Wealth Management Fees: AUM Schedules, Flat Fees, Fund Costs, and What the Fee Buys

An advisory fee is quoted as a percentage but paid in dollars, and it comes out every year whether the portfolio rose or fell. This guide covers the arithmetic: what advisors publish as fee schedules, how tiers and cliffs work, what other costs sit underneath, what 30 years of each fee model leaves you with, and what the evidence says the fee buys. How to pick an advisor is covered in our advisor selection guide, and the legal duty they owe you is in our fiduciary guide.

What advisors charge, per survey and per filing

Survey data. The Kitces Research summary published June 16, 2025 reports that 92% of advisors use AUM fees in some way and 86% use them as their primary pricing method. Fifty-eight percent of firms use graduated schedules, the most common structure. From Inside Information's 2024 "Fees in Motion" report, 62% of advisors charge at least 1% on a $1 million portfolio, but only 32% do on $2 million. The article also finds that clients on cliff schedules pay 10 to 15 basis points more at both the low end ($250,000 to $500,000) and the high end ($2 million and $10 million), with little difference at $1 million and $5 million. These are advisor-reported fees, not what every client pays.

Filed schedules. Three published schedules, all as of 2026. They are examples and not recommendations.

PMC's Form CRS also lists two non-AUM models: subscription membership at $47 to $997 a month plus a one-time onboarding fee of $350 to $2,500, and hourly project work at $125 to $375 an hour. Townsend describes itself as fee-only, meaning its revenue comes from clients and not from product commissions.

Illustration of the blended rate on Townsend's graduated tiers (we compute each tier on the dollars inside it):

A cliff schedule works differently: once you cross a breakpoint the new rate applies to the whole account. If Townsend's tiers were cliffs, a $999,999 account would pay about $10,000 and a $1,000,001 account about $8,000. With graduated tiers, that second account pays $10,000. Ask which one applies, since the wording of an Item 5 fee table is easy to misread.

Fees on top of the advisory fee

• Fund expense ratios. For 2025 the Investment Company Institute reports asset-weighted averages of 0.40% for equity mutual funds and 0.14% for index equity ETFs. On $1 million that is $4,000 and $1,400 a year. What your advisor buys is a choice they can explain.
• 12b-1 fees. These are fees paid out of fund assets to cover distribution and sometimes shareholder services. They typically apply to mutual funds and not to ETFs. A 0.25% 12b-1 fee on $500,000 costs $1,250 a year. If your advisor charges a fee for managing your money, ask why they hold share classes that pay for distribution.
• Wrap fees. An SEC investor bulletin describes a wrap fee as a single bundled fee for advice, brokerage, and administrative costs. The total may be higher or lower than paying for those services separately, and an account that seldom trades gets less out of the trading component. The sponsor gives you a wrap fee brochure, Form ADV Part 2A Appendix 1.
• Custody and trading charges, planning fees billed separately, and any product-level costs such as annuity charges. Kitces Research finds that advisors who charge planning fees separately do not usually lower their AUM fee to compensate.

The right sum is the advisory fee plus the funds' cost plus anything else, in dollars per year. Our choosing an advisor guide explains where to find each line in Form ADV and Form CRS.

Thirty years of each fee model

Illustration: $1,000,000 invested for 30 years at a 6.0% annual return before costs, with no deposits or withdrawals. Fund costs are deducted from the return each year. The advisory fee is taken at year end on that year's ending balance. All costs and returns are our assumptions. Our robo-advisor guide has a related table that starts at $100,000.

Three points come out of the table:

1. Fees compound. The 1.00% schedule paid $684,676 in fees over 30 years but cost $1.45 million of ending wealth, because each fee dollar stops earning.
2. The tiers helped. As the portfolio grew past $2 million, Townsend's blended rate fell, which is why it ends $156,101 ahead of a flat 1%. A flat 1% schedule ignores breakpoints, so it overstates what large accounts pay.
3. A flat fee shrinks as a share of a growing account. The $6,000 fee is 0.6% of the first year's balance and about 0.3% of the balance in year 30 (then $14,139). It is cheaper than 1% above a $600,000 balance and more expensive below it: at $250,000, $6,000 is 2.4%. Retainers make sense for larger, more complex households, and poorly for small ones.

The break-even is the other useful number. Against the do-it-yourself result, a 1.00% advisory fee needs the advice to add about 1.07 percentage points a year in gross return, over the whole 30 years, for you to end up level.

What the fee buys

The best-known estimate is Vanguard's Advisor's Alpha paper, July 2022 edition. It says a framework of best practices can add up to, or even exceed, 3% in net returns. The modules are cost-effective fund selection, rebalancing, behavioral coaching, asset location, spending strategy in retirement, and total-return investing. Vanguard says behavioral coaching may add 100 to 200 basis points, the largest single component.

Read it with its own caveats. The paper says the figure should not be expected annually and is likely to be very irregular, since the biggest gains come in periods of market stress when a client might otherwise sell. It says the amount varies with each client's circumstances. And it compares projected outcomes for a portfolio managed with best practices against one that is not, so it is a modeled comparison and not an observed result for people who hired advisors. Vanguard wrote it for advisors, and the copy we linked is marked for institutional and sophisticated investors. Treat 3% as a ceiling for an ideal case, not a forecast.

Concrete deliverables are easier to price than a percentage:

• A written financial plan. Ask what it covers and whether updates are included.
• Tax work: asset location across taxable and retirement accounts, harvesting losses, and sequencing withdrawals. Our tax-loss harvesting guide and tax-efficient investing guide describe what each can and cannot do.
• Rebalancing and portfolio selection. A robo-advisor or a target-date fund does this for 0.25% or less.
• Behavior. Someone who talks a client out of selling at a low is providing the service Vanguard values most, and the hardest to measure.
• Estate, insurance, and business-sale coordination with your other professionals.

If you would use none of these, a percentage-of-assets fee is difficult to justify. If you would use all of them, price the work directly: planning fee, hourly rate, or retainer.

Questions to ask

1. What is my all-in cost in dollars a year, including funds and any wrap or platform fees?
2. Are your tiers graduated or cliff, and where are the breakpoints?
3. Which services are included in the fee, and which are billed separately?
4. Do any of the funds you use pay you or your firm, or carry a 12b-1 fee?
5. What would you charge on a flat or hourly basis for the same work?
6. Can you show the Item 5 fee table in your Form ADV Part 2A, and your Form CRS?

Fee-only fiduciary status removes commission conflicts but does not lower the fee; the fiduciary guide explains what each standard does and does not cover.

This guide is for informational purposes only and does not constitute investment, tax, or legal advice. Fee schedules are as of the dates shown in the filings cited, are examples and not endorsements, and can change. Illustrations use assumed returns and costs and are not forecasts. Consult a qualified professional before choosing an advisor or fee arrangement.