What a Fiduciary Retirement Plan Costs in California

Four common fee models

Most cost questions get answered with a percentage, and a percentage is where the confusion starts. Two firms quoting the same number can be charging for different work, and two firms quoting different numbers can end up costing you a similar amount. The useful first step is to identify which arrangement you are being offered.

These are descriptions of common structures rather than a ranking, and other arrangements and hybrids exist. Firms frequently combine models, for example an asset-based fee alongside a separate planning fee in year one. Ask which combination applies to you.

None of these is the correct model in the abstract. Each is a reasonable answer to a different situation, and each carries its own set of considerations, all of which are disclosed. What matters is that the firm names its model plainly and can explain, without hedging, what it is paid for.

What comprehensive should mean

The term "comprehensive" can describe different scopes of service from one advisory firm to another. Before comparing two quotes, establish which of these five areas each one actually covers, because a plan that covers two of them is not expensive or cheap, it is simply a different product.

• Investment management. Portfolio construction, rebalancing, and an investment policy statement setting out how the portfolio is meant to behave.
• Tax planning. Withdrawal sequencing, conversion modeling across multiple years, and coordination with the person who prepares your return.
• Retirement income planning. Which accounts fund which years, how Social Security timing interacts with that order, and what the drawdown looks like under different assumptions.
• Estate coordination. Administrative assistance with beneficiary designations, account titling, and trust funding, in coordination with the client's attorney.
• Insurance and annuity review. Examining existing contracts against the plan, and identifying gaps in life, disability, or long-term care coverage.

Where several of these areas are handled together, decisions that touch two disciplines at once can be considered in the same conversation. When investment, tax, estate, and insurance professionals operate separately, effective communication among them can become especially important, and a coordinated planning process may help identify how a decision in one area affects another.

What sits outside the fee

The advisory fee covers advice and management. Depending on the services and investments involved, additional expenses may include the following, and knowing which ones apply in advance is the difference between a budget and a surprise.

• Fund expense ratios. Charged inside the funds themselves and layered on top of any advisory fee. Broad index funds commonly run in the low single-digit basis points; actively managed funds run considerably higher. These are published in each fund's prospectus.
• Custody and platform fees. Transaction costs and account maintenance charged by the custodian rather than the adviser.
• Tax return preparation. Commonly excluded from an advisory fee and billed by your CPA.
• Estate document drafting. Performed and billed by an attorney. An adviser may provide administrative assistance with account forms, but the documents themselves come from counsel.
• Insurance premiums. The cost of any policy or contract is separate from planning, and any commission on placement is paid by the carrier.

What actually moves your number

The complexity of a client's financial situation can be an important factor in determining the scope and cost of financial planning services. Common examples include the following.

• Equity compensation, concentrated stock, or a pending liquidity event.
• Multiple real estate holdings, particularly across state lines.
• Business ownership, and whether a succession or sale is in view.
• Blended families, or beneficiaries who need protective structures.
• A pension election, a rollover decision, or an inheritance arriving inside the planning window.
• How much coordination you want with your CPA and attorney, and whether that coordination is included or billed separately.

Factors such as these may require additional analysis and coordination and can affect the scope and cost of an engagement. The relevant question is not whether complexity affects the price but whether the additional work is scoped and visible before you agree to it.

Why California adds complexity

California taxes traditional IRA and 401(k) withdrawals as ordinary income and applies no preferential state rate to long-term capital gains, so a gain that receives favorable federal treatment receives none at the state level. The top state bracket is 12.3%, with an additional 1% Mental Health Services Tax applying to taxable income above one million dollars.

Social Security benefits are a significant exception. California does not tax them, which makes the interaction between benefit timing and taxable withdrawals different here than in states that tax both.

As a result, withdrawal sequencing and Roth conversion decisions for California residents may benefit from modeling both federal and state tax consequences across multiple years rather than evaluating a single year at a time. That modeling is work, and work is what you are paying for. How California taxes retirement income covers the mechanics in more detail.

Getting to a real figure

Four requests will convert any quote into something you can compare against another quote.

• Ask for the total first-year cost in dollars. Including every stream the firm earns from you, not the headline rate alone.
• Ask for a written scope document. Stating what is bundled, what is excluded, and what triggers an additional charge.
• Request Form ADV Part 2A. Reviewing it can help you understand a firm's services, fees, compensation arrangements, and material conflicts of interest.
• Ask what happens in year two. Some models front-load a planning fee; others do not. The second-year number is the one you will live with.

You can verify a firm's registration and read its filings before any of this through the SEC's Investment Adviser Public Disclosure database or FINRA BrokerCheck. Both are free and neither requires you to contact the firm first.

How Avinci is structured

Avinci Wealth Management is a Registered Investment Adviser registered in California, Arizona, Illinois, Texas, and Nevada, firm CRD #327780, with its headquarters at 23929 Valencia Blvd, Suite 404 in Santa Clarita and additional offices in Beverly Hills and Woodland Hills. Our advisory fee schedule is set out in Form ADV Part 2A, which we provide on request and which is also available through our IAPD record.

Avinci receives advisory fees for investment advisory services. Separately, insurance and annuity products may be offered through our affiliated insurance agency, Lucas Insurance Services, which may receive commissions from issuing insurance companies. This compensation arrangement creates a conflict of interest and is disclosed in our Form ADV. Avinci is accurately described as fee-based rather than fee-only.

The Retirement Blueprint is our documented four-step process, producing one plan document that covers investments, tax, income, insurance, and estate coordination rather than five separate conversations. Estate documents are drafted by the client's attorney and tax returns are prepared by the client's CPA. Avinci may provide administrative assistance related to trust funding, account titling, and beneficiary designations, with legal determinations referred to the client's attorney. Related reading: how to evaluate a fiduciary wealth manager and one-time plans against ongoing engagements.