Beacon Pointe Wealth Advisors
BEACON POINTE
WEALTH ADVISORS
An
Beacon Pointe Wealth Advisors
Background on Beacon Pointe Advisors
One of the country’s largest independent RIAs
Approximately $5.6+ billion assets under advisement
(as of 12/31/12)
Founded in 2002
Headquartered in Newport Beach, California
Significant institutional and private client businesses
Beacon Pointe Wealth Advisors
What is Beacon Pointe Wealth Advisors (BPWA)?
BPWA is a National Enterprise Building Partnership for a select
group of wealth managers/advisors throughout the country.
It is about collectively partnering to build a much larger enterprise, maximize the
business experience, and give you more certainty and control.
• Large firms growing fast have much larger valuation multiples
Key Concept
• Beacon Pointe is an RIA, not a financial model or “roll up” firm
Key Point
Beacon Pointe Wealth Advisors
Beacon Pointe Wealth Advisors is NOT being built to be sold, publicly or privately.
It’s all about maximizing enterprise value for each of our managing director partners
while having a great experience over the coming years.
When you are done, we want you to be able to maximize your succession with
certainty.
Beacon Pointe Wealth Advisors
Mission of BPWA
Provide a path to growth and maximize your business experience.
AUM Growth Adding Advisors
Today
The Next Level
Beacon Pointe Wealth Advisors
Mission of BPWA
No Questions, No Hassles
Stock
BPWA
$
Provide certainty for you and your clients when you choose to retire, at the
best possible valuation.
Beacon Pointe Wealth Advisors
How is BPWA Different?
Beacon Pointe is first a successful operating RIA, NOT a Financial Model/Consolidator.
Unlike virtually all of the well-known “Roll-Up” firms or “Consolidators,” Beacon
Pointe has taken no outside money from investors.
By not taking third party money, BPWA is not forced to recapitalize or have an “event.”
What happens to the advisors when a roll-up has their “event?” Nobody really knows.
Beacon Pointe Wealth Advisors exists for our advisor partners and, since we have not
Beacon Pointe Wealth Advisors
How does it work?
You contribute your business to BPWA in exchange for equity units in the much larger
enterprise.
You become an owner of BPWA and managing director of your operating company.
Beacon Pointe Advisors contributes everything that is Beacon Pointe, brand, scale,
compliance, reporting, best practices, etc.
You enhance your control of your growth and succession plan.
You
BPWA
Beacon
Pointe
Advisors
Beacon Pointe Wealth Advisors
The Result
You are the equity partner, managing director with your own exclusive territory.
You are running your BPWA operating company with the full support of Beacon Pointe.
Bigger
brand, story
Freedom to
focus on
growth
Maximize
your
business
experience
Certainty
when you
are done
Beacon Pointe Wealth Advisors
The Resources
Compliance,
Reporting, CRM
Enhanced standing
and relationships
with custodial and
vendor partners
Support and best
practices of Beacon
Pointe
Investment Platform
with considerable
flexibility
Investment/Research Platform: Institutional Level Research Process
Open Architecture
Unique Managers
And More…
Beacon Pointe Best Practices: Beacon Pointe Team
Board of Managing Directors
Custodial Partner Resources
And More… Custodial/Vendor Relationships: Schwab TD Ameritrade Fidelity Support: Compliance Support Performance Reporting CRM
Social Media Maintenance
Beacon Pointe Wealth Advisors
Collective Wisdom and Your Leadership
Board of
Managing
Directors
YOU
Orange County BPWA Arizona BPWA Northern California BPWALearn from each other
Board will help steer company
Share best practices
Maximize your business experience
YOU ARE PART OF THE BOARD OF MANAGING DIRECTORS
Beacon Pointe Wealth Advisors
When You Are Done…You Have Certainty
BPWA VA CO FL Northern CA AZ NY WA Orange County TX #1 CT
Third party valuation
on entire enterprise
You have certainty to
your buy out at FMV,
no discounts applied
Beacon Pointe Wealth Advisors
Beacon Pointe Wealth Advisors
Be part of
something
bigger
Maximize
growth,
valuation, and
business
experience
Certainty when
you are done,
for you and your
clients
Maintain/Enhance
control
Beacon Pointe Wealth Advisors
Who Is the Ideal Partner?
