We only get paid when you make money.
No management fee, and no fee on paper gains. We earn a share of the gains you’ve realized, once any losses are made up. Here’s exactly how it works.
Year 1+15%
Fee on the $15,000 gain.
Year 2−10%
No fee. The loss has to be made up first.
Year 3+14%
Fee on $2,990, the part above the old high.
How the fee works on a $100,000 account, if every gain and loss is realized within its year. An illustration, not actual or projected performance.
How the fee works
There’s no management fee and no charge for holding your money. We’re paid a share of realized gains: what an investment sells for above what it cost, plus interest and dividends. A gain that’s only on paper isn’t charged until it’s sold.
Losses carry forward. We keep a high-water mark, the highest your realized gains have reached on a billing date, and charge only on gains above it, so after a loss we earn nothing until it’s made up. Deposits and withdrawals aren’t gains, so they never change what you pay.
Your advisory agreement says which of your accounts are charged. Retirement accounts, such as IRAs, often aren’t.
| Year | Value at year end | High-water mark | Gain we charge on |
|---|---|---|---|
| Start | $100,000 | $100,000 | – |
| Year 1 +15% | $115,000 | $115,000 | $15,000 |
| Year 2 −10% | $103,500 | $115,000 | $0 |
| Year 3 +14% | $117,990 | $117,990 | $2,990 |
The losing year costs you nothing. An advisor charging 1% of assets would have billed about $1,035 in year two. We bill nothing until realized gains have made up the loss and the account is back above $115,000.
You don’t pay twice for the same dollars. In year three the account rose $14,490, but $11,500 of that only won back the loss. The fee applies to the $2,990 above the old high.
Hypothetical example, simplified to yearly billing and before fees, with every gain and loss realized within its year. Your rate, billing dates and the accounts charged are set in your advisory agreement.