Clients who have over $300k invested with us via Altruist can choose to have their Advisor Wealth Management flat-fee deducted directly from their investment accounts, rather than a checking or savings account. This is in line with standard practices across the wealth management industry.
FAQs
How does this benefit me?
This is purely a personal preference on payment methods. Some clients prefer having the funds deducted from investments rather than their checking accounts simply from a cash-flow management perspective.
Does this mean that my membership fees will be hidden?
No. Every quarterly invoice will be posted to your Altruist portal, where you can easily find fees being charged by going to Activity and selecting the 'Fee' transaction type.
Isn't this basically like AUM fees?
No. The difference between Advisor Wealth Management's flat-fee and the typical 1% AUM fee model many other financial advisory firms use is that our fee never changes no matter what payment method you use or how much your investments grow.
Which accounts will be used for the fee deductions?
Your financial advisor will coordinate with our operations team to determine the accounts from which the fees will be deducted. If you have specific preferences, please feel free to share them with us. We can either allocate the fee across multiple accounts or withdraw it from a single account. Our primary goal is to ensure your investments grow unencumbered.
Are there any tax implications to doing this?
No, fees charged as a management fee do not create a taxable event in your retirement accounts. This is because investment management fees are considered an expense, not a distribution. For tax-advantaged accounts like IRAs or 401(k)s, the deduction is taken from the assets within the account, so it doesn’t trigger a tax consequence on its own.
However, if you withdraw funds from your retirement account to pay for these fees directly (instead of having them debited from within the account), it could be seen as a distribution, which could have tax implications.
Learn more here: https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-plan-assets