THE BEST WAY TO PREDICT YOUR
FUTURE
IS TO CREATE IT
-Abraham Lincoln
Currently Accepting Singularity & Nucleus Tier Clients Only
Independent
01
Exploring the W-2 Model:
In the standard W-2 Model, meaning financial advisors who are employees for an institution, Advisors are beholden to the objectives, desires, and goals of their employer. These goals aren't necessarily the same goals of the Client.
The standard fee structure in finance can vary greatly from institution to institution. W-2 Advisors can earn income from a variety of sources such as advisory fees from their Clients, W-2 paychecks from their employer, as well as commissions from mutual fund company's, annuity companies, and stock and bond transactions. As you can imagine, this creates significant conflicts of interest. Who is the advisor actually "working" for? You? Their employer? A random mutual fund? A random annuity company?
Exploring the Independent Model:
As Independent Advisors, we exclusively earn income through the fees paid directly by our Clients. We refuse to be influenced by sales quotas, affiliations with particular financial products, or an employer, and therefore have a great degree of autonomy.
The absence of external compensation helps build a solid foundation of trust, where your goals naturally become our top priority because you are the only ones paying us.
Simply said, if you want objective advice and minimized conflicts of interest, we advocate choosing an Independent Firm.
Keep reading to see how our fee structure works and why we are legally prohibited from accepting commissions.
Fee-Only Fiduciary
02
Defining a Fee-Only Fiduciary:
A Fiduciary is someone legally obligated to act in another person's best interests. Fee-Only Advisors are Fiduciaries 100% of the time but not all Fiduciaries are Fee-Only Advisors.
Fee-Only Advisors are legally prohibited from accepting commissions. This was a decision we made at our inception when we chose to legally register as a Fee-Only Firm. Every firm faces this same structural decision: legally commit to a commission-free model (meaning Fee-Only) OR opt for a compensation structure which includes commissions.
Fee-Only Pay Structure:
Most Fee-Only Firms generate income by charging a percentage of Assets Under Management (AUM). This means clients pay a yearly fee based on a percentage of the total number of assets they have invested with the firm. Let's explore rationale behind our belief in the superiority of this model.
Symbiotic Relationship:
At the heart of the Fee-Only Model lies a shared ambition between Client and Advisor: the pursuit of asset growth for mutual financial gain. Clients naturally desire their asset to grow. Fee-Only Advisors are equally focused on this goal as they are directly incentivized to enhance the value of their Clients' portfolios. This is because as the Clients AUM grows, so does the total fee payout. A 1% fee on 1 Million dollars is a lot more than a 1% fee on $10. We believe the Fee-Only Model is the epitome of a symbiotic relationship.
Exploring Potential Issues of Alternative Pay Structures:
1) Many institutions collect 60%-80% of W-2 Advisor's AUM fee, leaving only 20%-40% for the Advisor. It would be hard to argue that this is not standard practice prevelant in finance. Advisors in this pay structure need substantially more clients to earn the same income as advisors who keep the Lionsshare of the AUM fee.
2) When advisors are paid commissions, they are often paid up-front, incentivizing a transactional nature for the relationship. Upfront payments can lead to a sense of 'already compensated' for those investments, potentially influencing future motivations and behavior.
3) In the W-2 Model, you, the Client, usually "belong" to the institution, not to the Advisor. This can negatively impact the Advisor's sense of "owning" the relationship. If the Advisor decided to leave, they usually cannot solicit previous clients for business. Many are unaware of the potential significance this mindset can play in the quality of the client-advisor relationship.
***Please note: Independent does not mean Fee-Only. Plenty of Independents Firms exist who chose to NOT adopt a Fee-Only Model and instead chose to accept commissions when they registered their firm. For the best finance experience possible, we advocate choosing a firm that is Independent AND Fee-Only
Active Management
03
Using Long-Term Investing as a Copout:
Tell me if this sounds familiar: You watch your portfolio fall enough to concern you. You call your Advisor and he tells you “don’t worry about short-term market swings. You are a long-term investor.”
Long-term investing is undisputedly a fundamental principle of good investing and one that we use with our clients. With that said, we believe it should not be justification to be lazy. We define a “lazy advisor” as an advisor who collects advisory fees while doing as little work as possible. Simply put, “lazy advisors” don't use Tactical Asset Allocation.
Tatical Asset Allocation:
Xenith Capital strongly believes Tactical Asset Allocation is responsible, proactive, and the core of active management. Tactical Asset Allocation involves actively adjusting the allocation of assets within a portfolio (meaning adjusting ratios of asset classes such as stocks and bonds) in response to changing market conditions and economic forecasts (such as geopolitical events or historical swings like the “Santa Clause Rally”, “September Selloff”, etc.).
Tactical Asset Allocation offers investors the advantage of adaptability and flexibility in their long-term investment strategy. This is because Tactical Asset Allocation aims to capitalize on short to medium-term opportunities, while minimizing downside exposure. This makes it a valuable tool for those seeking to achieve better risk-adjusted returns in their investment portfolios.
Tax Loss Harvesting:
Xenith Capital also utilizes Tax Loss Harvesting, a strategy used by investors to minimize their tax liability by offsetting capital gains with capital losses. This practice can help individuals and businesses to reduce their overall tax burden, thereby increasing their after-tax returns on investments. Tax Loss Harvesting allows for more efficient portfolio management and can enhance long-term investment performance.
