"I Don't Want To Pay An Asset Management Fee"
"I Don't Want to Pay an Asset Management Fee"
Why Financial Advisors Charge the Way We Do, and Why It Actually Works in Your Favor
We hear this a lot: "Can't I just pay you a flat fee?"
It's a fair question. And we think there's some education required here, because we are very different from what you might be picturing when you think of an advisor charging 1%. And it's worth saying that 1% of assets is the absolute maximum any of our clients pay. Our fees tier down with most paying a blended fee closer to 0.68%.
Most of our clients have never had an advisor before because they haven't needed one. But when your financial life gets complicated, it's invaluable to have an expert on your team who can help guide you. If it feels "expensive," it's probably because you've never had this much money (or this much potential future money via a liquidity event) before. You could compare it to switching from a regular doctor who sees you once a year for 15 minutes to a concierge physician who actually knows your history, answers your calls, and coordinates your entire care. The annual fee is based on the relationship, not the number of times you walk through the door. That's what this is. You're not paying for someone to pick index funds. You're paying for a team that knows your whole financial picture and is available when life throws you a curveball.
So before you scamper away, take five minutes to learn more about why we charge the way we do and why our clients find it invaluable. If you've landed on BKFi's website, chances are, we're a great fit for you. You're not just getting portfolio management. You're getting access to a team of highly skilled experts trained in the exact financial decisions you're trying to make. The way we happen to get paid is based on your portfolio, and by the way, the fee tiers down, so most of our clients pay well below the traditional 1%.
We want to be clear that 1% is the most any client pays us for a relationship. A client with a $5 million portfolio actually pays a blended rate of 0.85%. At $20 million, it's 0.49%.
Traditional Asset Managers Have a Problem
Traditional asset managers charge 1% of the assets they manage for something that has been commoditized. Picking a mix of index funds and rebalancing once a quarter can be handled for a lower fee than 1% of your portfolio every year. We didn't like it either. So we built something different.
We noticed that our friends were making real money but were faced with huge life decisions that would impact their finances, with no one to turn to. A software engineer wondering why she paid so much in taxes last year, and why her investment portfolio was generating taxable gains. She calls her advisor and hears:
"I can't give you tax advice."
That's broken.
How We're DifferentSo We Built Something Better
We built a modern investment and financial planning firm on top of an accounting firm. A firm that prioritizes what our clients need, always.
The Old Way
- Do as little for clients as possible.
- Use proprietary mutual funds with high fees.
- See clients once a year.
- Not allowed to give tax advice.
Our Way
- Do as much for clients as possible.
- Actually, file their taxes.
- Help them get their estate plans done.
- Learn what their short- and long-term goals are through a process based on George Kinder's Life Planning philosophy.
- Make a detailed plan to exit a concentrated company stock position.
You get all of this, plus unfettered access to your BKFi financial advisor, who is always a CFP® and a fiduciary.
DefinitionsWhat Counts as Assets Under Management?
We define assets under management or AUM as anything in a brokerage account that our investment team takes an active role in trading. This typically includes: taxable brokerage accounts, 401(k)s, and IRAs.
We Bill On
- Taxable brokerage accounts
- 401(k)s
- IRAs
We Don't Bill On
- Cash earmarked for short-term savings (put that in a high-yield account)
- Money in a donor-advised fund or other charitable vehicle
- The value of your home
- Any asset where there are restrictions that would prevent us from recommending a strategy
We are reasonable humans, and our goal is to be compensated fairly for giving you the best advice we can.
Behavioral CoachingThere's Also the Part Where We Keep You From Hurting Yourself
The biggest drag on your returns isn't fees. It's you.
It's called the behavior gap — the difference between what the market returns and what investors actually earn. Study after study shows that the average investor significantly underperforms the market, not because they pick the wrong funds, but because they panic-sell when things drop and pile in after things have already run up.
Here's what that gap looks like in real dollars. Say you have $500,000 invested. Over five years, the market returns 8% annually, but because of poorly timed moves — selling during a dip, sitting in cash too long, chasing a hot stock — you only capture 4%.
That's a difference of over $126,000 — exposed just by behavior. No bad stock picks required. Just normal, human, emotional decision-making.
One of the most valuable things a financial advisor does is stand between you and that impulse. We're the steady hand when the market drops 20% and every headline is screaming to sell. We're the voice reminding you of your plan when your coworker is raving about some speculative bet. That alone can more than pay for the cost of advice — many times over. It might feel like you're always able to "set it and forget it" during boom times but how will you feel when your $5,000,000 portfolio drops by $1,000,000 in one week (as it did in March of 2020)?
AlignmentSo Why Does a Modern Firm Use an Old Fee Model?
Because we like the way it aligns our incentives with yours.
