Why Flat Fee?

The way we charge for our work is a reflection of how we think financial advice should feel: clear, with as few conflicts of interest as possible, and grounded in the value of the advice we deliver.

That is what led us to a flat fee model.

Most financial advisors today are compensated either through commissions received by selling products (fee-based) or by charging a percentage of the assets they manage (AUM). For many clients, that structure works fine. It is familiar, widely used, and often convenient because fees are deducted directly from investment accounts. Many AUM advisors are doing great work for their clients, and some of those clients like having the fee tied to portfolio size.

But it also has its disadvantages.

One percent does not seem like much. Yet over time, especially as portfolios grow, that percentage can become a meaningful and increasing cost without a clear connection to the value being delivered. It can also create subtle conflicts when advice involves moving money in or out of managed accounts. For example, if it makes sense for you to keep a 401k with a former employer, an advisor may still prefer it be moved. Not out of bad intent, but because that is how they are paid. It’s human nature.

Flat fee is designed to better align how we are paid with the value we provide, while reducing those conflicts.

How flat fee works

At TapestryFP, we charge a single, clearly stated fee in dollars based on the level of service you choose. It is based on the complexity of your situation and the scope of the work involved. It does not fluctuate with market movements or portfolio size during the engagement. From time to time, fees may be adjusted at the end of a contract period to reflect changes in scope or inflation, but the goal is consistency and clarity.

Why don’t more advisors do this?

Many firms like the AUM model because it creates less friction and increases the stickiness of the advisor/client relationship. Fees are spread across accounts, automatically deducted, and often not felt in the same way as a direct payment. Unlike your checking account, most clients never feel it—less friction, just like a credit card. Some advisors worry that greater transparency will invite more direct questions about value and clients will potentially stop engaging the firm.

We believe a different kind of transparency is in clients' best interest.

Why flat fee?

In a flat fee model, clients know exactly what they are paying to the dollar. We encourage clients to pay the fee from their bank account because that fosters a clearer evaluation of the value you receive.

Some clients still prefer the convenience of fees being deducted from investment accounts, so we accommodate that if that's what you choose.

One advantage for us is stability; Our revenue doesn't fluctuate if the market is down, nor do we get a bonus when it's way up. Our business depends on whether clients are happy and continue to see value in the relationship.

For us, it comes down to alignment. We want to work with clients who value the simplicity and transparency of a flat fee.

Here are some other thoughts about why we chose flat-fee over other fee models:

• Account size alone doesn’t reflect financial complexity or the work required to deliver proper planning and advice.

• The value of advice in every area of your financial life is emphasized, not just investment performance.

• We have fewer conflicts when recommending strategies that affect the size of the portfolio we manage for you.

• Clients with larger portfolios aren't indirectly subsidizing the service to clients with smaller portfolios.

• High earning professionals without large portfolios can still be served when they might not fit other fee models.

• Knowing the fee won’t increase, clients are more willing to consolidate assets, letting us handle the day-to-day management, reduce idle cash, and optimize tax planning.

• A flat fee creates less drag on long-term performance than a percentage-based fee that increases as your portfolio grows.

• Advisory fees are predictable and easier to budget.

• We are not incentivized to chase returns or take unnecessary risk to increase revenue.

• It reflects how we would choose to pay for advice ourselves.

If you’re a client or advisor who wants to discuss this further, please email us. We’re always happy to hear your thoughts and explain what we mean in greater detail.