Capped Fee Investment Management
“If you don’t find a way to make money while you sleep, you will work until you die.”
- Warren Buffett
Managing your own investments can be scary and creates the potential to harm your financial plan if not done correctly. Working with a professional focused on sound and evidence-based investing principles can help keep you on track.
Initial Services
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Review of current investment holdings’ fees and asset allocation
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Investor Profile analysis to determine your investing tendencies and risk tolerance
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Development of an Investment Policy Statement to keep you on track through the swings of the market
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Account opening and portfolio implementation
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Comprehensive Financial Plan (For households with $500k or more invested)
Ongoing Services
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Quarterly market review
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Transparent dollar value invoicing
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Access to Right Capital financial planning software
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Semi-annual meetings
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Annual Comprehensive Financial Plan update (For households with $500k or more invested)
Fee: 0.85% of Assets Under Management
(Capped at $3,900 per year)
Advisory fee only. Average cost of underlying investments is 0.06% per year. Accounts with $3 million or more are charged an additional $500 per year for each $1 million over $3 million.
Frequently Asked Questions
Are there any account minimums?
Nope! We understand many people may not have much to invest and that is perfectly fine. The important thing is getting started. As the saying goes, "The best time to plant a tree was 30 years ago, the second-best time is today." We know not all those who need help can afford a flat annual fee so we offer a percentage of assets to help clients with lower account balances. Clients with investment accounts over $500,000 will receive the option of a Comprehensive Financial Plan with annual updates at no additional fee.
Is Investment Management right for me?
A lot of people feel comfortable navigating their investments on their own and that is fantastic. However, investing in the market can be intimidating and poor investing behavior can cause issues with your financial plan. Research* has shown that working with an advisor can add about 1.59% - 3% in value per year.
*https://www.kitces.com/blog/trust-research-advisor-planner-use-benefits-value-vanguard-alpha-morningstar-gamma/
If I invest with you, where will my money be held?
We utilize TD Ameritrade as a custodian to hold your money and process trades. We never have direct access to your money.
How do you compare to other advisors?
Most investment management services use a tiered approach to fee schedules where more money invested results in a lower percentage fee. According to a financial advisor fee comparison by Inside Information*, “a substantial number of advisors charge more than 1%, particularly for clients with portfolios of less than $250,000 where the median fee is almost 1.25%”.
However, that is just advisory fees and doesn't include the cost of the underlying investments advisors use to build portfolios, which can usually be substantial. Studies* have shown that "the typical advisor's all-in costs are more than 1.5%/year, even for millionaires!"
In general, the financial industry's use of percentage-based fees may not be an accident. While it is an easier way to calculate fees, clients may not be aware of the amount they are paying for their advisor. 1% of anything may initially appear like a trivial amount.
Seemingly small percentages combined with advisory and investment fees withdrawn directly from investment accounts may create a disconnect between a client's understanding of how much they are actually paying for advisory services. A simple restructuring of the percentages shown in the chart above to dollar amounts can help understand the actual cost of fees attributable to the average advisor.
We believe in the value of an advisor, but just because one client may have $250,000 and another has $1 million doesn't mean the service level is much different. We also send transparent, dollar value statements showing the actual amount paid for advisory fees each quarter.
Where our client's needs come first, we uniquely offer a capped fee for investment management and utilize low-cost investment options with an average expense ratio of 0.06%. The tables below illustrate our all-in fees and compare them to the median advisor.
So why does this matter? This client conscience low-cost approach allows portfolios to grow more over time while receiving professional portfolio management and unbiased advice. The charts below illustrate the hypothetical outcomes of our capped fee approach compared to the median advisor fees for both large and small valued accounts. It makes a pretty big difference no matter the initial size of the account!
For illustration purposes only. Past performance does not guarantee future results. Assumes a growth rate of 7% before fees. Rooted Interest fees based on 0.85% with a cap of $3,900 (large account assessed an additional $500 for every $1 million over $3 million) and an average expense ratio of 0.06% (First Ascent Asset Management Global ETF portfolios).
Median AUM fees source: https://www.kitces.com/blog/independent-financial-advisor-fees-comparison-typical-aum-wealth-management-fee/
If you charge less and my investments cost less, is there a sacrifice in quality?
Investment management isn't the same as consumer goods where you may find lower prices result in lower quality. We offer professional-grade investment management and financial advice at an affordable price. It's as simple as that.
We believe in helping our clients find and achieve their dreams. Unreasonably high fees can jeopardize those dreams so we offer a fair price for the expertise we offer.
Will you get too busy to meet my needs?
Nope! We are looking to serve around 50 households at my maximum capacity allowing plenty of bandwidth to serve everyone without getting stretched too thin. Once we hit capacity, we will start referring clients to other trusted advisors.