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How to Invest in Index Funds

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

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Few investment products become popular enough to make it into the general lexicon, but everyone seems to be talking about index funds these days. Index funds have doubled their share of asset management dollars since the financial crisis of 2008 ended, and they could surpass actively managed mutual funds in popularity as soon as 2024, according to Moody’s Investors Service. Even Warren Buffett, one of history’s most successful active investors, regularly touts index funds as the only strategy the average investor really needs.

Despite the buzz, index funds are not the most exciting investments at first glance. They are passive and powered by a computer model — without a manager attempting to pick winning holdings or to get rid of losers when they are down. Instead, an index fund tracks the performance of a set group of companies included in a major market index and produces returns in line with that benchmark.

An S&P 500 index fund, for example, provides exposure to the 500 largest publicly traded companies in the U.S. that make up the S&P 500. It’s like buying the performance of the benchmark U.S. stock market — and at a very low cost. With an index fund, you generally won’t outperform or underperform a given market, as you own the market.

Why investing in index funds has become so popular

While they may not be the kinds of investments you brag about, index funds consistently outperform hot-shot actively managed mutual funds over time.

Here are four reasons passive investing is winning out.

Index funds are low-cost

“One of the major factors to investing success is fees,” said Joseph A. Carbone Jr., a certified financial planner with Focus Planning Group in Bayport, New York. Lower fees help boost performance in any market because you are losing less of your investment to the cost of the fund. Without an expensive fund manager to pay, index funds charge an average annual expense ratio of 0.09%, compared to an average of 0.59% for actively managed mutual funds, according to the Investment Company Institute. At the extremes, Fidelity, the giant broker typically known for its actively managed mutual funds, offers no-fee index funds. Actively managed funds can charge as much as 2.5% in annual expenses, not including added sales charges.

Index funds are consistent

Mutual fund managers are sometimes guilty of “style drift,” or diverging from intended investment categories, which can impact the fund’s underlying asset allocation and risk profile. With index funds, the investments are set, so there is no risk of drift.

Active management isn’t adding value

For the past 15 years ending in June 2018, 92.43% of large-capitalization mutual fund managers, 95.13% of mid-cap managers and 97.70% of small-cap managers failed to outperform index benchmarks on a relative basis, according to midyear data from SPIVA. With those odds, why pay a stock or bond picker in an attempt to beat the market?

There are tax advantages to investing in index funds

“Passively managed investing is a lot more tax-efficient than actively managed,” said Carbone. Managers are able to buy and sell assets to take advantage of market opportunities, but that trading creates taxable capital gains, which can be a drag on performance. Because indexes generally shift infrequently, trading within index funds happens a few times a year at most.

What are the downsides to index funds?

Plenty of professional investors will tell you that index funds have their downsides. Here are a few of the most common arguments.

Index funds aren’t strategic

Many of the strategies that fuel market success stories — stock picking, concentrated positions, value investing, hedging — are not as easy to index.

They don’t weather downturns

Unlike a mutual fund, an index fund is not able to react when markets turn volatile. This should help actively managed funds handle downturns better than nonreactive index funds.

According to a 2018 analysis by Morningstar, the odds of an active U.S. equity fund beating its benchmark are almost twice as good during “down” market periods, regardless of asset class. It also found that funds that beat the benchmarks during down periods do so by a wider margin than in “up” markets. However, that performance was not sustained, and those funds that did well during a single three-year period tended do badly the following period.

Index funds may not be best for every asset class

OK, so maybe a manager can’t add value in the large domestic stock market, which is so well covered by analysts that there’s virtually no way to have an edge on other investors. But what about, say, small-cap international stocks? Surely there are managers who can uncover something there or in similar markets we don’t know much about.

For some years, this is true. In 2017, 55% of managers in foreign large-cap blend and diversified emerging markets funds beat their benchmarks, up from 36% in 2016, according to Morningstar. Active U.S. small-cap managers did well in 2017 too, with 48% of them beating their benchmarks, up from 29% in 2016. “In theory it makes sense, but the numbers don’t bear this out,” said Carbone. Over the long term, however, asset managers lag significantly in most asset classes.

