Most advisors charge a percentage of the money they manage for you. But a growing number charge a flat fee instead—a fixed dollar amount for their services, regardless of your portfolio size. If you have a large portfolio, this can save you a lot of money.
How flat fees work
Instead of paying 1% of your portfolio every year, you pay a set amount—typically $2,000 to $12,000 per year for ongoing advisory services, or $1,000 to $5,000 for a one-time financial plan.
The difference adds up fast. On a $1M portfolio, a 1% AUM fee is $10,000/year. A flat-fee advisor might charge $6,000 for the same services. Over 10 years, that's $40,000+ in savings—and the gap widens as your portfolio grows.
| Fee model | Annual cost | 10-year cost |
|---|---|---|
| 1% AUM | $10,000 | $100,000+ |
| Flat fee | $4,000–$8,000 | $40,000–$80,000 |
When flat fees make sense
Large portfolio, straightforward needs. If you have $1M+ and your financial life isn't unusually complex, you're probably overpaying at 1%. A flat-fee advisor gives you the same planning and oversight for less.
You don't need investment management. Some people already have their investments set up and just want help with tax planning, retirement projections, or a second opinion. A flat-fee or hourly advisor lets you pay for planning without handing over your portfolio.
You want to know exactly what you'll pay. AUM fees change as your portfolio fluctuates. Flat fees are predictable.
When AUM fees might be better
Smaller portfolios. If you have $200K, a 1% AUM fee is $2,000/year. Many flat-fee advisors charge more than that. The AUM model can actually be cheaper at lower portfolio sizes.
You want fully hands-off management. AUM advisors typically manage your investments directly—rebalancing, tax-loss harvesting, the works. Some flat-fee advisors create a plan but leave implementation to you.
What to watch for
- Scope matters: Make sure you know what's included. Some flat-fee advisors cover comprehensive planning (taxes, estate, insurance review). Others only cover investments.
- “Flat fee” vs. “hourly”: Flat fees are a set annual retainer. Hourly fees ($150–$400/hr) are pay-as-you-go. Different use cases.
- AUM fee in disguise: Some advisors call their fee “flat” but adjust it based on your assets. Ask if the fee changes as your portfolio grows.
Data source: Fee structures and compensation methods come from Form ADV filings with the SEC.