Investment Professionals
Financial Professional Fee Comparator: AUM vs Flat vs Hourly vs Subscription
See what each compensation model costs in real dollars.
Enter your portfolio balance and return assumptions to compare four adviser compensation models side by side: AUM-percentage, flat annual fee, hourly rate, and subscription fee. The tool shows each model's annual cost, cumulative fees paid, ending balance, and how much growth is foregone when fees are deducted before compounding.
Direct Answer
A 1% AUM fee on a $500,000 portfolio costs $5,000 in the first year; a flat $3,000 annual fee costs the same regardless of balance. Over time the AUM fee extracts more as the portfolio grows, while a flat, hourly, or subscription fee stays fixed. Foregone compounding means the total ending-balance gap is larger than the sum of fees paid.
What the Four Fee Models Mean
AUM fee: a percentage of your portfolio balance charged each year, typically 0.5% to 1.5%. As your balance grows, so does the dollar cost. At smaller balances this often costs less than a flat fee; at larger balances the math typically reverses.
Flat annual fee: a fixed dollar amount per year, often $2,000 to $10,000 depending on service scope. Cost does not change with portfolio size, so it becomes proportionally cheaper as your balance grows and proportionally more expensive at smaller balances.
Hourly fee: charged per hour of advice, typically $200 to $500 per hour. Annual cost depends on how much time you actually use. Useful for one-off consultations; harder to predict for ongoing relationships.
Subscription fee: a recurring monthly or annual fee for ongoing access, often $100 to $500 per month. Predictable cost, not tied to portfolio size.
Enter your own numbers below. The tool uses the same starting balance, gross return assumption, and time horizon for all four models so the only variable is the fee structure itself.
Fee Comparator Calculator
All models use the same portfolio balance, gross return, and time horizon. Results are estimates from your inputs, not a forecast or guarantee. Not investment advice. A lower fee does not guarantee better outcomes.
Results
Estimates based on inputs above. Not investment advice.
AUM fee is recalculated each year on the current balance (year-by-year, not fixed). Flat, hourly, and subscription fees are deducted as a fixed annual dollar amount. Fees are deducted before each year's compounding. Foregone growth = no-fee baseline minus ending balance. This model does not include adviser value added, tax efficiency differences, or contributions.
What Balance Makes Each Model Cheaper?
The balance at which an AUM fee and a flat fee cost the same dollar amount per year is called the break-even balance. Above that balance, the flat fee is cheaper; below it, the AUM percentage tends to cost less.
For a 1% AUM fee versus a $3,000 flat fee, the break-even is $300,000: at exactly that balance, both models cost the same $3,000 per year. Above $300,000 the flat fee wins on cost alone; below $300,000 the AUM fee is cheaper.
Hourly and subscription models break even differently. An hourly engagement at $300 per hour and 5 hours per year costs $1,500, which is cheaper than a $3,000 flat fee regardless of balance, but may not include the same scope of ongoing monitoring. The calculator above lets you adjust all inputs to find where your own break-even points lie.
Frequently Asked Questions
What is the difference between an AUM fee and a flat fee adviser?
An AUM (assets under management) fee is charged as a percentage of your portfolio balance, typically 0.5% to 1.5% per year, so the dollar amount grows as your portfolio grows. A flat fee adviser charges a fixed annual dollar amount regardless of portfolio size. At smaller balances an AUM fee often costs less in absolute dollars, while at larger balances a flat fee can cost significantly less because the percentage is no longer applied to a larger base.
Does a lower-cost compensation model always mean better value?
No. This tool isolates the mathematical cost of each fee structure given your inputs. It does not measure the quality, scope, or outcomes of advice. A higher-cost adviser who helps you avoid a major mistake or tax error can easily create more value than the fee difference. Use these numbers to inform your negotiation and evaluation, not as a substitute for assessing what you actually need.
How does this calculator model an AUM fee?
The AUM fee is recalculated each year as a percentage of the current balance at the start of that year. As the portfolio grows, the AUM dollar cost grows too. This year-by-year recalculation is why an AUM fee compounds against you: the same percentage rate extracts more dollars from a larger portfolio, whereas a flat or subscription fee stays fixed.
What does 'foregone growth' mean in these results?
Foregone growth is the difference between the no-fee baseline ending balance and your ending balance under each fee scenario. It is larger than total fees paid because every dollar removed as a fee is also a dollar that stops compounding. Over long periods, foregone growth can be substantially larger than the cumulative fees themselves.
Important Limitations
This tool compares fee costs only. It does not model the value of advice, tax optimization, behavioral coaching, or other services that a financial professional may provide. A lower-cost fee structure does not guarantee superior outcomes, and a higher-cost adviser may create enough value through planning to more than offset the higher fees. This calculator is for educational and comparative purposes only and is not investment advice. Verify any fee figures directly with the professional you are evaluating.