They can be boring to some people

If your idea of fun is buying individual stocks in the hope of finding the next Apple or Netflix, index funds probably are not your speed. On the other hand, some financial advisors prefer index funds because they feel like less of a gamble than other investments.

Index funds vs. mutual funds vs. ETFs

Mutual funds are actively managed, while index funds are passive. Otherwise, the two investments are fairly similar. Then there are exchange-traded funds (ETFs), which are index investments that trade on the stock exchange.

How to make sense of it all? Here’s a chart to help you compare the differences.

 Mutual FundIndex FundETF

What is it?

A pool of money through which large groups of investors can own a variety of stocks, bonds or other assets strategically selected by an asset manager or management team.

A pool of money through which large groups of investors can track the performance of a stock or bond market index. An index fund is a type of mutual fund without a manager.

A security that tracks the performance of a stock or bond market index or selection of assets. Think of an ETF as an index fund-stock hybrid.

How often can you trade?

Once a day at net asset value (NAV) or daily share price.

Once a day at net asset value (NAV) or daily share price.

All day at intraday share price.

Where can you buy it?

Purchase directly from a mutual fund company or through a broker.

Purchase directly from a mutual fund company or through a broker.

Trade shares on the stock exchange through a broker or online brokerage account.

How do you pay for it?

Through an ongoing expense ratio or percentage of assets. The average expense ratio for equity mutual funds is 0.59% per year. Some mutual funds have sales loads or commissions paid when you buy or sell shares.

Through an ongoing expense ratio or percentage of assets. The average expense ratio for index equity funds is 0.09% per year.

Through an ongoing expense ratio or percentage of assets. Index equity ETF expense ratios average between 0.20% and 0.50%. There are also trading fees when you buy and sell.

What’s the minimum investment?

Typically $500 to $3,000. Fidelity has no minimum investment funds.

Typically $500 to $3,000. Fidelity has no minimum investment funds.

None, other than the cost of a share plus the cost to trade it.

Source: 2018 Investment Company Fact Book

Carbone uses ETFs to build portfolios for clients but doesn’t always recommend them for the individual investor. “There’s a lot less that can go wrong when you’re purchasing a mutual fund or index fund versus an ETF.” said Carbone. “A mutual fund is much more user-friendly.”

How to select an index fund

Ready to invest in an index fund? These three steps can get you started.

1. Find a fund company

You can purchase an index fund directly from a mutual fund family, such as Vanguard, the company that pioneered index funds. Firms such as Schwab and Fidelity offer index funds and are large enough to offer products to handle all your investment needs. Keep in mind that index funds don’t really vary from firm to firm. So look for a provider with a good reputation for offering low-cost, no-load funds.

You also can purchase an index fund through a broker, and some discount brokerages will trade mutual fund shares without a transaction fee. If you still can’t decide, compare a couple of options and pay attention to things such as the expense ratio, minimum initial investment and account minimum. Vanguard and Schwab both offer a wide range of low-cost index products with relatively low minimums. Fidelity offers a handful of no-fee, no-minimum accounts, but the fund giant still makes its money through active investing.

2. Select your index

A recent finding by the Index Industry Association found that there are almost 3.3 million stock indexes around the world.

Where is a good place to start? Buffett recommends a simple S&P 500 index fund for the average investor. Or you can get even broader exposure through the total-market Wilshire 5000. Looking for just small caps? The Russell 2000 represents the smallest U.S. stocks. Looking for global exposure? The MSCI global equity index is popular with international investors.

You also can choose between equal-weighted and market-weighted index funds. Market weighted means the companies are represented according to their market value, with the largest companies representing a greater portion of the index. With an equal-weighted index, all companies are represented equally. Each strategy has its benefits: Market weighting tracks more closely to the market’s performance, but equal weighting helps reduce your risk and tends to outperform over time.

3. Balance your assets

Should you buy just one, or is it better to buy multiple index funds? For investors who want to keep things simple, a single broad domestic index fund, such as an S&P 500 fund, is a good start. But if you’re ready to diversify, you can build a world-class equity portfolio with as few as three index funds, said Carbone.

Start with an S&P 500 and add an international equity stock index, such as MSCI, he said. “This gives you global diversification.” For a bond portion, Carbone recommended a Barclays investment-grade bond index fund, a common benchmark for bonds.

