First Ascent charges advisors who use its outsourced portfolio management strategies a flat fee of $500 per account, regardless of account size.
When the firm launched in June, it capped fees at $1,500 on discretionary accounts and $1,000 on nondiscretionary accounts.
At the end of last year, First Ascent decided to offer to a handful of advisors the opportunity to open accounts at the $500 flat fee, as a way “to try and get business in the door before the end of the year,” according to Scott MacKillop, CEO of the Denver-based firm.
And it worked. In January, First Ascent rolled the flat fee out to all advisors before officially announcing the pricing change in February.
“We should – in a very short period of time – have over 40 advisors working with us,” MacKillop told ThinkAdvisor. “The pricing did make a big difference. So we very quickly decided to make that our pricing policy.”
By the end of the year, First Ascent had seven advisors signed up. Then they changed their pricing, and since Jan. 1 they’ve brought on 27 advisors. They also have another 17 advisors on deck, “working on paperwork and getting them signed up to work with us,” MacKillop said.
While First Ascent has seen success with flat fee pricing, MacKillop admits it may not be for everyone.
“The flat fee idea works for us. It works for our business model, and so we’re going with it,” MacKillop told ThinkAdvisor. “It doesn’t necessarily work for everyone … Everyone should look at their own business to see what really would work.”
According to MacKillop, the assets under management fee schedule has worked “really well” for the industry for many years.