P.O. Box 2049
Wimberley, TX 78676
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Arrowhead Asset Management's Advisor Fee Structure

Arrowhead Asset Management calculates all advisor fees based on mandatory legal requirements outlined specifically by Federal (SEC) and State (TSSB) law. Here are the basic tenets of our advisor fees, as defined by Federal and State regulatory standards:

  • Advisor fees are calculated on a contractually agreed to annual percentage, based on the totalassets under management” (AUM) for all aggregated “family” accounts. The annual fees will be 0.6% to 0.8%, depending on AUM for all combined family accounts (see your signed Fee Disclosure form for more detail).
  • Fees are assessed at the beginning of each calendar quarter, paid in advance, calculated against the previous quarter’s ending value.
  • Advisor fees are performance-based in that the each previous quarter’s total account growth (or loss) determines the actual dollar-value amount of the next quarter’s fee.
  • For example, if a client’s account is up 10% for the previous quarter, the advisor fee dollar amount - based on a fixed percentage - will also be up 10% compared to the previous quarter. Or, if a client’s account is down 5% for the previous quarter, the advisor fee dollar amount will be down 5% respectively.
  • Moreover, when you see your year to date advisor fees on our Arrowhead Asset Management quarterly statements, the current quarter's (paid in advance) fee is added to the year to date fees as cumulative.

Furthermore, to clear up general misconceptions about the "fairness" of advisor fees, advisor fees for most client accounts cannot be calculated on a performance “gain only” formula - unless the client meets the following strictly defined SEC and State “accredited investor” criterion:

  1. Has a net worth of more than $1 million, owned alone or jointly with a spouse
  2. Has earned $200,000 in each of the past two years
  3. Has earned $300,000 in each of the past two years when combined with a spouse
  4. Has a reasonable expectation of making the same amount regularly in the future

Finally, it is not uncommon - and even productive - for clients to question the advisor fee structure and its merits (or interpreted unfairness), especially when account values show a short-term market loss or during heightened market volatility. More often than not, the fee questions arise during heightened market volatility and/or weak periods of investment performance.

Fear is a normal part of investing. Fortunately, fear is mostly a short-term reaction to biased financial media market noise and sometimes newsletter marketing efforts by fear-mongering individuals.  

On the other hand, it is the professional responsibilty of an investment advisor to get your money out of the way of a long-term down or "bear market." That fact never goes away. Good investment advisors have the investment management tools necessary to mostly avoid the ugliness of long-term declining stock markets.  

In the end, our advisor fee structure is exceedingly fair, and for the most part, lower than other similar firms. And for consistency  -as well as fairness, our advisor fee structure is not negotiable.

Please feel free to contact us as needed for further clarification on your advisor fees and/or related performance and fee calculation concerns.

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