$100 million minimum AUM
Are NOT looking to give up total control and are NOT looking for immediate cash
Predominantly Fee based
Using mostly 3
rdparty managers, mutual funds, and ETFs
Excited about growing the business over the next 5-7 years minimum
Prefers to work with clients and prospects
Likes being part of something greater than themselves, and likes preserving control of
their local market
Beacon Pointe Wealth Advisors
How do the Economics Work?
• Scale is rewarded in
our industry
• Growth rate is
critical to valuation
• Larger firms
growing fast have
more attractive
valuation multiples
Beacon Pointe Wealth Advisors
Growth, Expenses, Scale…Increase, Decrease, Expand
Increase your growth rate by allowing you to focus and also capitalize on best
practices, bigger brand, and a better story.
Decrease operating expenses by leveraging resources of larger organization and
Beacon Pointe.
Expand the valuation multiple by joining forces with other great, like-minded advisors
across the country.
Beacon Pointe Wealth Advisors
Compare the Economics…Continue to Own Your RIA Practice
Growth Rate 10%
Operating Expenses 40% Valuation Multiple - Earnings 4 Income Tax Rate 45% Owner Replacement Cost 35%
Run Your Own RIA
Trailing 12
Months Year 1 Year 2 Year 3 Year 4 Year 5
Revenues $ 1,000,000 $ 1,100,000 $ 1,210,000 $ 1,331,000 $ 1,464,100 $ 1,610,510 Operating Expenses $ 400,000 $ 440,000 $ 484,000 $ 532,400 $ 585,640 $ 644,204 Earnings Before Owner's Comp $ 600,000 $ 660,000 $ 726,000 $ 798,600 $ 878,460 $ 966,306 Owner Replacement Comp $ 210,000 $ 231,000 $ 254,100 $ 279,510 $ 307,461 $ 338,207 Normalized Owner's Comp $ 390,000 $ 429,000 $ 471,900 $ 519,090 $ 570,999 $ 628,099
Firm Valuation $ 1,560,000 $ 1,716,000 $ 1,887,600 $ 2,076,360 $ 2,283,996 $ 2,512,396
Owner's Income Tax Rate 45% 45% 45% 45% 45% 45%
Beacon Pointe Wealth Advisors
Compare the Economics…Join Beacon Pointe Wealth Advisors
Growth Rate 20% Operating Expenses 30% Valuation Multiple - Earnings 10 Income Tax Rate 45% Owner Replacement Cost $ 300,000
Join Beacon Pointe Wealth Advisors
Trailing 12 Months Year 1 Year 2 Year 3 Year 4 Year 5
Revenues $ 1,000,000 $ 1,200,000 $ 1,440,000 $ 1,728,000 $ 2,073,600 $ 2,488,320 Operating Expenses $ 400,000 $ 360,000 $ 432,000 $ 518,400 $ 622,080 $ 746,496 Base Salary to MD $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 $ 300,000 Net Income of Local Company $ 300,000 $ 540,000 $ 708,000 $ 909,600 $ 1,151,520 $ 1,441,824 Bonus Paid to MD $ 150,000 $ 270,000 $ 354,000 $ 454,800 $ 575,760 $ 720,912 Cash Flow to BPWA $ 150,000 $ 270,000 $ 354,000 $ 454,800 $ 575,760 $ 720,912 Net Cash at BPWA after BPA 25% $ 56,250 $ 202,500 $ 265,500 $ 341,100 $ 431,820 $ 540,684 MD Share of BPWA $ 28,125 $ 101,250 $ 132,750 $ 170,550 $ 215,910 $ 270,342 Distribution to MD $ 22,500 $ 81,000 $ 106,200 $ 136,440 $ 172,728 $ 216,274 MD Total Current Cash Flow $ 472,500 $ 651,000 $ 760,200 $ 891,240 $ 1,048,488 $ 1,237,186 MD Current Income Tax Rate 45% 45% 45% 45% 45% 45%
MD After Tax Income $ 259,875 $ 358,050 $ 418,110 $ 490,182 $ 576,668 $ 680,452
Total Enterprise Value $ 3,000,000 $ 5,400,000 $ 7,080,000 $ 9,096,000 $ 11,515,200 $ 14,418,240 MD Share of Enterprise Value $ 1,500,000 $ 2,700,000 $ 3,540,000 $ 4,548,000 $ 5,757,600 $ 7,209,120
Beacon Pointe Wealth Advisors
Compare the Economics…Beacon Pointe Wealth Advisors Comparison
The opportunity is yours!
