We do things differently at Arcadia.
Arcadia is proud to be a flat-fee wealth management firm.
We charge a fee of $18,000 annually, including investment management.
Our fee is not dependent on the size of your investment portfolio.
Why we charge a flat fee instead of an AUM fee:
“When returns are concerned, time is your friend. But where costs are concerned, time is your enemy”
For a service that is as important as managing your financial life, you should expect to pay a reasonable fee. In some instances, however, the fees charged by a financial advisor may actually be compounding as your investment assets grow. This is because most traditional financial advisors charge clients an Assets Under Management (AUM) fee, in which they deduct a portion of the client’s investment portfolio every year. These fees may seem reasonable at first, presented as a “percentage” of your investment portfolio, but when translated to actual dollars the numbers can be surprising. Average financial advisor fees from a 2023 study are shown below.
The traditional AUM fee structure causes fees to rise as your investment portfolio grows. For example, assume you have $2,500,000 invested with a traditional financial advisor and you pay an advisory fee of 0.88% (the industry average for a $2,500,000 portfolio). That percentage fee translates to $22,000 per year deducted from your investment portfolio).
Fast forward seven years. The markets have appreciated and you’ve made contributions to your accounts as part of your retirement plan. Your investment portfolio has grown to $5,000,000. Now your industry average 0.84% advisory fee is taking $42,000 out of your investment portfolio each year. The more money your portfolio makes, the more your traditional advisor generally receives in fees.
Over long periods of time, these fees have a diminishing effect on your wealth and the size of your investment portfolio.
Flat fees as an alternative to the AUM model.
For many high net worth investors, the fee they pay their financial advisor is one of their larger retirement expenses. Under the traditional AUM fee model, this expense will grow every year, for the rest of their lives, with potentially no corresponding increase to the quality of the financial advice they receive.
In our opinion, the amount of time, effort, and resources for a financial advisor to manage a $2,500,000 or $5,000,000 portfolio is generally the same. The only difference between these two clients is the values on their account statements.
Consider the following:
Financial planning and retirement needs: Both of these clients (one with $2,500,000 of investable assets and the other with $5,000,000) require financial plans of similar complexity. They both have unique financial goals they wish to accomplish, specific cash flows they expect to realize, and a known amount of portfolio assets to fund their retirement goals.
Investments: There is no real difference between them when it comes to investment management. Both portfolios should be rebalanced, invested appropriately and aligned with their target allocation and Investment Policy.
Client Service: Both clients deserve expedient service from a dedicated advisor, regular meetings, and ongoing financial planning support.
Fiduciary Standard: Both clients deserve an advisor who serves as a fiduciary in all circumstances, and for all account types. Their advisors should be required to act in the clients’ best interest at all times.
Although there is nothing inherently wrong with the AUM model, we believe it is important for investors to investigate how much they are paying in advisor fees in dollars, not in percentages.
Arcadia’s fee structure is designed to be simple, fair, and transparent. We aim to build long-term relationships and provide outsized value compared to our cost. Our flat fee of $18,000 per year includes portfolio management and financial planning. There’s no asset under management (AUM) fee, no commissions, hidden fees, or extra charges—just straightforward pricing aligned with your best interest.