Sometimes life gives you lemons. Sometimes you give yourself lemons.
Last Monday, when we announced a forthcoming fee schedule, we quickly learned that we had made not only a clerical error, but also an error in judgment. Advisors were loud and clear: the changes could have a negative impact on their clients.
Over the course of the week, we tweaked our fee schedule: corrected two mistakes, rolled back some changes and amended others. By Friday, however, it was clear these piecemeal modifications weren’t up to our standards. This was an opportunity to think deeply about how something as simple as a fee schedule could be used to objectively improve client outcomes and make advice more accessible.
So we nuked it—and went back to the drawing board to design a fee schedule that fully represents our commitment to offering advisors and their clients the simplest, most transparent, and competitive pricing in the industry.
What’s changing?
Fewer fees.
We completely eliminated over 50 line items to reduce overall costs and complexity.
Industry-leading pricing.
For the items that remain on the fee schedule, we went line by line to ensure that we are at or better than our competitors.
Simple documentation.
The new fee schedule now lives in an intuitive brochure that any advisor or client can easily understand.
How does the new schedule compare to the broader industry?
In addition to offering lower fees, we are also committed to transparency – these are straightforward terms without hidden conditions.
And unlike our competitors, we aren’t giving preferential treatment to specific products. Doing so can force a trade off between cost savings and optimal investment choices.
More flexibility, lower costs
We now offer ~4,500 MFs without transaction fees and are adding ~3,000 more over the next few months. Any fund on our platform that is NTF at Schwab and Fidelity (with the exception of their proprietary funds) will be NTF at Altruist. If a fund does have a transaction fee, we aim to have the lowest transaction costs in the industry.
For example, all Vanguard and DFA funds will be $5 at Altruist. All transactions in all fund families under $1,000 will have no transaction fees. And our standard fee for transaction fee funds will be $20.
We’re also offering over 200 Money Market Funds–50+ without transaction fees.
And we continue to support commission-free fractional trading of equities and ETFs.
This approach empowers firms of all sizes to do what they feel is best for each client without having to worry about transaction costs.
Altruist’s product philosophy
Last week, I saw several variations of the following statement:
“Well, if they lower fees, they’re just going to make it up somewhere else.”
That’s both right and wrong.
Yes, we do need to “make it up” elsewhere. Our aim is to run a successful business that transforms the industry. But we’re going to do that not with hidden fees, but by bringing more advisors onto the platform.
Fees are not now, and will never be, our primary source of revenue. We, and other custodians, make money primarily via interest on cash, fully-paid securities lending, and other channels like margin, options, etc. Regardless of the source, all revenue at Altruist is reinvested into our product.
At Altruist, we abide by a simple product philosophy:
- Is this feature good for end clients? If we’re going to move forward, our answer must be “yes” — that’s our Sacred Rule.
- Is the feature good for RIAs?
- Can this feature work for Altruist?
Together, these questions guide us toward making independent financial advice better, more affordable, and accessible to everyone.
Going forward
First, we learned that more notice is better. Starting now, we’ll be increasing our notice period from 30 days to 60 days for all fee changes.
Second, this process has been a great reminder that Altruist advisors bring value to our company in ways that go beyond our product roadmap and service model. To further codify your input into our business, we’ll be launching a customer advisory board later this year (more info to come).
And finally, we will continue building Altruist to deliver the highest value at the lowest possible cost.
Our new fee schedule is available here. The official notice will go out today; changes will go into effect on July 1st, 2024.
Thank you for your feedback—we are listening. More to come,
Jason
