fee schedule

Aligning Principles and Economics

Clients, we recently wrote about our quest to align our pricing with our values. The advisors of Leibman Financial Services service $50 million in advisory assets through LPL Financial. The fees charged could better reflect your contribution to investment results through effective investing attitudes and behavior. We are going forward with changes by year-end.

We believe that people can learn to frame things more effectively, to see the long term, to find out a temporary drop is NOT a loss. New clients usually require more intensive communication (and hand-holding, in some cases). It makes sense to charge them a little more, and reduce costs for you longer term clients.

For the vast majority of you, “heads you win, tails you don’t lose.” Generally, if the new schedule indicates a fee reduction, that will go into effect as soon as possible. If it shows an increase, we will leave the pricing the same. Current pricing is a hash, depending on when accounts were originally opened. So we will be communicating with each of you.

The new table rewards your persistence three ways.

1. A fee reduction after two years, shown in the table below.

2. Additional reductions after eight and sixteen years, about 3% to 6% depending on household account value.

3. The potential for assets to grow over time tends to put longer-term clients into higher value brackets, with lower fees.

pricing

In a few cases (particularly for newer clients), the table may indicate a higher fee than what we currently charge. Please do not be alarmed—we are not going to try to jack up our rates on anyone we are doing business with. Consider yourself grandfathered in.

Clients, with this project we have attempted to align our economics more closely with our values. We will be in touch about your specific situation. If you would like to discuss this or any other issue at greater length, please write or call.

Additional reading:

About learning to live with volatility: They Say You Can’t Handle the Truth

About discretion to act on your behalf: Freedom to Decide vs. Freedom to Debate


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.

Have We Mentioned How Wonderful You Are?

© Can Stock Photo / mikdam

The foundational theory here at 228 Main is people can gain effective perspectives and productive attitudes about investing. It doesn’t matter if you were born that way or were capable of learning, you as a group are special. We believe your behavior is one of the keys to long term investment results.

Consequently, while some colleagues live with frustration as untrained customers fall prey to counterproductive behavior—selling out low, chasing performance, jumping on fads—you and we are appreciated for our mutual faith in each other. No wonder some advisors are looking for an exit strategy, and I’m planning to work to age 92!

You do the difficult things, like going against the crowd, listening to people at the salon or barbershop or café or water cooler, and yet still stay the course. A benefit of my long commute is time to think about the business. I spent a day recently pondering this: how might we make things better for you?

If we change our pricing philosophy to reflect total household assets under our management, including results through the years, we honor your role in creating those results. And if we price new clients a little higher for an initial period, we can offer small discounts for longevity to you longer-term clients. This would better reflect our values.

This presents two issues. One, we tinkered with the schedule over the years, and sometimes failed to update existing clients to the new schedule. Two, our general philosophy has been to use a volume discount based on net invested capital, excluding changes due to investment results. We need to figure out how to implement changes in a way that makes sense to you. We have no intention of chasing anyone down and asking them for more money. Our growth allows us to offer breaks where they have been earned (after all, it is ultimately you to whom we owe that growth!) without needing to claw back money from any clients.

Clients, you have heard us express admiration for the very special group to which you belong. We talk about the mutual benefits of our shared perspectives on investing. We have said in as many ways as we know how that your behavior is large factor in investment outcomes. The one thing we have not done is align the economics of our shop with those noble sentiments.

We are committed to doing so. We will be communicating the results of our work in the near future. If you have any questions about this or any other pertinent topic, email us or call.


The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results.

All investing involves risk including loss of principal. No strategy assures success or protects against loss.