How much you put into each fund will depend on your own goals and risk tolerance, but the three components represent all the diversification you need at a combined cost of less than one percentage point.

Bottom line

Any active manager or investment trader will tell you that outperforming the market is not easy to do. Take fees into account, and an active manager has to work even harder to beat a passive investment. So why not consider jumping on the index fund bandwagon? This is one popularity contest investors can win.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Phipps
Melissa Phipps |

Melissa Phipps is a writer at MagnifyMoney. You can email Melissa here

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Review of Boston Private Wealth LLC

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Boston Private Wealth is a fee-only advisory firm serving individuals, high net worth individuals, pension and profit-sharing plans, charitable organizations and other businesses. The firm specializes in working with professionals in law, accounting and medicine, as well as executives and business owners. With headquarters in Boston, the firm has more than 70 investment advisors around the country overseeing the firm’s more than $12.8 billion in assets under management (AUM).

All information included in this profile is accurate as of December 9th, 2019. For more information, please consult Boston Private Wealth’s website.

Assets under management: $12,827,947,779
Minimum investment: $1 million
Fee structure: A percentage of AUM, ranging from 0.70% to 1.25%, depending on account size; fixed fees; hourly fees
Headquarters: One Federal Street
30th Floor
Boston, MA 02110
(617) 223-0200
bostonprivate.com

Overview of Boston Private Wealth

Founded in 1986, Boston Private Wealth is headquartered in Boston, with a number of additional offices throughout Florida, California and New York. Boston Private Wealth entered the Northern California market in 2001, the Southern California market in 2004 and the Florida market in 2014. In fall of 2019, the company announced the integration of KLS Professional Advisors Group in New York City.

The firm is a wholly-owned subsidiary of Boston Private Financial Holdings, Inc., a public reporting company, and it is affiliated with Boston Private Bank & Trust Company, a full-service private banking company. Boston Private Wealth has more than 130 employees on staff, including 72 performing investment advisory functions. Fourteen employees are licensed agents of an insurance company, though the company is clear that it earns no commissions for product recommendations. The firm currently manages more than $12.8 billion.

What types of clients does Boston Private Wealth serve?

Boston Private Wealth serves a broad variety of clients, with its largest client group being high net worth individuals. The SEC defines a high net worth individual as someone with at least $750,000 managed by a firm or whose net worth exceeds $1.5 million.

The full range of clients the firm serves includes:

  • Individuals
  • High net worth individuals
  • Trusts, estates and charitable organizations
  • Family offices
  • Corporations or other business entities
  • Banking and trust companies
  • Not-for-profit entities, including foundations
  • Retirement and profit sharing plans, including IRAs and 401(k) accounts
  • State or municipal government entities
  • Other investment advisors

We reached out to Boston Private Wealth and the firm confirmed that its minimum account requirement is $1 million. However, the firm also notes that because it views clients’ financial pictures holistically, it works with some clients who may have less than the $1 million but who are building wealth. In addition, the filing also states that of the firm’s individual clients, about six out of 10 are high net worth, although that leaves about 40% who aren’t.

Among those clients are a large number of business owners who frequently have limited liquidity as they grow their businesses. The company also focuses on professionals in private practice, such as law firms, accounting firms and medical, dental or veterinary practices, as well as executives. It offers these clients help with business financing and the management of personal income.

Although the vast majority of the firm’s assets under management ($11.2 billion of $12.8 billion) are from high net worth individuals, Boston Private Wealth also serves corporations, charitable organizations and pension and profit-sharing plans.

Services offered by Boston Private Wealth

Boston Private Wealth provides a host of services to its clients, from wealth management to trust and estate services. The firm also recently added family office services designed to handle the needs of ultrahigh net worth investors, including helping with personal accounting and net worth reporting, tax and accounting services, bill pay and mail management, and budgeting and cash flow planning.

