Servo can help you create a plan to achieve your most important financial goals and manage an investment portfolio for you to achieve those goals. This process is designed to give you a better investment experience, greater peace of mind, and save you the time you’d normally spend researching, managing, and worrying about your money.
As of early 2023, Servo works with about 60 individuals, families, and retirement plans and manages over $100,000,000 of client assets. This relatively small number of clients allows Servo to provide a high level of individualized attention and advice.
No. As a matter of fact, most of our clients do not live in Oklahoma City, or even in Oklahoma. We have clients all over the United States who are looking for an experienced financial advisor who can provide a high level of personalized advice.
Servo doesn’t charge commissions, our only compensation comes from the %-based fee that we charge to manage investment portfolios. Our fee is 1% per year on the first $2,000,000 of client assets, 0.50% on amounts between $2,000,000 and $9,999,999, and 0.25% on amounts above $10,000,000.
Fees (1/4 of the annual fee) are assessed quarterly based on the account value at the end of each quarter and are generally debited directly from each account. Each client receives a quarterly invoice letting them know what their fee is.
Servo doesn’t have different fee schedules or different services. We view financial planning, investment management, and ongoing advice as one service for which we charge a %-based fee in accordance with the amount of assets we’re managing. This approach ensures maximum transparency and simplicity for our clients, and avoids the risks that we will produce overly complex or redundant plans that create unnecessary hours of billing and added fees for clients.
Servo has two types of clients we work with: individuals and families with established wealth (investment portfolios of greater than $500,000), and those with emerging wealth (less than $500,00). We have different levels of service that work best for these different types of investors, but we can effectively accommodate both without charging excessive fees or providing a watered-down investment experience.
Servo’s only business is providing ongoing advice and investment management, Servo is not a brokerage firm and does not hold on to client funds. Instead, Servo utilizes an independent brokerage firm/custodian—Charles Schwab or Betterment-where clients maintain their accounts and keep their investments. Servo requires a Limited Power of Attorney on client accounts that allows us to buy and sell investments (to manage client portfolios).
The goal of our financial planning and Asset Class Investing approach is for you to be relatively more confident and focus less on your short-term financial progress. That being said, most clients wish to touch base two to four times per year to discuss various aspects of their plan, the investment portfolio, or how recent events impact our decisions. The exact schedule of ongoing communication is discussed with each client at inception. All clients receive a quarterly report with a summary of their accounts, inflows and outflows, rate of return, and portfolio and asset class commentary.
Simply buying an index fund (such as the S&P 500) or index funds (a mix of Vanguard funds) is not the same thing as developing a financial plan or designing a portfolio that is appropriate for that plan. It is unlikely the results will be the same.
What’s more, most DIY (do-it-yourself) index fund portfolios are not designed optimally—they hold excessive amounts in lower-returning in bonds and are not adequately diversified across small cap and value stocks specifically.
Finally, most individual investors who own index funds don’t stick to their investment choices consistently, buying and selling at the wrong time, which can lead to “behavioral costs” that far exceed the 1% fee for Servo’s professional management and advice. In investing, as in life, you get what you pay for.
Most financial advisors are employed by Wall Street brokerage firms and are still charging some form of commissions to sell their firms’ products. They put their own interests (profits) ahead of their client. As an independent firm and Registered Investment Advisor (RIA), Servo acts as a fiduciary and puts our clients’ best interests first.
Our combination of customized advice and individualized attention to our clients is unique in the industry and helps create greater peace of mind.
We are among the foremost experts in the financial industry in Asset Class Investing, and we design our portfolios to have higher expected returns that typical DIY model portfolios or other advisor allocations.
We are more disciplined as advisors when it comes to sticking to our investment approach and not constantly tweaking the allocations or swapping out different funds in an effort to appear to be “doing something.”
Finally, the relatively small number of clients we have allows us to provide more proactive advice which helps increase the chances that they remain disciplined and stick to their plans in difficult times.
Everything we do is centered around giving our clients a better investment experience than they can get anywhere else.
No. We believe the fee we charge—similar to the industry average—is fair in relation to the ongoing value we try to provide. We believe that our clients should see 2-3% per year value (over time) from our planning, investing, and ongoing advice (especially including the time it should save you having to do it yourself), which far exceeds the 1% that we charge.
And if our goal is 2-3% more in value—which is a different amount of money depending on your portfolio size—then charging a fixed-dollar fee doesn’t make sense either.
