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The Most Important Asset Allocator: You

By December 20, 2016September 21st, 2022No Comments

You—not any advisor—are responsible for deciding how much of your assets you spend for various advisory services, based on what you’ll receive in return. Your decisions will have a meaningful impact on your wealth.

Under the status quo, wealth management clients are focused on investment management services, paying hefty fees for a confusing and often unsuccessful set of solutions. But times are changing, with competition and technology leading to more transparency and lower-cost options.

Case in point: Passive investing has caught fire with individuals and institutions alike. Vanguard, best known for its low-cost, passive ETFs and mutual funds, attracted $236 billion from investors in 2015, ending the year with more than $3.3 trillion of assets under management and cementing its place as the world’s second-largest asset manager1.

In all, investors put $361.8 billion into index funds and withdrew $139.5 billion from actively managed stock and bond funds through November 2015.

Meanwhile, technological advances are threatening to overturn Wall Street’s old order. So-called robo-advisors such as and are providing well-diversified portfolios of low-cost ETFs tailored to meet investors’ goals. The new breed of “robos” not only define and implement customized portfolios, but they also rebalance and tax-manage them for a fraction of advisors’ traditional fee.

As for transparency, technology is helping investors understand whether they’re getting enough value from their fund managers. Tools such as and allow investors to view their assets, see clearly what they pay, and understand the alternatives.

Those who are serious about preserving and increasing their family’s long-term wealth must break from the “investments-first” mindset. One way to do that is to understand the services an advisor provides, and the relative value of each service.

While there are numerous ways to divide the responsibilities that an advisor has to their client, we segregate them into four primary categories:


If you’re not receiving any or all of the services, then you shouldn’t pay for them. Furthermore, each category should have a maximum fee: After all, many of the services an advisor provides require the same effort for a small account or a large account. Wealth advisory clients should pay only for the value that is truly being delivered.

That’s not the way the industry has traditionally worked, however. Advisors frequently charge a fee starting at approximately 1% or more, regardless of the range of services they deliver. But a very different approach is emerging: unbundled fees, which allow clients to pay for exactly the value they receive. We hope that the unbundled fee structure will ultimately gain ground, forcing advisors to be accountable for the services they do and do not provide.

1 Wall Street Journal, Investors Poured Record $236 Billion Into Vanguard Last Year, January 2016
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