First Ascent Asset Management, a Denver-based firm that provides investment management services to independent financial advisors and their clients, has introduced a client-friendly fee schedule that caps the amount a client pays annually.
Virtually all asset management firms charge based on a percentage of assets under management. Under this approach, on a dollar basis, the larger the account, the more the client pays. And they pay more as their account grows over time.
“The traditional approach just doesn’t make sense,” says Scott MacKillop, First Ascent’s CEO. “It doesn’t cost any more to manage a $1 million portfolio than a $300,000 portfolio. Why should the larger account 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.”
“Our business is not like a financial advisor’s practice,” says MacKillop. “Advisors meet face-to-face with clients every day and deal with the specifics of each individual situation. They have limited capacity and larger accounts often do come along with greater complexity. Our business has scale. If done right, it’s an assembly line.”
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.”
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 fees schedule that limits what their clients pay each year.”
“We’d like to take this concept even farther and charge every account a simple flat annual fee,” says MacKillop. “We do that for advisors who transfer a significant number of accounts to us, but we can’t do it yet on an account-by-account basis.”
MacKillop believes the First Ascent fee schedule puts it in a strong competitive position. “It’s a win/win/win situation. Clients can benefit from lower fees. Advisors benefit by saving their clients thousands of dollars a year. And we benefit from all the new clients leaving our competitors because they can’t match our fees.”
“The 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, but our competitors will have a hard time reacting.”
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 moc.m1521602495atnec1521602495satsr1521602495if@tt1521602495ocs1521602495 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.