A Flat-Fee Model for $10-25M Families
"The miracle of compounding returns is overwhelmed by the tyranny of compounding costs." - John C. Bogle
Chart shows the impact of fees on a $10,000,000 portfolio with an annualized return of 7% over a 20-year period. Assumes no contributions or distributions. AUM fees are 0.75%. Birchwood's illustrated $10M fee is $45,000/yr and inflated at 2% annually for comparative purposes. 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.
Our Fee Structure
We built a wealth management model specifically for affluent families who no longer believe percentage-based pricing makes sense. The biggest boon to your investment returns could simply be how you pay your advisor.
How It Works
Instead of having your fee tied to your invested asset level and increasing along with market appreciation or additional capital, Birchwood does it differently.
- We agree on a flat-fee at the start of our relationship after evaluating your situation and asset level (Fee range: $45,000 - $60,000/yr).
- The fee won't change with added funds or market appreciation.
Compare to AUM Firms
| Asset Level | Comparable AUM Firm |
| $10 million | (0.75%) = $75,000 |
| $15 million | (0.60%) = $90,000 |
| $20 million | (0.50%)= $100,000 |
Why It Matters
1. Better alignment of interests.
When firm revenue is derived directly from the amount of assets managed, it becomes exceedingly difficult (or impossible) to recommend any action that moves assets away from the firm. An advisor might discourage you against helping your adult children with a down payment on a house. They might balk at a mortgage being 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. You want to work with a professional who is providing objective advice.
2. Encourages your advisor to work in the areas that matter most to your wealth.
When working with affluent families the most eye-opening discovery we made is that the assets are probably the least important aspect of a family's wealth.
When asked, "Which is more important: passing on values or passing on assets?" Most people respond with saying they want to pass on values. To which we respond, "What have you done so far towards that end?"
Giving clients a roadmap to build trust and strengthen their family connections is one of the most valuable ways we can support them.
Additionally, most families we work with have some form of concentrated stock. It is possible for someone in that position to be able to save hundreds of thousands in taxes with proper planning. The vast majority of similar families miss this. It’s also common that their estate plan is either non-existent or more than ten years old. It’s often set up to wreak havoc on their family if and when something happens to the primary breadwinner.
When you operate off of an AUM model, everything is tied to investments. So naturally, the conversations tend to be mainly investment-oriented. This is a massive misappropriation of time and effort. We believe that you can get a world-class, evidence-based, academically-researched portfolio for next to zero in cost. Ask us - we'll show you how in 5 minutes.
We'd rather spend our time and expertise helping a family flourish and saving them real money in taxes.
