What does a financial advisor cost in Utah?

A financial advisor in Utah costs the advisory fee plus everything layered underneath it: fund expense ratios, trading and custody charges, platform or wrap fees, any commissions, and the interest you give up on swept cash. The only figure that matters is the all-in total, and you can work it out yourself from your account statements and Item 5 of the advisor’s Form ADV Part 2A.

Fee numbers are missing from this page on purpose, including ours at Harvest Lane in Sandy. A number out of context is how people get misled. Your own number is the one worth knowing.

How do financial advisors charge?

Four structures. Some firms mix them.

1. A percentage of assets. A share of the account’s value, usually billed quarterly and deducted from the account. The bill rises and falls with the market whether or not the work changes. Many firms tier the rate; the schedule is in Item 5.A of Form ADV Part 2A.
2. A flat fee. A fixed retainer for a defined scope of work. You know the dollar amount in advance, and it does not move with the market.
3. Hourly. You pay for time, as you would a lawyer or a CPA. Common for a one-time plan, rare for ongoing management.
4. Commissions. Pay from the product rather than from you: a sales load on a fund, a trailing 12b-1 fee, a markup on a bond. For that transaction the advisor is acting as a broker, and the cost sits inside what you bought.

A firm paid only by its clients is fee-only. A firm that charges fees and also takes commissions is fee-based. The two labels are one word apart and mean different things.

What other costs sit underneath the advisory fee?

Four more.

1. Fund expense ratios. Every mutual fund and ETF pays its own operating costs out of the fund’s assets. Investor.gov’s bulletin on fund fees explains that these are stated as a percentage of the fund’s average net assets, the expense ratio, in the prospectus fee table. No bill arrives; the money is gone before the price prints.
2. Trading and custody costs. Commissions or ticket charges per trade, plus whatever the custodian charges to hold the account. Form ADV Part 2A requires an adviser to disclose that clients pay these costs in addition to the advisory fee.
3. Wrap or platform fees. One bundled fee for advice, trading, and administration. The SEC’s bulletin on wrap fee programs says you may still pay mutual fund fees and expenses in addition to the wrap fee, so check what it does and does not cover.
4. Cash sweeps. Uninvested cash gets swept into a bank deposit or money market fund. The SEC’s bulletin on cash sweep programs says advisers and broker-dealers may be compensated for the arrangement, a conflict of interest. What your cash earns, against what it could earn, is a cost that never appears as a fee.

Which of these costs are hidden?

The advisory fee is the visible one, a debit on your statement. The rest are quiet by design. Expense ratios never appear as a line item. A wrap fee is one line, so you cannot see what part is advice and what part is trading. A 12b-1 fee sits inside the expense ratio, hidden twice. A sweep spread appears nowhere.

Form ADV gets at this directly. Item 5.C requires an adviser to describe other fees clients may pay, such as custodian fees or fund expenses. Item 5.E requires an adviser that accepts sales compensation to describe the conflict and say whether it reduces its advisory fee to offset that money.

How do I find my own all-in number?

You need a year of statements, the brochure, and an hour.

1. Pull the brochure. Search the firm on IAPD at adviserinfo.sec.gov, open Part 2A, and read Item 5. Item 5.A gives the fee schedule and says whether fees are negotiable.
2. Find the advisory fee. Add up the year’s debits, or the invoices if you are billed outside the account.
3. Look up each fund’s expense ratio. Apply the total annual operating expenses in each prospectus to what you hold in that fund, and add them up.
4. Add trading and custody. Commissions are on trade confirmations; custody and account fees are separate debits. In a wrap program, check the wrap brochure, Appendix 1 of Part 2A, for what the fee excludes.
5. Check the cash. Compare the sweep yield with a money market fund at the same custodian. The gap, applied to the balance, is the cost.
6. Total it. One figure for the year, divided by the account’s average value. That is what the advisor costs. Not the advisory fee. The cost.

Then ask your advisor for the same figure in writing: the total cost of the relationship last year, in dollars, funds included. If the two numbers differ, or you do not like the one you get, you have your next question.

What does Harvest Lane charge?

Harvest Lane Investment Partners LLC is an investment adviser registered with the Utah Division of Securities, which licenses investment advisers below the SEC’s assets-under-management threshold. Our Form ADV is on file there and on IAPD under CRD 340042.

Our advisory fee is tiered, as described in Item 5 of Form ADV Part 2A.

Harvest Lane is fee-only. No commissions, no 12b-1 fees, no sales loads.

If you have done the arithmetic and don’t like the answer, or one line refuses to add up, send me the statements. I will run the all-in number myself, show you what you own, and tell you what I would change, if anything. Complimentary.