DENVER—JUNE 8, 2016—First Ascent Asset Management opened its doors for business today featuring a client-friendly fee schedule that caps the amount a client pays annually for outsourced investment management solutions.
Led by 40-year industry veteran Scott MacKillop, the firm’s disruptive business model challenges industry conventions about how to build portfolios, how to charge for them and how to educate clients to help them reach their goals. Its first offerings— a series of Global Explorer portfolios—are managed by an internal investment group and an independent, outside investment committee to bring an added level of objectivity and fresh perspectives along with the commitment to a low cost structure.
“The traditional approach of charging clients based on a percentage of assets under management just doesn’t make sense,” says MacKillop, First Ascent’s CEO. “It doesn’t cost any more to manage a $1 million portfolio than a $300,000 portfolio, so why should larger accounts pay so much more? We took a hard look and concluded that clients, both large and small, are paying too much for portfolio management services. We decided to do something about it.”
First Ascent’s answer was to lower fees across the board and cap them so that once an account reaches a certain size, the fee never goes up. MacKillop says, “the cap kicks in for most accounts somewhere between $300,000 and $400,000 and limits annual fees to $1,000 to $1,500. So the larger the account, the greater the savings.”
First Ascent’s Global Explorer portfolios incorporate that focus on fees. Designed for long-term investors, the portfolios use a “core plus satellite” approach to constructing and managing conservative, balanced and growth-oriented portfolios. Each “core” consists of low-cost index funds or exchange- traded funds (ETFs) that provide broad exposure to global securities markets. “Satellites” consist of actively managed mutual funds, index funds or ETFs added selectively to improve portfolio performance.
MacKillop thinks the time is right for a new approach to fees. “With the current emphasis on fiduciary responsibility, we think advisors will be very interested in a simple, transparent fee schedule that limits what their clients pay each year.”
First Ascent plans to take the fee cap further, eventually charging all accounts a simple flat annual fee. “The asset management industry has always charged clients based on a percentage of AUM and has rooted its infrastructure and practices around this historical artifact,” says MacKillop. “We think this presents us with a huge opportunity. Advisors and their clients will see the benefits immediately and competitors will have a hard time reacting.”
First Ascent Asset Management was created by industry veterans from Frontier Asset Management, Envestnet and other leading financial services companies. The firm’s focus on building a better way to manage money is based on five core ideas:
Client Focus. If you design a firm that truly puts clients’ interests first, you end up with a fundamentally different firm than if your focus is making money for the house. We tried to build the firm we would want our mothers to work with if they needed help investing their life’s savings. We always ask, “What’s best for our clients?”
Rethinking Portfolio Management. Many of today’s portfolio management practices are built on dogma, bad math and pseudo-science that don’t work in the real world. We went back to basics and questioned everything. The world is complex, but investment solutions don’t need to be. We build elegantly simple portfolios.
Investor Education. Investment success depends on investor behavior. We all should have been given a course in school about investing, but most of us never were. We are creating an ongoing program of clear, concise information to help clients become better, more confident investors. We want to equip clients for success.
Changing the Fee Paradigm. The fee structure used today by the asset management industry lacks logic and results in both large and small accounts paying too much. We charge low fees and cap them. Once an account reaches a certain level, the fee never goes up. For advisors with lots of accounts, we manage them all for a flat fee.
Humans Matter. We welcome the advent of the robos. Their technology benefits everyone. We certainly put it to good use. But investing is not a mechanical process. Building portfolios requires judgment and experience. Clients benefit from expert guidance. Our seasoned professionals work hand- in-hand with fiduciary advisors.
About First Ascent Asset Management
First Ascent provides outsourced portfolio management services to financial advisors and their clients. The firm works directly with registered investment advisors (RIAs) and advisors affiliated with independent broker-dealers. Its portfolios are also available for distribution through “fund strategist” platforms.
The firm’s founder, Scott MacKillop, is a 40-year veteran of the financial services industry and has been providing portfolio management services to independent advisors for over 25 years. First Ascent has both an internal investment group and an independent, outside investment committee to bring an added level of objectivity and fresh perspectives. Collectively, the team has over 200 years of experience.
For more information, contact Scott MacKillop at firstname.lastname@example.org or 720-670-9169. First Ascent is located in the Industry Building www.industrydenver.com at 3001 Brighton Blvd., Suite 2760, in the heart of Denver’s RiNo Arts District.