A Flat-Fee Financial Advisor

$6,300 per year, per client relationship

 

Summary:  Working with a flat-fee financial advisor reduces conflicts of interests and allows more of your money to compound for you, not against you. Due to the ubiquitous practice of charging by assets under management (AUM), advisory firms have inflicted massive economies of scale on unsuspecting clients. These clients can stand to lose almost $500,000 due to AUM fees (see below). Instead, Birchwood Capital built a fee structure based on the value we provide, keeping the vast majority of clients' money where it should be - with them.

What You Get

We provide advice, not products. We are a fee-only firm that does not receive commissions, kick backs, or any other type of compensation that would jeopardize our mandate of putting clients' interests first. The only fees we collect come directly from clients. With our annual flat-fee, clients receive the following services:

1. Comprehensive retirement planning
2. Investment management and advice
3. Tax planning

What that means for you is:

• You get a proven plan to make your money last throughout your retirement
• You get a customized portfolio that you understand, but don't have to manage
• You get a strategy for not overpaying the IRS
• You get a meeting and action structure so nothing in your financial life falls through the cracks
• And that's just the start...

We take every prospective client through our Birchwood Blueprint process, so we can understand their situation fully and share how exactly how we can provide quantifiable value.

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 $1,000,000 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, since they do not vary substantially between clients with more or less money. This flat annual fee ($6,000 per year) 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.