Compound Your Portfolio Not Your Expenses

One Simple, Annual Flat Fee

Instead of charging a percentage based on assets under management as is common, Meredith Wealth Planning has implemented a flat annual fee structure that does not increase or decrease based on the size of your portfolio. The current amount for new clients is $5,700 ($475 monthly).

We do not accept any commissions and adhere to a fiduciary duty at all times while serving clients.

We find many people do not grasp the magnitude that an asset-based fee can impact their wealth over time so we have created this flat fee savings calculator:

Here is What We Include in the Annual Fee

The flat annual fee includes discretionary portfolio management, ongoing investment recommendations on accounts that cannot be held under our management, as well as financial planning services. You can read about our investment philosophy here.

Here is What We Include in Financial Planning:

Financial planning can mean different things to different people. Below we list the primary areas covered in the offering from Meredith Wealth Planning:

Retirement planning

• Projections on future income sources.
• Structuring the best method to distribute from your investment accounts.
• Social Security claiming strategies.
• Assessing savings rate versus projected future needs.

Tax planning strategies

• Roth IRA conversion.
• Take capital gains and losses when it makes sense.
• Using asset location strategies to optimize after-tax returns on investments.
• Qualified charitable distributions from retirement accounts.
• Backdoor Roth IRAs and Mega-Backdoor Roth IRA recommendations (when available).

Insurance

• Review and recommend insurance policies in regards to life, disability, and long-term care insurance.

Estate Planning

Meredith Wealth Planning does not draft wills, trusts, or any other legal documents. We think estate planning is best left to estate planning attorneys. We will coordinate with your estate planning professional to ensure the following:

• Accounts and beneficiaries are properly titled.
• Gifting strategies are done in the optimal manner.
• Add appropriate trusted contacts to your accounts.

We can and have recommended corporate trustees to serve as successor trustee when requested. Referrals to estate planning professionals are available upon request.

Why we charge flat fees and why it’s important

Generally speaking there is not more time, service, or overhead involved for a $1 million client versus one with say $500,000. However if both clients are charged the industry standard of 1% annually, one of them pays $10,000 while the other pays $5,000. Assuming they are both receiving similar services, one client should not pay twice as much as the other. A flat annual fee can make more sense given that the services rendered are substantially similar. We don’t believe in charging someone more just because they can afford to pay it.

The sole determinant of your cost should not be based on how much money you have. Imagine shopping for a financial planner and one of the questions you ask is how much your advisory fee is annually in terms of dollars, and they respond with “how much money do you have?”.

It’s similar to the scene from National Lampoon’s vacation when the Griswold family is broken down at a remote tire repair shop:

Clark Griswold: “How much will it be?”

Mechanic: “How much ya got?”

“It’s only 1%…”

As investors we want our portfolios to benefit from compounding interest, not our advisory expenses. Asset-based fees compound and can make a significant difference in the long run. A 1% fee may not seem like a large amount, especially during a bull market. The compounding effect of a 1% fee however, is quite ugly.

This chart below displays the cumulative fee comparison over a 20 year period of two $1 million portfolios, where one pays 1% annually of assets under management and the other pays a flat annual fee of $5,700 (the current flat fee for new clients of Meredith Wealth Planning). Assuming both portfolios earn a gross annual return of 7% annually, the asset-based fee portfolio would pay about $280,227 more in expenses over those 20 years.

However, the difference in fees is not all that matters. The asset-based fee investor’s portfolio would actually be worth $428,874 less than the flat fee investor’s after 20 years, despite the difference in fees being ONLY $237,492. Why? The more you take out in expenses, the less money you have left to compound. While this investor paid an advisory fee $280,227 greater than the flat-fee investor, they cost themselves an additional $106,667 in missed compounding.

Conflicts of Interest

One of the primary missions of Meredith Wealth Planning is to eliminate conflicts of interest that exist between the advisor and the client. Under an asset-based fee model conflicts still exist. Our belief is that a flat fee model helps mitigate many of them. Here are a few examples of situations where an asset-based fee advisor may be conflicted:

• Recommendations on a pension versus a lump sum payout.
• Potentially recommending riskier investments to try and grow assets under management more quickly. More assets equates to more revenue for the firm.
• Any time a client asks about withdrawing money from their account.

Why Do Asset-Based Fees Persist?

The short answer is “because it’s always been done this way”. A few other reasons:

• It’s lucrative. With equity markets expected to outperform inflation over time, asset-based fee advisory firms receive automatic raises.
• Shifting to flat fees would massively disrupt many major investment firms, as they use higher net worth clients to subsidize lower net worth clients currently.
• As stated above, “it’s just 1%” doesn’t sound too terribly bad until you look at the math and the inequitable nature of the fee.

Asset-based fees will be around for a very long time, but now clients can choose which fee model works best for them.