The firm’s full list of services includes:

  • Wealth and financial planning
    • Vision statement that may include a client’s financial, philanthropic, tax and wealth transfer objectives
    • Income and retirement planning
    • Protection planning
    • Investment management planning
    • Legacy planning
    • Philanthropic planning
    • Business succession planning
    • Executive planning
    • Education analysis
    • Estate plan analysis and review
    • Insurance and risk management review
    • Cash flow and debt management
    • Compensation and benefits
    • Donor advised fund
  • Portfolio management for individuals and/or small businesses
  • Portfolio management for businesses (other than small businesses) or institutional clients
  • Pension consulting
  • Selection of other advisors (including private fund managers)
  • Publication of periodicals or newsletters
  • Educational seminars/workshops
  • Planned giving
  • Family office services
    • Personal accounting and net worth reporting
    • Tax and accounting services
    • Budgeting and cash flow planning
    • Bill pay and mail management
  • Concentrated holdings services
  • Proprietary separate account strategies
  • Investment consulting
    • Diagnostic review
    • Investment policy and governance design
    • Asset allocation services
    • Portfolio construction and implementation
    • Performance measurement, reporting and analysis
    • Custom investment solutions
  • Retirement plan advisory services
  • Wrap-free programs
  • Trust services

How Boston Private Wealth invests your money

Boston Private Wealth engages in active portfolio management, using a client’s goals, time horizon and risk tolerance to create a customized, diversified portfolio. The company prefers to use active strategies because it believes, over time, that it can outperform the market on a risk-adjusted basis.

Typical client portfolios include 40 to 60 carefully selected individual stocks, alongside a customized bond portfolio with investment-grade taxable or municipal bonds. The firm also offers access to as many as seven additional asset classes, from international large cap stocks to alternatives.

The firm uses both internally managed strategies as well as external money managers to complete clients’ financial plans.

Fees Boston Private Wealth charges for its services

For wealth management services, Boston Private Wealth charges clients a percentage of assets under management based on a tiered fee schedule, which starts at 1.25% for the first $1 million, 1.15% for the next $1.5 million and so on. For fixed-income portfolios — meaning individual fixed income securities, including investment-grade and municipal bonds — Boston Private Wealth negotiates a fee schedule not to exceed 0.75%.

For consulting services, the firm charges a flat rate per engagement, or a fee of $300 per hour, depending on the arrangement with the client, and those services include portfolio review, financial planning, asset allocation and performance reporting, monitoring and analysis. For investment advisory services to retirement plans, the firm charges a maximum fee of 0.50%, with a minimum annual fee of $5,000.

There may be additional fees and expenses beyond the firm’s set fees, including:

  • External separate account manager fees (if Boston Private Wealth uses an external separate account manager as a sub-advisor to manage a client’s assets)
  • Mutual fund and ETF management fees
  • Mutual fund transaction fees
  • Donor advised fund fees
  • Brokerage fees

Boston Private Wealth doesn’t use a wrap fee program, which is when a firm offers a bundle of services for a flat fee, but it does participate in wrap fee accounts when it place investments with other investment managers. It charges a management fee of 0.15% to 0.50% for wrap accounts.

Boston Private Wealth notes that for accounts with a portfolio value of less than $1,000,000, the effective fee may be more than 1.25%.

Boston Private Wealth Fees
Wealth Management
  • 1.25% on the first $1,000,000
  • 1.15% on the next $1,500,000
  • 0.90% on the next $7,500,000
  • 0.70% on higher balances
Fixed Income-Only Portfolios Negotiated fee schedule not to exceed 0.75%
Consulting Services Negotiated flat rate per engagement or $300 per hour
Investment Advisory Services to Retirement Plans Negotiated fee schedule not to exceed 0.50% (Minimum annual fee: $5,000)

Boston Private Wealth’s highlights

  • Services for high net worth individuals. The recent addition of KLS, which is a wealth management firm specializing in law firms, attorneys and other high net worth clients, makes this combined operation one of the more sizable firms focusing on the high net worth set. The firm now manages more than $11 billion in assets from high net worth individuals, and it recently opened a family office arm devoted to ultrahigh net worth families.
  • Diverse leadership. In an industry that’s still fairly male-centric, half of Boston Private Wealth’s leadership team is female, as is 45% of its board members.
  • Locally revered. In 2013, readers of the Boston Business Journal chose Boston Private Wealth as the Most Admired Financial Institution.

