This week we had a few milestones: On Tuesday, we celebrated the two year anniversary of RWM, which launched on September 16, 2013.
Second, we announced a new program that will help lower fees for our clients.
Costs are something we are very conscious about. We are always looking for ways to keep fees as low as we can, as part of a general approach to reducing portfolio drag. There are a number of ways to do that — in our portfolio design, in how we approach managing assets for people, in our cost structure. Its why we developed Liftoff, a low cost automated asset management program for smaller accounts where high fees are potentially a significant issue.
We have been thinking about other ways to accomplish this goal, while simultaneously encouraging good investor behavior on the parts of our clients. A few serendipitous factors came together that led to the creation of this. One of them was an article by Jason Zweig of the WSJ, titled, Why Mutual Funds Should Pay Investors for Loyalty. The other has been our conversations with folks like Nick Murray, who did a MiB podcast with me in August.
Both Zweig and Murray are brilliant insightful observers of the world of investing and advisor services. They were really the muse for this concept. Having discussed related ideas with both of them, these two gentlemen led us to a flurry of ideas and conversations inhouse.
Could we lower fees based on longevity, AUM, the firm’s assets, our efficiency, or some other factor?
The big breakthrough insight came from Michael and Kris — a discount as an incentive for good investor behavior. The goal is to avoid the sorts of issues which plague nearly all investors: Don’t get emotional, don’t try to market time, don’t chase the latest hotness, create a financial plan and follow through with it, stay the course despite when things get volatile like last month or today. It is really just following good, solid, basic long term investing strategies.
We looked at the costs against the long term benefits to the client — and we decided it was worth it. Compounded to the investor, savings over time can add up. Hence, “Milestone Rewards” was born.
Clients who are with RWM for 3 years, complete and maintain financial plan, and don’t engage in the sorts of self-sabotage we see all too often will qualify. There will be fine print, I am sure, but thats the gist of it.
I am very proud of our team for this kind of innovative thinking. I am very confident that you will be seeing more of these sort of ideas going forward, quite soon.
Related:
Ritholtz Wealth Management Celebrates Second Anniversary with a Reward for its Clients (PR Newswire)
This firm has a radical new plan to keep clients focused on long-term investing (Business Insider)
A noble endeavor.
May I suggest advertising on some internet sites aspirational women frequent? Seemingly they would be interested in smart, frugal money management and would take the time to “click thru” to get more info.
Brilliant! Another incentive to help clients avoid those behavioral mistakes. Great stuff, Barry.
Really interested in seeing how this innovation works. I’ve found it takes years to train clients–and those who aren’t trainable leave…
Just make sure the fee reduction isn’t rewarding lack of communication. If a person is reluctant to call in a volatile time for fear of losing their reward, yet are still scared, might seek to sooth the fear elsewhere. Make sure it isn’t a wall.