How You Get Paid
Here's a summary of what advisor compensation looks like at Commonwealth.
PPS Growing Advisor Program Compensation and Enhanced Payouts
Most Commonwealth advisors do business in our fee-based Preferred Portfolio Services® (PPS) advisory program. With this program, advisors choose how to best serve their clients by either delegating portfolio management or managing portfolios themselves.
We have designed our compensation model to reward you as your business expands. Through our Growing Advisor Program (GAP), as your AUM rises, we reduce your maximum admin fee (what we call the GAP cap) and increase your payout percentage. Payout starts at 90 percent for $25 million in program assets and rises to as high as 99 percent. We calculate AUM at the end of each calendar quarter, looking at both total AUM and individual account size. Whichever table drives the lower admin fee is applied to the next quarterly billing cycle.
Total AUM | GAP Administrative Fee (bps) | Payout |
|---|---|---|
$10,000,000+ | 17.5 | Production-Based Schedule |
$15,000,000+ | 15.0 | Production-Based Schedule |
$25,000,000+ | 12.5 | 90% |
$40,000,000+ | 11.0 | 90% |
$50,000,000+ | 10.0 | 94% |
$60,000,000+ | 9.5 | 94% |
$75,000,000+ | 8.75 | 94% |
$100,000,000+ | 7.5 | 95% |
$150,000,000+ | 6.5 | 96% |
$200,000,000+ | 6.25 | 96% |
$250,000,000+ | 6.0 | 97% |
$300,000,000+ | 5.75 | 97% |
$350,000,000+ | 5.5 | 97% |
$400,000,000+ | 5.25 | 97% |
$450,000,000+ | 5.0 | 97% |
$500,000,000+ | 4.75 | 98% |
$750,000,000+ | 4.5 | 98% |
$1,000,000,000+ | 4.25 | 99% |
$2,000,000,000+ | 4.0 | 99% |
PPS Administrative Fee
As part of the PPS advisory program, we charge an administrative (admin) fee that’s based on client account size. The larger the account, the lower the fee the advisor pays.
Client Account Size | PPS Administrative Fee (bps) |
|---|---|
$25,000+ | 20.0 |
$250,000+ | 15.0 |
$500,000+ | 12.5 |
$750,000+ | 10.0 |
$1,000,000+ | 7.5 |
$1,500,000+ | 5.0 |
$5,000,000+ | 2.5 |
For more information about PPS, refer to the Program Pricing page.
Production-Based Payout
We also offer a payout based on the cumulative firm revenue paid to and received by Commonwealth (i.e., your production) resulting from the sales you generate in a calendar year (or annualized first year).
If your production increases during the year, the percentage of the firm revenue you’re paid will be adjusted at that time and applied to future revenue.
Production | Payout |
|---|---|
$3,000,000+ | 92%/95% |
$2,000,000+ | 91% |
$1,000,000+ | 90% |
$750,000+ | 89% |
$500,000+ | 88% |
$150,000+ | 87% |
$100,000+ | 85% |
Less than $100,000 | 50% |
Grouping Production
We pay all advisors who belong to a production group at the group's payout level. For all advisors to receive the payout, the group's average production per advisor must be at least $100,000 within a calendar year.
If the group's average production per advisor falls below $100,000, only those advisors who individually produce $100,000 or more will receive the payout at the group's payout level in the next calendar year. Advisors who produce less than $100,000 will receive compensation at their individual payout level based on our standard payout in the next calendar year.
Consulting Program Compensation and Enhanced Payouts
Wealth Management Consulting
Advisor Compensation: You can get paid for your advice per project on a retainer basis or on a periodic schedule. You may charge your clients a flat fee or an hourly rate not to exceed $500. You set the fee, which is paid out based on the payout schedule.
Enhanced Payout: Business written under Commonwealth’s Wealth Management Consulting Agreement (WMCA) will be eligible for a flat 95 percent payout for advisors (or production groups) who produce $100,000 or more in annual WMCA firm revenue. If your (or your group’s) WMCA production increases during the calendar year, the percentage of WMCA firm revenue paid will be adjusted at that time and applied to future WMCA revenue.
Retirement Plan Consulting
Advisor Compensation: You may charge a flat-dollar or flat-percentage fee, or an hourly rate not to exceed $500, on a onetime or ongoing basis for comprehensive plan management. The maximum annual account consulting fee, when stated as a percentage of assets, is 1.50 percent and is negotiable. You are paid based on the payout schedule.
Enhanced Payout: Business written under Commonwealth’s Retirement Plan Consulting Agreement (RPCA) will be eligible for a flat 95 percent payout for advisors (or production groups) who produce $100,000 or more in annual RPCA firm revenue. If your (or your group’s) RPCA production increases during the calendar year, the percentage of RPCA revenue paid will be adjusted at that time and applied to future RPCA revenue.
Plan Participant Consulting
Advisor Compensation: You may charge a firm-level fee for providing fee-based consulting services to SIMPLE IRA plan participants with American Funds. Currently, this program is available only for fee-based SIMPLE IRA plans using the F-2 share class at American Funds. Commonwealth has set the following tiered fee schedule, which will be applied based on total plan assets.
Tier | Total Plan Assets | Advisory Fee |
|---|---|---|
1 | $0−$500,000 | 100 bps |
2 | $500,001−$1,000,000 | 75 bps |
3 | $1,000,000+ | 50 bps |