Our mission at BKFi (the Fi stands for financial independence) is to get our clients to financial independence as fast as possible. That means freedom. That means building a solid and stable investment portfolio that allows you the optionality to do whatever it is you want.
The way we get paid is based on the part of our clients' financial lives that has the biggest impact on their ability to achieve financial freedom: the portfolio. When your portfolio grows, we do better. When you do well, we do well. That's the alignment we want.
Many of our clients find us at pivotal moments in their lives where they may not have a large investment portfolio yet. Maybe they're an employee at a startup with equity that might someday be worth something. Or a business owner who has just turned the corner and finally has the cash flow to start investing their profits.
We have structured our fees in a way that our clients still get the full value and attention of our services, even when their portfolio is small and growing.
Our ModelWhy Flat Fees Don't Work for BKFi and Our Clients
Let us be frank: the flat fee model is not sustainable for the type of in-depth equity compensation advice we give. Our financial advisors and CPAs have decades of experience and context specifically for stock options and companies going public. We tried flat fee, when we first started the firm and it worked when we were a simple shop with our co-founders meeting with every client and having the first one hundred clients to themselves. As the firm grew, we wanted to serve more than 100 clients. And we found that clients paying a flat fee would view the relationship as a transaction. They would get a ton of advice up front, we'd spend sometimes hundreds of hours solving a really complex equity exit, only to be told "thanks so much, I've got this in year two." You may think that sounds GREAT, but it's not. Many of those clients have actually returned a few years later after realizing you can't just pick a few funds and set everything on autopilot — that isn't sustainable when you reach a certain level of wealth (we think it's about a million dollars in liquid net worth). For a firm to survive and remain true to its values, it needs a sustainable business model so that it can bring its speciality and expertise to MORE people. The boutique flat-fee model is great for one person serving a limited number of clients, we think that number is 80, and for that solo advisor to survive, they better know some good rich people within their personal network. Our vision is to bring this expertise to more people who wouldn't traditionally have access to it and serve thousands of clients, not dozens.
We think about this a lot and have not come up with a way to scale really good advice for a flat fee. Maybe someone will solve this soon. AI may help. But from we have seen, the firms that compete with cheap, flat-fee pricing are propped up by VC money and deliver disappointing quality of service. The larger a client's portfolio, the more issues and complexity arise. That's what we've seen with the hundreds of clients over the years.
PricingHow We Get Paid
Transparent. Tiered. Built to align our incentives with yours.
Start-Up Clients pay an annual retainer for financial planning ($5,200 to $14,700/year depending on complexity: stock options, RSUs, self-employment, closely held business). Tax filing starts at $1,200 and is billed separately. Any money in 401(k)s, IRAs or taxable accounts is managed and billed separately at 1%. As Start-Up clients grow and we manage more of their assets, the planning fee decreases. Under $500K managed, you pay the full planning fee. At $500K+ managed, the planning fee drops by 50%. At $1M+ managed, the planning fee is waived entirely and you graduate to Core.
Core & Private Clients pay based on managed assets:
Blended fee on a $10M portfolio
Blended fee on a $30M portfolio
In the context of tax rates, strategy and the opportunity cost of NOT investing well, our fees are a rounding error.
Our fees may look traditional, but the advice and value you get for them is anything but.
The Client ExperienceWhat a Typical Year as a BKFi Client Looks Like
Our tax team sends you a checklist of the tax documents we need to file your return.
After you upload your documents, one of our CPAs prepares your tax return and sends you a video walk-through to review at your leisure. If you have questions, you book a meeting.
Happy spring! Your financial planner reaches out to book your Spring Planning Meeting to review your portfolio, your goals, your financial plan, and make any changes.
Something big happens. You got your dream job offer. You email your planner to set up a meeting to go through the offer and create a really strong counter-offer.
Your planner reaches out to schedule your Tax Planning Season meeting. Our tax team prepares a tax projection estimating your tax bill for the year. With that job change and a stock sale, we want to make sure we get everything right and there are no surprises.
During your Tax Planning Season meeting, you and your planner discuss the tax-loss harvesting moves our investment team made for you throughout the year. They also complete a backdoor Roth for you, stashing $7,500 in the stock market that will now grow without ever being taxed again. You leave with a short checklist of items to complete in the next 30 days.
You toast with your planner to your long-term health and wealth at our fabulous annual holiday party in Brooklyn.
That's what 1% gets you. A year-round partnership with a team that handles your taxes, your investments, your planning, and your biggest financial decisions, all working together so you don't have to.
This article is for educational purposes and is not personalized investment, tax, or legal advice. Your financial situation and goals are unique, so talk to a qualified advisor before making decisions.
Let's Run Your Numbers
BKFi works with clients at every stage of building wealth, from startup equity to eight-figure portfolios, with a fee that tiers down as you grow. Let's talk through what your relationship with us would actually look like.
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