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How Wealthramp Makes Money: Complete Transparency

How Wealthramp Makes Money: Complete Transparency

April 10, 2019

The most frequently asked question that I hear is, “Pam, how does Wealthramp make money?

My answer is straightforward and with complete transparency about who pays whom––that’s how our company was set up and that’s how we operate every single day.

We Make Money With a Professional Fee-Share Arrangement.

As a registered investment advisory, we refer you to a choice of independent fiduciary advisors with common interests and goals to yours––each of whom has met our vetting process. Once you choose one advisor from Wealthramp and you begin a successful relationship, that advisor then agrees to share a small portion of your fee with us. This way, our interests are aligned.

Getting Matched on Wealthramp Does Not Result In Higher Fees to You.

In our contract with Wealthramp advisors, they agree that they will not alter or increase fees you pay for their services whenever they compensate us for gaining a new client. Wealthramp’s share can be as much as 25% of the fee that the advisors are paid. But, for example, when a client only needs a one-time financial plan or just a planning relationship with his or her advisor, our share is typically less than 15% of the planning fee.

This fee-sharing is a typical agreement throughout the financial industry; it’s frequently used by financial advisors, CPAs and estate attorneys to pay one another for referred business.

There Are Literally Hundreds of Thousands of Advisors -- We Hand-Select a Few Hundred.

We know there are roughly 500,000 individuals in the U.S. who label themselves as ’ financial advisors’. We also know that 90% of those advisors are brokers or agents who work for brokerage  firms or insurance companies and can’t meet our fiduciary qualifications. At the same time, simply inviting all independent registered advisors who consider themselves fiduciaries doesn’t automatically mean they are the best qualified. Wealthramp is exacting and thoughtful about our selection process.

Won’t Wealthramp Miss Out On Great Advisors Who Don’t Want to Share Their Fees?

Almost all professional wealth managers who want to stay in business or grow organically are happy to share a fee after they start working with a client, as they do with other professionals who refer clients to them, and vice versa. There are plenty of A-Grade advisors in the country who can meet our fiduciary best-practices qualifications. We turn away advisors a regular basis who want to pay us but we don’t want to lower our standards. That’s true even when we have to say no to advisors operating in areas where we really need new advisors most.

The bottom line is, we don’t make money simply by adding more and more advisors. In fact, our goal is to keep the number of vetted advisors manageable so that we curate a community of like-minded fiduciary advisors to cover the U.S. We strive for a low turn-over among the advisors, and we get to know each one personally and at a deeper level. In fact, I’ve personally either met face to-face or interviewed on the phone or Skype every advisor on our platform. For us, it’s about having the right advisors, so less is actually more.

Financial Planning is the New Black.

Wealthramp’s fees are low because we want to encourage more financial planning and education around the planning process. This is especially true for younger savers and for those who may not have yet invested as much as they wanted for retirement. We’ve interacted with users who came to Wealthramp and really needed planning help but truly couldn’t afford it. The advisors who were matched in those cases were more than willing to donate their time and forgo their fees entirely. This is the kind of service we feel will grow our business because when you have an outstanding experience with an advisor you met on Wealthramp then you’re very likely to tell your friends and family about it.

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Respectfully, while I'm sure that Wealthramp's fee is disclosed at the point of engaging the client, I find the claim of "complete transparency" untrue from a prospective client standpoint.  I'm unable to find Wealthramp's exact solicitor fee (in either absolute dollars or a percentage of the Advisor's fee) anywhere on your website.  Additionally, Wealthramp's Form ADV Part 2A also does not disclose this information.  I was interested in utilizing your service, but this is a deal breaker for me.  Finding out your portion of the overall Advisor's fee, AFTER I provide MY information is not acceptable.  Please understand that I'm aware that you only affiliate with Advisors that agree to not scale-up their own fee in order to maintain their own profit margin.  However, many factors go into Advisor pricing and not knowing such a large component up-front is not acceptable to my selection process.  Being disingenuous about "complete transparency" within your own prospecting methods is entirely unacceptable and undermines the ethical openness that I expect in selecting someone with whom I will entrust my financial future.  Thank you.

Thank you for leaving your comment!

Our Form ADV does include the precise language about how Wealthramp gets paid. In fact, a user cannot get their matches until they’ve checked the box that they acknowledge links to both our Form ADV and solicitor’s fee disclosure documents.

In addition, we provide this information in our terms and conditions.

It’s taken me four years to curate the network of advisors I’ve found to be not only acceptable, but exceptional. I did a lot of thinking about how I can align all the stakeholders’ interests and still make money. We’re proud of what we’ve build so the last thing I want is for anyone to be confused about our referral fee arrangement with advisors in our network.

I wish I could write you personally, but I don’t have your email so hopefully, you’ll read this. Thanks again for suggesting we make our ADV more visible on the site. I hope you’ll return, and know I’m available to answer any questions personally. My email is pam@wealthramp.com

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