Boston Private Wealth’s downsides

  • Fees are higher than average. For the non-high net worth investor, Boston Private Wealth’s rate of 1.25% on the first $1 million in assets is slightly higher than the RIA industry average of 1.17%. Asset-based fees do decrease as the amount of assets under management increases, but Boston Private Wealth notes that for accounts with a portfolio value of less than $1 million the effective fee may be more than 1.25%.
  • Potential conflicts of interest. Boston Private Wealth receives client referrals and other benefits from the Fidelity Wealth Advisor Solutions Program, TD Ameritrade’s AdvisorDirect program and the Schwab Advisor Network. These relationships raise potential conflicts of interest, as Boston Private Wealth may be more likely to suggest client strategies that benefit those companies.

Boston Private Wealth disciplinary disclosures

The firm has only one disclosure listed in its Form ADV, paperwork that firms file with the SEC. The disclosure is in relation to an advisory affiliate who was involved in a rules violation. In 2017, FINRA suspended the individual, who was with Merrill Lynch at the time, for one year for false expense reports. Boston Private Wealth itself has never been the subject of any disciplinary action.

Boston Private Wealth onboarding process

To start a relationship with Boston Private Wealth clients must complete an online form with their contact information, the services they’re interested in and the amount they currently have invested. Prospective clients can also call advisors directly to learn more about working with Boston Private Wealth.

The bottom line: Is Boston Private Wealth right for you?

Boston Private Wealth could be a good match for you whether you’re a high net worth individual. The firm’s recent moves — the acquisition of KLS and the opening of a family office group — suggest that they’re doing some gunning for the high net worth space. Additionally, the firm’s tiered fees drop below average RIA rates for assets over $1 million, making it a more attractive option for investors with seven figures to invest. Boston Private Wealth also works specifically with professionals in the areas of law, accounting or medical work, and executives in general, potentially making this firm worthwhile for anyone in these fields.

If your investable nest egg is smaller, however, you’d likely be better served looking elsewhere since the firm has a $1 million minimum. Plus, you can find advisory services for less than the 1.25% — or more — that Boston Private Wealth is charging for portfolios of less than $1 million. That said, if you’re a business owner with a larger net worth but less liquidity, it might be worth a look.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Kate Ashford
Kate Ashford |

Kate Ashford is a writer at MagnifyMoney. You can email Kate here

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Review of Aspiriant

Editorial Note: The content of this article is based on the author’s opinions and recommendations alone. It has not been previewed, commissioned or otherwise endorsed by any of our network partners.

Aspiriant, LLC is an independently-owned firm with headquarters in Los Angeles and 10 additional offices nationwide. The firm primarily caters to wealthy individuals and families, as well as a smattering of institutional investors, like charities. Aspiriant provides what it calls total wealth management, which includes portfolio management as well as a broad range of specific financial planning services. The firm has 155 employees, 86 of whom perform research or serve as investment advisors to the firm’s more than 1,700 clients.

All information included in this profile is accurate as of December 9th, 2019. For more information, please consult Aspiriant’s website.

Assets under management: $11,669,979,000
Minimum investment: No absolute minimum, but clients typically invest at least $1.5 million
Fee structure: A percentage of AUM, ranging from 0.2% to 1%, depending on account size (Minimum annual fee: $14,000)
Headquarters: 11100 Santa Monica Blvd.
Suite 600
Los Angeles, CA 90025
aspiriant.com
310-806-4000

Overview of Aspiriant

Aspiriant is independently owned, with roughly 65 of its current employees owning shares in the holding companies that own the firm. Aspiriant is the product of a 2008 roll-up of the Los Angeles-based wealth management firm Quintile, and the San Francisco-based firm Kochis Fitz. Today, the combined entity, which also absorbed Deloitte’s national investment practice in 2010, manages over $11 billion in client assets and has spread its geographic footprint, with five offices in California as well as locations in Austin, Boston, Cincinnati, Milwaukee, Minneapolis and New York.

The firm’s specialties beyond wealth management include family office services and divorce consulting. Aspiriant, which has 86 investment advisors and researchers on staff, has earned spots on recent lists of top investment advisors compiled by Barron’s as well as the Financial Times. The firm’s co-founder and CEO, Rob Francais, was inducted into Barron’s Hall of Fame in 2019 for his work in the field.

