Trail Financial Planning, LLC is a fee-only financial planning and investment management firm located in Bellingham, WA

Fees

Overview of Fees

Financial Planning  Fees for financial planning are based on time worked, and the hourly rate.  The rate depends of the level of expertise required to complete the work:

  • Administrative assistant: $60/hour
  • Associate advisor:   $125/hour
  • Lead advisor:   $150/hour

Fees may be negotiable based on client and lead advisor discussions.

Investment Management

  • 1.0% of Assets Under Management (AUM) for the first $500,000 of AUM
  • 0.5% for any AUM above $500,000

Wealth Management (both Financial Planning and Investment Management) All services are covered under the same fee structure as “Investment Management.”  Minimum Assets Under Management (AUM) is $1,000,000. Terms may be negotiable based on client and lead advisor discussions. Details of how fees are calculated, what constitutes AUM, when fees are paid, how fees are paid, etc. may be found at the bottom of this page.

How our clients engage us

The remainder of this page describes how four different clients typically engage with our services.  Typically, a client asks us to prepare a financial plan, then transitions into an ongoing planning/investment management service.  Thus, we present fees and services as clients typically engage with us.

Snip from Mt Baker Wilderness Green Trails map.

Develop a Financial Plan

We believe that everyone should go through the process of developing a comprehensive financial plan.  Your financial life is complex – goals, cash flows, investments and taxes all interweave.  We help you prioritize the most important areas, then create a strategic plan to address them.

A comprehensive financial plan involves establishing your goals and values, organizing and analyzing your financial life, then determining how your finances are aligned with your goals/values.  Here are the pieces:

  • We meet to “Clarify and Organize.” We discuss your values, develop some goals, and organize your financial life.  This is one or two meetings, done in person or virtually (video chat).
  • We analyze the data, crunch some numbers, evaluate different scenarios, make recommendations, and prepare a readable, concise plan for your financial future.
  • We present the plan to you in plain English
  • We develop an implementation plan with you (suggesting how you could carry out the recommendations), and deliver a one-page financial plan summary.
  • We support the plan for 30 days after delivery, through email and phone contact.

Fee We charge a one-time fee to develop a Financial Plan (based on hours worked).  Typically, a plan costs between $800 and $3,000, depending on the scope of work.  Four example situations including estimated cost:

  1. Zoe is a teacher, and recently divorced. She needs to develop a plan under a new family structure.  She has kids, and is receiving child support.  Fee:  $800.
  2. Adeline and Bob are a working couple. Adeline is a teacher, Bob works for the state.  They have kids.  They want to figure out how to save for retirement and their kids’ college.  They want to examine their insurance and investment choices, and make sure they aren’t paying too much in taxes.   Fee:  $1,200.
  3. Chris and Diane are a working couple. Chris is a firefighter, Diane is self-employed.  They have kids, they own a rental property, they have a complex tax situation, and self-employed retirement plans to manage and organize.  Fee:  $1,500.
  4. Ehrin and Fred own multiple businesses and rental properties. They have kids and a complex tax situation.  They have significant investment assets to analyze and make recommendations on.  Fee:  $3,000.

How financial planning fees are calculated

We create an estimate for a client, including the anticipated hours of work and rate for each hour.  At the end of each month, we send an invoice to the client detailing the work completed.  The client can choose to pay in full, or pay a set amount each month.

Ongoing Services

Mt. Baker wilderness area. Photo by John Chesbrough

After creating the plan, most clients continue with an ongoing planning service (either wealth management, financial planning only, or investment management only). There is value in ongoing planning.  Good financial management is about curating good financial habits.  Habits, or behaviors, are best addressed over time.  Additionally, planning needs change over time.  An ongoing planning relationship will encourage you to address your financial questions proactively rather than retroactively. We believe we do our best work, and provide the most value to a client in an ongoing relationship.

Investment Management only

If we have not completed a financial plan with a client, we still meet with a client to determine some essential information about your investment needs for the assets (your goals and time frame).  In addition, we will talk about your tolerance and capacity to accept risk.  We develop an “Investment Policy Statement,” or IPS.  Once you have agreed with the IPS, we will invest and manage your portfolio.  We monitor your contributions and withdrawals (in particular, required limits such as maximum contributions and Required Minimum Distributions from retirement accounts).  We monitor your investment portfolio regularly, and make adjustments if necessary.  Every quarter, we will send you a report detailing the status of your investment accounts.

