Investment Management
0.25% of AUM
Use a low-cost, cutting-edge technology to automatically handle your investment strategy.
This is an optional add-on service for our clients who are enrolled in Wealth Mode Planning ongoing services.
How it Works
As your financial planner, we will always give you specific investment instructions to allocate your portfolios.
However, not everyone enjoys spending the time it takes to manually buy, sell, and place trades in their investment accounts.
If you’d like, we can provide investment management services at a low cost.
Introducing automated investing with Betterment.
We use Betterment to manage your investments. Betterment is a new-age automated investing platform - sometimes known as a “robo-advisor” system.
What does that mean?
All you have to do is open an investment account, pick an allocation strategy, and then set up deposits. It feels the same as putting money in a bank account.
The computers will do all the work of taking that money and automatically buying/selling the investments needed to keep your portfolio balanced and diversified!
Professionally-managed investments at low-cost.
At 0.25% of AUM (“assets under management”, meaning the money in investment accounts held there), the cost of our investment management services much lower than the industry-wide standard of 1.00 - 1.50% of AUM!
This 0.25% is the same cost you would pay at Betterment if you used their platform on your own. But with us as your assigned advisor, you also get access to custom built-portfolio design.
A host of benefits.
Using this includes automatic dividend reinvesting, portfolio rebalancing, and even Tax Loss Harvesting+ and asset location for tax-efficient investing.
Click image to learn more on Betterment’s website.
Goals-based approach.
Highly visual, engaging, and goals-oriented, Betterment’s platform connects investing to your life and dreams rather than making investing all about the numbers, spreadsheets, and tables.
Click image to learn more on Betterment’s website.
Evidence-based custom portfolio design.
We’ve partnered with XY Investment Solutions, a professional team of investment analysts who provide academically researched portfolios for us to follow so that your money can be invested optimally.
Learn more about our Investment Philosophy here.
Benefits
Is paying an AUM Fee “Worth It”?
In the information age, many consumers are convinced through websites, blogs, podcasts, and books that they are more than capable of managing their own investment accounts. The focus is always on how much wealth will be “lost” for paying an AUM fee over time, instead of being fair and also including what investment management services adds in terms of future wealth.
What are the benefits? Here’s the short list of increase in value, measured in additional expected returns, that some of the research suggests:
Picking lower-cost investments: 0.45% - 0.82%
Tax loss harvesting: 0.20% - 0.60%
Asset location: Up to 0.75%
Investment selection for additional returns: > 0%
Rebalancing: 0.35% - 0.44%
Behavioral coaching to avoid mistakes: 1.50%
Does that look like it adds up to more than a typical AUM fee of 1%? You decide.
So the next question is, how much time would it take you to try to do the list above all on your own?
Of course, it depends on how knowledgeable you are, but I can I tell you something?
I’m a Certified Financial Planner™ professional, but I still choose to pay for investment management services instead of making my own trades to get the benefits listed above.
Why? Because I believe there is real value to having your investment strategy implemented soundly and consistently. As is often the case in life, it’s the small improvements that can drastically improve long-term results.
Vanguard’s famous Advisor’s Alpha Study estimates that properly implementing things like rebalancing, tax location, efficient distribution, and selecting low cost funds can potentially contribute up to 2% or more higher average annual returns over time.
Additionally, properly incorporating small-cap and value tilts in mutual fund and portfolio design has academic evidence of boosting returns over time as well.
So are these improvements worth the Assets Under Management (AUM) fees? I believe so, and that’s why I pay for investment management services myself.