Most advisors have a core group of asset management firms whose products they use to build client portfolios. It can be a challenge to break into advisors’ most-favored-asset-management-firm fold, but it looks like Scott MacKillop’s First Ascent Asset Management is doing just that.
Using a unique approach to building and pricing its portfolios, and practicing what smart advisors preach in terms of being client-centered while outsourcing non-core operations, MacKillop said in an October interview that First Ascent is approaching its goal of reaching $300 million in assets by year-end 2018 and $1 billion by year-end 2019.
In addition to finding more traction among advisors, First Ascent is finding more backers for its business model. On November 15, the Denver-based company said it had received $1.5 million in series B funding led by a group of high-net-worth individuals and institutional investors.
With this most recent infusion of capital, First Ascent has now raised a total of $4.4 million. It said it will use the new funding to expand its technology development and hire more employees in its investment and operations groups.
In a prepared statement, MacKillop, CEO of First Ascent, said “this fresh infusion of capital will enable us to do what we do best—build a business that serves advisors and clients, while providing a clear and better alternative to traditional TAMPs.”
In an October interview, MacKillop said the company has become the “fastest growing TAMP from scratch” in the industry’s history; last year it began offering its outsourced portfolio management strategies at an annual fee of $500 per account, or $1,000 per household. This flat fee approach turned the traditional TAMP pricing model of charging a fee based on a percentage of assets under management.
Eighty advisory firms now use First Ascent’s portfolios, and a recent win of a 401(k) plan “pushed us over the $220 million in assets” level, he said. The company serves as a sub-advisor to Oranj and VestMark and is now on Envestnet’s platform, relationships that should keep its growth on track. “Our direct business is good,” MacKillop said, but the “platform business is a huge opportunity.” Helped by the latest capital infusion, MacKillop expects to be profitable by the end of 2019.
In what is music to the ears of advisors, the seven full-time and two part-time employees at the company are all invested in First Ascent. And the company became even more efficient while focusing more on its core competency by outsourcing its back-office operations to Orion, a relationship that MacKillop said has also helped First Ascent reach out directly to RIAs.
MacKillop himself has had a long and interesting career. He’s a Stanford grad who interned at the SEC while attending law school at George Washington and then practiced securities, ERISA and venture capital law in DC for 15 years. He then jumped into the investment world where he held leadership positions at, notably, Portfolio Management Consultants (PMC) and Frontier Asset Management before starting First Ascent in 2015, where he serves as CEO and chief evangelist for First Ascent’s unique business model. He also gives back to the advisor community through regular writing for the trade press (including ThinkAdvisor and Investment Advisor) and is an ambassador for Knut Rostad’s Institute for the Fiduciary Standard.
So what exactly makes First Ascent unique?
MacKillop says it’s the $500 flat fee for all its portfolios, which serves as the “lightbulb” that attracts the advisors or 401(k) plan sponsors to the platform. First Ascent can offer such low fees because “we use technology to sell things for less than what people sold them for in the past.” After all, as he argues, it doesn’t cost any more to manage a $1 million portfolio than it does to manage a $500,000 portfolio, so why should the $1 million investor pay twice as much for that management?
If the flat fee is the lightbulb, what keeps advisors interested in First Ascent is its range of portfolios, MacKillop says. “Advisors say we do things the way they would” in creating portfolios, “but cheaper.” Its range of portfolios are built by its in-house team supplemented by four independent members of its investment committee.
The third appeal is First Ascent’s service team, which he says is experienced and is steeped in a service-oriented culture which is helped by the fact that the team has, like all its employees, skin in the company.
To win most-favored-asset-management status among advisors, First Ascent’s web site makes good use of online demos, ‘master classes’ on investing issues and social media posts, along with in-house professionally produced videos that serve as “virtual wholesalers” for the company. In another twist on traditional asset-management firm marketing, the staffer who shoots the videos is a former film maker who “helps people see who we are. Most videos aren’t emotional,” MacKillop says, but if an advisor “watches ours you get to know our people well. Most people we work with have never met us.”
One of those videos—this one featuring MacKillop explaining in black-and-white the genesis of the firm and its pricing and portfolio approach—reveals First Ascent’s ultimate goal. “We don’t expect to change the world,” he says, “just a little corner of it.”