The short discussion below will clarify the costs and benefits of our discretionary services fee. A complete list of all of our fees can be found in Form ADV 2A, page 4, accessible via the "Disclosures" link in this website's footer. Generally, Solitude Financial charges 1% per year of assets under our direct management, in arrears, by quarter. Discounts apply to clients with over $1M in managed accounts.
It can be difficult to understand fees. 1% can seem like a lot, unless you have been in this business long enough to watch a client burn several times 1% of their portfolio on a single mistake. The average unadvised client makes one or two big mistakes each year. Clients often believe that fees should reflect return, and in bad years, no fees or lower fees are appropriate. Some feel that the fee should cap at a certain number. But those beliefs fail to acknowledge what the fee is for: expertise in improving returns by protecting net worth from the market.
- You are not an expert on securities, no matter what Peter Lynch or Jim Kramer say on the matter.
- You are not an expert on portfolio design.
- You are not an expert on risk management.
- Amateurs make mistakes. Often they make big ones. Study after study shows that retail investors underperform market averages by about 6% per year*. That adds up in a hurry.
- In bad market years we still need to plan, pay taxes, pick proper beneficiaries, and make choices for the future. Often those years are more work than the more common rising market years as opportunities can be plentiful but require extra research. Extra time can also be spent counseling jittery clients.
Suffice it to say, if SFS doesn't add value to your life, any fee we charge is not worth it. Remember, the true value of our services are: goal accomplishment, contentment, and time savings. See our Results You Will Value Video.
*Still think you can do it yourself? Check out this link: Study Finds that Investors are Own Worst Enemy