Go It Alone
BPWA
Difference
After Tax Income for AdvisorYear 1 $ 363,000 $ 358,050 $ (4,950) Year 2 $ 399,300 $ 418,110 $ 18,810 Year 3 $ 439,230 $ 490,182 $ 50,952 Year 4 $ 483,153 $ 576,668 $ 93,515 Year 5 $ 531,468 $ 680,452 $ 148,984
Total Cumulative 5 Years $ 2,216,151 $ 2,523,462 $ 307,311
Equity Value for Advisor
Year 1 $ 1,716,000 $ 2,700,000 $ 984,000 Year 2 $ 1,887,600 $ 3,540,000 $ 1,652,400 Year 3 $ 2,076,360 $ 4,548,000 $ 2,471,640 Year 4 $ 2,283,996 $ 5,757,600 $ 3,473,604 Year 5 $ 2,512,396 $ 7,209,120 $ 4,696,724 Assumptions Beginning Revenues $1,000,000 $1,000,000 Growth Rate 10% 20% Operating Expenses 40% 30%
Valuation Multiple - Earnings 4 10
Income Tax Rate 45% 45%
Beacon Pointe Wealth Advisors
Case Studies
The following are real case studies of Beacon Pointe Wealth Advisors (BPWA) partners
who have recently joined BPWA. While each case study is separate and distinct and
focuses on a key element that attracted the advisor to join BPWA, all the advisors sited
in these case studies recognize the overall value proposition of being a partner with
Beacon Pointe and creating a national enterprise. Each values being able to truly
maximize their business and business experience as well as having certainty to the
succession plan when they are ready in the future.
Beacon Pointe Wealth Advisors
The Case for Partnering for Growth - BPWA Arizona
Bruce realized a few years before joining BPWA in 2011 that he wanted to take his business to a higher level in terms of growth and assets under management. He understood that if an advisory business is not growing and adding clients and assets, the value of the business is being degraded.
By most measures, Bruce was a successful advisor. In the first 10 years of business he had grown his practice to $130 million in assets, was making a very good living for his family and his clients were happy after coming through the worst financial meltdown in generations with very good results. However, Bruce also understood what got him to $130 million the first 10 years would not be enough to take him to $1 billion in the next 10 years. With over 100 clients and the complexities of running the business and the non-money making activities, it was nearly impossible to find time to prospect and grow.
Bruce was affiliated with a well known national independent broker dealer and was an IAR of the corporate RIA. He understood the service, product, compliance and financial limitations of this relationship and was looking for a better partner. Growth had trailed off to almost nothing over the past 3 years after 2008 as Bruce focused on his current clients.
Bruce joined BPWA as our partner and Managing Director. He immediately realized the benefits of joining in terms of growth. He was no longer a relatively small advisory shop, but part of a $5+ billion RIA. He had a list of institutional clients, hospitals, museums, large religious organizations and universities he could site as clients. He was now able to speak of a truly upgraded institutional level investment research process and the quality of investments available to clients. He was energized as part of a bigger brand and telling a bigger story.
No longer would Bruce have to worry about compliance, reporting, investment research, social media management etc. He effectively delegated the non-making activities and was now able to focus on developing his client relationships proactively and with a purpose, attract new clients. Whether one on one, or through group presentations, Bruce has a new fresh story, new resources and a new partner supporting him. The centers of influence he had known for years have reacted in the most positive manner to this upgrade in resources and capabilities. Combined it has been a recipe for growth.
While he had not grown the previous 3 years, he has grown significantly since joining BPWA and has added 45 new clients and $35 million in net new assets, exclusive of market growth. In addition, one new advisor joined his office bringing 19 new relationships, $5.1 million in additional assets and the capacity and energy to add much more. This all amounts to considerable growth in revenues since joining after several years of little to no growth. He is just getting started. He is energized and more confident than
Beacon Pointe Wealth Advisors
The Case for Partnering for Certainty in Succession - BPWA Orange County
Two principals own an independent RIA in Southern CA and have been focused on a “Year 2020 plan” for the past few years. Both gentlemen in their 60s and in very good health had decided that they would like to work for a few more years and retire from the business in the year 2020. How to do it? How to maximize value? How to maximize the experience for themselves and their clients? They realized that if they continued on their current path of single digit growth rates, net of market growth, and with a client base that will be several years older by the time we arrive at 2020, the value of their current practice will degrade significantly over that time. Also, with just over $130 million in assets, they were not material to any large strategic buyer and therefore would not drive a significant multiple on their business and would also likely be subject to a rigorous due diligence process and discounts when they were ready to sell.
