Services and Fees
Warning: extract() expects parameter 1 to be array, boolean given in /home/purpose/www/www/pages/Services/screens/default.inc on line 38
Fee-Only Compensation
Purpose Wealth is 100% fee-only. Client-paid fees are our only source of revenue.
Portfolio Management Fee
Our low Portfolio Management fee is 0.25% of assets under management (AUM) per year, subject to a $250 quarterly minimum or $1,500 quarterly maximum flat fee per household. Our maximum fee is below the minimum fee of many advisors.
Why does cost matter? Based on simple math, lowering cost is one of the best ways to improve performance. On a personal level, spending time and money trying to identify ways to beat the market - or hiring someone at high cost to do it for you - is one of the least productive activities an investor or advisor can do. It promotes dysfunctional behaviors, business practices, and marketing messages. It takes an emotional toll from the constant cycle of fear, greed, euphoria, regret, worry, etc. that results from many high-cost strategies.
Stripping away the cost and artifice that characterizes so much of the investment industry reveals the sophisticated, highly-effective alternative: Low-cost, academically-structured, passive investing.
Consider the impact of our Portfolio Management fee vs. the typical industry fee of 1% annually on a $1 million portfolio earning a gross annual return of 7% for 30 years. All else equal, the 1% fee subtracts nearly $1.5 million more than our fee by year 30!
Minimum and Maximum Flat Fee Examples:
- $100,000 AUM = $1,000 minimum flat fee
- $400,000 AUM = $1,000 minimum flat fee
- $1,000,000 AUM = $2,500 based on 0.25%
- $2,400,000 AUM = $6,000 maximum flat fee
- $20,000,000 AUM = $6,000 maximum flat fee
Fund Expenses
Client accounts hold mutual funds and/or exchange-traded funds which have expenses (expressed as the expense ratio) not related to our management fee.
We recommend passive and index funds to keep expense ratios very low. Total costs may be further reduced by tax management and/or securities lending by the funds. Purpose Wealth is not compensated by fund companies for recommending their products.
Trading Costs
Fidelity Institutional, Charles Schwab Institutional, and TD Ameritrade Institutional are the primary custodians for client accounts. Each custodian may charge transaction fees for buying and selling securities, typically $25 per trade on mutual funds (with a range of $0 to $50) and $7.95 per trade (with a range of $0 to $12.95) on exchange traded funds or individual stocks.
Purpose Wealth is not compensated by transaction fees. Our goal is to trade only when necessary to maintain portfolio structure and keep transaction fees to a minimum. Because we typically design portfolios comprised of fewer funds than traditional allocations, our portfolios tend to be less costly to own over time with respect to transaction fees and taxes.