What We Believe
We believe advisory fees should reflect active oversight and management — not passive balances.
Clients should clearly understand how fees apply across all components of their portfolio, including cash.
The Background
In many advisory arrangements, management fees are applied to total assets under administration. This can include equities, fixed income, alternative strategies — and sometimes cash.
Cash may be held for several reasons:
• Short-term liquidity needs
• Working capital
• Pending investment deployment
• Income distributions
• Risk positioning during volatility
In some structures, advisory fees are applied uniformly across all assets — including cash balances — regardless of whether those balances require active portfolio management.
That approach may be administratively simple, but simplicity does not always equal alignment.
Why It Matters
Cash plays an important role in portfolio construction and liquidity management. However, it does not typically require the same level of active oversight as invested capital.
When advisory fees apply to idle or transitional cash without distinction, clients may unknowingly pay active management fees on assets that are not actively deployed.
Charging fees on cash is not inherently inappropriate. The key is clarity.
Clients benefit from understanding:
• Whether cash is included in fee calculations
• Whether certain cash vehicles are treated differently
• How working capital is structured
• How fee policy aligns with service delivery
The Bottom Line
Advisory fees should be intentional and transparent.
If you are a client or a prospective client of Forseth & Co. Wealth Strategies and would like to review how cash is treated within your portfolio — including whether management fees apply to cash balances and how that structure aligns with your expectations — we would welcome that discussion.
We manage your wealth. You focus on living.