Fees Our fee structure is a tiered structure based on the Assets Under Management (AUM).  Fees are deducted from client accounts once per quarter.

Assets Under Management Annual fee
$0 – $500,000 1%
Above $500,000 $5,000 + 0.5% on assets above $500,000

Example calculation for $600,000 AUM:  ($500,000 × 1%) + ($100,000 × 0.5%) = $5,500 per year. The actual fee deducted in a quarter would be one-fourth the annual fee, or $1,375 in the example above.

Wealth Management

This service includes financial planning and investment management. Life changes, and so will your planning needs. Clients have access to their advisor in an ongoing way for individual needs. Throughout the year, we identify core areas in your financial life, and focus on planning in that area.  For example, we may determine that your goals and investment savings are the most critical areas.    Next we may target your cash flow or budget.   In addition, we tackle important planning issues as they are relevant to your life. For example:

  • Do you want to talk about and analyze a possible job change and the financial repercussions?
  • Did your job change, and do you need to make new choices about benefits and retirement strategies?
  • Are you considering a remodel, but want help analyzing loan options? Do you want ongoing assistance with your budget?
  • Are you considering a new investment opportunity (like a rental property), and want to examine the possible return on investment?
  • Are you thinking about shifting your business strategy, and want to do some planning around revenue, profitability and tax implications?

Fee The Annual Wealth Management fee follows the same fee structure as Investment Management.  However, there is a minimum “Assets Under Management” to qualify for this service. Minimum Assets Under Management:  $1,000,000 Terms (and fees) may be negotiable based on client and advisor discussions.

Fee Details for Financial Planning Services

Fees for financial planning are based on time worked, and the hourly rate.  The rate depends of the level of expertise required to complete the work:

  • Administrative assistant: $60/hour
  • Associate advisor:  $125/hour
  • Lead advisor:   $150/hour

Fees may be negotiable based on client and lead advisor discussions.

Details about “level of expertise required to complete work”

Administrative assistant:  This type of work is typically clerical in nature, such as data entry or paperwork completion.  There is no analysis, or strategy creation, or recommendations as a result of this work. Although the work requires the employee to follow the firm Code of Ethics and confidentiality, it (the work) does not require the employee to have any license or registration to complete. Associate advisor:  This is work to support the lead advisor’s work with a client.  The work by the Associate advisor would require, at a minimum, registration as an Investment Advisor Representative under the Registered Investment Advisory firm, Trail Financial Planning LLC.  The work is typically within one of the areas described by the Certified Financial Planner Board, as stated below. Lead advisor:  Each client is assigned a lead advisor.  This is the person responsible for managing the client relationship and all planning work related to the client.  The Lead advisor is responsible for making final analysis, recommendation and reporting actions with the client. The work requires, at a minimum, registration as an Investment Advisor Representative under the Registered Investment Advisory firm, Trail Financial Planning LLC. The fee is written into the client-advisor agreement, and is established before any work is done.

How fees are assessed and paid

At the end of each month, the Adviser will prepare and send an invoice to the client that includes a description of the work completed, the date the work was completed, and the formula used to calculate the which is compliant with requirements set forth in WAC 460-24A-135 (Washington state Administrative Code).  Clients may opt to make partial monthly payments to pay off the account balance over time. All work (except for initial deposit as described below) will only be invoiced after the work is completed. Typically, an initial deposit is requested from the client to secure a spot in advisor’s schedule.  This deposit will be less than $500. Trail Financial will not bill an amount above $500 more than 6 months in advance.  Financial planning services may be terminated at any time by written notice. If the planning agreement is terminated, client will be billed for work done, but not yet paid for.  If payment was received, but work was not done (such as an initial deposit was received, but the client decided not to proceed with services), a refund will be provided to the client for the amount of payment received less any work completed. Fees may be paid by electronic funds transfer or check.

Fee Details for Investment Management Services

Our standard investment management advisory fee is based on the market value of the Assets Under Management, or AUM.