Data- Driven Portfolios:
Finally, our active management strategy revolves around data. Data-Driven Portfolios are constructed by leveraging advanced analytics and machine learning algorithms to analyze vast amounts of market and financial data. This approach allows us to identify unique investment opportunities and optimize portfolio performance by adapting to market changes in real-time. We emphasize a holistic view of risk management, ensuring that our portfolios are not only optimized for returns but also resilient to market volatilities. By continuously monitoring and adjusting our strategies based on new data insights, we aim to deliver superior returns and meet our clients' investment objectives.
04
BOUTIQUE
"Simplicity is the ultimate sophistication."
- Leonardo da Vinci
Less that 100 Clients:
Xenith Capital is highly protective of our Boutique Firm status. Our number one measure in place is to cap each Advisor to 100 Clients. Maintaining less that 100 Clients per Advisor give us quality control and personalized attention in our service.
The 100 Client limit is not just about service or exclusivity; it allows us the freedom to be highly selective of who we give the 100 slots to.
Our ideal client is someone we like and someone we genuinely connect with. Of course we love it when clients understand the economy, but seeing the potential to build enduring, close-knit, relationships is far more important to us. The Boutique nature of our firm allows us to build a dream book of business and the nature of the Fee-Only Model is what allows us the liberty to prioritize quality over quantity.
High Client Loads:
Advisors who receive comissions often have motive to continusoully generate new clients. This can lead to a high client load, potentially causing compromised service quality and a more strained client-advisor relationships.
TECHNOLOGY
05
Our Stance on Tech:
Xeinith Capital was founded by a man whose love of Technology was so strong that he was torn between becoming a Tech CEO or a Finance CEO. Naturally, Technology became the lifeblood to our approach. We are as passionate about Technology as we are about Finance!
Let's consider Moores Law for a moment: it states that the number of transistors on a microchip doubles approximately every two years, while the cost of computers is halved. This exemplifies the rapid, exponential growth of Technology itself. In the finance sector, staying ahead means embracing the latest Tech developments.
Tech & Boutique Firms:
Boutique Firms have an advantage in this. Our smaller client base enables us to quickly adopt and implement new technologies.
Imagine this example: a revolutionary platform emerges, 50 times more advanced than its nearest rival. An Independent Boutique Firm, serving under 100 clients per advisor, could adopt this new technology quickly.
Tech & Large Firms:
Contrast this with large institutions that have million of clients; they may take years to complete the same task. By then, the technology would likely be outdated, surpassed by newer and better options, making the transition seem futile and potentially trapping them in a cycle of outdated technology as they could naturally be reluctant to initiate another lengthy transition so soon.
This reality profoundly affects W-2 Advisors, who are bound by their employer's tech choices and don't have the autonomy to switch platforms or software as they might wish.
Being Boutique and Independent give us the ability to make strategic moves when they make sense.
06
EDUCATION
"The more you learn, the more you earn."
- Warren Buffet
Xenith Capital loves assisting people in their efforts to become more financially literate. Nothing delights us more than then seeing lightbulbs go off when connections happen. Here is how we place an emphasis on education:
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Regular Market Updates: Staying informed is crucial. We provide regular updates on market trends and movements, helping you understand the factors influencing your investments.
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Timely Economic Information: We keep you abreast of significant economic and geopolitical events as they happen, ensuring you have the latest information to make informed financial decisions.
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Personal Discussions: One-on-one interactions allow us to understand your individual needs and provide tailored advice.
07
3-Tier System
Xenith Capital operates using a carefully structured 3-Tier System to manage our clientele, organizing clients into tiers – Singularity Tier, Nucleus Tier, and Binary Tier – based on their asset levels managed by our firm. This structure ensures that the quality and extent of services provided are in direct correlation with the fee paid by each Client, with higher AUM receiving more comprehensive services.
We have established a maximum client capacity for each tier to ensure quality control and maintain balance within our Advisor's books of business. By setting these caps, we reserve a portion of our client base for those outside our target market (the Nucleus Tier) thus broadening our reach while upholding our high service standards and boutique character. Xenith Capital reserves the right to accept clients over or under these limits on a case-by-case basis.
Singularity Tier
5 Million+ AUM
Capped to 20 Clients per Advisor
Our Top Tier service is inspired by the Technological Singularity, symbolizing a future where exponential technological advancements redefine growth.
Nucleus Tier
1 -5 Million AUM
Capped to 50 Clients per Advisor
Our target market is modeled after the nucleus of an atom, a symbol of strength and centralization. Just as the nucleus forms the core of an atom, holding it together with its powerful forces, our Nucleus Tier acts as the pivotal core of our wealth management services.
Binary Tier
<1 Million AUM
Capped to 20 Clients per Advisor
Binary code forms the fundamental building blocks of all digital languages, much like our first tier serves as the foundational entry point into the realm of tailored wealth management.
08
FRIENDS & FAMILY
Xenith Capital Advisors are pleased to provide a bonus service: complimentary consultations for the family members and very close friends of our existing clients, regardless of their asset levels.
For example, if you have a son or daughter who just graduated college and needs real financial guidance, or a brother or sister who has fallen on hard times, we would be honored to jump on a phone or video call and help point them in the right direction.
***Please note: Xenith Capital previously accepted family members of existing clients as new clients to the firm, regardless of asset level. We have phased out this practice to maintain our boutique character. However, we continue to honor this commitment to all family members who are grandfathered in.
Prospective Clients
Xenith Capital is highly selective and only accepts new clients on a case by case. If you think we may be a good fit to develop a working relationship together, reach out in the "Let's Chat" icon in the bottom right hand corner.
