If your financial advisor invites you to a fancy steakhouse for lunch… run.
It sounds nice on the surface. Who doesn’t like a free filet mignon? But in the financial industry, a free lunch is the surest sign that you are massively overpaying.
The Math of the “Free Lunch” (And the Hidden Subsidy)
The traditional industry model charges 1% of Assets Under Management (AUM). If you have a $2,000,000 portfolio, you are paying that advisor $20,000 every single year. If you have $5,000,000, you are paying $50,000.
For $50k a year, they better buy you a steak.
But here is the dirty secret: The traditional model forces wealthy clients to subsidize everyone else. It costs a firm roughly the same overhead to manage a $500k account as it does a $5M account. But the $500k account isn’t profitable on its own. So, the firm charges the “A-Client” ($5M) an exorbitant fee to cover the costs of the “C-Clients” ($500k).
The steak dinner isn’t a gift. It is a distraction to keep you from realizing you are subsidizing the firm’s entire operation.
At Financial Zen, we don’t do subsidies. We do Blue Ocean Planning.
We have completely disrupted the pricing model to democratize financial planning. We don’t segment our clients into “A-Lists” and “C-Lists.” Whether you have $100,000 or $10,000,000, you get the same access to us because we charge based on Time, not wealth.
How We Fixed the Pricing:
- The Membership Fee (For Our Time): We charge a flat monthly membership fee for advice. Everyone pays the same because our time costs the same. It doesn’t take me 10x longer to talk to a client with 10x more money. Result: The $10M client isn’t subsidizing the $100k client.
- The 0.25% AUM Fee (For the Machine): We charge commodity pricing (0.25%) for investment management. This pays for the systems—the robo-advisor tech that handles Rebalancing and Tax-Loss Harvesting. Result: This is an investment that usually pays for itself in tax savings.
The Bottom Line: Our $10M member gets the same access as our $100k member. You aren’t paying for my country club membership, and you aren’t paying for other clients’ accounts.
You are paying for pure, unconflicted advice and high-tech portfolio management.
So, no. I won’t take you to lunch. But I will save you thousands of dollars in fees so you can buy your own lunch—and maybe a boat to go with it.
That’s Zen.