Empirical Wealth Management is an SEC-registered investment advisory firm that mostly works with individuals, including high-net-worth ones. It also provides services to corporations and charitable organizations. In total, the firm employs 28 financial advisors. You can find the firm's headquarters in Seattle. But it also runs offices in Oregon, Alaska and California.
The firm has more than $1 billion in assets under management (AUM). To open an account, you'd need a minimum investment of $2 million. Its services include holistic financial planning, portfolio management and pension consulting as well as tax preparation and insurance services.
Empircal Wealth Management secured a spot on our list of the top 10 Financial Advisor Firms in Seattle.
Empirical Wealth Management Background
Kenneth Smith founded Empirical Wealth Management in 2006. Today, the advisory firm employs 28 advisors. The majority of them are certified financial planners (CFPs), but the firm does employ one certified public accountant (CPA). It is also known as Empirical Financial Services.
What Types of Clients Does Empirical Wealth Management Accept?
Empirical Wealth Management primarily works with individuals. Its clientele breaks down nearly evenly among high net worth individuals and those with more modest financial situations. It also provides services to a few charitable organizations and corporations. You'd need a minimum of $2 million to open an account with Empirical Wealth Management.
Empirical Wealth Management Minimum Account Size
To open an account with Empirical Wealth Management, you'd need an account minimum investment of $2 million.
Services Offered by Empirical Wealth Management
Empirical Wealth Management provides holistic planning around several financial needs, including the following:
- Retirement planning
- Pension consulting
- Business planning
- Small business retirement saving strategies
- Tax planning and preparation assistance
- Disability protection
- Stock option and deferred compensation plan strategies
- 401(k) recommendations
- Children’s education
Empirical Wealth Management Investment Philosophy
Empirical Wealth Management provides investment advisory services based on Modern Portfolio Theory, a philosophy that centers around diversified portfolios that will deliver optimal returns based on an investor's particular risk tolerance. This means the firm aims to develop portfolios whose asset allocations have breadth and variety. It typically utilizes 12 to 21 different asset classes when building portfolios. The amount devoted to each asset class is driven by risk characteristics and overall investment goal of the portfolio. It invests in mutual funds as well as exchange-traded funds (ETFs), and it often selects institutional funds or those available only through investment advisors. Common securities the firm invests its clients' assets include the following:
- Investment company securities
- United States government securities
- Commercial papers
- Corporate debt
- Municipal securities
- Futures securities
Investment decisions are also influenced by research material devised by other corporate rating services, filings with the SEC, annual reports and more.
Fees Under Empirical Wealth Management
Depending on the types of services rendered, Empirical Wealth Management may charge fees based on the following:
- Percentage of AUM
- Hourly charges
- Fixed arrangement
Some clients may also be in the firm’s wrap-fee program. When it comes to clients in the wrap-fee program, the firm will charge a comprehensive fee that covers portfolio management, custodial and brokerage services and more.
For fee-based investment advisory clients, Empirical charges management fees based on assets under management (AUM). These charges are made quarterly based on an average daily balance calculation. So they're calculated using the general fee schedule below times the average market value of the account during the preceeding quarter.
Below is the firm’s current general schedule of fees. Since they are charged on a quarterly basis, it breaks down into fours. So 1.00%/4 = 0.25% per quarter. These are generally deducted from your accounts on the first day of each calendar quarter.
|Assets||Portfolio Annual Fee|
|$2,000,001 - $5,000,000||0.80%|
|$5,000,001 - $10,000,000||0.70%|
|$10,001 - $20,000,000||0.50%|
|More than $20,000,000||0.30%|
According to documents that Empirical Wealth Management has filed with the SEC, all fees are negotiable. However, the way the firm charges fees would be outlined in your written contract agreement.
