RIAs assailed Altruist and put Jason Wenk on defense over a new fee schedule, but-- four days later -- Wenk went back on offense, promising to better even unchallenged fees

Jason Wenk just pledged to “redo everything” with Altruist's fee structure, after quickly rowing back on proposed fee increases that outraged RIAs.

The co-founder and CEO of the Culver City, Calif., start-up custodian faced the wrath of dozens of RIAs on social media, who slammed the firm's Apr. 1 fee update.

They slammed it as “predatory," “distressing,” “a joke," a bid to “nickel and dime” customers, “crazy” and "untrue" to Altruist's ethos.

Wenk clearly got the message. 

"I'm fully nuking the Altruist fee schedule," he wrote in an Apr. 5 post.

“By nuking, I'm basically redoing everything and committing to the simplest, lowest, most customer-centric fees in the industry,” he explained, in an email exchange with RIABiz. 

“Imagine if you took Schwab and Fidelity, for example, and took the better [parts] of all of their administrative and transactional fees, and then made them even better. 

That's what should roll out before the end of this week,” he adds.

Fair or foul

The drama played out largely on the social media site, “X,” formerly known as Twitter.  

The initial RIA response to Altruist's now junked fee changes was a mix of bemusement and anger.

“Altruist is going to start charging for Roth conversions … I’ve never seen that anywhere else … maybe it’s a joke,” Kevin Lum, founder and CEO of micro Los Angeles, Calif., RIA, Foundry Financial, tweeted.

"No doubt plenty of folks feel bait and switched. I keep hoping for an 'April Fools!' message to come out," Ronnie Colvin, founder of financial planning start-up, Fractional Planning, tweeted, Apr. 1.

Yet others in the industry argued that small shops are always likely to make a mountain out of a mole hill, despite having only a marginal impact on a custodian's revenues.

“Smaller firms can absolutely be ridiculous and will always complain … [the issue with Altruist's fee changes] is more about getting the cost and type of fee correct,” posted Donald R. Windle, founder of Oklahoma City, Okla., RIA, Windle Wealth, with $159 million of managed assets. 

“They're going to have to make some money somehow, right? They can’t just keep bending to advisors who want the world and want it for free,” added James Sweeney, founder of Provo, Utah, RIA, Switchpoint Financial Planning, with $221 million of AUM.

“It’s a tough position to be in. How do you all want to pay? ... Fidelity charges $10,000* a year platform fee for small firms. The service provided isn’t cheap," he adds. See: Fidelity's annual $10,000 custody fee will attach to a wider swath of small RIAs

Addressing changes

The initial fee schedule, slated to go into effect May 3, included an annual $50 charge to custody and “maintain” a single IRA account and $25 to convert a Roth IRA. Altruist has never charged for either process.

It also introduced new trading fees on mutual fund trades larger than $1,000.

Altruist responded to complaints in a series of posts on its own “X” account, addressing several proposed fee changes, first by clarifying them, then by apologizing.

Click here: Wenk explains Altruist's rationale for account closure and exit fees.

It stated, for instance, that proposed account maintenance charges were a communications “blunder.” Clients received an early rejected draft of fee updates, rather than the final version, it said. 

Then, four days later, Wenk dropped his atom bomb, promising to undercut Fidelity, Schwab and every other custodian in the business.

He also pledged to keep most account maintenance fees at zero, and to get the firm's new pricing model out to RIAs by the end of the week.

Zero, 'indefinitely'

Wenk said the firm intends to keep account administration fees for IRAs, Roth conversions, solo 401(k) setup and administration all at "zero indefinitely."

He also pledges Altruist will stick with "no strings" fractional trading, and ETF and equities trading free of commission and platform fees.

Altruist is also "committed to having the lowest price mutual fund platform in the market," Wenk said. 

Reduced ACAT transfer charges could also be in the offing.

Missing the mark

“As for why we made some changes, initially we were just proposing a few updates, but wanted to stay mostly in-line with our prior fee schedule.