Finally, they were concerned about continuity for their clients and the long term sustainability of the quality of advice they had delivered to their clients over the years.
While other suitors had come calling with the offer to buy them today at today's valuation, neither principal needs the cash today and truly wanted to make the next few years count and exit with bigger results on their terms.
They decided to join Beacon Pointe Wealth Advisors. BPWA is partnering with these advisors to grow the business organically. They are now part of a larger brand and bigger story. Their wealth management platform and capabilities have been expanded and they now have a partner to help them execute on a growth strategy for the next few years which includes both organic growth as well as recruiting the next generation of advisors to their office.
Most important to the principals involved is that BPWA is giving them certainty to their succession plan and sustainability for their clients longer term.
When they choose to retire in 2020, BPWA guarantees that their shares will be purchased at fair market value (FMV). A third party valuation firm, upon which we must all agree, will be hired to value the overall BPWA enterprise. Since larger firms, growing fast generally have larger valuation multiples, we anticipate a larger valuation for their equity. No discounts will be applied to the valuation and no employment contracts will be required. They are free to enjoy retirement. They will have certainty, at a greater valuation for themselves, their families and their clients. They know the buyer, they know the terms and they are assured FMV
Beacon Pointe Wealth Advisors
The Case for Partnering for Adding Advisors - BPWA Northern California
When Eric left his former firm and broker dealer to establish his own RIA, he envisioned building an office of several advisors and well over $1 billion in AUM. He set out on his own and established his own RIA in 2007. Optimistically, he created a platform that he believed would be attractive for advisors to join; both break away brokers from the brokerage firms as well as the small independent advisor looking to join.
With market turmoil in 2008 and brand equity for the large brokerages suffering, it seemed only natural that advisors would lining up to join his firm. But the reality was at his current size and scale, advisors were not inclined to take the risk of joining a small firm. In addition, the asset custodians, Schwab, TD Ameritrade and others did not view his firm as a key client or as a firm with a track record of successfully recruiting and transitioning advisors. They too were not willing to take the risk of making the referral of an advisor and not being able to complete the deal. Finally, the independent recruiting firms did not view Eric and his firm as an attractive offering for the advisor looking for a new home. Again, they saw completion risk and were not willing to engage.
The recruiting environment is extremely competitive. Eric realized the opportunity cost of not being effective was huge. Time away from his end clients and prospecting was a real and considerable cost. He also realized the investments necessary in terms of people and capabilities were prohibitive for a firm his size. As a small RIA, he clearly saw the benefit of partnering with Beacon Pointe. Eric joined Beacon Pointe Wealth Advisors in the 4th quarter of 2011. Immediately changing his recruiting story and value proposition. Within the first couple weeks an advisor affiliated with Ameriprise, who had been hesitant to join in the past, joined Eric's office and brought his clients and assets with him.
More recently, an advisor affiliated with Morgan Stanley resigned and has joined the BPWA Northern California office. This advisor's clients also followed him to Eric’s office. This advisor was introduced to Eric by a business development officer for a major asset custodian. Admittedly, Eric would have never been introduced to the advisor had he not partnered with Beacon Pointe and expanded both his brand, platform and credibility to get the deal done.
Because of his partnership with Beacon Pointe, Eric is currently engaged not only with our asset custodian partners, but also several recruiting firms. He is telling a story of a $5+ billion firm and demonstrating success in recruiting and completing advisor transitions to his office. He will continue to recruit and add advisors with the help, support and credibility of Beacon Pointe. $1 billion is clearly
Beacon Pointe Wealth Advisors
FAQs
24
1. Will I be an employee of BPWA?
Yes, you will be an employee of BPWA, but also an owner and equity partner. You
will be the Managing Director and running your local operating company within your exclusive territory. You will
also be part of the Board of Managing Directors that meets regularly to help guide the company, share best practices
etc.
2. How will my ownership be determined?
Ownership is determined by the amount of net income that your local
operating company generates. Each time a new partner joins and at least once a year, equity ownership percentage is
recalculated to be sure it accurately reflects the amount of net income each local partner office is generating.
3. Is there money paid up front to join?
No. BPWA is not buying books or making forgivable loans. We do not want
advisors to sell us their equity today at a low multiple based on a small practice. Instead, we want partners to help
scale BPWA and drive a larger multiple and then when you are ready, buy your shares at the highest possible
multiple.
