Jan 18

2011 Review and 2012 Plans

by Anthony Farella


Over the holidays, many of our clients and friends asked how business is going.  I thought it would be a good time to provide an update on Rockbridge Investment Management and what we are looking forward to in the New Year.

Financial Results
As a firm, Rockbridge continues to grow steadily.  Over the past two years we’ve grown the amount of assets under management by 20% from $194 million to $232 million.  While the markets have contributed to this increase, most of this rise is due to new clients who have discovered our firm via a referral from a current client or through our website.

Surprisingly, a significant number of our new clients have found us via our website after searching for a local fee-only advisor.  We’ve invested in website improvements to bring our story to more people.  We don’t have an advertising budget and rely on referrals as our main source of new clients.

Our Business Model is a Winner
While our clients know this, it’s worth repeating.  Rockbridge is a fee-only Registered Investment Advisor (RIA).  Our only source of revenue is from fees paid by clients.  We have never accepted a commission from a product we recommend.  The fee-only RIA business model has experienced steady growth while commission-based brokers continue to lose market share as individual investors discover the value of working with an objective fee-only investment advisor.

Our Fees Are Modest
Our mantra continues to be “costs matter.”  The amount an investor pays in investment costs will definitely affect their standard of living.  We continue to have a relentless focus on costs for our clients.  Each year, Charles Schwab surveys the advisors they service.  Rockbridge participates in order to benchmark our firm against others like us.  The survey revealed that our management fees are less than our peers.  Our fees for a typical client average .50% of assets managed versus our peers whose fees average .67%.  Lower investment costs mean more money in our client’s pocket.

Education Never Ends
Our firm is part of a study group of likeminded advisors committed to the passive investment philosophy.   We meet quarterly in New York City to discuss investment strategies or products and compare notes on our business practices.  The insight we get from these meetings makes us better advisors.  We also continue to be a member of The National Association of Personal Financial Advisors (NAPFA).  NAPFA is the country’s leading professional association of fee-only financial advisors—highly trained professionals who are committed to working in the best interests of those they serve.  NAPFA holds several training events throughout the year that we are proud to be a part of.

Plans for 2012 and Beyond
We will continue to meet with clients to review their investment plans.  There is no way to predict future returns; however, we are confident that markets will reward investors for taking investment risk over the long term.  Expected future returns may not be as high as in the past, as articulated in Craig’s accompanying article, so we will continue to help clients determine the right amount of risk to take in order to meet their financial goals.

Changes in technology and new investment products are introduced at an ever increasing pace.  We take time to evaluate new technologies and products on a regular basis.  We spend money on technologies that make us better, more productive advisors.  We are slower to make changes involving new investment products since many are designed to maximize profit  for their own companies, not necessarily for their investors.

Our strategic plan for the next three years calls for modest growth both in new clients and firm revenue.  Our five professional fee only investment advisors have capacity to help more individual investors.  As the baby boom generation is poised to start retiring, we look forward to referrals from our clients and professional networks.

Recent regulatory changes to be enacted in 2012 will shine a light on the abuses in the 401(k) marketplace, especially for small employers.  At Rockbridge, 31% of our revenue comes from managing 401(k) plans for small business owners.  We are poised to be an objective partner for other small firms who care about their employees and their retirement goals.

In conclusion, we continue to be passionate about our investment philosophy and thoroughly enjoy working with and educating our clients.  Personally, I enjoy coming to work every day surrounded by smart, confident, passionate people.

About the Author

Tony Farella, is a Certified Financial Planner® and a Principal Founder of Rockbridge Investment Management.  Tony is a contributor to Forbes, CNN Money, NAPFA’s FI Guide, Advisor Perspectives and local tv, radio and print publications.  Tony is the board director for NAPFA New England-Mid Atlantic Region), previous board member of the Financial Planning Association of CNY, acting Board Member of the Downtown Syracuse YMCA, as well as the Board of Directors for Countryside Credit Union.
Learn more and/or Contact Tony »


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