Understanding Fees In The Wealth Services Industry

Understanding Fees in the Wealth Services Industry

Understanding Fees in the Wealth Services Industry

Broadly speaking there are two ways for clients to pay for financial services. The first is generally used by wealth management firms like banks, insurance companies, pension plans and asset management companies. Traditionally these professionals will charge a percentage fee based on the client’s assets under management (AUM).

The second is on a “fee for service” basis typically used by financial planners, tax preparation and accounting firms, lawyers and other related professionals. We’ll discuss in more detail below.

Fee for Advice

The “Fee for Advice” business model is now the industry standard with bank based advisory firms as well as a growing number of independent wealth management companies. Typically, a client will be charged a fee ranging from 1.00% to 1.50% by the advisor. It is possible to see this amount reduced as the size of the client’s account grows, but for accounts between $1.0 to $5.0 million dollars it is rare to see it fall much below 1.00% meaning the average client with $1.0 MM of investment assets will pay approximately $10,000 per year in fees.

It is important to keep in mind that this fee is ONLY the amount charged by the advisor and her firm. Any additional charges by outside investment managers such as mutual funds, separately managed accounts, and hedge funds are then added to the advisor fee. This amount is typically found in the “management expense ratio” (or MER) of the fund or investment vehicle.

Finally, while the advisor will typically not levy additional charges for any services she provides beyond investment selection and trading, that advice will typically be restricted to general financial advice. For example, most investment advisors will not talk about tax returns or planning.

Embedded Trailer Fees

We at CHF continue to manage our client’s assets based on a trailing fee. The advantage of this model is that it tends to charge lower fees to clients based on their asset allocation. In a traditional 50/50 fixed income and equity portfolio the client can expect to pay roughly 0.75 to 0.85% depending on the funds selected. For a $1.0 million portfolio this difference could be as high as $2,500 per year in fees!

Fee for Service

What sets CHF apart from our competition is that in addition to providing investment management services, we also offer a variety of advisory services for which we bill by the hour. We believe this method is better for our clients for several reasons.

First, it is much more transparent. Clients can pick and choose which, if any advisory services they want from CHF. They will then know how much they pay for tax preparation and planning, estate planning, financial advice and plans, and any other financial work beyond the construction and monitoring of their investment portfolios.

Second, we believe this system is fairer. For the banks and other fee for advice firms it is not uncommon for them to set asset minimums before someone can become a client. For example, below a certain threshold (typically $250,000 to $500,000) they will not accept a client since such accounts would not generate enough revenue to make them profitable. Instead they will refer these clients to a bank branch or to an online investment platform. By contrast, at CHF we expect to be helping our clients with a number of other aspects of their financial lives beyond just the management of their assets. And since we will be compensated for this work, we are able to build better and deeper relationships with our client families. Most importantly, we do not need to set an asset minimum for when someone could become our client.

Finally, each client only pays for the services they use. In a fee for advice model the cost remains the same year after year regardless of the amount of work being done, causing those with low financial advice needs to subsidize those with higher demands.


Everything we do at CHF is designed with our client’s best interests in mind. For this reason, we feel that our unique blended billing model sets the industry standard for fairness and transparency.

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We’re looking for aspirational clients who require the whole spectrum of financial services because managing the whole is how we’re able to deliver unbeatable value – it’s our “secret sauce.”If this describes you, let’s set up a meeting andget to know each other.

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I just want to say we have been with your team since 1993, and we have never had any bad advice. The investments you set up for us during this time has paid for university education for our two granddaughters and provided a significant monthly income for us to augment our pensions.

We are with you for the long run and are not going anywhere. Jeremy has told us that at these times the numbers tend to scare you, but you haven’t really lost anything if you don’t panic and sell.

Ken M, Calgary

With CH Financial since 1993

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When I became a client of CHF it was a real game-changer as I was going through a very difficult time both professionally and personally.

I went through a divorce and the loss of a job and a parent, all within a 12-month period. While it was very tough to deal with at the time, I was reassured by the fact that the team at CHF had my back and really cared about me and what I was going through.

Looking back now, I’m not sure how I would have managed without the support of the CHF family.

Jeremy and his team were there every step of the way to help me navigate my way through the complexities of a divorce and inheritance. They got me back on track both financially, as well as emotionally.

I have now been a client of CHF for over 10 years and thanks to their expertise, I know that my family will be well taken care of for many years to come. I am now in a position where I don’t need to worry about money thanks to a solid financial plan.

I would highly recommend the CHF team to others going through life-changing and difficult situations as your financial partner.

Linda, Victoria

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As an investment industry professional, I am constantly on the go and maximizing my peak career earning years in my 40s. With travel and work commitments I am very limited for time to spend with family and do the things I love to do and chose CH Financial to allow me more freedom and lifestyle balance.

Being in the investment industry my whole career and an extremely busy professional, I know I could probably do a good job at managing my money as I work in the industry after all while I rely on and trust the CH Financial team that they will take care of the details, both growing my assets as well as taking care of every aspect of my financial situation, including my tax, investments and insurance, they simply take away the stress of having to worry about it all and help me to navigate the complexities for me so it all meshes together and importantly saves me valuable time and headaches.

At the end of the day, the reality is I truly value my time and the opportunity cost of my time and would rather hire the best in the industry so ultimately my wife and I can do the things that we love to do, have more leisure time, relax and enjoy spending time in the great outdoors, exploring new countries, hiking in the mountains and volunteer work.

Since engaging CHF more than 5 years ago we have enjoyed significant growth in our investments but more importantly, we have peace of mind and sleep much better at night knowing the team at CHF has our financial back and anything financial they will take care of for us.

I would have absolutely no hesitation in recommending the team at CHF to other career-focused busy professionals who really value their time and lifestyle balance.

Kevin & Sharron, Calgary

Financial industry professionals

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Prior to joining CH Financial as a client, I had been partially managing our investments and using a bank-owned broker for many years, with moderate success. When we became clients of CHF, I quickly realized how little I knew about the complexities of managing investments and the importance of seeking out the best specialists in the industry to assist with my family’s full financial picture.

Brian and the team at CHF encouraged us to take an introspective look at our assets and expenditures and even helped us implement a comprehensive budget. The team really stepped up to take care of all aspects of our financial picture, including portfolio design, CH Financial introduced us to a lawyer who took care of everything for us, estate planning and tax, while helping us simplify our financial affairs.

Being of the sandwich generation my wife and I spend considerable time caring for our surviving parents and our grandkids, so

freeing up valuable time is essential to allow us to do the things we love to do. The team at CHF takes care of the details and today my wife and I enjoy a comfortable, stress-free financial situation.

Over the years as a client of CHF, both our portfolio and wealth has grown exponentially, more than we could have ever imagined. Now that we are both happily retired, having the CHF team in our corner helps us to sleep better at night knowing that our somewhat complex financial puzzle is being looked after by a team of people that really care, as opposed to being treated like a number by a big bank.

I would have no hesitation in recommending the CHF team to others looking for a superior financial home in Calgary and a safe place to invest your hard-earned money.

Ian C, Calgary

Comfortably retired thanks to CH Financial