What types of clients does Aspiriant serve?

Aspiriant primarily serves high net worth individuals and families, including corporate executives, business owners, foundations and family and limited partnerships. Clients typically have investment portfolios of $1.5 million or more. However, the firm does not have an absolute minimum account size requirement, and some of its clients do have more modest levels of investable assets. For particularly complex situations, however, a portfolio larger than $1.5 million may be required.

Aspiriant also provides investment management and consulting services to some institutional investors, such as charitable organizations, trusts, pension and profit-sharing plans and corporations and other businesses.

Services offered by Aspiriant

Aspiriant can manage your investment portfolio, as well as advise on other areas of your finances, including your estate, taxes, retirement, education, compensation, cash flow and philanthropic goals. In addition, the firm has certified divorce financial analysts (CDFAs) on staff to provide divorce consulting services. For each client, Aspiriant crafts an individualized investment management program that aligns to their specific needs.

Aspiriant also has an in-house, 35-person team that provides family office services, such as filing taxes, paying bills, buying insurance and planning family legacies. This team can also educate multiple generations about living with their wealth.

In addition to its services for individuals and families, the firm offers investment management services for institutional investors.

Here is a complete list of services offered by Aspiriant:

  • Investment management for individuals and institutions (both discretionary and non-discretionary)
  • Financial planning services
    • Tax planning
    • Estate planning
    • Charitable giving
    • Retirement planning
    • Education goals planning
    • Risk management
    • Expense management
    • Compensation planning
    • Liquidity and cash flow needs
    • Private foundations and business entities
    • Divorce financial consulting
  • Family office services
    • Family legacy planning
    • Estate document preparation
    • Alternative investment coordination
    • Tax and compliance filing
    • Bill paying and reporting
    • Foundation management
    • Insurance

How Aspiriant invests your money

Aspiriant creates customized plans for each client, investing their money in a mix of global and domestic stocks, bonds, mutual funds (some of which Aspiriant may advise), ETFs, real estate, cash and other instruments. The personalized plans take into consideration the client’s individual circumstances, as well as Aspiriant advisors’ market outlook for the short and long term and which asset classes they expect to perform well.

The firm starts the process by having each client speak extensively with an advisor about their goals, risk tolerance, time horizon, cash needs and expected returns. Based on those conversations, the client and their advisor will agree on an appropriate asset allocation. Aspiriant prefers the advisor to then be in charge of choosing the specific investments to meet those goals, known as discretionary management. However, some clients have non-discretionary relationships with Aspiriant, meaning the client must approve trades.

When choosing investments, Aspiriant may recommend that clients invest in the publicly-traded mutual funds that it manages. A small percentage of clients also invest in private equity and real estate funds that Aspiriant advises. A $500,000 minimum investment is required for those private funds.

Fees Aspiriant charges for its services

To manage your portfolio, Aspiriant charges an annual fee based on a percentage of assets under management, which typically starts at 1% and ranges down to 0.20% for larger portfolios. The minimum annual fee is $14,000, though the firm discloses that all fees are negotiable. Each quarter the investment management fee is automatically debited from client accounts.

Clients also will likely pay fees to third parties, such as expense ratios and trading costs, in addition to the advisory fee.

On top of your portfolio management fee, you’ll pay for wealth planning services, which can include financial planning, estate planning, tax planning, tax return preparation, expense management and bill payment services, retirement planning, risk management and philanthropy. Retainer fees range from $5,000 to $50,000, depending on the complexity of the services offered and the time involved. Clients also may pay an hourly rate for special projects and/or ongoing consulting, with rates typically ranging from $100 to $695. The firm says that these fees are also negotiable.

Aspiriant’s highlights

  • Fee-only: As a fee-only firm, Aspiriant earns money solely through the fees that its clients pay for advice and portfolio management. This means that it has no financial incentive to recommend certain products to earn commissions or referral revenue, which mitigates potential conflicts of interest.
  • Awards for its track record: Aspiriant has nabbed high marks on many coveted rankings of top investment advisors. For example, it has appeared on Barron’s top RIAs list for more than 10 years, ranking 13 out of 50 firms in 2019. Aspiriant has also made the list of the top 300 RIAs from the Financial Times since the list launched six years ago.
  • Employees hold ownership stake: Aspiriant is independently owned by holding companies, which 63 of the firm’s current employees own shares in. Aspiriant believes that this helps provide continuity for clients and a clear road map for ownership succession.
  • Access to alternative investments: Aspiriant provides some clients access to private equity and real estate funds without charging an additional fee. This allows clients to further diversify their portfolio and gain exposure to investments that may not move in lockstep with the stock market.

