The Exchange Experience

How Does Exchange’s Pricing Compare to Other Firms?

How Does Exchange’s Pricing Compare to Other Firms?

If you’ve landed on this article, you are probably considering how our costs compare to other wealth-management firms. We have talked about our all-in costs and lack of hidden fees before, but it is important to consider which pricing method makes the most sense for your assets before choosing a wealth-management firm.

Exchange charges a management fee for our service. This fee is calculated as a percentage of the assets you place with us. Not every financial advisor chooses to use a management fee based on a percentage of Assets Under Management (AUM). Some opt for flat fees, but the AUM model is arguably the most transparent way to do business and maintain our fiduciary obligation to our clients.

What Should I Watch Out For?

While a wealth management firm’s pricing is important, it should always be looked at with a healthy degree of skepticism. When evaluating a firm, it is imperative to look past the surface-level management fee and dig into its investment process to discover any fees that aren’t explicitly stated. Keep an eye out for firms getting kickbacks from the investments and products they choose. Some firms that operate within the AUM model build expensive portfolios, filled with costly mutual funds or commission-based investments. Be cautious, as these investments create a conflict of interest for the advisor. They might be choosing investments to line their pockets, rather than build a portfolio in your best interest.

Some firms may try to skirt around their hidden fees. They’ll tell you their services don’t have a specific price, or their fee schedule is based off the investments they choose. Be careful. This can be a good indication that those investment advisors and financial planners invest in life insurance policies, annuities, and expensive mutual funds that have commission kickbacks.

So, is a management fee truly the only cost of an advisor? While a firm may charge a standard fee of 1% of your AUM, the added costs of the investments they choose can increase that percentage. Your 1% management fee can quickly become 2% or even 3%.

What Makes Exchange Different?

Exchange does not partake in commission kickbacks for our employees. By choosing not to have money tied with what investments we make for you, we can make unbiased choices in your investments.

As stated above, sometimes 1% isn’t the only cost associated with a firm. Exchange can help you avoid high-cost investments through our in-house portfolio management team. Rather than investing client assets in high-cost investments, we research and select low-cost alternatives where possible. While these investments are always guided by your financial plan, our team is dedicated to building low-cost portfolios.

Do I Have to Pay to See My Financial Plan?

At Exchange, we will create your initial financial plan before you pay us anything. Why would we give this away for free? We want to give every prospective client the ability to see the benefits of our services firsthand. It is one thing to see an example financial plan with routine investments and generic goals. It's another thing entirely to see your specific accounts, investments, and goals outlined and stress-tested, with charted paths to help you reach your long-term goals. Whether you choose to hire us or not, we build your financial plan to clearly outline the benefits of our service, at no cost to you.

The Bottom Line

We believe an AUM fee is the best and most transparent way to operate as a firm. It explicitly aligns with our interests, giving you confidence that our advice is always in your best interest. If you have further questions about our fee and what it looks like for your accounts, consider giving us a call or scheduling a free discovery meeting with one of our advisors.

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