Technology Transforms Industry Pricing Model and Expands Affluent Wealth Management Services

Concierge wealth management firm Flat Fee CIO issomething of an industry outlier. In fact, in one veryimportant respect, it’s a 180-degree departure from thenorm. Through the experienced application of efficientfinancial services technology, Flat Fee CIO, your FamilyChief Investment Officer, offers a fixed-dollar annualretainer with the potential to deliver significant savingsover the old asset-based percentage fee structure thathas existed unchanged for close to 30 years.

“Investment styles go in and out of favor,” says DonRudolph, principal of Flat Fee CIO and 25-year veteranof the high-net-worth investing arena. “But advancingtechnology has fundamentally transformed the industrystatus quo with an expanded suite of services and lowerstandard fee thresholds.”

Trusted Wealth Advisorand Experienced Fiduciary

Flat Fee CIO, founded by Rudolph, is a boutique wealthmanagement offering of Founders Financial Alliance, LLCand, provides affluent investors what they need and wantmost: deep expertise, an expanded suite of services, andproactive account management for a single transparentfixed-dollar annual advisory fee. What makes the firmnotably different is its commitment to the fiduciarystandard of care that includes implementing fixed-feealternatives within customized wealth solutions.

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“At Flat Fee CIO, our commitment as fiduciaries does not end with ensuring our wealth structuring and investmentrecommendations are always in the client’s best interest,” Rudolph says. “It also includes maintaining a keen eye on the client’sbottom line in seeking to minimize ongoing costs and help clients keep more of what they earn. Unlike percentage-based fees,with our fixed fee structure, our clients—not the markets—determine when we earn a raise.”

In the course of Flat Fee CIO’s comprehensive fiduciary review, it may be determined that simply replacing the old asset-basedpercentage fee with our lower fixed annual fee on the current investments can save tens of thousands of dollars each year. Otherdetails in the review may reveal further opportunities to reduce or eliminate additional underlying product costs that can increasethe total ongoing annual investment management expense.

Wealth Services Technology Marches Forward to a Tipping Point

Over the past 30 years, technology has transformed affluent wealth management services. Yet affluent fee structures havechanged little, even in recent years as the pace of technological change has accelerated. As it does for virtually every industryit touches, technology has lowered operational and administrative costs through added efficiencies while expanding choicefor investors.

A Transparent Fixed Dollar Alternative

Today, advisory fee choices in affluent wealth services have reached a tipping point with fixed fee options at lower competitivethresholds in the marketplace. Flat Fee CIO’s fixed-dollar fee is not simply a capping of prospective client’s current level of feesunder their old percentage-based structure; it is a fixed dollar level that reflects the new operational efficiencies that technologyhas delivered for professional investment management. Under our fixed fee arrangement, clients can consolidate more of theirinvestments under our fixed dollar fee in an effort to further reduce their average annual costs.

The True Cost of Asset-Based Percentage Fees

“Even the most experienced affluent investors may not be fully aware of the total ongoing costs of their advisory services,”Rudolph says. “For the past 30 years, our industry has adhered to a compensation model that grows directly with the growth ofunderlying assets. We believe the time has come for clients to embrace a fee model based on the complexity of their ongoingneeds so they can capture the significant savings afforded by a more predictable and transparent fixed-dollar approach.”

In fact, the traditional asset-based percentage advisor’s fee may be just the tip of the iceberg of an investors’ total annualrecurrent costs. Beneath the surface, there can be multiple layers of product and platform fees.

“Under the traditional percentage fee, as account values grow larger over time, the dollar amount of the fees both above andbelow the surface rise directly with any increase in the value of the account,” Rudolph says. “This can take a larger and largerbite out of clients’ net spendable income and dramatically impact financial outcomes. Our fee structure is a function of a client’sfinancial complexity, not asset growth. It’s straightforward, transparent, and easier to understand.”

Offering the Potential for Higher Net Returns and Higher Net Income

For example, the traditional 1% annual advisor fee on a $2 million portfolio is $20,000 per year. If an investor receives a 4%annual income stream ($80,000 per year) from that same portfolio, the annual advisor fee alone represents 25% of grossspendable income. After federal and state taxes, the 1% annual advisor fee may approach 30% or more of net spendable income.“When they view it from that perspective, clients begin to understand why fee considerations are as crucial as determiningportfolio risk and investment selection,” Rudolph says. “The potential savings with our fixed annual fee goes directly to our clientsbottom line and helps them retain more of their valuable retirement income.”

Expanded Suite of Services

Flat Fee CIO’s suite of services includes simplifying the reporting of complex holdings across multiple client accounts by makingthem accessible through a single secure portal backed by Fidelity Investments. Rudolph and his team build tax-aware portfoliossupported by institutional research and harness a variety of portfolio and fixed income analytical tools on the clients’ behalf. Theyalso partner with clients’ existing legal, accounting, and family office professionals depending on their multi-disciplinary needs.

Although Flat Fee CIO’s fee structure alone can enhance the client’s bottom line, Rudolph remains committed to deliveringexceptional value in the form of personalized, concierge-level service.

“We apply efficient financial technology for tangible and measurable savings, but our clients will never shake a robot hand,”Rudolph says. “We’re a full-service boutique, not a discount or bare-bones self-service operation. We are experienced wealthadvisors who are personally invested in our clients’ financial success.”

“In light of new lower fee thresholds made available by advancements in wealthmanagement technology, we would ask prospective clients for the opportunityto compare and evaluate whether their existing services remain priced forluxury wealth or a more practical affluence.” – Don Rudolph

Any references to or calculations of account values, fee amounts or returns are purely hypothetical and should not beexpected for all clients.

Investment advice offered through Founders Financial Alliance, LLC, a registered investment advisor.

This content was provided by Financial Service Directory. Kiplinger is not affiliated with and does not endorse the company or products mentioned above.