4. Will I have to re-brand/change the name of my business?
Yes. We want to do everything we can to drive valuation
so when you are ready to retire, we are buying your shares at the greatest valuation. Common branding is a valuation
driver. In addition, we believe being part of a significantly larger enterprise brand is valuable in the marketplace
when prospecting for clients and also allows us to centralize market efforts, social media management etc.
5. Will I have a voice in how the company is run?
Yes. You will be part of the Board of Managing Directors which
meets at least twice annually and helps direct and steer the company.
6. How will I be required to invest? Will I have to sell all my clients current investments?
You will not be required to
sell all of your clients investments when you join. We encourage advisors to bring their client portfolios to BPWA "in
kind." The Beacon Pointe investment management platform of separately managed accounts, mutual funds,
alternatives and ETFs is very robust and has proven to serve clients very well, especially through rough markets. We
ask that over a 24 to 36 month period after joining BPWA, you transition your client portfolios to our investment
managers. Investments are a strong suit and differentiator for BPWA.
Beacon Pointe Wealth Advisors
FAQs
7. I have variable annuities and other broker-dealer business. Is there a BD? Yes. BPWA advisors can affiliate with PKS, a third
party, "RIA friendly" broker dealer who will hold your license and pay your trails at a very competitive rate.
8. How is compensation structured? What is my "payout"? You will be an owner and partner in BPWA. Your compensation will
consist of a base salary of 30% of the revenue of your local operating company up to $300,000, plus 50% of the net income of your local operating company after salary and operating expenses, plus your capital account and potential distributions from BPWA, LLC where you are an owner. Finally, you own the equity in the larger enterprise. This all typically amounts to economics equal to a 57%-58% payout, plus the value of the equity in the larger BPWA enterprise.
9. Why wouldn't I just "take a check" from a large brokerage firm? Certainly at first glance the loan checks being paid by the large
wire house firms look appealing. However, these checks are loans and are forgiven at ordinary income tax rates. BPWA is about creating wealth at capital gains rates. Taking a loan check from a wire house could cost your family and heirs millions of dollars. While the cash feels good in the first couple years, we believe the economics of equity ownership in a larger privately held enterprise are much more appealing. And, we believe you will take home more after tax current cash flow over the next 10 years as well.
10. What if it doesn't work out and I have to leave? Clearly BPWA is looking for long term partners. We are very deliberate and
careful about partnering with people we believe are a good fit and share our values and vision. It's important that we like, trust and respect each other. That being said, we can clearly mark your business/clients that you bring to BPWA. There are protections within the BPWA documents for partners that allow you to leave for "good reason." We want great partners and it is in everyone's best interest that BPWA maintain an environment and culture that makes people want to stay.
11. Will I have an exclusive territory and how will it be determined? Yes. You will have an exclusive territory where BPWA cannot
hire another advisor or open another office without your permission. We will determine the territory based on discussions between you and BPWA and with consideration of the size of your current business. BPWA has a goal of 35 to 40 partner offices by the year 2021. Therefore, there are plenty of markets and territory.
Beacon Pointe Wealth Advisors
FAQs
13. Is there a comprehensive Wealth Management platform? Yes. Beacon Pointe has a robust financial planning platform and
strategic planning department. Commie Stevens, JD is our Director of Planning. Beacon Pointe Insurance Services is our insurance agency to provide life insurance, long term care and disability insurance for our advisors to best serve their clients at the most competitive payouts.
14. What about Social Media? Beacon Pointe hired a full time employee this past year who is completely dedicated to marketing,
branding and Social Media Management. She is a 25 year old, Communication Management Masters (MCM) who graduated with honors from both the Communication and Business Schools at the University of Southern California. She understands this medium and is a valuable resource. Our BPWA partners will not have to worry about Social Media management or compliance relative to Social Media.
15. Who will handle compliance? BPWA will assume the responsibility for compliance. We have a dedicated compliance person
who will oversee all issues related to compliance and directly interface with our third party compliance firm. While each Managing Director will be designated as local compliance officer, the primary responsibility for compliance matters is at BPWA.
16. I want to recruit additional advisors, will BPWA help? Yes. One of the primary focuses of BPWA is to help our partners recruit
additional advisors to their office. By virtue of our scale and track record of success, we have great relationships with asset custodians, third party recruiting firms and other sources. We will employ all in a comprehensive strategy to grow your office through by adding advisors to your office.
