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Grow
Your Wealth
Savings
Keep more of your hard earned savings and benefit from its effect. Over time, it can lead to life changing wealth.
Savings is Return
The saying, 'a penny saved is a penny earned' is actually quite accurate. Just as return on an investment can add to wealth, anything that isn't spent will also add to wealth.
Take the hypothetical, but very common, situation shown in the graph in which an individual has $250,000.00 and about 30 years until their expected retirement. They can invest in two different portfolios: One has industry average fees of about 1.75% and the other is a Convexity portfolio with fees of about 0.41%.
If the pre-fee annualized return of each portfolio is 10% how much do you think the difference in portfolio value would be at the end of 30 years?
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The answer is $1,203,673.27! *
The portfolio with industry average fees of 1.75% results in a portfolio value that is over 30% less than the Convexity portfolio. This is precisely why institutional clients demand lower fees and why you should too.
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*Dollars in the graph are in thousands.
The Average Fee Structure
Most advisory firms charge a management fee of 1.00% to 1.25% depending on the amount of assets they are managing for their clients. Additionally, the investments they choose for their clients have a fee as well.
If mutual funds are used to build client portfolios, mutual fund expense ratios will add another 0.25% to 1.00%. This results in an average all-in cost of at least 1.25% to 2.25%. (Even more fees can be charged but for simplicity's sake, we will only compare using management fees and fund expense ratios.)
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On average, our advisory fees are 0.41%, and the funds that we use to build portfolios have an average expense ratio of 0.08%. Together, this comes to just under 0.50%, which is just over 70% less than the industry average.
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Our significantly reduced fee schedule is far more common in the institutional space than in the retail space. (more detail on institutional below).
The reason for this is two-part, and simple economics. First, because of the value of assets an institutional client has (typically more than a retail client), the institutional service provider will compete in all ways possible including the fees that they charge. This competition drives down the fees that the institutional client pays. Second, if the value of the institutional client's assets is very large, the service provider doesn't have to charge as much to be a going concern.
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Given that we charge our clients a fee that is more common to institutional investors, we are giving our clients very similar treatment to an institutional investor regardless of the value of assets, and our clients are maintaining a greater amount of their own wealth through this form of savings that we offer.