Below, you can see how Emperical's general asset-based portfolio fees compare to national median advisory fees.
|*Fee estimates only consider the maximum base fees for the services each firm provides. You may also pay manager fees and other fees, which can vary in amount. **All figures are based on median fee levels according to Bob Veres' 2017 Planning Profession Fee Survey. The above estimates solely take into account AUM-only fees. Total costs will likely be higher due to additional expenses.|
|Estimated Fee Comparison*|
|Your Assets||Empirical Wealth Management||National Median Advisory Fees**|
|$500K||n/a (below required minimum)||$5,000|
|$1MM||n/a (below required minimum)||$8,500 - $10,000|
|$5MM||$44,000||$25,000 - $32,500|
Regardless of which program you’re in, fees deducted from your account may come from, but are not limited to, the following sources depending on what type of services you’re getting:
- Internal expenses of mutual funds and index funds
- Brokerage commissions
- Custodial fees for holding non-standard assets such as alternative investments
- Service charges
- Stock transfers
Additional fees may include charges for IRA and retirement plan services and expenses charged by variable annuities.
A performance-based fee framework may come into play if you’re a “Qualified Client.” Under the Investment Advisers Act of 1949, this generally means someone with at least $1 million in AUM or with a net worth of at least $2 million. Empirical claims it typically requires the latter for this arrangement to commence. The firm would negotiate these fees with the client.
In addition, Empirical Wealth Management charges a fixed or hourly fee for tax preparation services depending on the scope of the work rendered. Clients with AUMs higher than $1 million may get discounts on these services.
What to Watch Out For
Because Empirical Wealth Management has a performance-based fee schedule, it may provide incentive for advisors to recommend riskier investments to try to capture stronger returns and therefore compensation. However, Emperical Wealth Management reports that all supervised persons are fiduciaries. As a result, they are legally required to put the best interests of clients above personal gain.
Furthermore, the firm also employs at least one individual affiliated with Empirical Insurance who is licensed to sell insurance products in the states of Washington, Oregon and Kansas. Because this individual receives commission when selling Empirical Insurance products, the person may be incentivised to recommend products based on potential compensation. However, this individual is also bound by fiduciary standards, according to paperwork filed with the SEC.
In addition, the firm receives custodian and broker-dealer services from Charles Schwab, an SEC-registered financial institution and member of the Financial Industry Regulatory Authority (FINRA). Empirical does not pay for these services as long as it keeps at least $10 million worth of client assets in Schwab accounts. This relationship may influence Empirical Wealth Management advisors to recommend that clients keep their accounts with Schwab. So you may pay more in commissions to Schwab than you would to other broker-dealers. In addition, Empirical is involved in the TD Ameritrade institutional customer program. This arrangement may raise similar incentives.
Empirical Wealth Management has reported no disclosures, according to the latest Form ADV it filed with the SEC. This is a document that all registered members must submit to keep their status.
Opening an Account with Empirical Wealth Management
Empirical Wealth Management is based in Seattle, Washington and has other offices throughout the state. It also runs branches in California, Alaska and Oregon. You can stop by any of these offices to discuss opening an account or receiving the firm’s services. In addition, you can call their main customer service line at (800) 923-4307.
Where Is Empirical Wealth Management Located?
Empirical Wealth Management is active in Washington in the cities of Seattle and Bellevue and Spokane. It has an office in Portland, Oregon, and also has offices in the California cities of Irvine and San Francisco. You can find a branch in Anchorage, Alaska as well.
Tips for Finding The Right Financial Advisor
- Not all financial advisors are created equal. Some are held to higher standards. Fiduciaries, for example, are required by law to act in your best interest. Advisors also have different fee structures. Fee-only certified financial planners (CFPs), for example, don’t make commissions and essentially only make money when you make money. So it’s important to shop around. We can help narrow down the search with our SmartAsset financial advisor matching tool. It connects you with up to three financial advisors in your area. The tool also gives you access to detailed profiles. So you can review their qualifications, certifications and experience before making a decision.
- Once you’re meeting with financial advisors you may want to work with, it’s important to keep a few things in mind. To help, we published a piece on the five questions to ask when choosing a financial advisor.