Our service is not a “zero-sum” arrangement where Servo benefits at the expense of our clients; we believe it is “positive sum” in that the fee we charge allows us to be profitable and sustainable—even in difficult times—and also helps our clients to be better off financially than they would be without us (on their own or with another advisor).
As an independent financial advisor, we are free to invest in any products that we believe are best suited to achieve our clients’ goals. But it also means that we should only invest in the products that we believe are best for our clients and that we own personally (“skin in the game”).
Our research covering multiple decades finds that the mutual funds and exchange-traded-funds (ETFs) from Dimensional Fund Advisors do the best job of capturing the returns of the asset classes (for example US small cap value) we wish to own in portfolios. We continually compare our funds to alternatives—both existing and new offerings—but we continue to believe that Dimensional Funds are the best way to implement an Asset Class Investing approach.
An Asset Class portfolio holds a small number of well-diversified stock and bond categories, or “asset classes”, with unique return and risk characteristics. These include large and small, growth and value stocks, and short-term bonds, in developed markets. Asset classes with the highest expected returns—for example small cap and value stocks—are overweighted in relation to their market weightings.
Asset Class portfolios are rebalanced periodically to ensure they continually reflect their original design and return expectations.
The goal of an Asset Class portfolio is to earn a higher and less unpredictable rate of return compared with indexing.
Asset Class portfolios are best implemented using the mutual funds and ETFs from Dimensional Fund Advisors (DFA) because of how they are designed and managed to fully capture the small cap and value potential returns.
All of Eric’s personal and family investments (a snapshot is available upon request to clients) is invested in Asset Class portfolios and the Dimensional Funds that are recommended to Servo clients. From that perspective, Servo is invested along side its clients and literally “puts its money where its mouth is.”
You shouldn’t invest without having a plan. But it is always a good time to establish a plan that will determine how you can achieve your goals. From there, the best time to invest in a portfolio that makes sense for your plan is immediately, because it is the allocation and approach that gives you the highest probability of success. There’s no reason to wait to move to a better portfolio.
There is always the chance, especially in the short run, that a well-designed portfolio can decline in value temporarily. But increases are far more common than decreases in value, especially the longer the period in question.
And there is no way to be able to forecast ahead of time when stocks will go down in value—even if recent returns have been negative, a diversified stock portfolio or stock-oriented portfolios have positive future expected returns every day, week, and month.
With Madoff or other Ponzi schemes, the most common situation finds that the firm doing the “investing” is also holding on to client assets (and sending their own, fictitious statements). There’s no system of “checks and balances.”
When you hire an independent investment advisor like Servo, there is a system of checks and balances that protects you from theft or fraud. Servo only provides ongoing advice and investment management, we do not take possession of funds. Client assets are held at a separate firm—Charles Schwab—that provides custodial services (executes trades, provides web access to accounts, provides quarterly statements, etc.). Our portfolios are then implemented using yet another independent firm—Dimensional Funds, which are again separate and unaffiliated with either Servo or Charles Schwab.
We do not invest client funds in any private or alternative investments. We don’t believe that net of fees and (where relevant) taxes that private investments and alternative assets add value to a well-designed Asset Class portfolio.
Private and alternative assets are often marketed as more sophisticated investments that are appropriate for high-net-worth investors, but the truth is that these strategies are simply repackaged active management funds that unnecessarily increase portfolio complexity and reward the managers far more than their investors.
Servo does not do taxes or create trusts or estate plans. Our business is focused on our specific area of expertise and where we can provide the most value—financial planning, investment management, and ongoing advice. We do have relationships with CPAs and estate planning attorneys who specialize in their discipline, and we are happy to provide referrals to clients when needed. We are willing to work closely with our clients’ existing accountants and attorneys to ensure that clients are having all of their financial needs addressed by the most competent professional.
You are free to terminate your relationship with Servo at any point in our relationship. You will be refunded any unused part of the quarterly advisory fee you have paid.
Servo has a simple and straightforward fee structure— we charge a 1% annual fee on the first $2,000,000 of assets that we manage, 0.50% on amounts between $2,000,000 and $9,999,999, and 0.25% on amounts above $10,000,000. No hourly charges, no financial planning fees, no one-time costs
Servo’s typical client is an individual or a family, and has at least $1,000,000 in investable assets that they are able to commit to their long-term goals, however individual’s and families with fewer assets are considered on a case-by-case basis.