Frequently Asked Questions
We are compensated solely by advisory fees that are based on a percentage of investment assets under management. We do not receive any investment commissions or referral fees. Our fees are charged quarterly, in advance, based on the value of managed assets on the last day of the prior quarter. We make pro-rata adjustments for any contributions or withdrawals during the quarter. Fees are generally deducted directly from managed investment accounts. The standard charge for our Wealth Management Program is 1% annually on the first $3Million of assets, and the percentage drops on amounts over $3M. Should a client terminate their relationship with us at any time, fees for the remainder of the quarter are refunded.
Certainly. Suppose that we manage three accounts for a married couple, Desmond and Molly. On June 30, Molly's IRA is valued at $400,000, Desmond's IRA at $325,000, and their jointly owned investment account at $775,000, for a total of $1.5M. Their quarterly fee would be 0.25% (1% annually/4 quarters) multiplied by $1.5M, or $3,750. The fee would be deducted proportionally from the three accounts by the investment custodian in early July.
Our advisory fee covers all regular custodial charges, expenses for trades that we initiate in the normal course of managing your accounts, and all financial planning services. We try to make things as simple and transparent as possible with a single asset based fee. Many other investment advisors charge a similar asset based fee, but do not cover custodial and trading expenses. In addition, many advisors charge separately for financial planning services. Be sure to take these things into consideration as you are comparing potential advisors.
We only cover custodial expenses associated with the regular, ongoing management of your account. There may be custodial charges for client directed trades or things such as overnight checks and wire transfers. We do not cover any custodian expenses after the termination of a client contract. We do not cover any services provided by third parties (e.g. CPAs, attorneys, insurance agents, etc.). Our Wealth Management Agreement provides complete details of covered and non-covered expenses.
Our Wealth Management Program has a minimum annual fee of $12,000 ($3,000/ quarter). If the calculated percentage based fee is less than this amount, the minimum fee will apply. Other client service programs have different minimum annual fees.
We do not have a formal minimum required investment amount, but we generally accept new clients only into our Wealth Management Program. Due to the minimum annual fee of $12,000 for that program, it is usually appropriate only for households with at least $750,000 of investable assets.
Our Legacy and Investment programs are designed for clients who do not meet the asset requirements for our Wealth Management Program but otherwise match our client profile. We generally do not accept new clients into these programs, though occasional exceptions may be made on a case-by-case basis for referrals from current clients.
No. Clients are free to terminate their relationship with us at any time, for any reason, so we have to work hard to make sure they don't want to!
No. Sovereign is not a broker, and does not accept custody of any client funds. An independent investment custodian (generally TD Ameritrade Institutional) actually holds your investments. The custodian is authorized to accept our instructions regarding securities purchases and trades within your account(s). We cannot have funds disbursed from your account for any other reason than to send them directly to you or for payment of our advisory fees.
Yes. We have clients in a number of other states. Each state has its own requirements for non-resident investment advisors differ though, so contact us for specific information.
Absolutely. We examine available employer benefits in our financial planning process to help you make the most of your available benefits. For employer sponsored defined contribution plans like 401(k)s and 403(b)s, we can review available investment options, design an investment policy just as we would any other investment account, and can usually monitor and manage the account on an ongoing basis. For many employer plans, we can even use our account aggregation system to bring your account information into our financial planning and reporting systems for comprehensive evaluation and reporting.
Our Wealth Management Agreement with you authorizes us to work with third party professionals as needed, and we have information disclosure releases that you can sign to allow them to do the same with us. Using this approach allows us to work directly with such individuals on your behalf rather than sending you off to them with instructions to "do x and report back." We also use checklists driven systems to ensure that they are integrated into the ongoing management of your financial picture in a systematic, structured way. This can transform disconnected tax, legal, financial, and insurance professionals into a coordinated team working on your behalf. Because the professionals are still separate and unrelated businesses though, this approach can also effectively provide some additional "checks and balances." We only work with third party professionals that you have specifically authorized.
Absolutely. The work we do for you, and the information you share with us, is always kept strictly confidential. Even the information we disclose to your authorized third party tax, insurance, and legal professionals is shared only on a "need to know" basis.