How Much Does A Portfolio Service Cost?
Like all services, the cost of investment management is relative to the complexity and number of services you require to meet your needs. The primary goal of all investment management is to provide you with the appropriate level of return for the risk you are willing to take, at a price you are willing to pay to meet your financial planning goals.
For all the bells and whistles in portfolio management as well as a service that is independent and objective, you should expect to pay a premium. You should also expect value that is over and above those costs in the long term.
The cost of portfolio management services goes towards a variety of investment management and operational services. It is broken down as follows:
1. The cost of Investment management
This includes:
- Active security selection: top independent asset managers charge a premium for their talent. Internal managers who work directly for a bank or other financial institution are generally less expensive than third-party expertise.
Many mainstream providers, such as banks or large mutual fund companies, hire asset managers on staff to provide security research and selection capabilities. In- house money managers tend to manage assets to a single category or style. Often, they focus on competing solely within their asset class category (e.g. global balanced, dividend or fixed income) and manage for returns to beat their peers in a given category. How they do relative to their peer group very often determines their bonus or compensation structure - a factor that may bias a portfolio’s long- term returns potential. This approach is common in the industry. A portfolio service, on the other hand, may hire any one of these suppliers if they are suited to any part of an overall portfolio strategy.
- Investment specialist selection and monitoring: for the research, selection and monitoring of each investment specialist managing assets in a portfolio. Each investment manager provides specific security selection capabilities for a given geographic market, investment style or asset class.
- Portfolio design, stewardship and oversight: for the construction of well- diversified multi-strategy, multi-manager portfolios. Includes regular rebalancing,
asset allocation calls, portfolio constraint management, tax management, currency management, and risk management strategies.
- Administration and operational oversight: the administration of the assets, buying and selling securities, tax reporting, regulatory filing, etc.
- Reporting and communication: detailed reporting on how your portfolio is tracking towards your goals, market commentary and reports from investment specialists, trading summaries, capital gain/loss reporting and other regulatory reporting.
2. The Cost of Advice
A portion of your fees go directly to your financial advisor for the personalized advice and wealth management services they provide you. This part of the fee is usually agreed upon between you and your advisor when you first start to work together. Some factors that influence the cost of advice include the type and level of financial planning services you require, and the amount of assets that they invest on your behalf.
Factors that influence your costs
- Account size: as with many other services, generally, as the amount of money you invest with a portfolio service increases, your average cost rate declines. Generally, we include all assets that belong to your entire family unit when calculating your overall costs.
- Type or structure of investment– some types of investment structures are more expensive than others. If you are looking for basic exposure to an asset class without the benefit of oversight or security selection, then an ETF is a less expensive alternative to a full-service money manager.
If capital preservation is important to you, then you may want to include specific downside protection strategies or access to alternative investments (e.g. real estate, specialized sectors, etc.) and currency management strategies, which add to the overall cost.
Even the type of assets that go into your portfolio will have an impact on cost. The fee to manage a bond portfolio, for example, is less expensive than an actively managed stock portfolio.
View the infographic on management fees (click through to management fees attachment)
Is a Portfolio Service Right for You? To find out more information click here (add link when ready to: Is a Portfolio Service Right For You)
The following gives you an idea of the costs associated to managing a balanced type (i.e. 60% Equities; 40% Fixed Income) asset allocation portfolio with IPC Portfolio Services.
