Wealth manager Aaron Skloff, chief executive of Skloff Financial Group in Berkeley Heights, N.J., chooses to stand pat for this reason. "Despite equities growing faster than other investments [over the long term], when we withdraw pro rata [to keep asset allocation relatively constant], the assets under management can decline for clients in distribution mode," says Skloff. "If this happens, it reduces fees for that client. But if the appreciation and income can more than offset the amount of distribution, the overall account size can still grow, increasing the fees."
Altfest's firm manages $650 million for a clientele chiefly of retirees, the widowed and active professionals.
Altfest says, "We have changed our retirement plans, providing further cash flow analysis that we generate for clients; we are producing more helpful reports, such as how much to withdraw from retirement plans, and have more intensive follow-up planned. We have not changed the way we manage their portfolios, but we have raised our asset management fees overall to compensate for the additional work."
Bruce W. Fraser, a financial writer in New York, is a frequent contributor to Financial Advisor. Email: [email protected]; Web site: www.bwfraser.com.