Why Do We Use Nest Wealth As Our Asset Management Partner?
Written By: Dentro Financial
September 17, 2020
Asset management firms are everywhere, and selecting a partner to support our clients was a complicated process. We had to find a firm that shared many of the same values as our clients, including transparency, low fees, and a digital platform. Big firms that charge high fees have been battling against the disruptive change of new innovative companies for a few years now, and as an independent firm, we are free to choose the best partners for our clients.
So, why would a wealth management firm recommend the services of a fintech company to its clients? The simple answer is, we trust the data. Follow us as we review the top five reasons we chose Nest Wealth to fill this role on our team and how our clients benefit from the partnership.
Transparency
Transparency is essential for long-lasting relationships, so having an asset management partner that prioritizes this is crucial. We know that by using Nest Wealth, the fees our clients pay are disclosed upfront and displayed inside the client dashboard. At any time, our clients can see how much they have paid in fees, in terms of dollars, and in real-time. There is no guessing or hiding behind a percentage reported once a year. Our clients value this transparency, and so do we.
Equally as important as fee transparency is the ability to see how well your investments are performing; Nest Wealth has made it easy for our clients to do so. Both the amount invested and the performance a client has received are displayed on the client’s dashboard. Clients can access this information at any time from anywhere, and we believe that promptly displaying return results in this manner speaks volumes about Nest Wealth as a company. Nest Wealth’s commitment to transparency mirrors our values and gives clients genuine peace of mind. Being completely open about these two topics has been hard for the investment industry, and the fact that Nest Wealth does not need to hide or bury the fees our clients pay or the performance they receive was a major factor in our decision.
Fees! Fees! Fees! We have all seen the ads demonstrating how high investment fees can erode portfolio performance. We agree that high investment fees can be a huge issue and have elected to work with Nest Wealth because the Management Expense Ratio (MER) our clients pay is well below the industry average of 2.25%.[1*][1**] It is rare that you can get two specialized professionals that come together. The result is lower fees, but that is precisely what has happened for our clients. Working with Dentro Financial means that the MER you pay to receive a custom financial plan and a top-tier asset management portfolio starts at 1.42% per year and decreases as your portfolio’s value increases. Yes, we said it decreases! Our clients benefit from working with top financial professionals, resulting in lower fees.
Not only do our clients pay lower investment fees, but Nest Wealth also does not charge our clients fees for depositing money (money in) or withdrawing funds (money out). All fees are billed monthly, which means that our clients only pay for what they use. When it comes time to draw down on these retirement investments, for a house, or in an emergency, our clients have no additional investment fees to consider. The relationship benefits our clients, as they receive comprehensive financial planning from a Certified Financial Planner (CFP) and customised investment portfolios from a team of dedicated Chartered Financial Analysts (CFA). Although low investment fees are crucial, they become irrelevant if the portfolios fail to deliver strong performance.
Investment Philosophy
Dentro Financial, Nest Wealth, and Warren Buffett all share a common belief: clients benefit from a passive investment philosophy. In 2007, Buffett famously made a million-dollar bet against Protégé Partners that hedge funds would not outperform the S&P 500 index. [2] To no one’s surprise, Buffett won! At the same time, as the S&P 500 returned 7.1% compounded annually, hedge funds returned only 2.2%. Ouch! The same investment philosophy is used to design the asset management portfolios at Nest Wealth. By utilising passive investments that capture what the market has to offer and removing our egos from the equation, our clients receive returns that are supported by data, not emotion. Passive investments lead to more efficient portfolios that cost less, and in many cases, outperform active portfolios and “stock pickers.”
Custom Portfolios
Clients come to us because they do not want to be treated like a number. They want a customized financial plan tailored to their specific situation, which is why we believe our clients benefit from using Nest Wealth’s approach to designing portfolios. Nest Wealth utilizes custom software that considers a client’s unique situation and provides them with a custom portfolio tailored to their needs. So, in most cases, no two clients have the same portfolio. Unlike the static portfolios offered by most other firms, a more detailed approach is taken, resulting in a more tailored solution. Although this may only mean a couple of percentage point changes, those changes are often significant. The blend of tailored financial plans with custom portfolios allows our clients to get an experience that is unique to them, their situation, and their family.
Fintech Platform
The race to the digital age was already accelerating rapidly, and then the COVID-19 pandemic struck, forcing companies to adapt even more quickly. Nest Wealth has made that transition easy for our clients. Having designed their platform to be simple, transparent, and accessible, Nest Wealth makes the client experience of understanding, tracking, and accessing your money easier. We were looking for a platform that fulfilled these requirements, since this is what clients have told us they want. They do not want to have to wait for their quarterly statement to know how they are doing; instead, they want to log in and view their daily results without having to search for them or calculate them manually. Doing it this way also enables us to deliver better financial plans, as we can use current and accurate data when making financial recommendations.
Many people say that a traditional wealth management company working with a fintech company is bold, but by working with both Dentro Financial and Nest Wealth, you get the best of both worlds. All the personalized financial planning services of a boutique wealth management firm are paired with all the technological advances of a fintech asset management company. Overall, partnering with Nest Wealth provides our clients with more benefits than any other platform or investment vehicle we have evaluated. As an independent firm, we are always open to new ideas that benefit our clients. If you have any suggestions, we would love to hear them!
Endnotes
[1]Calculation by Dentro Financial of 2.25% = 1.15% Management fee* and 1.10% Advisory Fee**
(*) Morningstar Inc Median MER.
(**)**Advisory HQ. “What are the Average Financial Advisor Fees & Investment Fees Being Charged in 2020?”
[2] Orr, Leanne. “Protégé Partners Pays Up in Buffett Bet.” January, 08, 2018
