Annual Flat Fee of $5,700
Instead of charging a percentage based on assets under management as is common, Meredith Wealth Planning has implemented a flat annual fee structure that does not increase or decrease based on the amount of money we manage for you. The current amount for new clients is $5,700.
What is included in the annual fee?
The flat annual fee is designed to encompass advice on all of your investable assets, whether they are under the management of Meredith Wealth Planning or not. In addition to portfolio management and investment advice we will provide financial planning in any or all of the following categories:
–Retirement planning – Projections on future income sources, distribution analysis, Social Security strategies etc.
–Tax planning strategies – Roth IRA conversions, capital gain/loss harvesting as needed, tax-efficient portfolios, qualified charitable distributions etc.
–Employee Benefits Optimization – Which benefits offered through your employment that should be utilized and which ones should not.
–Insurance – Life insurance and disability insurance analysis as needed.
Why do flat fees matter?
Imagine two clients that have very similar situations, and require very similar work from their financial planner year to year but the only difference is that one of them has $500,000 and the other has $1 million. Under a common 1% advisory fee, one client would pay $5,000 and the other would be penalized for having more money and have to pay $10,000. Thanks to software, managing a larger portfolio does not always mean more work from the wealth management firm, and managing less money is not always less work.
Having a flat fee also helps combat against potential conflicts of interest that can arise between the advisor and client. Should you rollover your 401k to your financial advisor? If they work based on an asset based fee there is a potential conflict of interest in the advice.
Compound your wealth, not your expenses:
Another consequence of fees based on assets under management is the compounding nature of them. This is illustrated below
This is a hypothetical illustration showing the annual expenses of two portfolios with a starting amount of $750,000 growing at 6% annually minus costs. One portfolio is paying your typical 1% fee every year while the other has a flat fee arrangement of $5,700 (and assumes a 2% annual increase for inflation). In the portfolio with asset based fees, the expenses balloon to $30,000+ annually by year 30, while the flat fee is around $10,000.