Aspiriant’s downsides

  • Caters primarily to the wealthy: Given the typically $14,000 minimum annual fee, many investors just starting out or who don’t have seven-figure portfolios may feel Aspiriant’s services are out of reach. Most clients who work with Aspiriant have a portfolio value of at least $1.5 million. That’s not to say Aspiriant won’t work with more modest incomes, though. About 25% of its individual clients are not high net worth individuals, who are defined by the SEC as having at least $750,000 under management or a total net worth of more than $1.5 million.
  • No published fee schedule: Unlike many other registered investment advisors, Aspiriant’s does not publish a tiered fee schedule. The firm states that clients’ fees will fall in the range of 0.2% to 1%, but you can’t easily see ahead of meeting with an advisor at the firm how much you should expect to pay or how much you need to invest to nab the lowest fee rate.
  • Additional charges for ongoing financial planning: Some registered investment advisors include financial planning and other services beyond investing in their standard asset-based fee. Aspiriant charges separately for these recurring wealth planning services, either by the hour or per project. If you decide to work with Aspiriant, make sure to ask your advisor what comes as part of their wealth planning services.
  • Private funds lock up your money: Though the private equity and real estate funds offered by Aspiriant are unique investing opportunities, they may have limited liquidity for 10 to 15 years. Additionally, the strategies that these funds pursue “are not completely transparent to investors,” Aspiriant notes in its Form ADV.

Aspiriant disciplinary disclosures

All registered investment advisors are required to disclose in their Form ADV, paperwork that they file with the SEC, any legal, regulatory or criminal action that is material to a client’s evaluation of the advisory business or of the integrity of the management personnel. Aspiriant has had no such events over the last 10 years, meaning it has a clean disciplinary disclosure record.

Aspiriant onboarding process

To arrange an initial conversation with an Aspiriant, reach out to the firm’s director of marketing, Cammie Doder, by phone at 415-371-788, or by filling out the form on the Start a Dialogue page of Aspiriant’s website. If you live near one of Aspiriant’s 11 offices, you can meet an advisor in person. If not, plan on a phone call with an advisor at Aspiriant.

For ongoing communications with clients, Aspiriant advisors typically meet with their clients at least annually, though meetings may be as frequent as every quarter. The firm also communicates with clients over email or on the phone throughout the year. Clients receive quarterly reports, typically electronically, although portfolios smaller than $250,000 receive only annual updates.

Additionally, clients will need a brokerage account with a third party to hold their assets, since Aspiriant is not a broker-dealer and does not take physical custody of your assets. Aspiriant recommends that clients use Charles Schwab, Fidelity or TD Ameritrade, though clients are free to choose other providers. Clients will receive regular statements from these firms as well.

If an advisor has discretion to choose investments on a client’s behalf, the client will need to execute a limited power of attorney granting Aspiriant permission to execute trades.

The bottom line: Is Aspiriant right for you?

If you’re willing to pay at least $14,000 annually in fees and want a professional to handle all trading through discretionary management, Aspiriant may be worth a look. The firm may also be a good fit for high net worth individuals and family offices looking for comprehensive financial planning and wealth management, as well as investors who desire access to alternative investments like private equity or real estate funds.

While Aspiriant doesn’t have a firm minimum investment requirement, it does say that most of its clients have portfolios of at least $1.5 million, and many of its services do cater to the wealthy. Plus, the firm does not publish a clear fee schedule, so it may be hard to know before you talk to a representative how much you can expect to pay — especially if you also want financial planning services, which the firm charges extra for on top of investment management.

Before you make a decision on whether Aspiriant is right for you, make sure to do your research, compare your options and, perhaps most importantly, think carefully about your own financial situation.

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Amanda Gengler |

Amanda Gengler is a writer at MagnifyMoney. You can email Amanda here