October 16, 2023 • Karen DeMasters
AC Family Office was featured in an article by Karen DeMasters focused on how financial firms structure advisory fees, particularly for high-net-worth and ultra-high-net-worth clients. The coverage examined the limitations of traditional assets-under-management (AUM) pricing, where clients are typically charged a percentage of portfolio value regardless of the actual scope or complexity of services provided.
The firm was highlighted for its fee-for-service approach, where client fees are based on the specific services delivered rather than asset levels. This model is designed to better align pricing with the time, resources, and expertise required to serve each client. It serves approximately 60 wealthy families, including some with significant multibillion-dollar assets, and applies a customized fee structure tailored to each client’s needs and engagement.
The coverage also placed this approach in contrast with broader industry practices, where most firms continue to rely on AUM-based pricing. The 2023 Fidelity Benchmarking Study was referenced, noting that a common fee for a $1 million client is around 1% (100 basis points), often applied regardless of how many services are bundled. The study also pointed out that there is often little correlation between the number of services provided and the fees charged.
It further noted how AUM-based models can lead to increasing fees over time as portfolios grow, even when the level of service remains consistent. In contrast, service-based pricing was presented as a more stable and transparent approach, tying fees directly to client needs rather than market-driven fluctuations in asset values.
Overall, the feature placed the firm within a broader shift in the wealth management industry toward more transparent, service-driven pricing models aimed at improving alignment between advisor incentives and client outcomes while providing greater clarity for clients.