"For a number of unfortunate reasons, some items were proposed to be changed that were never intended,” Wenk explained.

"We missed the mark and also clear types of fees can be really hurtful to end clients – think a $50 annual fee for a retirement account type with a $1,000 balance – that's 5%, which is way too high.

“I thought that rather than just reset to our original fee schedule, let's champion simpler, lower fees … no gotcha fees, platform fees, hidden fees,” he says.

Advisors received the incorrect fee-update as a result of a "super embarrassing" breakdown in internal communications, according to Wenk.

“It was an early draft that was changed by our pricing committee,” he explained, in a tweet.

Long-term win

Yet the snafu could, in fact, be all to the good for Altruist.

Its fees needed clearing up to begin with, says Andrew Besheer, principal of Besheer & Associates, via email.

“The fee schedule was already pretty complicated and full of line item fees that I’m sure were a pain for RIA’s to keep track of,” he explains.

“If this leads Altruist to actually coming up with a more streamlined, understandable, transparent fee schedule, it could end up being like New Coke, a disaster that turns into a long-term win,” he adds.

Depending on how Wenk's nuclear option pans out, a revamped fee structure could also be timed perfectly.

Rival Apex is about to make a sizable play to replace TD Ameritrade (TDA) as one of the big-four custodians, after a very TDA-tinged hiring spree and software build. See: Apex, with dozens of TDA staffers, reimagines VEO & iRebal combo.

“Altruist still has potential to win, especially if they come out of this with the ‘objectively lowest, simplest and most customer-centric schedule in the industry,'" Besheer says. 

In particular, Altruist could win in the low to medium-sized segments of the market, he adds. 

“It remains to be seen if they can turn into the TDA replacement, especially with Apex now bringing in ex-TDA talent to try to recreate the ethos of VEO,” he says.

Threatened brand

Altruist may have riled RIAs so much because the debunked fee schedule cut against its brand – perhaps to satisfy venture capital (VC) investors, at least one industry observer opined.

Indeed, one advisor was so spooked by the potential fee changes, he stated he might move small 401(k) accounts back to Schwab.

Altruist has grown from zero to 3,662 RIA clients in six years largely by being tech-adept, open to small practices, and not Schwab – in other words, it's the rebel alliance versus the Death Star.

Yet Wenk believes the firm's snafu presents an opportunity to further burnish, rather than diminish, its RIA credibility.

“I wish we'd never have made the blunder in the first place; it has been a great learning experience … and hopefully, has shown to our RIA customers and the industry more broadly that we absolutely listen and care," he says.

"People appreciate the way we've handled the last week."

Wenk has written at least a score of replies to advisors on social media, alone, explaining and apologizing for the firm's mistake, as well as clarifying the rationale for account closure fees in a detailed debate. 

No pressure

Charles Schwab's 2019-announced acquisition of TDA – completed in 2023 – also assured Wenk's firm (and Apex) a clear niche to fill.

The fact has not been lost on VC investors, who have funded Altruist to the tune of $280.5 million. See: Altruist's $112-million 'D' raise poses challenge.

Altruist's ability to attract a slew of backers, including former Vanguard CEO Bill McNabb, funded its build out of in-house clearing capabilities – at Apex's expense.

Its purchase of long-standing indie custodian, SSG doubled the firm's RIA client-count. See: Altruist is taking careful aim at RIA custody.

Wenk denies the firm's now aborted fee change was driven by a desire for a quick return-on-investment for VC partners.

“[There's] definitely no VC pressure, quite the opposite, actually. They very much see the big picture, in that, with a 50-plus year time horizon, this will be a monstrous business as long as we always put our customers first,” he tweeted.

“We don’t take money from short-term thinkers.”

* Fidelity declined to comment on its RIA fees, although one source in the industry stated that although the firm does in some cases charge platform fees, this is not universal and Fidelity's pricing is personalized to each individual RIA.