"0.85% of assets" is easy to say and hard to feel — until you convert it to dollars and compound it over twenty years. This calculator prices an AUM fee against a flat-fee alternative, estimates the value genuine advice delivers, and shows the value-add percentage your advisor must beat just to break even.
Situation: A retiree with $750,000 invested pays a 0.85% assets-under-management fee. A flat-fee planner in the same market charges $4,500 per year for the same scope of advice and does not manage the assets.
AUM cost: 0.85% of $750,000 is $6,375 in year one. Because the fee is charged on a growing balance, 20 years of contributions and growth pushes the cumulative cost past $150,000.
Flat-fee cost: $4,500 per year, or $90,000 over 20 years before any inflation adjustment to the flat fee.
Verdict: The fee gap is large enough that the advisor needs to add roughly 0.6% of portfolio value per year in genuinely measurable benefit — better tax placement, better fund selection, disciplined rebalancing, and prevented behavioural mistakes — before the AUM arrangement pays for itself.
Situation: A $2,000,000 portfolio, 1.0% AUM fee, $30,000 of annual contributions, over 15 years.
AUM cost: 1% of $2M is $20,000 in year one alone, rising as the portfolio grows. The 15-year cumulative cost exceeds $400,000 — more than many people pay for their home.
Flat-fee alternative: an advice-only planner charging $8,000 per year costs $120,000 over the same 15 years, a difference of roughly $280,000.
Perspective: the difference is only justified if the advisor reliably adds more than 1% per year of net value. Research on advisor value-add clusters around 0–3% depending on the client's starting behaviour — and much of the benefit is only realised by people who would otherwise make costly mistakes.
Advisor pricing in the United States has bifurcated. Traditional firms still charge a percentage of assets under management; a fast-growing segment charges a flat retainer, an hourly rate, or a project fee for advice alone and never touches the assets. The two models differ by an order of magnitude in dollar terms at larger portfolio sizes.
| Fee model | Typical 2026 price | Cost on a $750k portfolio | What it covers |
|---|---|---|---|
| AUM — percentage of assets | 0.50% – 1.25% per year | $3,750 – $9,375 | Advice plus discretionary investment management |
| Flat annual retainer | $3,000 – $12,000 per year | $4,500 typical | Comprehensive planning, no asset management |
| Hourly | $150 – $450 per hour | $2,250 for 15 hours | Project-based advice, engagement-specific |
| Project / one-time plan | $1,500 – $8,000 one-time | $3,500 typical | A full financial plan, updated on request |
| Robo-advisor | 0.15% – 0.35% per year | $1,125 – $2,625 | Automated portfolios, minimal human advice |
The AUM model scales with your success and your contributions — the fee rises every year as the portfolio grows, even though the advice workload is largely unchanged. Flat and hourly models scale with the work performed. That asymmetry is the core of the debate, and at $2M and above it can amount to hundreds of thousands of dollars over a retirement.
Advisor value-add is real but widely oversold. Academic and industry estimates generally place it between 0.5% and 3% per year, with the upper end driven almost entirely by clients who would otherwise make expensive behavioural mistakes. Assess the claim by asking which of these you would genuinely get:
The practical test: calculate the dollar fee, then list the specific services above that you will actually use. If the fee exceeds the sum of the benefits you can name, the structure is wrong for you — not the advisor.