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Flat Fee Investment Advice

Online brokerages have reduced trading fees to $0. Investment managers are racing to introduce new ETFs with ever lower (and in some cases even zero) management fees. Yet most investment advisors still charge 1.00% of assets per year to manage their clients’ investments. Why?

The typical responses to this question (i.e., “because that’s what everyone else charges”, “because that’s the way the industry has always done it”) are bad answers in my view. (And the real answer: “because we can,” is even worse.) When I founded Servant Capital, my goal was to bring a fresh perspective to investment advice, to approach it differently. And that starts with how I charge for my services: instead of charging a percentage of assets, I charge a flat fee. The flat fee model is particularly beneficial for high net worth investors as your investment portfolio compounds over time. The flat fee is high enough to fairly compensate me for my services. But I have found that it takes about the same amount of work to manage a $1 million account as it does for a $2 or $3 million account, so I do not feel the need to charge 2-3 times as much for the latter.

Now there are other financial advisors who have introduced a flat fee or monthly subscription model for financial planning. But these advisors all charge separately for managing investments, and that fee is always on a percentage of assets basis. I provide financial planning and investment management all for one flat fee.

In exchange for customized financial planning and investment advice for a low, flat fee, I ask all clients to pledge that once they have achieved all of their financial goals (saving for retirement, children’s education, etc.) they will give away 10% of their excess investment profits to charities of their choice. My goal in founding Servant Capital is to help my clients serve others, and in so doing to indirectly achieve a far greater philanthropic impact than I could ever hope to accomplish on my own.

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