When it comes to investment advice, many wealthy families are paying far more than they realize. The standard model of charging a percentage of assets under management (AUM) seems innocent enough. But hides conflicts of interest. Since, the bigger your account grows, the more expensive it gets. And, not with a proportional increase in value for money.
Why Percentage-Based Fees Don’t Add Up
Some advisors charge 1% of assets under management. That might feel reasonable when you have $1 million invested. But at $10 million, the same service costs $100,000 per year. At $100 million, it balloons to $1 million annually. Yet the work involved, such as portfolio reviews, rebalancing, client meetings, doesn’t scale in complexity with the fee. It’s the same work to manage $10 million as it is for $100 million.
The Problem with Paying for Active Management
Some families justify high fees by pointing to returns. But they often fail to differentiate between the value advisors add and the market return. Afterall, a rising tide lifts all boats. In other words, investors don’t need to pay advisors for beta, only alpha.
Plus, advisors who charge more aren’t necessarily better investors; in fact, research consistently shows that active managers struggle to outperform simple, low-cost strategies over the long run. Paying more for the hope of outperformance just isn’t worth it.
A Different Approach: Paying for Work, Not Assets
Our wealth management services are designed with wealthy families in mind. We charge fees for the actual work we do, not a percentage of your portfolio. So, our clients use us selectively, choosing the services that bring them the most value, whether that’s reporting, bookkeeping, data integration, and bill pay. This flexibility ensures our clients pay for what they need, not subsidizing someone else’s bottom line.
Monitoring and Benchmarking Advisor Fees
Our service doesn’t replace investment advisors, but we do hold them accountable. Using our proprietary fee reports, we benchmark what you’re paying against marketplace norms. If fees are high, we’ll show you why and whether it’s justified. Great advisors welcome this transparency because it reinforces their value. Bad advisors, such as those hiding behind complex fee structures, tend not to (go figure!).
Helping Families Overcome Awkward Conversations
For many families, confronting an advisor about high fees is uncomfortable. Even with the facts in hand, emotions can cloud judgment. We’ve seen clients reluctant to act because an advisor “performed best recently” or “has been with us so many years”. However, past performance does not predict future results, and sticking with a high-cost option for sentimental reasons is like betting on last year’s Superbowl.
Our role is to cut through these biases and set objective expectations to ensure fair and sustainable arrangements.
Transparency Creates Value for Everyone
We believe in creating clarity and fighting against complexity. Our goal isn’t to undermine advisors, it’s to foster trust, accountability, and long-term value for investors. Good advisors benefit from this process as much as clients do, since it makes their value proposition clear and measurable too.
If you are interested in learning more don’t hesitate to reach out!