Assets Under Management (AUM) Annual Advisory Fee
$0 – $500,000 1.00%
$500,001 and above $5,000 + (0.5% of AUM above $500,000)

Assets Under Management, or AUM, are defined by any and all assets that are included in a separate Investment Management contract, and for management of which the client pays a fee to the Advisor. Investment management fees may be negotiable.  They are pro-rated, based upon time of management, and paid in arrears on a quarterly basis. The advisory fee is a blended fee and is calculated by assessing the percentage rates using the predefined levels of assets as shown in the above chart, resulting in a combined weighted fee. For example, an account valued at $1,000,000 would pay an effective fee of 0.75%. This is determined by the following calculation: ($500,000 x 1.00%) + ($500,000 x 0.5%) = $7,500.  The AUM is based upon the last open market day of the calendar quarter. No increase in the annual fee shall be effective without agreement from the client by signing a new agreement or amendment to their current advisory agreement.

How fees are assessed and paid

Advisory fees may be directly debited from client accounts, or paid by check or electronic funds transfer, per client’s choice.  An investment management agreement may be terminated at any time with written notice. Accounts initiated or terminated during a calendar quarter will be charged a pro-rated fee based on the amount of time the Client-Advisor Agreement was valid during the billing period.  Upon termination, any unearned fee will be refunded to the client. When advisory fees are deducted from Wealth Management client’s account(s), the Adviser will provide an itemized invoice that includes a description of the work completed, the date the work was completed, and the fee for the work which is compliant with requirements set forth in WAC 460-24A-135 (Washington state Administrative Code). Members of the same family may combine account values (for purposes of fee calculation) if their finances are enmeshed in such a way as to allow for one Investment Policy Statement and Advisory Agreement to cover all accounts.

Fee Details for Wealth Management Services

For Wealth Management clients, financial planning services are not billed separately, but are included in an overall engagement.  The fee is calculated in using the same formula as Investment Management.  The minimum account size for Wealth Management is $1,000,000. Fees are pro-rated, based upon time of management, and paid in arrears on a quarterly basis. The advisory fee is a blended fee and is calculated by assessing the percentage rates using the predefined levels of assets as shown in the above chart, resulting in a combined weighted fee. For example, an account valued at $1,000,000 would pay an effective fee of 0.75%. This is determined by the following calculation: ($500,000 x 1.00%) + ($500,000 x 0.5%) = $7,500.  The AUM is based upon the last open market day of the calendar quarter. The fees for Wealth Management (including account minimum) may be negotiable between client and advisor.  No increase in the annual fee shall be effective without agreement from the client by signing a new agreement or amendment to their current advisory agreement. Advisory fees may be directly debited from client accounts, or paid by check or electronic funds transfer, per client’s choice.  An investment management agreement may be terminated at any time with written notice. Accounts initiated or terminated during a calendar quarter will be charged a pro- rated fee based on the amount of time the Client-Advisor Agreement was valid during the billing period.  Upon termination, any unearned fee will be refunded to the client. Members of the same family may combine account values (for purposes of fee calculation) if their finances are enmeshed in such a way as to allow for one Investment Policy Statement and Advisory Agreement to cover all accounts. If a Wealth Management client account was held at Betterment Institutional, there would be an additional 0.2% annual fee as presented in Table 3. When advisory fees are deducted from Wealth Management client’s account(s), the Adviser will provide an itemized invoice that includes a description of the work completed, the date the work was completed, and the fee for the work which is compliant with requirements set forth in WAC 460-24A-135 (Washington state Administrative Code).  

A note about excessive fees

As fiduciaries to our clients, we research and discuss the effect of fees on long-term financial health.  We aim for our advisory fees to be between 0.5% and 1.0% of Assets Under our Management. However, we recognize that some of our clients without significant Assets Under our Management would be paying a higher fee as measured by “percent of Assets Under Management.”  Within the industry, a “reasonable maximum advisor fee” is considered to be less than 2% of Assets Under Management. However, a client may receive value from our financial planning services apart from the investment management service.  Thus, they may wish to engage our services despite the fact that our fees would appear excessive as a “percent of assets under management.”  In such a case, where a client is paying a fee higher than 2% of Assets Under Management, we will inform the client of the fee, and disclose to them that it may be possible for them to find another advisor or advisory firm where they can pay less in fees than our firm charges.

Other Types of Fees and Expenses

Our fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which may be incurred by the client, and may be the result of our investment recommendation. Clients may incur certain charges imposed by custodians, brokers, and other third parties such as custodial fees, deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Mutual fund and exchange traded funds also charge internal management fees, which are disclosed in a fund’s prospectus. Such charges, fees and commissions are exclusive of and in addition to our fee, and we shall not receive any portion of these commissions, fees, and costs.  

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