percentage of manged assets, a conflict could arise relative to R.O.I.'s advice about a client's
use or allocation of manageable assets (but see NAPFA Oath & Values)
351 East 140
North, Lindon, Utah 84042-2004
Phone: 801.785.3254 Fax: 801.785.3244 Email:
ronaldolsoninc@gmail.com
