# Definition

Heuristics are mental short cuts. They are ways that we can speed up the decision-making process. Rather than consider all the data, which is time consuming and difficult, someone takes some of the data and makes assumptions in regards to the rest of the information. The person than makes a decision based on those assumptions.

# Example

You’re trying to decide what toothpaste to buy. The time-consuming way to make that decision is to check out all the reviews for them online, read studies concerning their effectiveness, etc. A possible heuristic is simply buying the most expensive brand. We know from an earlier post that price is a measurement of demand (assuming equal supply). If more people want to buy it, maybe they have a good reason to.

# Problem

The assumptions can be wrong and thus lead to bad conclusions. If you see a person covered in tattoos and piercings, you might assume their dangerous. That assumption might be completely false. They could be a sweet and harmless individual. Your heuristic (tattooed people with piercing are dangerous) would have lead you to the wrong conclusion and thus the wrong course of action.

# Fee Structure

 Rate Assets Under Management 1.44% Below \$125,000 1.00% Between \$125,000 and \$750,000 .85% Between \$750,000 and \$1,250,000 .80% Between \$1,250,000 and \$1,750,000 .75% Between \$1,750,000 and \$2,500,000 .70% Between \$2,500,000 and \$3,250,000 .65% Between \$3,250,000 and \$4,250,000 .60% Above \$4,250,000

A single rate is applied to the entire account. So a person with a \$750,000.01 account pays less than a person with a \$750,000 account. I will waive personal tax return fees for accounts over \$1 million. For accounts that are above \$5,250,000, we’ll need to discuss a custom rate.

As I’m writing these to help my readers, I would be very appreciative of any input in regards to what I should write next. If you want me to write about a particular topic, please contact me. Please contact me if you would like to submit a post to my blog.

If anything that I mentioned above interests you, please consider downloading my free e-book. The book contains my thoughts on investment management and some information that I think everyone should know. You can also download it below.