Are You Paying Too Much for Financial Advice?
Paying fees based on your assets under management may be costing you dearly, in more ways than one. Here’s why. Want a better deal? Consider a flat fee method instead.


To this day, the first question industry peers ask me is, “What is your AUM (assets under management)?” They never seem interested in the quality of my advice, how my advice positively impacts my clients’ lives, or how I help my clients get married, start families, buy homes, start businesses and even retire with financial security.
Why do assets under management matter? They are how most financial advisers get paid, and it’s been this way for decades. Most charge an “AUM-based fee” of 1% – sometimes more, sometimes less, but always tied to your overall asset level, managed by your adviser. This is what you pay them for financial planning and their investment advice, and conceptually, it makes sense – when your investments do well and your assets grow, so too does the amount of money the adviser makes. On the flip side, if the adviser loses you money, you pay less in fees. But the reality is that win or lose, these fees are eating into your portfolio’s returns, and the truth is they are costing you a substantial amount of money.
For example, if you invested $100,000 for 30 years at an 8% annual return, you would have just over $1 million. If you paid a 1% fee, you’d have only $761,225, a sizable amount, right? Not so when you come to the realization that this 1% fee cost you $245,040 or almost 25% of your wealth.

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Seeking professional advice is a good thing. When money is the No. 1 cause of stress for most Americans, and that stress materially affects their overall well-being, access to financial planning, done right, is quite literally essential to living well. But paying the wrong way for the wrong advice is a problem.
The AUM-based fee is the model of the past, not the future. New fee models are emerging, and there is only one that is best for you (as it should be): the flat fee. This fee is completely decoupled from your assets and as advisers and their clients are rapidly discovering, is by definition an approach much more in line with the fiduciary standard.
Defining the flat, subscription-based fee
A flat, or subscription, fee is a fixed amount for ongoing, as opposed to one-time, planning and investment advice. It’s not based on how much you invest but rather on your planning needs and the complexity of your financial life as it evolves over time.
To be fair to the AUM-based model, a flat fee still costs money. You could pay from $2,000 to north of $5,000 per year, or even more, but it is tailored to meet your needs, as opposed to a more arbitrary fee that’s tied to how much money you have, like the AUM model. It is likely very similar to how you pay your CPA.
Three reasons why a new model is needed
1. Greater access and affordability
The AUM-based fee is an exclusionary model. Ninety percent of Americans own only 11% of stocks in the U.S. The AUM model was created for the 10%, who have money to invest, and not the other 90%. If you are just starting to save or your investments can’t be managed by an adviser because they are in your 401(k), your avenues to access advice are limited.
A flat subscription fee creates an inclusive model because you can get access to advice no matter what stage you are at in life. It can be tailored to your situation so it’s affordable, and it doesn’t require you to have a lot of money before you can get help for your finances. Quality, affordable financial advice is essential to living well and should be accessible with or without money to invest.
2. Redefining financial advice and aligning cost to value
With an AUM-based model, how much you pay hinges on one thing: how much you invest. And that fee goes up as you invest more. But do you get more from your adviser when you pay more? The answer is probably no.
A flat subscription fee gives you and the adviser the same priority: improving your financial health and well-being. And as your needs change throughout life – family, career, retirement – a flat fee can be adjusted to ensure you get the right advice for a fair price. You shouldn’t pay more just because you invest more.
3. Unbiased advice for a better relationship
The AUM-based fee creates a conflict because the adviser has an incentive for you to invest more even if that money could be used elsewhere. In fact, studies have found that how an adviser charges affects the advice they give to clients and may even lead to advice that is not in your best interest. Life is filled with trade-offs – should you invest, pay for college or pay down your mortgage? You don’t want the answer to those questions to depend on how your adviser charges.
A flat fee removes this conflict and cements alignment between you and your adviser. The only incentive is to provide quality, unbiased advice that’s best for your life and what matters most to you. You know what you are paying, why you are paying it, and it’s a model you can trust.
A confusing advice landscape for consumers
Financial advice is sold under one wrapper as if it’s all the same, but what you get can be dramatically different.
For starters, there is no standard of advice for advisers. An adviser can be certified, like a CFP® Professional, or pass a simple licensing exam and charge you the same amount. Advisers can use different fee models – flat fee, hourly, AUM-based – and provide different services.
Is the flat fee the perfect answer by itself? No. But if you know what to look for you can get quality advice tailored to your life, from an adviser you can trust, for a fair price. Not all financial advice is created equal, but here are some questions you can ask to make a more informed decision:
- How do you charge, and how do you determine your fee?
- What services will you provide, and will they be limited to investments, or will you help guide my entire life?
- Are you a CFP® Professional, and will you be my dedicated adviser?
Improving financial well-being with a flat fee
My grandparents never had an adviser. Their little bit of money was everything to them, but they were told it wasn’t enough. They navigated life – careers, family and retirement – on their own. They needed advice for their entire life, and all of the decisions in it that touched money, and not just their investments. I became a financial planner to help people like my grandparents.
True financial well-being is when you have freedom from financial worry and the power of choice – the ability to see your range of choices and to make the best decisions based on what matters to you. New fee models, including a flat subscription fee, will ensure that more people have access to essential financial counsel.
This isn’t rocket science. It’s just good advice.
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Brent Weiss is co-founder and Head of Financial Wellness at Facet. His belief that financial wellness is essential to living well and that all people deserve access to the kind of financial advice that can lead to an enriched life has been the driving force behind the firm's mission and vision. He is dedicated to enabling greater access to innovative, next-generation planning solutions and technology that can improve the quality of life for all people.
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