Beacon Pointe Wealth Advisors
Appendix
Beacon Pointe Wealth Advisors
Beacon Pointe Wealth Advisors
Presented by:
Matthew B. Cooper
President, Beacon Pointe Wealth Advisors
Beacon Pointe Wealth Advisors
24 Corporate Plaza Drive, Suite 150
Newport Beach, CA 92660
Direct line: (949) 718-1612
mcooper@bpwealthadvisors.com
Beacon Pointe Wealth Advisors
The information set forth herein is confidential and is for the sole use of our clients, and only in connection with the purposes for which it is presented. By accepting delivery of the information, the intended recipient agrees that: a) the information set forth and the methodologies utilized herein are proprietary to Beacon Pointe Advisors, LLC (“BPA”) and b) no part hereof will be reproduced, reprinted, disseminated, displayed, or utilized for any reason other than the purposes expressed by the client and BPA without the prior written consent of BPA.
BPA has exercised all reasonable professional care in preparing the information. However, BPA has not independently verified, or attested to, the accuracy or authenticity of the information, including any investment performance measurement. Any investment performance measurement reflects the deduction of advisory fees and the reinvestment of dividends, where applicable. Past performance is not indicative of future results.
If applicable, for your convenience your fees are automatically deducted from your portfolio. The calculation of fees had not been verified by the custodian, however custodial values provided to Beacon Pointe are used to calculate the fee.
Please contact Beacon Pointe Advisors if there are any changes in your financial situation or investment objectives or if you wish to add or modify any reasonable restrictions to your account. Our current disclosure statement as set forth in Part II Form ADV as well as our Privacy Policy is available for your review upon request. BPA shall not be liable to customers or anyone else for the inaccuracy or non-authenticity of the information or for any errors of omission in content regardless of the cause of such inaccuracy, non-authenticity, error, or omission, except to the extent arising from the sole gross negligence of BPA. In no event shall BPA be liable for consequential damages.
Monte Carlo simulation is a modeling tool used to assist investors in a range of key decisions, including setting their long-term asset allocation. The forecasts displayed do not represent a guaranteed amount, but rather a range in which the return value for a particular year may fall. Simulations are generated by Ibbotson Associates’ Encorr Optimizer software program and include inputs such as the client’s asset allocation and any anticipated cash contributions and withdrawals. The 1% and 99% probability levels determine the “best case” and “worst case” scenarios, while the 50% level represents the median, or “expected case”. Unless otherwise noted, the forecasts are not inflation adjusted.
Asset allocation analyses and Monte Carlo simulations are based on either Goldman Sachs Asset Management, or Ibbotson Associates long-term capital market assumptions. The individual asset class assumptions for Goldman Sachs are as follows (listed as expected return and standard deviation, respectively); Large Cap: 7.50%, 18.50%; Small Cap: 8.40%, 23.90%; International Equity: 7.40%, 18.20%; Emerging Markets Equity: 9.40%, 28.10%; US Fixed Income: 4.40%, 4.40%; US High Yield: 6.0%, 13.10%; International Fixed Income: 4.20%, 3.40%; Emerging Markets Debt: 6.20%, 14.60%; Public Real Estate: 8.80%, 30.10%, Private Real Estate: 7.50%, 12.30%; Private Equity: 10.20%, 24.40%; Hedge Funds: 7.9%, 7.7%, Commodities: 6.60%, 26.90%, Cash: 2.00%, 2.25%. The individual asset class assumptions for Ibbotson Associates are as follows; Large Cap: 9.85%, 16.80%; Small Cap: 12.13%, 18.54%; International Equity: 10.95%, 21.93%; Emerging Markets Equity: 15.24%, 33.41%; US Fixed Income: 4.20%, 7.28%; Short Term Fixed Income: 3.92%, 3.23%; International Fixed Income: 5.75%, 13.16%; Cash Equivalents: 3.34%, 2.89%.
The collection of fees produces a compounding effect on the total rate of return net of management fees. As an example, the effect of investment management fees on the total value of a client’s portfolio assuming (a) quarterly fee assessment, (b) $1,000,000 investment, (c) portfolio return of 8% a year, and (d) 1.00% annual investment advisory fee would be $10, 416 in the first year, and cumulative effects of $59,816 over five years and $143,430 over ten years.
Returns will be reduced by advisory fees and other expenses incurred in the management of the portfolio.
Actual future results may not meet the estimates of the capital market return assumptions listed above, as these returns are subject to a variety of economic, market, and other variables. Accordingly, the analysis should not be construed as promising actual future results, the actual range of future results, or the actual probability that these results will be realized.