When looking for an investment manager or advisor, fees are an important factor to consider. Northern Trust is a large investment firm that offers investment management and advisory services to institutions, financial advisors and individuals. Their fee structures can be complex, so it’s important to understand exactly what you’ll be paying for. This article will provide an overview of Northern Trust’s typical fee structures across their major offerings, so you can determine if the value they provide is worth the cost for your specific investment needs and portfolio size.
Asset management fees for institutions and advisors
For institutional clients like pensions, endowments and foundations, Northern Trust charges an annual asset management fee that is typically around 0.30-0.50% of assets under management. This covers investment management, trading, reporting and other operational services. There may be additional fees for performance-based fees or specialized mandates. This fee range is quite typical for large asset managers managing tens of billions in assets.
For financial advisors, Northern Trust offers its FlexShares ETFs and pooled funds. The annual expense ratio on FlexShares ETFs ranges from 0.08% to 0.50% depending on the strategy. Meanwhile, pooled funds have annual expenses of around 0.35% to 0.65%. These are reasonable fee levels for professionally managed investment strategies.
Wealth management fees for individuals
For high net worth individuals, Northern Trust charges a wealth management fee that consists of an annual asset management fee and service charge. The asset management fee ranges from 0.50% to 1.25% depending on portfolio size and services needed. The greater the assets, the lower the fee rate. There is also an annual service charge based on the level of services utilized, such as investment management, family office services, philanthropy advisory, etc. Service fees typically range from 0.10% to 0.60%.
At the low end, a $1 million portfolio would pay around 0.60% overall. On a $10 million portfolio, the overall fee would be around 0.80%. While not rock-bottom, these are competitive fees for the customized investment management and integrated services provided by firms like Northern Trust.
Evaluating if the fees are worthwhile for you
The key is determining whether Northern Trust’s expertise and services are worth those fees for your specific needs. For large institutional investors like pensions and endowments, Northern Trust has the scale, resources and institutional-level service capabilities to provide good value at their typical fee level of 0.30-0.50% of assets. Their fees are very competitive in the institutional space.
For high net worth investors, you are paying slightly higher fees for highly customized investment management combined with concierge services through your dedicated advisor and team. This premium level of service has significant value for investors who want a holistic wealth management experience.
However, for middle income investors just looking for solid investment management on a smaller portfolio, Northern Trust’s wealth management fees may not make sense. Robo-advisors, online brokers and low-cost mutual fund providers can offer strong solutions at a fraction of the cost. Always look at what you are getting for the fees you pay.
Northern Trust charges fees ranging from 0.08% to 1.25% depending on services provided and assets under management. While not the cheapest, their fees are competitive given their capabilities. Assess your specific needs to determine if their expertise is worthwhile for you.