The No-Load Delaware Statutory Trust (DST)

Happy CoupleA week seldom goes by where we don’t hear someone describe us as “The John Bogle or Vanguard of the DST industry.”  Since Sera Capital is a Registered Investment Advisory firm and must act as a fiduciary, when we first started to offer DSTs, we set our sights on a business model that had to be:

  • No Load
  • Transparent
  • Unconflicted

When we did our initial due diligence of the DST industry, we were struck with the archaic compensation structure of the industry and the one-dimensionality of those providing DST advice.  The top DST sellers in the industry were commission-based brokers that:

  • Were held to a broker’s suitability standards and not a fiduciary standard
  • Had very little or no wealth management expertise
  • Often had their own white labeled DST products they would sell to the unsuspecting
  • Charged what we considered to be exorbitant commissions for the value they provided

We decided to change the playing field.  Our fee-only or no-load compensation structure credits 100% of what a DST sponsor would pay a commission-based broker.  If the broker would receive a $10,000 commission for selling a particular DST, we would credit our client with that $10,000.  No matter the amount, we credit 100% of the commission back to our client.  We never receive compensation from a DST sponsor.  We essentially operate as buyer’s agents for our clients since they pay 100% of our fee.

As we placed more and more DSTs over the years, we came to realize that educating our clients required a minimum time commitment and so we developed a tiered fee structure to provide even more of a credit to our higher net worth clients.  They still required time and often much more time than the smaller DST clients but not on a proportional level, so we lower our fees once clients get to certain break points.

The last thing we did, that most CPA’s find attractive, is we charge a fee that is transparent and appears on an invoice.  We don’t just lower commissions like some of the smarter DST brokers do, we charge a fee.  This invoice becomes tax-deductible which is in stark contrast to the inability to deduct commissions since they are embedded in most DSTs.

We hope the no load Delaware Statutory Trust, DST concept catches on and welcome more of our fiduciary brethren into the DST fold.

If you’re an accredited investor and would like to learn more about Delaware Statutory Trust and 1031 Exchanges or Delaware Statutory Trusts Fees and Commissions, schedule your free 30 minute call today.

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