Ultimately, the ownership of future RIA’s will impact a firm’s business model, pricing and service offering. It is our view that RIAs owned by private equity firms will initially be left alone. Inevitably, however, pressure on fees, profit margins and pricing will force these firms to manage their organizations to achieve their organizational desired investment return. Over the mid- and long-term, these firms may become more focused on asset gathering and client fees, similar to banks and brokerage firms, perhaps losing their ‘client focus’. Oxford will not succumb.

Also, it is our view that wealth enhancement will not be an easy proposition using a long-only equity/fixed income model. High net worth clients may be able to keep pace with inflation and perhaps generate enough income to pay their annual income taxes. However, after inflation, taxes and fees, it will be difficult to grow wealth without taking advantage of institutionally priced Aspirational Solutions and Niche Growth Strategies. An appropriate allocation to these asset classes can support wealth enhancement well above the S&P 500. Of course, to achieve these nuanced returns, clients must stay focused on internal fund fees, friction costs, placement fees, spreads, commissions, carries/preferred fees, management and transaction fees. In some private market investments, fees can erode portfolio returns by a few to several hundred basis points prompting clients and their advisors to question their validity.

At Oxford, we focus on keeping fees on long-only investments as low as possible. In addition, we apply a ‘budget’ to fees associated with Aspirational Solutions and Niche Growth Strategies. This intentional process encourages clients to be thoughtful about how they spend their professional fees in the same manner as other dayto-day expenses. Buy as much as possible at wholesale and keep the commodity investment solutions as economical as possible. This strategy ensures that the higher fees are associated with the higher return generating investment ideas in your portfolio.

We believe that the firms who focus exclusively on long equity/fixed income strategies will evolve into the bank/brokerage firm model or financial ROBO advisor. Furthermore, regardless of their fees, they will be primarily down-market within the financial services industry. Eventually, clients will not be able to justify paying a fee for average performance on actively managed investment products. Rather, they will increasingly utilize passive funds to avoid the manager fees completely. This is what the industry refers to as the mass affluent. As a result, many RIAs will begin to operate much like the retail brokerage model.

Our commitment to independence is central to creating solutions customized precisely to your needs and objectives. Over the past year, our investments in infrastructure, personnel and technology continue to support the personalized advice we deliver each day. These include:

Oxford Financial Group Annual Report - 2019