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IPC Essentials Portfolios |
You get:
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You don’t get:
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For investors who want |
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the core elements of |
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portfolio management |
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with downside |
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protection strategies at |
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a lower cost. |
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Portfolio Management Cost (Management Fee + Administration Fee, |
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excluding the cost of Advice, underlying fund fees and applicable taxes): |
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0.55% + 0.15% |
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IPC ESG Balanced |
You get all of the above plus:
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You don’t get:
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Essentials Portfolio |
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For investors who want |
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to invest in companies |
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that follow ethical |
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environmental, social |
Portfolio Management Cost (Management Fee + Administration Fee, |
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and governance (ESG) |
excluding the cost of Advice, underlying fund fees and applicable taxes): |
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standards. |
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0.55% + 0.15% |
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IPC Private Wealth Fundamentals Portfolios For investors who want a discretionary portfolio that includes directly held stock positions with managed volatility strategies at a lower cost |
You get:
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You don’t get:
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Portfolio Management Cost (Management Fee excluding the cost of Advice, underlying ETF fees and applicable taxes):
Starts at 0.60% at $250,000 and reduces at higher asset levels. Your effective marginal costs: $0 - $500,000 0.60% $500,000 - $1 million 0.50% $1 million - $2 million 0.40% $2 million - $7.5 million 0.35% $7.5 million and over 0.30% |
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Counsel Retirement Portfolios For investors who are in or nearing retirement, or those who want portfolio management strategies that provide enhanced downside protection to preserve capital in periods of sustained market downturns. |
You get:
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You don’t get:
sectors
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Portfolio Management Cost (Management Fee + Administration Fee, excluding the cost of Advice, underlying fund fees and applicable taxes): |
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0.90% + 0.15% |
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Management fee reductions of 0.05% at specific thresholds. Your marginal fee would be: |
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$0 - $250,000 1.05% $250,000 - $500,000 1.00% $500,000 - $1 million 0.95% $1 million - $2 million 0.90% $2 million - $3 million 0.85% $3 million - $5 million 0.80% $5 million and over 0.75% |
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Counsel Strategic |
You get:
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You don’t get:
sectors
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Portfolios |
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For investors who want |
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a single portfolio |
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solution with |
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comprehensive |
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portfolio management |
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strategies to enhance |
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growth and manage |
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volatility. |
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A pension-like approach |
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to meeting a specific |
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range of returns over |
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the full market cycle. |
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Portfolio Management Cost (Management Fee + Administration Fee, |
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excluding the cost of Advice, underlying fund fees and applicable taxes): |
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1.02% + 0.11% |
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Management fee reductions of 0.05% at specific thresholds. Your |
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marginal fee would be: |
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$0 - $250,000 1.13% |
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$250,000 - $500,000 1.08% |
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$500,000 - $1 million 1.03% |
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$1 million - $2 million 0.98% |
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$2 million - $3 million 0.93% |
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$3 million - $5 million 0.88% |
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$5 million and over 0.83% |
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Customized solutions using Counsel components For investors who want to tilt their portfolios toward a specific investment style or region. |
You get:
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You don’t get:
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Portfolio Management Cost (Management Fee + Administration Fee, excluding the cost of Advice, underlying fund fees and applicable taxes): |
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Management fees range from 0.85% to 1.10% + 0.15% for administration fees. |
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Management fee reductions at higher asset thresholds are available. |
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Your marginal fees are: |
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$0 - $250,000 1.15% $250,000 - $500,000 1.10% $500,000 - $1 million 1.05% $1 million - $2 million 1.00% $2 million - $3 million 0.95% $3 million - $5 million 0.90% $5 million and over 0.85% |
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IPC Private Wealth Portfolios Best-suited for investors who want a robust, personalized solution with discretionary portfolio management that includes directly held securities. |
You get:
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You don’t get:
sectors
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Portfolio Management Cost (Management Fee excluding the cost of Advice, underlying fund fees and applicable taxes): |
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Management fees for a balanced mandate start at 1.16% and receive reductions at specific thresholds. |
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Your marginal fee before service fees would be: |
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$0 - $500,000 1.16% $500,000 - $1 million 0.81% $1 million - $2 million 0.61% $2 million - $7.5 million 0.56% $7.5 million and over 0.51% |
What you ultimately pay for portfolio management will depend on the services you require to best target your goals. You can work with your IPC Advisor to better understand what you need to achieve your goals.
For more information on IPC Portfolio Services, visit What Makes Us Different (add link when ready)
Counsel Portfolio Services | IPC Private Wealth
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