Our Fee Structure

As crazy as this sounds, this is how the vast majority of financial advisors charge -- based on a percentage-of-assets fee model known as “assets under management” or “AUM”. Ask yourself why this might be. When most of the value an exceptional advisor provides is on financial planning & advice, why do the majority of advisors bill on the portfolio, and give away the value-add?

Furthermore, with developments in technology, we acknowledge that it costs no more to manage a $1,000,000 portfolio than it does a $100,000 portfolio. A $3,000,000 account costs the same to manage as a $300,000 account. It’s the same work. Why, then, should larger clients subsidize smaller clients - based on the relative value of their portfolio & their ability to pay - when they receive essentially the same services?

Finally, consider how other professional service providers – such as an attorney or CPA – charge for their services. These professionals are compensated based on their time & expertise, not based on the size of the client’s gross estate or how big the numbers on the client’s tax return are. That would be just as illogical as a financial planner billing for comprehensive advice based on how much money a client has saved over the course of his/her career. We get it - a competitor would probably dismiss us as simply undercutting on price. And while it is true that we are significantly less expensive, the annual retainer fee is reflective of our cost of doing business, plus reasonable compensation for a professional service provider. Our retainer fee is not about being the least expensive financial advisor or competing solely on price — it’s about being honest about what it costs to deliver these services.

Let’s review an example that underscores why investment expenses are so important:

Assuming a 7% rate of return, a $2,000,000 portfolio subject to the industry-standard 1% AUM fee will grow to just over $8,500,000 over 25 years. With the same 7% return, the $2,000,000 portfolio subject to a $7,500 flat annual retainer fee will grow to over $10,300,000. That’s nearly a $1,800,000 savings over 25 years. Put differently, the seemingly benign 1% AUM fee results in a roughly 15% reduction in wealth after 25 years. Let that sink in -- after 25 years, 15% of your family’s investable assets will have been transferred to your financial advisor’s family.