“It's hard for traditional advisors to service these clients at the 1 percent of assets fee structure; it's not profitable for them,” says Facet Wealth co-founder and CEO Anders Jones. “We’re trying to bring a high-touch, white-glove experience to clients with less than $1 million who want a more holistic wealth management solution.”
Jones says Facet Wealth’s average client has a net worth of $350,000, with about 60 percent of that, or roughly $200,000, invested with the firm.
Once a client joins Facet Wealth—and Jones says it’s successful 85 percent of the time in transitioning them over—they are assigned a single dedicated certified financial planner just like at a traditional firm. But instead of charging 1 percent of AUM, clients pay about $500 to $5,000 per year, based on the number of financial planning services they sign up for from among the dozen-plus available.
The average client pays about $1,500 a year, Jones says, which works out to about 0.45 percent of their average net worth, or a significant discount to what they would pay at a traditional firm. The typical client is 55 years old.
While Facet Wealth invests client money at no charge in passive market-tracking portfolios, Jones says the company doesn't care whether or not it manages money. “Our value added is on the planning side, he says. “We have a lot of clients we don't manage money for. It's a very different approach.”
Jones says technology enables mass-affluent clients with $200,000 to $1 million in net worth to be profitable for Facet Wealth.
“Traditional RIAs spend three hours on preparation for every one hour they spend with the client,” he notes. “We've gotten that three hours down to about 30 minutes. So our advisors can spend more time with clients. Our platform is built on making our advisors a lot more efficient so they can work with more clients, which lowers the cost to the client.”
Jones says the company, which started in early 2016, employs more software developers than it does advisors. It currently has seven certified financial planners, with three more expected by year end.