Most financial advisor or financial planner would discuss their wonderful services, but all of them would charge a fee based on a percentage of assets under management regardless clients’ asset value and performance. My approach to fees is totally different. Not only I have fiduciary responsibility to clients but also I am not paid unless I outperform and clients make money.
| S&P 500 Index Return | Client's Return | Management Fee |
| 5% | 5% or under | 0% |
| 5% | 5.2% | 0.2% |
| 5% | 5.5% | 0.5% |
| 5% | 6% or above | 1% |
Mmy fee will be waived if 1) a client’s asset value is lower than the client’s highest balance at the ends of previous billing cycles, excluding client’s contribution and distribution; 2) a client’s asset return is lower than that of S&P 500 index during the same period.
Numerical Example:
| S&P 500 Index Return | Client's Return | Management Fee |
| -20% | -10% | 0% |
| -20% | 1% or above | 1% |
Two years ago, a client’s ending balance was $200,000, which was the highest ending balance for his account. Due to economic downturn and stock market crash, his ending balance was $160,000 a year ago and $192,000 at the end of current billing year. There will be no management fee until his balance increases above $200,000.
| S&P 500 Index Return | Client's Return | Management Fee |
| 15% | 20% | 0% |
Because my selection is restricted by the choice of mutual funds and client’s retirement horizon, I cannot use S&P 500 as benchmark, but my fee will be waived if a client’s retirement account asset has not grown excluding client’s contribution and distribution.
If a client is not satisfied with my designed financial plan, our contractual relation will be terminated and the fee is waived.