Kalorama Wealth Strategies - A Beautiful View to Your Financial Future!

Fee-Only Structure

Financial Planners who take commissions have a built-in conflict of interest ... even with disclosure, my choice would be a Fee-Only planner.

- Jane Bryant Quinn, Newsweek

If you want a planner with no potential compensation conflicts and with a legal obligation to put your interests first, hiring a fee-only registered investment advisor is recommended.

- Barbara Roper, Director of Investor Protection, The Consumer Federation of America

When initiating a relationship with a financial planner or advisor, the compensation structure is an important consideration. It is imperative that you not only know the amount of compensation, but also the method. There are three methods in which planners/advisors can be compensated: (1) fee-only; (2) commission-based; and (3) fee-based.

"Fee-only" planners/advisors are compensated solely by their clients and do not accept commissions or compensation of any kind from any other source. Compensation is based upon fees for consultation, plan development, or investment management services. The fees are charged on a project or hourly basis, an annual retainer, or on a percentage of assets under management or total net worth.

"Commission-based" planners/advisors are compensated by a third-party (generally a financial institution such as an insurance or investment company), who pays the planner/advisor commissions based upon the products purchased by a client in connection with the implementation of financial planning recommendations. Typically, there is no direct charge for advice or preparation of a financial plan (if one is prepared at all).

"Fee-based" planners/advisors are compensated from a combination of fees and commissions. A type of fee-based is "fee-offset", in which commissions from the sale of financial products are used to offset (reduce) the fees charged in the planning process.

The Clear Choice:

Kalorama Wealth Strategies strongly believes that a fee-only structure is the sole method of compensation that aligns the interests of the advisor and the client. Both commission and fee-based planners have an incentive to invest client money in products that pay the highest commissions. Kalorama adopted a fee-only structure to avoid the significant, inherent conflicts of interest that arise when an advisor is in a position to gain financially from the purchase of any investment or insurance product recommended to a client.

Kalorama is exclusively committed to helping clients achieve greater financial security and independence by providing independent and objective advice that has no potential of being conflicted by the payment of commissions or compensation of any kind from any other source other than our clients. With Kalorama’s strict adherence to a fee-only structure, you are assured that our allegiance is always with you — our client. As an independent, fee-only advisor, Kalorama is on your team.

What this means to you:

Kalorama focuses on solutions, advice, and client service, not products and sales — we do not accept any commissions from transactions involving mutual funds, stocks, bonds, insurance, annuities, or any other commissioned product.
Kalorama's fees are transparent — you will know exactly what the advice costs.
Kalorama has no proprietary products or programs and is free to recommend products and strategies from a nearly unlimited menu. Advisors or brokers who are employed by a bank, brokerage firm, mutual fund, or insurance company typically have a limited menu of products that they recommend. Further, these captive or proprietary programs generally have incentive compensation structures that could result in the advisor making the recommendation for the wrong reason.
Kalorama does not receive compensation of any kind when you buy or sell investments — our recommendations are based upon the merits of adding an investment to your portfolio, not our compensation. Because our investment advisory fees are based on a percentage of the assets managed, we have a strong incentive to minimize your transaction fees and operating expenses, and to maximize your portfolio value. Our fees can only rise when your portfolio increases in value.
Kalorama has a fiduciary duty to its clients. We are legally obligated to maintain an allegiance of confidentiality, trust, loyalty, disclosure, obedience, and accounting. This is in contrast with stock brokers, who are considered Agents and are exempt from this fiduciary duty.

Fee Arrangements:

Financial and Investment Planning

After a complimentary initial consultation, depending on the scope and nature of the engagement, an hourly fee is charged to review your current situation, provide our recommendations, and assist with the implementation of the proposed plan. We will outline our understanding of the services to be provided, along with an estimate of our fees, in an engagement letter.

Portfolio Management

Kalorama calculates investment advisory fees based upon a percentage of assets under management. The following tiered schedule applies:

Up to and including $250,000	1.50% per annum
Greater than $250,000 up to and including $500,000	1.25% per annum
Greater than $500,000 up to and including $1,000,000	1.00% per annum
Greater than $1,000,000 up to and including $5,000,000	0.75% per annum
Greater than $5,000,000	0.50% per annum

Advisory fees are billed quarterly, in arrears, based upon the market value of the portfolio at the end of the previous quarter as valued by the Custodian. Please note that fees paid do not include commissions, or transaction, account maintenance, and custody fees, if any, that may be paid to third parties (none of which are retained in whole or part by Kalorama Wealth Strategies). This fee schedule is subject to change and negotiation depending upon the nature of the assets under management.

Click here to subscribe to our complimentary e-newsletter.

Home Who We Are Services Mission & Investment Philosophy Investment Advisory Process Financial Planning Process Fee-Only Structure Client Area News & Articles FAQs Contact Us Tell A Friend!