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Portfolio Strategist Introduces Flat Fee for All Accounts

WealthManagement.com

By Diana Britton | February 22, 2017

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Scott MacKillop’s First Ascent will charge $500 per account, no matter what size.

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As one of the first asset management firms to do away with charging investors a percentage of assets, First Ascent Asset Management, a portfolio strategist launched by Scott MacKillop last summer, has lowered its prices, moving to a flat fee of $500 per account regardless of the size. The flat fee applies to all advisors that use the firm’s Global Explorer portfolios.

“As the investment world moves inexorably to a fiduciary business model, flat asset management fees make sense—for advisors and their clients,” said MacKillop, CEO of Denver-based First Ascent. “They’re rational, cost-effective and fair to clients. They fit perfectly in a world where client and advisor interests intersect.”

WealthManagement.com profiled First Ascent in October 2016. When MacKillop first launched the firm, he charged 50 basis points for accounts up to $300,000, then kept the fee at a flat $1,500 for any amount larger than that.

“I looked at the percentage-of-assets-under-management fee that the industry uses universally, and I couldn’t come up with any good explanation why we were using a structure like that,” he said. “With today’s technology, it doesn’t cost any more to manage a $1 million account than it does a $100,000 account.”

The firm currently has $55 million in assets, and expects to have $100 million by June. MacKillop originally thought the firm would do away with the AUM-based fee and charge a single flat fee for all the portfolios once the firm reached profitability, which he estimated to be around $300 million to $400 million in assets. But at the end of 2016, they worked on their financial models and found that they could go directly to the flat fee and make it work given the increased rate at which advisors have been signing up and moving assets over to the firm.

“Flat-fee pricing removes a significant barrier to entry and makes professional investment management accessible to a wider group of investors,” said MacKillop, in a statement. “With fewer pension plans and more individual responsibility for financial security, unlocking access to investment advice may help solve the nation’s looming retirement crisis.”