Our Fee Structure

A Flat-Fee Financial Advisor

One straightforward fee for all services:

$24,000 per year, per household

Investment management, Tax planning, Retirement planning

 

Birchwood is a flat-fee financial advisor that assesses a fixed, flat, and completely transparent fee that does not change based on your assets under management. A typical household at Birchwood has between $5 million and $25 million in investable assets.

Won't an AUM Advisor Offer More/Better Services?

No, we offer the exact same services (maybe even more). Despite claims to the contrary, the amount of time, effort, and resources that a competent advisor must bring to bear on a client is nearly identical whether a client has a $5,000,000 or $10,000,000 portfolio.  It is not an exaggeration to claim that – from the advisor’s standpoint – the only difference between these two clients is the numbers on their account statements. We provide the exact same high-level services as any AUM advisor:

  1. Comprehensive financial planning for retirees
  2. Investment management
  3. Tax planning

We can do this because we don't have an expensive office space in a high-rise or a bloated payroll. We place a higher value on our expertise, kindness, and efficiency. And frankly, we'd rather charge what an advisor should (rather than what and advisor can) and let the rest compound for clients.

After onboarding, every client goes through our Birchwood Blueprint process, so we understand their situation fully, cover all the finer details of retirement and share exactly how we will partner with them.

Portfolio Comparison

Chart shows the impact of fees on a $5,000,000 portfolio with an annualized return of 7% over a 20-year period. Assumes no contributions or distributions. AUM fees are 1%. Birchwood's fee is $24,000/yr and inflated at 2% annually for illustrative purposes only. The use of a 7% annualized return is in no way indicative of an actual return realized by a client. No guarantee of a return is implied or intended.

Don't Buy Your Advisor a House

The chart shows the total (cumulative) advisory fees paid to Birchwood vs. a Traditional AUM advisor. Assumes $5,000,000 portfolio with an annualized return of 7% over a 20-year period. Assumes no contributions or distributions. AUM fees are 1%. Birchwood's fee is $24,000/yr and inflated at 2% annually for illustrative purposes only. The use of a 7% annualized return is in no way indicative of an actual return realized by a client. No guarantee of a return is implied or intended.

Why It Matters

Over the past few decades, the financial services industry has attempted to align itself more with clients by reducing conflicts of interest. We’ve seen a reduction in commission-based products and greater public education about who is a true fiduciary and who is not.

All of these are good things. Removing the incentive for brokers and advisors to churn clients accounts and creating greater consumer awareness about who is legally obligated to do what’s in client’s best interest leads to better outcomes for clients in general. But, stubbornly, the largest conflict of interest remains: fees for financial advice being based on assets under management (or AUM).

When firm revenue is derived directly from the amount of assets managed, it becomes exceedingly difficult (or impossible) to recommend a mortgage to be paid off or the rolling of an IRA back into an employer-sponsored 401(k) to prevent RMD’s by using money that is invested with the firm. There are many situations where taking investments out for some other purpose is in the best interest of the client, but not necessarily in the best interest of the firm.

Not only that, this widespread acceptance of assets under management has allowed for massive economies of scale to be inflicted on clients - taking earnings that are rightfully theirs and putting it in the pockets of brokerage firms and investment advisors. It does not cost a firm more to manage a $10,000,000 portfolio versus a $5,000,000 portfolio. If clients are receiving the same services, why should some pay more?

The truth is the majority of consumers who utilize financial advisors don’t know much about the service and what they are buying. They lack the power that an informed consumer should have.

We set out to change this by asking two basic questions:

  • How would I want to be charged if I was hiring an advisor? 

  • What does an advisor actually do and what is that actually worth?

As a flat-fee financial advisor, Birchwood Capital has built a fee structure around the services we provide for the type of clients we serve.This flat annual fee is based on our costs and reasonable compensation for a professional service provider. We believe this is a more appropriate fee structure and that clients will greatly benefit from it.